-----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, IpiVcbqKWTzXpb5WiprUFsTk/LXuSCYg8g/64hKXSOkRVIag+M33uC5HOiJQmlW0 KJmJomuttMfvtAptQo8tVw== 0001036050-99-000838.txt : 19990422 0001036050-99-000838.hdr.sgml : 19990422 ACCESSION NUMBER: 0001036050-99-000838 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 22 FILED AS OF DATE: 19990421 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-4 SEC ACT: SEC FILE NUMBER: 333-76753 FILM NUMBER: 99598497 BUSINESS ADDRESS: STREET 1: 27 CHURCH LANE CITY: UNCASVILLE STATE: CT ZIP: 06382 BUSINESS PHONE: 2038480545 S-4 1 FORM S-4 As filed with the Securities and Exchange Commission on April 21, 1999 Registration No. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- Mohegan Tribal Gaming Authority (Exact name of registrant as specified in its charter) Not Applicable 7993 06--1436334 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification Number) incorporation or Classification Code organization) Number) Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 (860) 204-8000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) -------------- Roland J. Harris Chairman and Member of Management Board Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 (860) 204-8000 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------- Copies to: David B.H. Martin, Jr., Esq. Hogan & Hartson L.L.P. 555 Thirteenth Street, N.W. Washington, D.C. 20004 (202) 637-5600 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. -------------- If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d) 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. [_] -------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------
Proposed Proposed Maximum Title of Each Class of Amount Maximum Aggregate Amount of Securities to be to be Offering Price Offering Registration Registered Registered Per Share(1) Price(1) Fee - ------------------------------------------------------------------------------ 8 1/8% Senior Notes Due January 1, 2006....... $200,000,000 100% $200,000,000 $55,600 - ------------------------------------------------------------------------------ 8 3/4% Senior Subordinated Notes Due January 1, 2009....... $300,000,000 100% $300,000,000 $83,400 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(f) under the Securities Act of 1933, as amended. 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 the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion Dated April 21, 1999 PROSPECTUS [LOGOS] - -------------------------------------------------------------------------------- $500,000,000 Mohegan Tribal Gaming Authority Offer To Exchange All Outstanding $200,000,000 8 1/8% Senior Notes Due 2006 For $200,000,000 8 1/8% Senior Exchange Notes Due 2006 and All Outstanding $300,000,000 8 3/4% Senior Subordinated Notes Due 2009 For $300,000,000 8 3/4% Senior Subordinated Exchange Notes Due 2009 Interest Payable January 1 and July 1, Beginning on July 1, 1999 - -------------------------------------------------------------------------------- Material Terms of the Exchange Offers . We are offering to . The terms of the exchange all validly Exchange Notes will be tendered and not substantially identical validly withdrawn to the terms of the Outstanding Notes for Outstanding Notes, an equal amount of a except for special new series of notes transfer restrictions that are registered and registration rights under the Securities relating to the Act of 1933. Outstanding Notes. . The Exchange Offers . You may only tender the will expire at 5:00 P. Outstanding Notes in M., New York City Time, denominations of $1,000 on , 1999, unless and multiples of extended. $1,000. . You may withdraw . The exchange of notes tenders of Outstanding should not be a taxable Notes at any time exchange for U.S. before the expiration federal income tax of the Exchange Offers. purposes. . We will not receive any . The Exchange Offers are proceeds from the subject to customary Exchange Offers. conditions. Please see Risk Factors beginning on page 15 for a discussion of factors that you should consider in connection with the Exchange Offers. We are not making the Exchange Offers in any state or Jurisdiction where it is not permitted. None of the National Indian Gaming Commission, the U.S. Securities and Exchange Commission or any other federal or state agency has approved or disapproved of the Notes to be distributed in the Exchange Offers, nor have any of these organizations determined that this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is , 1999. TABLE OF CONTENTS
Page ---- PROSPECTUS SUMMARY....................................................... 1 RISK FACTORS............................................................. 15 THE EXCHANGE OFFERS...................................................... 26 USE OF PROCEEDS.......................................................... 34 CAPITALIZATION........................................................... 35 SELECTED FINANCIAL DATA.................................................. 36 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................................... 38 BUSINESS................................................................. 44 THE AUTHORITY............................................................ 55 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................... 58 MOHEGAN TRIBE OF INDIANS OF CONNECTICUT.................................. 59 OTHER MATERIAL AGREEMENTS................................................ 61 GOVERNMENT REGULATION.................................................... 68 DESCRIPTION OF OTHER INDEBTEDNESS........................................ 72 DESCRIPTION OF THE EXCHANGE NOTES........................................ 74 PLAN OF DISTRIBUTION..................................................... 129 LEGAL MATTERS............................................................ 129 INDEPENDENT AUDITORS..................................................... 129 WHERE YOU CAN GET MORE INFORMATION....................................... 130 INDEX TO FINANCIAL STATEMENTS............................................ F-1
PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. Because it is a summary, it does not contain all of the information that is important to you. This summary is qualified in its entirety by the more detailed information and by the Authority's Consolidated Financial Statements, the notes thereto and the other financial data that are contained elsewhere in this Prospectus. You should carefully read this entire Prospectus and the Letter of Transmittal in their entirety, particularly the section entitled "Risk Factors" and the financial statements and the related notes to those statements. References in this Prospectus to the "Authority" are to the Mohegan Tribal Gaming Authority. The term the "Tribe" refers to the Mohegan Tribe of Indians of Connecticut. The terms "we" and "us" refer to the Tribe and the Authority, collectively. The Tribe and the Authority The Mohegan Tribe of Indians of Connecticut is a federally recognized Indian tribe with a 390-acre reservation located in southeastern Connecticut. Under the Indian Gaming Regulatory Act of 1988, 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 compact with the affected state. The Tribe and the State of Connecticut have entered into such a compact that has been approved by the U.S. Secretary of the Interior. The Tribe's gaming operation is one of only two legally authorized gaming operations offering traditional slot machines and table games in the Northeastern United States outside of Atlantic City, New Jersey. The Tribe has established an instrumentality, the Mohegan Tribal Gaming Authority, with the exclusive power to conduct and regulate gaming activities for the Tribe. The Authority is governed by a Management Board, which consists of the nine members of the Mohegan Tribal Council. Mohegan Sun In October 1996, the Authority opened a gaming and entertainment complex known as Mohegan Sun at a total cost of approximately $303 million. Mohegan Sun is located in Uncasville, Connecticut, approximately 125 miles from New York City and approximately 100 miles from Boston, Massachusetts. Mohegan Sun is situated on a 240-acre site on the Tribe's reservation overlooking the Thames River with direct access from Routes I-395 and 2A via a four-lane access road constructed by the Authority. As of December 31, 1998, Mohegan Sun had approximately 176,500 square feet of gaming space. Mohegan Sun currently offers . 3,025 slot machines, 150 table games (including blackjack, roulette, craps, baccarat, caribbean stud poker and let it ride) and 42 poker tables; . food and beverage amenities, including three gourmet restaurants, a 680- seat buffet, a New York style delicatessen, a 24-hour coffee shop, a 10- station food court and multiple service bars for a total of 1,888 restaurant seats; . a high stakes bingo hall with seating for up to 1,400 guests, which is also used as an events center that can accommodate up to 1,800 guests; . an approximately 10,000 square foot lounge featuring live entertainment seven days a week; . an approximately 9,000 square foot simulcasting race book facility; . parking spaces for 7,500 guests and for 1,700 employees; . a children's arcade area and a child care facility operated by New Horizons Kids Quest, Inc.; and . an approximately 4,000 square foot gas station facility. Mohegan Sun, which frequently operates at capacity on weekends, does not currently offer any hotel accommodations or a large-scale dedicated entertainment venue. Additionally, it offers only limited retail outlets. We believe that there are significant opportunities to increase revenues and profits by expanding the gaming space and adding hotel, entertainment and other amenities. 1 For its first fiscal year of operations ended September 30, 1997, Mohegan Sun welcomed approximately 6.5 million guests and recorded gross revenues of $512.1 million. During its second fiscal year ended September 30, 1998, Mohegan Sun had approximately 7.5 million guests, an increase of 15.4% over 1997, and its gross revenues were $641.4 million, an increase of 25.2% over the prior year. The Authority's EBITDAM (earnings before extraordinary items, interest, income taxes, depreciation, amortization and management fees) for the 12 months ended September 30, 1997 and 1998 were $135.4 million and $200.3 million, respectively. The Authority's EBITDAM for the quarters ended December 31, 1997 and 1998 were $35.1 million and $51.8 million, respectively. Strategy Our overall strategy is to profit from expanding demand in the Northeast gaming market. Our initial success has resulted primarily from guests living within 100 miles of Mohegan Sun. Based upon Mohegan Sun's results and experience to date, we believe the Northeast gaming market is strong and that there is significant demand for additional amenities. We expect to develop Mohegan Sun into a full-scale entertainment and destination resort and believe that this will increase the number of guests and lengthen their stays at Mohegan Sun. Specifically, we plan to expand Mohegan Sun's facilities using the proceeds from the Outstanding Notes, along with money we borrow pursuant to a bank credit facility, as well as internally generated cash flow. The expansion will include additional casino space, a hotel, a large convention facility, entertainment facilities and additional retail establishments. We will build the expansion with an effort to minimize disruption to the existing facility while Mohegan Sun continues to operate. In preparation for the expansion and to capture existing demand, we have recently widened our marketing efforts to include the entire New York City metropolitan area. We believe that by providing Mohegan Sun with additional capacity and the ability to capture a share of the overnight market in connection with our marketing efforts, we will extend Mohegan Sun's market penetration. We believe that the expansion will create a long-term competitive advantage for Mohegan Sun in the East Coast gaming market. See "Business--Competition." The Mohegan Sun Expansion To capitalize on the strong market fundamentals in the region and Mohegan Sun's popularity, we are expanding the casino significantly and adding a hotel, convention facilities, entertainment facilities and additional retail establishments. Key elements of the expansion include . approximately 100,000 square feet of additional gaming space; . a hotel with approximately 1,500 rooms; . approximately 100,000 square feet of convention space; . an entertainment events center with seating for up to 10,000; . nine new restaurants and lounges; . approximately 300,000 additional square feet of retail space; and . approximately 6,000 additional guest parking spaces. The Authority commenced construction on the expansion in March, 1999 and intends to complete the expansion by the fall of 2001. The cost of developing, constructing, equipping and opening the expansion is expected to be approximately $750 million (excluding capitalized interest). The Tribe has issued a formal resolution capping the scope of the expansion budget at $800 million (excluding capitalized interest). In addition, the Tribe has set up a $40 million construction reserve account that, in some circumstances, will be used to pay for costs in excess of the expansion budget. 2 The Tribe has chosen a project developer, an architect, a cost and scheduling consultant, a site master planning firm and a retail consultant for the expansion. The expansion development team currently includes . Project Developer--Trading Cove Associates, a joint venture between an affiliate of Sun International Hotels Limited and Waterford Gaming L.L.C., to oversee the planning, design, construction, furnishing and opening of the expansion; . Project Architect--Kohn Pedersen Fox Associates PC, an internationally recognized architectural firm, to coordinate the design of the expansion facilities; . Cost and Scheduling Consultant--Hanscomb Limited, an international project cost and scheduling consulting firm, to oversee cost planning and control and provide other planning and scheduling services; . Site Master Planner--EDAW, Inc., a land planning and architectural firm, to master plan the expansion site in a manner that minimizes disruption to the existing facilities during construction; and . Retail Consultant--Gordon Brant LV, LLC, a retail consulting and development firm with experience in gaming industry projects, to assist with the overall concept and design of the retail facilities of the expansion. We believe the market favors expansion now for several reasons, including: (1) unsatisfied current demand for gaming space at the existing facility; (2) a growing gaming market in the Northeast region; (3) length of stay data indicating the need for a hotel and other amenities; and (4) the need to remain competitive with the Foxwoods Resort Casino, a neighboring gaming resort. The expansion is intended to attract a greater number of guests to the facility, particularly during mid-week periods, and to increase the amount of time and money guests spend at Mohegan Sun. Market Mohegan Sun and the Foxwoods Resort Casino are the only two legally authorized gaming operations offering both traditional slot machines and table games in the Northeastern United States outside of Atlantic City, New Jersey, which is approximately 260 miles from Mohegan Sun. Foxwoods is located approximately 10 miles east of Mohegan Sun and is owned and operated by the Mashantucket Pequot Tribe. Foxwoods is currently the largest gaming facility in the United States in terms of the number of total gaming positions. Based on the size and success of Foxwoods and the rapid growth of Mohegan Sun, we believe that the gaming market in the Northeastern United States remains underserved. See "Business--Competition." Mohegan Sun frequently operates at capacity on weekends. The addition of new gaming space will accommodate more of this weekend demand. The Authority estimates that the current average length of time that guests spend at Mohegan Sun is approximately 110 minutes. We believe that the addition of a large hotel as well as convention and entertainment amenities will increase the average length of time guests spend at Mohegan Sun. In the past, the Authority has marketed primarily to guests living within 100 miles of Mohegan Sun. This excludes most of the New York City metropolitan area. The Authority has recently begun a substantial marketing effort to tap a wider market, including the New York City metropolitan area. As a result of this marketing effort, the number of guests from New York State has grown over 50% from the last fiscal year as measured by Mohegan Sun's guest database. The Authority believes the majority of this increase can be attributed to guests residing within the New York City metropolitan area and believes the New York City market shows significant potential for additional growth. The Authority also believes the expansion, particularly a large hotel, should draw many additional customers from this and other more distant markets. See "Business-- Marketing Strategy." 3 Assumption of Self-Management The Authority engaged Trading Cove Associates in 1995 to operate, manage and market Mohegan Sun under a seven-year management agreement. Management fees paid to Trading Cove Associates under this agreement are based on profitability thresholds of Mohegan Sun. In anticipation of the expansion of Mohegan Sun, the Authority and Trading Cove Associates have agreed to terminate this management arrangement. Under the Relinquishment Agreement, the Authority will formally assume, and Trading Cove Associates will relinquish, the management, operation and maintenance of Mohegan Sun on January 1, 2000. The Relinquishment Agreement provides that the Authority will pay Trading Cove Associates 5% of gross revenues from Mohegan Sun (as determined under the terms of the Relinquishment Agreement) beginning January 1, 2000 and ending December 31, 2014. As a result of this new agreement, the Authority was required to recognize the estimated present value of this payment obligation as a liability in the fourth fiscal quarter of 1998. This liability was recorded as a non-cash extraordinary charge. See "Other Material Agreements--Existing Management Agreement with Trading Cove Associates" and "--Relinquishment Agreement with Trading Cove Associates." Trading Cove Associates has agreed to work closely with the Authority to facilitate a smooth and effective management transition. The Authority anticipates entering into long term employment contracts with the senior managers of Mohegan Sun, three of whom collectively have 45 years of experience in the gaming and hotel industry. The Authority has also entered into a development services agreement with Trading Cove Associates to oversee the planning, design, construction, furnishing and opening of the expansion of Mohegan Sun. See "Other Material Agreements--Expansion Development Services Agreement with Trading Cove Associates." Address and Telephone Number The Authority's mailing address is 1 Mohegan Sun Boulevard, Uncasville, CT 06382. Its telephone number is (860) 204-8000. 4 SUMMARY OF THE EXCHANGE OFFERS The following is a summary of the principal terms of the Exchange Offers. A more detailed description is contained herein under the caption "The Exchange Offers." The term "Senior Exchange Notes" refers to the 8 1/8% Senior Notes due 2006 being offered in our Exchange Offer. The term "Outstanding Senior Notes" refers to the Authority's currently outstanding 8 1/8% Senior Notes due 2006 that the Authority is exchanging for Senior Exchange Notes. The term "Senior Subordinated Exchange Notes" refers to the 8 3/4% Senior Subordinated Notes due 2009 being offered in our Exchange Offer. The term "Outstanding Senior Subordinated Notes" refers to the Authority's currently outstanding 8 3/4% Senior Subordinated Notes due 2009 that the Authority is exchanging for Senior Subordinated Exchange Notes. The term "Outstanding Notes" refers to the Outstanding Senior Notes and the Outstanding Senior Subordinated Notes, collectively. The term "Exchange Notes" refers to the the Senior Exchange Notes and the Senior Subordinated Exchange Notes, collectively. The term "Senior Notes Indenture" refers to the indenture that applies to both the Outstanding Senior Notes and the Senior Exchange Notes, and the term "Senior Subordinated Notes Indenture" refers to indenture that applies to both the Outstanding Senior Subordinated Notes and the Senior Subordinated Exchange Notes. The term "Indentures" refers collectively to the Senior Notes Indenture and the Senior Subordinated Notes Indenture. The Exchange Offers ........ The Authority is offering to exchange $1,000 principal amount of our Senior Exchange Notes, which have been registered under the Securities Act, for each $1,000 principal amount of our unregistered Outstanding Senior Notes. Together with this exchange, the Authority is also offering to exchange of $1,000 principal amount of its Senior Subordinated Exchange Notes, which have been registered under the Securities Act, for each $1,000 principal amount of its unregistered Outstanding Senior Subordinated Notes. The Authority issued the Outstanding Notes on February 24, 1999 in a private offering. In order for your Outstanding Notes to be exchanged, you must properly tender them before the expiration of the Exchange Offers. All Outstanding Notes that are validly tendered and not validly withdrawn will be exchanged. The Authority will issue the Exchange Notes on or promptly after the expiration of the Exchange Offers. Outstanding Notes may be tendered for exchange in whole or in part in integral multiples of $1,000 principal amount. Registration Rights Agreements ................. The Authority sold the Outstanding Notes on February 24, 1998 to a group of initial purchasers which included Salomon Smith Barney, NationsBanc Montgomery Securities LLC, SG Cowen, Bear, Stearns & Co. Inc., BancBoston Robertson Stephens Inc. and Fleet Securities, Inc. Simultaneously with that sale, the Authority signed a registration rights agreement relating to the Outstanding Senior Notes and a registration rights agreement relating to the Outstanding Senior Subordinated Notes with these initial purchasers which requires the Authority to conduct the Exchange Offers. You have the right under the registration rights agreements to exchange your Outstanding Notes for Exchange Notes with substantially identical terms. The Exchange Offers are intended to satisfy these rights. After the Exchange Offers are complete, you 5 will no longer be entitled to any exchange or registration rights with respect to your Outstanding Notes. For a description of the procedures for tendering Outstanding Notes, see "The Exchange Offers-- Procedures for Tendering Outstanding Notes." Consequences of Failure to Exchange Your Outstanding Notes ...................... If you do not exchange your Outstanding Notes for Exchange Notes in the Exchange Offers, you will still have the restrictions on transfer provided in the Outstanding Notes and in the Indentures. In general, the Outstanding Notes may not be offered or sold unless registered or exempt from registration under the Securities Act, or in a transaction not subject to the Securities Act and applicable state securities laws. The Authority does not plan to register the Outstanding Notes under the Securities Act. Expiration Date ............ The Exchange Offers will expire at 5:00 p.m., New York City time, on , 1999. This will be the Expiration Date unless extended by the Authority. If the Authority does extend the offers, the Expiration Date will be the latest date and time to which an Exchange Offer is extended. See "The Exchange Offers--Expiration Date; Extensions; Amendments." Conditions to the Exchange Offers...................... The Exchange Offers are subject to conditions which the Authority may waive at its sole discretion. The Exchange Offers are not conditioned upon any minimum principal amount of Outstanding Notes being tendered for exchange. See "The Exchange Offers--Conditions to the Exchange Offers." The Authority reserves the right in its sole and absolute discretion, subject to applicable law, at any time and from time to time . to delay the acceptance of the Outstanding Notes; . to terminate either or both Exchange Offers if specified conditions have not been satisfied; . to extend the Expiration Date of either or both Exchange Offers and retain all tendered Outstanding Notes subject, however, to the right of tendering holders to withdraw their tender of Outstanding Notes; and . to waive any condition or otherwise amend the terms of the Exchange Offer in any respect. See "The Exchange Offers--Expiration Date; Extensions; Amendments." Procedures for Tendering Outstanding Notes .......... If you wish to tender your Outstanding Notes for exchange, you must . complete and sign a Letter of Transmittal according to the instructions contained in the Letter of Transmittal; and 6 . forward the Letter of Transmittal by mail, facsimile transmission or hand delivery, together with any other required documents, to the relevant Exchange Agent, either with the Outstanding Notes to be tendered or in compliance with the specified procedures for guaranteed delivery of such Outstanding Notes. Specified brokers, dealers, commercial banks, trust companies and other nominees may also effect tenders by book-entry transfer. Please do not send your Letter of Transmittal or certificates representing your Outstanding Notes to us. Those documents should only be sent to the appropriate Exchange Agent. Questions regarding how to tender and requests for information should be directed to the appropriate Exchange Agent. See "The Exchange Offers--Exchange Agents." Special Procedures for Beneficial Owners ......... If your Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, the Authority urges you to contact such person promptly if you wish to tender your Outstanding Notes. See "The Exchange Offers--Procedures for Tendering Outstanding Notes." Withdrawal Rights .......... You may withdraw the tender of your Outstanding Notes at any time before the Expiration Date. To do this, you should deliver a written notice of your withdrawal to the appropriate Exchange Agent according to the withdrawal procedures described under the heading "The Exchange Offers-- Withdrawal Rights." Resales of Exchange Notes... The Authority believes that you will be able to offer for resale, resell or otherwise transfer Exchange Notes issued in the Exchange Offers without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that . you are acquiring the Exchange Notes in the ordinary course of your business; . you are not participating, and have no arrangement or understanding with any person to participate, in the distribution of the Exchange Notes; and . you are not an affiliate of the Mohegan Tribal Gaming Authority. The Authority's belief is based on interpretations by the staff of the SEC, as shown in no-action letters issued to third parties unrelated to the Authority. The staff of the SEC has not considered the Exchange Offers in the context of a no-action letter, and, the Authority cannot assure you that the staff of the SEC would make a similar determination with respect to these Exchange Offers. 7 If the Authority's belief is not accurate and you transfer an Exchange Note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from such requirements, you may incur liability under the Securities Act. The Authority does not and will not assume, or indemnify you against, such liability. Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes which were acquired by such broker-dealer as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. A broker-dealer may use this Prospectus for an offer to sell, resale or other transfer of Exchange Notes. See "Plan of Distribution." Exchange Agents ............ The exchange agent for the Exchange Offer for the Outstanding Senior Notes is First Union National Bank. The exchange agent for the Exchange Offer for the Outstanding Senior Subordinated Notes is State Street Bank and Trust Company. The addresses, telephone and facsimile numbers of the exchange agents are shown in "The Exchange Offers--Exchange Agents" section of this prospectus and in the Letters of Transmittal. Use of Proceeds ............ The Authority will not receive any cash proceeds from the issuance of the Exchange Notes offered hereby. See "Use of Proceeds." Certain Federal Income Tax Consequences .............. Your acceptance of an Exchange Offer and the related exchange of your Outstanding Notes for Exchange Notes will not be a taxable exchange for United States federal income tax purposes. You should not recognize any taxable gain or loss or any interest income as a result of the exchange. See "The Exchange Offers" for more detailed information concerning the Exchange Offers. 8 SUMMARY OF THE TERMS OF THE EXCHANGE NOTES The Exchange Offers relate to the exchange of (1) up to $200,000,000 principal amount of Senior Exchange Notes for up to an equal principal amount of Outstanding Senior Notes and (2) up to $300,000,000 principal amount of Senior Subordinated Exchange Notes for up to an equal principal amount of Outstanding Senior Subordinated Notes. The form and terms of the Exchange Notes are substantially identical to the form and terms of the Outstanding Notes, except the Exchange Notes will be registered under the Securities Act. Therefore, the Exchange Notes will not bear legends restricting their transfer and will not be entitled to registration under the Securities Act. The Exchange Notes will evidence the same debt as the Outstanding Notes (which they replace). The Outstanding Senior Notes and the Senior Exchange Notes are governed by the same indenture, the Senior Notes Indenture. The Outstanding Senior Subordinated Notes and the Senior Subordinated Exchange Notes are governed by the same indenture, the Senior Subordinated Notes Indenture. Senior Exchange Notes Securities Offered ......... $200 million in total principal amount of 8 1/8% Senior Exchange Notes due 2006. Maturity ................... January 1, 2006. Interest ................... Annual rate--8 1/8%. Payment frequency--every six months on January 1 and July 1. First payment--July 1, 1999. Ranking .................... The Senior Exchange Notes rank equally with all of the Authority's existing and future senior unsecured indebtedness and equally with 50% of the Authority's payment obligations under the Relinquishment Agreement and senior to all of the Authority's senior subordinated indebtedness and the remaining 50% of the Authority's payment obligations under the Relinquishment Agreement. The Senior Exchange Notes will effectively be subordinated to all of the Authority's existing and future senior secured indebtedness, including the bank credit facility. Assuming the Authority had fully drawn all possible amounts available under the Bank Credit Facility on December 31, 1998, the Senior Exchange Notes would have been . subordinated to $500 million of senior secured debt; ranked equally with 50% of the Authority's payment obligations under the Relinquishment Agreement and with no other senior debt; and ranked senior to (1) $300 million of senior subordinated debt, (2) $90 million in original principal amount plus accrued and unpaid interest thereon of defeased junior subordinated notes, and (3) the remaining 50% of the Authority's payment obligations under the Relinquishment Agreement. 9 Optional Redemption ........ The Authority may redeem some or all of the Senior Exchange Notes at any time at prices equal to the greater of (1) 100% of their principal amount or (2) the sum of the present value of 100% of the principal amount plus all required interest payments due on such Senior Exchange Notes (excluding accrued but unpaid interest) discounted to the Maturity Date at the treasury yield plus 50 basis points plus accrued and unpaid interest (including some additional interest) to, but excluding, the date of redemption. See "Description of Exchange Notes-- Description of the Senior Exchange Notes" under the heading "Optional Redemption." Mandatory Offer to Repurchase ................. In some circumstances, if the Authority sells certain assets or experiences specific kinds of changes of control, it must offer to repurchase the Senior Exchange Notes at the prices listed in the section "Description of Exchange Notes-- Description of the Senior Exchange Notes" under the heading "Repurchase at the Option of Holders." Basic Covenants of Senior Notes Indenture ............ The Authority will issue the Senior Exchange Notes under an indenture with First Union National Bank. The Senior Notes Indenture will, among other things, restrict the Authority's ability to . incur additional indebtedness; . pay dividends or make other distributions; . make investments; . use assets as security in other transactions; and . sell certain assets or merge with or into another person. For more details, see the section "Description of Exchange Notes--Description of the Senior Exchange Notes" under the heading "Certain Covenants." Senior Subordinated Exchange Notes Securities Offered ......... $300 million in total principal amount of 8 3/4% Senior Subordinated Exchange Notes due 2009. Maturity ................... January 1, 2009. Interest ................... Annual rate--8 3/4%. Payment frequency--every six months on January 1 and July 1. First payment--July 1, 1999. Ranking .................... The Senior Subordinated Exchange Notes rank equally with all of the Authority's existing and future senior subordinated indebtedness and senior to all of the Authority's subordinated indebtedness. The Senior Subordinated Exchange Notes will be subordinated to all of the Authority's existing and future senior indebtedness, including the Senior Exchange Notes and the Bank Credit Facility. 10 Assuming the Authority had fully drawn all possible amounts available under the Bank Credit Facility on December 31, 1998, the Senior Subordinated Exchange Notes would have been . subordinated to $500 million of senior secured debt; . subordinated to $200 million of other senior debt (the Senior Exchange Notes); . subordinated in a liquidation, bankruptcy or similar proceeding to 50% of the Authority's payment obligations under the Relinquishment Agreement that are then due and owing, but effectively not subordinated to such payment obligations that are not yet due under the Relinquishment Agreement since the payment obligations under the Relinquishment Agreement cannot be accelerated by their terms; . ranked equally to the remaining 50% of the Authority's payment obligations under the Relinquishment Agreement that are then due and owing, but effectively senior to such payment obligations that are not yet due under the Relinquishment Agreement since payment obligations under the Relinquishment Agreement cannot be accelerated by their terms; and . ranked senior to $90 million in original principal amount, plus accrued and unpaid interest thereon, of defeased junior subordinated notes. Optional Redemption ........ On or after January 1, 2004, the Authority may redeem some or all of the Senior Subordinated Exchange Notes at any time at the redemption prices listed in the section "Description of Exchange Notes--Description of the Senior Subordinated Exchange Notes" under the heading "Optional Redemption." Mandatory Offer to Repurchase ................. In some circumstances if the Authority sells certain assets or experiences specific kinds of changes of control, it must offer to repurchase the Senior Subordinated Exchange Notes at the prices listed in the section "Description of Exchange Notes--Description of the Senior Subordinated Exchange Notes" under the heading "Repurchase at the Option of Holders." Basic Covenants of Senior Subordinated Notes Indenture .................. The Authority will issue the Senior Subordinated Exchange Notes under an indenture with State Street Bank and Trust Company. The Senior Subordinated Notes Indenture will, among other things, restrict the Authority's ability to . incur additional indebtedness; . pay dividends or make other distributions; . make investments; . use assets as security in other transactions; and . sell certain assets or merge with or into another person. 11 For more details, see the section "Description of Exchange Notes--Description of the Senior Subordinated Exchange Notes" under the heading "Certain Covenants." Terms Common to Senior Exchange Notes and Senior Subordinated Exchange Notes Special Redemption ......... The Authority may redeem a holder's Exchange Notes or require the holder to dispose of the Exchange Notes if (1) any gaming regulatory authority requires such holder to be licensed or otherwise qualified under applicable gaming laws in order for the Authority to maintain any of its gaming licenses or franchises and (2) such holder does not obtain such license or qualification within the required time periods. Any such redemption or sale shall be at the price listed in the section "Description of Exchange Notes-- Description of the Senior Exchange Notes" and "-- Description of the Senior Subordinated Exchange Notes" under the respective headings "Optional Redemption." Risk Factors See "Risk Factors" beginning on page 15 for a discussion of factors that you should carefully consider before tendering any Outstanding Notes for Exchange Notes. 12 Summary Financial Data The following table summarizes the information under the section "Selected Financial Data" and should be read with the Authority's financial statements and the related notes included in this Prospectus beginning on page F-1. You should also read the following information in conjunction with the sections in this Prospectus entitled "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business."
Fiscal Year Ended Quarter Ended September 30, December 31, ------------------ ----------------- 1998 1997(1) 1998 1997 -------- -------- -------- -------- (Dollars in thousands, except per diem data) Statements of Income (Loss) Data: Net revenues.............................. $575,143 $467,837 $163,858 $127,142 Income from operations.................... 135,350 80,029 33,456 22,858 Interest expense.......................... 50,172 45,137 12,810 11,778 Income before extraordinary items......... 87,578 36,687 21,261 11,728 Extraordinary items(2).................... (419,457) -- -- -- Net income (loss)(2)...................... (331,879) 36,687 21,261 11,728 Ratio of earnings to fixed charges(3)..... 2.7x 1.8x 2.6x 1.9x Other Data: EBITDA(4)................................. $152,878 $112,184 $ 38,125 $ 27,658 EBITDAM(5)................................ 200,320 135,427 51,770 35,062 Depreciation and amortization............. 17,528 32,155 4,669 4,800 Capital expenditures...................... 32,731 35,749 6,113 17,909 Slot machine win per day.................. 361 319 401 311 Table game win per day.................... 2,545 2,401 2,727 2,364 Slot machines............................. 3,029 2,962 3,025 2,996 Table games............................... 150 149 150 148 Restaurant seats.......................... 1,868 1,808 1,888 1,808 Casino square footage at period end....... 176,500 167,500 176,500 167,500 Other Financial Data: Ratio of EBITDAM(5) to interest expense... 4.0x 3.0x 4.0x 3.0x Ratio of total debt to EBITDAM(5)......... 1.6 2.3 -- --
December 31, 1998 --------------------- As Actual Adjusted(6) -------- ----------- (In thousands) Balance Sheet Data: Cash and cash equivalents................................. $109,578 $244,978 Defeasance trust assets(7)................................ -- 135,700 Total assets.............................................. 554,746 841,846 Total debt and capital lease obligations(8)............... 327,998 652,998 Total capital(2)(9)....................................... (372,300) (410,200)
- -------- (1) The Authority commenced operations at Mohegan Sun on October 12, 1996. (2) The Authority, in conformance with FASB 5, has recorded a non-cash expense and liability for the estimated present value of the Authority's future Relinquishment Agreement payment obligations. These payments are based on the amount of gross revenue generated by the Authority. As of September 30, 1998, the present value of this liability was estimated at $549.1 million, of which $419.1 million was reflected as an extraordinary item in the statements of income (loss), and $130.0 million was capitalized 13 on the balance sheet as trademarks and other intellectual property acquired as part of the Relinquishment Agreement. Recording this liability has created negative capital as of September 30, 1998. This liability will be reassessed periodically and may require additional non-cash adjustments to be recorded in the statement of income (loss). The estimated liability has not changed as of December 31, 1998. See the Authority's financial statements and the accompanying notes and "Other Material Agreements-- Relinquishment Agreement with Trading Cove Associates." (3) The ratio of earnings to fixed charges is determined by dividing (a) earnings before extraordinary items and fixed charges by (b) fixed charges. Fixed charges consist of total interest expense, including cash flow participation interest relating to the 13 1/2% Senior Secured Notes. (4) Earnings before extraordinary items, interest, income taxes, depreciation and amortization. EBITDA is presented because we believe it is frequently used by securities analysts, investors and other interested parties in the gaming industry. However, EBITDA should only be read in conjunction with all of the Authority's financial data summarized above and its financial statements, including the notes, prepared in conformance with generally accepted accounting principles or GAAP appearing elsewhere herein. EBITDA should not be construed as an alternative either to (a) income from operations (as determined according to GAAP) as an indicator of the Authority's operating performance or (b) cash flows from operating activities (as determined according to GAAP) as a measure of liquidity. In addition, because the Authority is an instrumentality of a sovereign Indian nation, it is not subject to federal or state income tax. (5) Earnings before extraordinary items, interest, income taxes, depreciation, amortization and management fees. Management fees are paid by the Authority to Trading Cove Associates under the terms of its management agreement which terminates on January 1, 2000. Until such termination and because management fees are subordinate to debt service, the Authority believes EBITDAM is a supplemental financial measurement useful in the evaluation of its gaming business. (6) As adjusted amounts reflect (a) the sale of the Outstanding Notes and the application of the related net proceeds, including to redeem $175.0 million in aggregate principal amount of senior secured notes and to establish a defeasance trust account for junior subordinated notes of the Authority; (b) the release of restricted cash balances to the Authority in the amount of $81.3 million; and (c) the closing of the Bank Credit Facility with no loan amounts drawn. (7) The Authority created a defeasance trust account as of March 3, 1999 and deposited into such defeasance trust cash or government securities estimated to be sufficient to redeem its junior subordinated notes. The Authority has outstanding $40.0 million of junior subordinated notes bearing interest at 15% per annum and $50.0 million of junior subordinated notes bearing interest at prime rate plus 1% per annum. These notes do not pay cash interest. The Authority will redeem these notes on January 1, 2000, the first permitted redemption date, at a price of 100% of the principal amount plus accrued and unpaid interest less $500,000. (8) Actual and as adjusted amounts include $90.0 million of principal and $35.2 million of accrued and unpaid interest related to junior subordinated notes which were defeased as of March 3, 1999 and will be redeemed on January 1, 2000. (9) As adjusted amounts reflect a tender premium of $37.9 million for redemption of senior secured notes. 14 RISK FACTORS You should carefully consider the information below, as well as all other information provided to you in this Prospectus before tendering your Outstanding Notes in the Exchange Offers. High Degree of Leverage; Restrictive Loan Covenants The Authority's substantial indebtedness could adversely affect its financial health and prevent it from fulfilling its obligations under the Exchange Notes. The Authority currently has and will continue to have a significant amount of indebtedness. Total debt and capital lease obligations (including accrued and unpaid interest on junior subordinated notes) as of December 31, 1998 were $328.0 million. As of the same date and as adjusted to reflect (1) the sale of the Outstanding Notes and the application of the related net proceeds, including the redemption of $175.0 million in aggregate principal amount of senior secured notes and the establishment of a defeasance trust account for the Authority's junior subordinated notes; (2) the release of restricted cash balances to the Authority in the amount of $81.3 million; and (3) the closing of the Bank Credit Facility with no loan amounts drawn, total debt and capital lease obligations would have been $653.0 million. In addition, the Authority has borrowing capacity under the Bank Credit Facility of up to $500.0 million. If the Authority had fully drawn all possible amounts available under the Bank Credit Facility, total debt and capital lease obligations would be approximately $1.2 billion. The Authority's substantial indebtedness could have important consequences to you. For example, it could . make it more difficult for the Authority to satisfy its obligations with respect to the Exchange Notes; . increase the Authority's vulnerability to adverse economic and industry conditions; . limit the Authority's ability to fund future working capital, capital expenditures and other general corporate requirements; . require the Authority to dedicate a substantial portion of its cash flow from operations to payments on the Authority's indebtedness, thereby reducing the availability of the Authority's cash flow to fund working capital, capital expenditures and other general corporate purposes; . limit the Authority's flexibility in planning for, or reacting to, changes in its business and the industry in which the Authority operates; . place the Authority at a disadvantage compared to its competitors that have less debt; and . limit, along with the financial and other restrictive covenants in the Authority's other indebtedness, among other things, the Authority's ability to borrow additional funds. Failure by the Authority to comply with covenants in its debt instruments could result in an event of default which, if not cured or waived, could have a material adverse effect on the Authority. See "Description of Exchange Notes-- Description of the Senior Exchange Notes--Repurchase at the Option of Holders-- Change of Control," "--Description of the Senior Subordinated Exchange Notes-- Repurchase at the Option of Holders--Change of Control" and "Description of Other Indebtedness--Bank Credit Facility." The Bank Credit Facility includes covenants that, among other things, restrict the Authority's ability to do the following: . pay dividends and make other restricted payments; . incur additional indebtedness; 15 . grant liens, other than liens created under the new Bank Credit Facility and certain other permitted liens; . sell material assets; and . make capital expenditures (subject to amounts for the casino expansion). The Bank Credit Facility will also require the Authority to maintain specified financial ratios, including interest coverage and leverage ratios and not to exceed specified fixed ratios of senior indebtedness to EBITDA. There can be no assurance that these requirements will be met in the future. If they are not, the holders of the indebtedness under the Bank Credit Facility would be entitled to declare such indebtedness immediately due and payable. See "Description of Other Indebtedness--Bank Credit Facility." Unsecured Ranking and Subordination to Existing Indebtedness The Authority's obligations under the Indentures are not secured. Your right to receive payments on the Senior Exchange Notes will effectively be subordinated to the Authority's Bank Credit Facility and other secured indebtedness. Your right to receive payments on the Senior Subordinated Exchange Notes will be junior to the Authority's existing and future senior indebtedness, including the Bank Credit Facility and the Senior Exchange Notes. Senior Exchange Notes The Senior Exchange Notes are general unsecured obligations of the Authority and rank pari passu in right of payment with all current and future unsecured senior indebtedness of the Authority. However, borrowings under the Bank Credit Facility and other equipment financing arrangements are secured by first priority liens on substantially all of the assets of the Authority. As a result, upon any distribution to creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to the Authority or the Tribe, the holders of secured debt may be paid in full in cash before any payment may be made with respect to the Senior Exchange Notes. Assuming the Authority had fully drawn all possible amounts under the Bank Credit Facility on December 31, 1998, the Senior Exchange Notes would have been subordinated to approximately $500 million of senior secured debt. In addition, under the Relinquishment Agreement with Trading Cove Associates, beginning on January 1, 2000 and ending on December 31, 2014, the Authority has agreed to pay Trading Cove Associates 5% of Mohegan Sun's gross revenues (calculated under the terms of the Relinquishment Agreement) to compensate Trading Cove Associates for terminating its management rights. 50% of this payment ranks equal in right of payment to the Senior Exchange Notes and the remaining 50% of this payment ranks junior in right of payment to the Senior Exchange Notes. Senior Subordinated Exchange Notes In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to the Authority or the Tribe, holders of the Senior Subordinated Exchange Notes will participate with trade creditors and all other holders of subordinated indebtedness in the assets remaining after the Authority or the Tribe has paid all of the senior debt, including the Senior Exchange Notes. However, because the Senior Subordinated Notes Indenture requires that amounts otherwise payable to the holders of the Senior Subordinated Exchange Notes in a bankruptcy or similar proceeding be paid to holders of designated senior debt instead, holders of the Senior Subordinated Exchange Notes may receive less, ratably, than holders of trade payables in any such proceedings. In any of these cases, the Authority or the Tribe may not have sufficient funds to pay all creditors and holders of the Senior Subordinated Exchange Notes may receive less, ratably, than the holders of senior debt. Assuming the Authority had fully drawn all possible amounts under the Bank Credit Facility, the Senior Subordinated Exchange Notes would have been subordinated to approximately $700 million of senior debt. The Authority will be permitted to borrow substantial additional indebtedness, including senior debt, in the future under the terms of the Indentures. In the event of a liquidation, bankruptcy or a similar proceeding, the Senior 16 Subordinated Exchange Notes are subordinated to 50% of the Authority's payment obligations under the Relinquishment Agreement that are then due and owing, but are effectively not subordinated to such payment obligations that are not yet due under the Relinquishment Agreement since the payment obligations under the Relinquishment Agreement cannot be accelerated by their terms and have no blockage rights as Designated Senior Debt. In addition, the Senior Subordinated Exchange Notes rank equally to the remaining 50% of the Authority's payment obligations under the Relinquishment Agreement that are then due and owing, but are effectively senior to such payment obligations that are not yet due under the Relinquishment Agreement since payment obligations under the Relinquishment Agreement cannot be accelerated by their terms. Difficulties in Enforcing Obligations Against the Authority Your ability to enforce your rights against the Authority is limited by the Tribe's sovereign immunity. Although the Tribe and the Authority have sovereign immunity and may not be sued without their consent, both the Tribe and the Authority have granted a limited waiver of sovereign immunity and consent to suit in connection with the Exchange Notes, the Indentures and the other documents related to the Exchange Notes. Such waiver includes suits against the Authority to enforce its obligation to repay the Exchange Notes. If such waiver of sovereign immunity is held to be ineffective, the Trustees (as defined) and the holders of the Exchange Notes could be precluded from judicially enforcing their rights and remedies. Generally, waivers of sovereign immunity have been held to be enforceable against Indian tribes. Neither the Authority nor the Tribe has waived sovereign immunity from private civil suits, including violations of the federal securities laws. For this reason, an investor may not have any remedy against the Authority or the Tribe for violations of federal securities laws. The Tribe's Constitution has established a special court, the Gaming Disputes Court, to rule on disputes with respect to Mohegan Sun, including any disputes relating to the Notes and the Indentures. The Gaming Disputes Court must consist of at least four judges, none of whom may be members of the Tribal Council or their families 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 Division 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 Mohegan reservation. Moreover the federal and state courts, under the doctrines of comity and exhaustion of tribal remedies, may be required (1) to defer to the jurisdiction of the Gaming Disputes Court, or (2) to require that any plaintiff exhaust its remedies in the Gaming Disputes Court before bringing any action in the federal or state court. Thus, there may be no federal or state court forum with respect to a dispute relating to the Exchange Notes or the Indentures. In addition, the Authority may not be subject to the federal bankruptcy laws. Thus, no assurance can be given that, if an event of default occurs under the Indentures, any forum will be available to the holders of the Exchange Notes other than the Gaming Disputes Court. In such a court, there are few 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 Tribal officials to carry out such judgment. In addition, the land under the casino facility is owned by the United States in trust for the Tribe, and creditors of the Authority or the Tribe may not force or obtain title to the land. See "Mohegan Tribe of Indians of Connecticut-- Gaming Disputes Court." 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, before 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 Branch of the Gaming Disputes Court that the proposed amendment would constitute an impermissible impairment of contract. Further, the Tribal Constitution prohibits 17 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. The Tribe has approximately 750 registered voters. Amendment to any of such provisions of the Tribe's Constitution could adversely affect the ability of the holders of the Exchange Notes to enforce the obligations of the Authority on the Exchange Notes. Exclusive Reliance on Gaming Revenue for Debt Service Payments Mohegan Sun's failure to generate sufficient cash flow could prevent the Authority from fulfilling its obligations under the Exchange Notes. The Authority relies on revenues from the gaming operations of Mohegan Sun to meet its debt service requirements. Such operations are subject to many financial, economic, political, competitive and regulatory factors beyond the Authority's control. If Mohegan Sun is unable to generate sufficient cash flow, the Authority 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. Risks of Expansion Failure to complete Mohegan Sun's expansion on budget and on time could adversely affect the financial health of the Authority. Construction projects such as the expansion of Mohegan Sun are inherently subject to significant development and construction risks. These include the following: . labor disputes; . shortages of material and skilled labor; . weather interference; . engineering problems; . environmental problems (including asbestos, lead and hazardous waste removal); . fire, flood and other natural disasters; and . geological, construction, demolition, excavation, regulatory and/or equipment problems. All of these risks could cause unanticipated cost increases. Although we have chosen a developer and have preliminary plans, the final plans for the expansion are still under development. The actual cost and scope of the project will be dependent upon the final plans. The Tribe expects the expansion to cost approximately $750 million (excluding capitalized interest) and has adopted a formal resolution capping the expansion budget at $800 million to account for any unforeseen design changes or enhancements. In addition, the Tribe has established a $40 million construction reserve account that, in some circumstances, will be used to pay for costs in excess of the expansion budget. The anticipated construction costs and completion dates for the expansion are based on budgets, conceptual design documents and schedule estimates prepared by Trading Cove Associates for the Authority with the assistance of certain architects and contractors. The final amount of the project is subject to modification based upon the occurrence of particular events, such as design change order delays. Construction in the northeastern United States is also subject to a number of weather related risks. Long winters and severe or unexpected rain, storms or other bad weather may delay completion and/or increase the costs of the construction. 18 The expansion is scheduled to be completed in the fall of 2001. There can be no assurance that the expansion facilities will commence operations on schedule or that construction costs for the expansion will not exceed budget. Failure to complete the expansion within the budget or on schedule may have a material adverse effect on the results of Mohegan Sun's operations and the Authority's financial condition. Although construction activities related to the expansion of Mohegan Sun are planned to minimize disruption, construction noise and debris and the temporary closing of some facilities may disrupt Mohegan Sun's current operations. Unexpected construction delays could exacerbate or magnify these disruptions. There can be no assurance that construction of the expansion will not have a material adverse effect the Authority's results of operations. Failure to Obtain Funds to Complete Expansion In the event Mohegan Sun fails to achieve expected results, the Authority may not have sufficient funds to complete Mohegan Sun's expansion. The Authority expects that approximately $376.0 million of the Mohegan Sun expansion will be financed from cash flow from operations through December 31, 2001. There can be no assurances that Mohegan Sun will generate sufficient cash flow from operations to finance the Mohegan Sun expansion. If Mohegan Sun fails to generate cash flow as expected, the expansion could be delayed, resulting in a material adverse effect on the financial condition of the Authority. Competition from Other Gaming Operations Many competitors have greater resources than the Authority, and other Indian tribes may receive approval to engage in casino gaming. The gaming industry is highly competitive. Mohegan Sun currently competes primarily with the Foxwoods Resort Casino and, to a lesser extent, with casinos in Atlantic City, New Jersey. Foxwoods is approximately 10 miles from Mohegan Sun and is the largest gaming facility in the United States in terms of total gaming positions. In addition, Foxwoods offers a number of amenities that Mohegan Sun does not have, including hotel accommodations, extensive retail shopping and more expansive non-gaming entertainment offerings. Foxwoods has been in operation for nearly seven years and may have greater financial resources and greater operating experience than the Authority or the Tribe. Upon the completion of the expansion, the Authority intends to broaden Mohegan Sun's market beyond day-trip customers to include guests making overnight stays at the resort. This means that Mohegan Sun will begin to compete more directly for customers with casinos in Atlantic City, New Jersey and, to a lesser extent, gaming resorts such as those on the Gulf Coast of Mississippi and Las Vegas, Nevada. Many of these casinos and other resorts have greater resources and greater name recognition than Mohegan Sun. Under current law, outside of Atlantic City, New Jersey, casino gaming in the northeastern United States may be conducted only by federally recognized Indian tribes operating under federal Indian gaming law. Currently, the Oneida Indian Nation operates Turning Stone Casino Resort in Verona, New York, approximately 270 miles from Mohegan Sun. The St. Regis Mohawk Tribe in Hogansburg, New York near the Canadian border has entered into a gaming compact with the state of New York. Although this tribe has yet to develop a gaming facility, it has initiatives both on its reservation in Hogansburg (for which it has had a gaming management contract approved by the National Indian Gaming Commission) and at Monticello Raceway in the Catskills, 90 miles from New York City (for which it has received Bureau of Indian Affairs Eastern Area Office approval to take land into trust). Both initiatives still require additional federal and state level approvals. In addition, at least two other federally recognized tribes in New England are each seeking to establish gaming operations. Several other tribes in New England are seeking federal recognition as Native American peoples with the intent of establishing gaming operations. A number of states, including Connecticut 19 and New York, have also investigated legalizing casino gaming by non-Indians in one or more locations. The Authority cannot predict whether any of these other tribes or other efforts to legalize casino gaming will be successful in establishing gaming operations, and if established, whether such gaming operations will have a material adverse effect on the Authority's proposed operations. See "Business--Competition." Need to Obtain Construction Related Licenses and Permits A failure to obtain necessary licenses and permits could delay the expansion of Mohegan Sun thereby causing a material adverse effect on operating results. No assurances can be given that the required licenses, permits or other approvals for the expansion of Mohegan Sun will be issued. Even if issued, such licenses, permits or other approvals could have conditions or restrictions that could adversely affect the completion of the expansion. The failure to obtain any of these licenses, permits or other approvals in a timely manner may delay, restrict or prevent the expansion from being completed as contemplated herein. See "Government Regulation." Reliance on Nearby Markets A downturn in the local economy could negatively impact the Authority's financial performance. Until and for some time after the expansion is completed, Mohegan Sun will depend heavily on day-trip customers. Any downturn in the regional economy, the entrance of new competitors or the expansion of existing competitors within this local market could have a material adverse effect on the Authority's results of operations. See "--Competition From Other Gaming Operations." Limited Operating History Associated with the Operation Mohegan Sun is subject to the risks of a new business. Mohegan Sun did not begin operations until October 12, 1996 and has many of the same risks inherent in the establishment of a new business enterprise. In addition, Mohegan Sun's limited operating history makes the prediction of the Authority's future operating results difficult. Management of Growth; Uncertainty of Future Expanded Operations The transition to full management responsibility for the Authority coupled with the risks associated with operating a substantially expanded facility could have a material adverse effect on Mohegan Sun's future performance. Mohegan Sun's profitability has been partially dependent upon the efforts and skills of Trading Cove Associates. Trading Cove Associates will have legal responsibility for overseeing and managing Mohegan Sun until December 31, 1999. While the Authority has already assumed many of Mohegan Sun's day-to-day management functions, on January 1, 2000, it will assume full management, operation and maintenance responsibility of Mohegan Sun. There can be no assurance that the Authority will be as successful managing Mohegan Sun as Trading Cove Associates has been. See "Other Material Agreements." Mohegan Sun, when expanded, will have significantly larger gaming facilities, entertainment venues and retail space, as well as new hotel and convention facilities. There can be no assurance that the Authority will be successful in integrating the planned casino and resort expansion into Mohegan Sun's current operations or in managing the expanded resort. The failure to integrate and manage the new services and amenities successfully could have a material adverse effect on the Authority's results of operations. 20 Dependence on Key Personnel; Significant Change in Tribal Management The loss of any key management member or any significant change in the makeup of the Tribal Council could have a material adverse effect on Mohegan Sun. Mohegan Sun's success depends in large part on the continued service of key management personnel, particularly William Velardo, the Authority's Executive Vice President and General Manager, Mitchell Etess, the Authority's Senior Vice President of Marketing, and Jeffrey Hartmann, the Authority's Chief Financial Officer. The loss of the services of one or more of these individuals or other key personnel could have a material adverse effect on the Authority's business, operating results and financial condition. See "The Authority." Additionally, Roland J. Harris serves as Chairman of the Tribal Council of the Tribe and Chairman of the Management Board of the Authority. The Members of the Tribal Council, including the Chairman, are elected by the Tribe every five years. The next election is in October of 2000. The loss of Mr. Harris's services, as well as a significant change in the composition of the Tribal Council, could have a material adverse effect on the Authority and the development of the Mohegan Sun expansion. See "Mohegan Tribe of Indians of Connecticut." Regulatory Redemption Your Exchange Notes may be redeemed automatically if your ownership of the Exchange Notes jeopardizes the Authority's gaming licenses. The Authority will have the right to redeem the Exchange Notes if any holder of Exchange Notes jeopardizes the Authority's gaming license by not having required licenses or qualifications. The redemption price for these Exchange Notes, without accrued interest, is equal to the lowest of the holder's cost, the principal amount of such Exchange Notes or the average of the current market price of such Exchange Notes. See "Description of Exchange Notes-- Description of the Senior Exchange Notes--Optional Redemption" and "Description of Exchange Notes--Description of the Senior Subordinated Exchange Notes-- Optional Redemption." Highly Regulated Industry Changes in the law could have a material adverse effect on the Authority's ability to conduct gaming. Gaming on the Tribe's reservation is extensively regulated by federal, state and tribal regulatory bodies, including the National Indian Gaming Commission and agencies of the State of Connecticut (for example, the Division of Special Revenue, the State Police and the Department of Liquor Control). As is the case with any casino, changes in applicable laws and regulations could limit or materially affect the types of gaming that may be conducted by the Authority and the revenues realized therefrom. In August 1996, federal legislation became effective, creating a nine-member commission to examine and prepare a report within three years on the effects of gambling, including gambling on riverboats, Indian reservations and at non- Indian casinos. No prediction can be made as to what, if any, legislation might arise from such a report if it is completed. Moreover, Congress has regulatory authority over Indian affairs and can establish and change the terms upon which Indian tribes may conduct gaming. Currently, the operation of all gaming on Indian lands is subject to the Indian Gaming Regulatory Act of 1988. For the past several years, legislation has been introduced in Congress with the intent of modifying a variety of perceived problems with this act. Virtually all of the proposals that have been seriously considered would be prospective in effect and have contained clauses that would grandfather existing Indian gaming operations such as Mohegan Sun. Bills have also been proposed, however, which would have the effect of repealing many of the key provisions of the Indian Gaming Regulatory Act and prohibiting the continued operation of particular classes of gaming on specified Indian reservations in states where such gaming is not otherwise allowed on a commercial basis. 21 However, none of the substantive proposed amendments to the Indian Gaming Regulatory Act have proceeded out of committee hearings to a vote by either the House or the Senate. While it is possible that retroactive legislation could be adopted forcing the closure of existing Indian gaming enterprises, given the number of existing gaming compacts and tribal gaming operations nationwide, we believe that it is unlikely that Congress would enact such legislation without grandfathering existing Indian gaming operations. Furthermore, such legislation would certainly be challenged by us and other Indian gaming operations as an invalid exercise of Congressional authority. However, if Congress passes prohibitory legislation that does not include any grandfathering exemption for existing tribal gaming operations, and if such legislation is sustained in the courts against tribal challenge, the Authority's ability to meet its obligations to creditors, including the holders of the Notes, would be doubtful. Under federal law, gaming on Indian land is dependent on the permissibility under state law of specified forms of gaming or similar activities. If the State of Connecticut were to make various forms of gaming illegal or against public policy, 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. If Connecticut were to make gaming against public policy, it would forfeit the substantial income ($276.2 million for the 12 months ended December 31, 1998) derived from the gaming activities at Mohegan Sun and Foxwoods and the resulting slot contributions to the state. See "Other Material Agreements-- Gaming Compact with the State of Connecticut." Possible Environmental Liabilities Risks of material environmental liability may remain as a result of incomplete remediation of known environmental hazards. The Authority currently incurs and may continue to incur costs to comply with environmental requirements, such as those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste, and the cleanup of properties affected by hazardous substances. Under such environmental requirements, 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. The owner or operator may also 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. These 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 remediate such property properly, 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 the site. In addition, environmental requirements address the impacts of development on wetlands areas. See "Business--The Expansion." The site on which Mohegan Sun is located was formerly occupied by United Nuclear Corporation, a naval products manufacturer of, among other things, nuclear reactor fuel components. United Nuclear Corporation's facility was officially decommissioned on June 8, 1994 when the Nuclear Regulatory Commission confirmed that all licensable quantities of special nuclear material had been removed from the site and that any residual special nuclear material contamination was remediated according to an approved decommissioning plan. From 1991 through 1993, United Nuclear Corporation commissioned environmental audits and soil sampling programs which 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. In addition, initial construction at the site involved extensive soil excavation 22 and contaminated soils were removed during the excavation. The site currently meets state remediation requirements. Under the terms of United Nuclear Corporation's environmental certification and indemnity agreement with the Department of the Interior (which took the former United Nuclear Corporation land into trust for the Mohegan Tribe), United Nuclear Corporation agreed to indemnify the Department for environmental actions and expenses based on acts or conditions existing or occurring as a result of United Nuclear Corporation's activities on the property. Notwithstanding the foregoing, no assurance can be given (1) that the various environmental reports or any other existing environmental studies revealed all environmental liabilities, (2) that any prior owners or tenants did not create any material environmental condition not known to us, (3) that future laws, ordinances or regulations will not impose any material environmental liability, or (4) that a material environmental condition does not otherwise exist on the site. Taxation of Indian Gaming A change in the Authority's current tax-exempt status could have a material adverse effect on the Authority's ability to repay its obligation under the Exchange Notes. Based on current interpretation of the tax code, neither the Tribe nor the Authority is a taxable entity for purposes of federal income taxation. There can be no assurance that Congress will not reverse or modify the exemption for Indian tribes from federal income taxation. Efforts have been made in Congress over the past several years to amend the Internal Revenue Code to provide for taxation of the net income of tribal business entities. These have included a House bill which would have taxed gaming income earned by Indian tribes as unrelated business income subject to corporate tax rates. Although no such legislation has been enacted, some could be passed in the future. Future proposals or amendments in this area could materially and adversely affect the market value of the Exchange Notes or the Authority's ability to pay the principal and interest on the Exchange Notes. Change of Control Events The Authority may lack sufficient funds to effect a repurchase of the Exchange Notes upon a change of control. Upon the occurrence of specified change of control events, the Authority will be required to offer to repurchase all then outstanding Exchange Notes. The Authority may not have the ability to raise the funds necessary to finance the change of control offer required by the Indentures. Year 2000 Date Conversion Failure by the Authority to address the Year 2000 problem adequately may have a material adverse effect on results of operations. The Authority is currently working to verify system readiness for the processing of date-sensitive information by its computerized information systems to the end of the century. The "Year 2000" problem impacts computer programs and hardware timers using two digits (rather than four) to define the applicable year. Any of the Authority's programs that have time-sensitive functions may recognize a date using "00" as the year 1900 rather than 2000, or not at all, which could result in miscalculations or system failures. The Authority, like many companies, depends on fully operational computer systems in all areas of its business. As a large facility in a relatively remote location, Mohegan Sun is heavily dependent on a local infrastructure which may not be adequate to take on the challenges of the Year 2000 problem. It is especially dependent on that local infrastructure for critical services such as incoming utilities and outgoing sewage. Additionally, the Authority is dependent upon many vendors such as food and beverage suppliers, outside software suppliers and system integrators to provide uninterrupted service for the operation to run effectively. 23 With the assistance of an outside consultant, the Authority has implemented a Year 2000 program to provide an independent analysis of the Authority's Year 2000 preparedness and the adequacy of the Authority's Year 2000 plans. The program includes inventorying entities, identifying problems, planning compliance and implementation strategies, attempting to correct the problems and testing the solutions. As of March 31, 1999, Mohegan Sun was approximately 75% in conformance with the GartnerGroup Year 2000 best practices model. The Authority anticipates completion of the program by June 1999. Although there can be no assurance, it is anticipated that remediation and verification to become Year 2000 compliant will not exceed $1.0 million and will not have a material adverse impact on the Authority's financial position, results of operations, or cash flow. While the Authority's efforts are designed to be successful, because of the complexity of the Year 2000 issues and the interdependence of organizations using computer systems, there can be no assurance that the Authority's efforts, or those of a third party with whom the Authority interacts, will be satisfactorily completed in a timely fashion. This could result in a material adverse effect on future operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Certain Transfer Restrictions; No Prior Market for Exchange Notes; Failure to Exchange the Outstanding Notes Certain transfer restrictions and the failure of a market to develop could affect the liquidity and price of your Exchange Notes. In the event you do not exchange your Outstanding Notes, you cannot be assured of a continuation of a trading market for the Outstanding Notes. You may generally sell Exchange Notes without complying with the registration requirements of the Securities Act, unless you are: . an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act . a broker-dealer that acquired Outstanding Notes as a result of market- making or other trading activities . a broker-dealer that acquired Outstanding Notes directly from us for resale pursuant to Rule 144A or another available exemption under the Securities Act "Affiliates" of the Authority may sell Exchange Notes only in compliance with the provisions of Rule 144 under the Securities Act or another available exemption. The broker-dealers described above must deliver a prospectus in connection with any resale of Exchange Notes. The Exchange Notes constitute a new issue of securities for which no established trading market exists. If Exchange Notes are traded after their initial issuance, they may trade at a discount, depending upon the Authority's financial condition, prevailing interest rates, the market for similar securities and other factors beyond the Authority's control, including general economic conditions. The Authority does not intend to apply for a listing or quotation of the Exchange Notes on any securities exchange. The initial purchasers of the Outstanding Notes have informed the Authority that they intend to make a market in the Exchange Notes. However, the initial purchasers have no obligation to do so, and may discontinue any market-making activities at any time without notice. The Authority cannot assure you of the development or liquidity of any trading market for the Exchange Notes following the Exchange Offers. The Authority has not registered nor does it intend to register the Outstanding Notes under the Securities Act. Outstanding Notes that remain outstanding after consummation of the Exchange Offers will therefore remain subject to transfer restrictions under applicable securities laws. Unexchanged Outstanding Notes will continue to bear a legend reflecting these restrictions on transfer. Furthermore, the Authority has not conditioned the Exchange Offers on receipt of any minimum or maximum principal amount of Outstanding Notes. As Outstanding Notes are tendered and accepted in the Exchange Offers, the principal amount of 24 remaining Outstanding Notes will decrease. This decrease will reduce the liquidity of the trading market for the Outstanding Notes. The Authority cannot assure you of the liquidity, or even the continuation, of the trading market for the Outstanding Notes following the Exchange Offers. Risks of Not Complying with Exchange Offer Procedures In order to receive Exchange Notes, you must follow the Exchange Offer procedures. You are responsible for complying with all Exchange Offer procedures. You will only receive Exchange Notes in exchange for your Outstanding Notes if, prior to the Expiration Date, you deliver the following to the appropriate Exchange Agent: . certificates for the Outstanding Notes or a book-entry confirmation of a book-entry transfer of the Outstanding Notes into the Exchange Agent's account at the Depository Trust Company ("DTC") . the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed by you, together with any required signature guarantees . any other documents required by the Letter of Transmittal You should allow sufficient time to ensure that the Exchange Agents receive all required documents before the expiration of the Exchange Offers. Neither the Authority nor the Exchange Agents have any duty to inform you of defects or irregularities with respect to the tender of your Outstanding Notes for exchange. See "The Exchange Offers." Forward-Looking Statements Differences between the Authority's expectations and actual future events could lead to a material adverse effect on the Mohegan Sun Expansion. Forward-looking statements are subject to risks, uncertainties and assumptions about the Authority, and there can be no assurances about the Authority's current expectations and projections about future events. The uncertainties include . the expansion and construction activities for the new casino, the new hotel and the convention center and related upgrades and amenities; . the financial performance of the existing casino; . its dependence on existing management; . its levels of leverage and ability to meet its debt service obligations; . general domestic and global economic conditions; . changes in federal or state tax laws or the administration of such laws; . changes in gaming laws or regulations (including potential legalization of gaming in some jurisdictions); and . maintenance of licenses required under gaming laws and regulations and construction permits and approvals required under applicable laws and regulations. If the Authority's estimates on these types of items differs from actual future events, there could be a material adverse effects on future operations and cash flow from those operations. 25 THE EXCHANGE OFFERS Purpose and Effect of the Exchange Offers In connection with the sale of the Outstanding Notes, the Authority entered into registration rights agreements with the initial purchasers of the Outstanding Notes pursuant to which the Authority agreed to file and to use its best efforts to cause to become effective with the Commission a registration statement with respect to the exchange of the Outstanding Notes for Exchange Notes with terms identical in all material respects to the terms of the Outstanding Notes. Copies of these registration rights agreements have been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The Exchange Offers are being made to satisfy the contractual obligations of the Authority under the registration rights agreements. By tendering Outstanding Notes in exchange for Exchange Notes, each holder represents to the Authority that: (1) any Exchange Notes to be received by such holder are being acquired in the ordinary course of such holder's business; (2) such holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of Exchange Notes; (3) such holder is not an "affiliate" of the Authority (within the meaning of Rule 405 under the Securities Act), or if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; (4) such holder has full power and authority to tender, exchange, sell, assign and transfer the tendered Outstanding Notes, (5) the Authority will acquire good, marketable and unencumbered title to the tendered Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances; and (vi) the Outstanding Notes tendered for exchange are not subject to any adverse claims or proxies. Each tendering holder also will warrant and agree that such holder will, upon request, execute and deliver any additional documents deemed by the Authority or the Exchange Agent to be necessary or desirable to complete the exchange, sale, assignment, and transfer of the Outstanding Notes tendered pursuant to the Exchange Offers. Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes pursuant to the Exchange Offers, where such Outstanding Notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." The Exchange Offers are not being made to, nor will the Authority accept tenders for exchange from, holders of Outstanding Notes in any jurisdiction in which the Exchange Offers or the acceptance of the Exchange Notes would be in violation of the securities or blue sky laws of that jurisdiction. Unless the context requires otherwise, the term "holder" with respect to an Exchange Offer means any person in whose name the Outstanding Notes are registered on the books of the Authority or any other person who has obtained a properly completed bond power from the registered holder, or any participant in DTC whose name appears on a security position listing as a holder of Outstanding Notes (which, for purposes of the Exchange Offers, include beneficial interests in the Outstanding Notes held by direct or indirect participants in DTC and Outstanding Notes held in definitive form). Terms of the Exchange Offers The Authority hereby offers, upon the terms and subject to the conditions shown in this Prospectus and in the accompanying Letter of Transmittal, to exchange $1,000 principal amount of Senior Exchange Notes for each $1,000 principal amount of Outstanding Senior Notes and $1,000 principal amount of Senior Subordinated Exchange Notes for each $1,000 principal amount of Outstanding Senior Subordinated Notes, properly tendered before the Expiration Date and not properly withdrawn according to the procedures described below. Holders may tender their Outstanding Notes in whole or in part in integral multiples of $1,000 principal amount. The form and terms of the Exchange Notes are the same as the form and terms of the Outstanding Notes except that (1) the Exchange Notes have been registered under the Securities Act and therefore are not subject to the restrictions on transfer applicable to the Outstanding Notes and (2) holders of the Exchange Notes will not be entitled to some of the rights of holders of the Outstanding Notes under the registration rights agreement. The Exchange Notes evidence the same indebtedness as the Outstanding Notes (which they replace) 26 and will be issued pursuant to, and entitled to the benefits of, the Senior Notes Indenture and the Senior Subordinated Notes Indenture. Neither Exchange Offer is conditioned upon the other Exchange Offer or on any minimum principal amount of Outstanding Notes being tendered for exchange. The Authority reserves the right in its sole discretion to purchase or make offers for any Outstanding Notes that remain outstanding after the Expiration Date in either Exchange Offer or, as shown under "--Conditions to the Exchange Offers," to terminate, either or both of the Exchange Offers and, to the extent permitted by applicable law, purchase Outstanding Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offers. As of the date of this Prospectus, $200 million principal amount of Outstanding Senior Notes and $300 million principal amount of Outstanding Senior Subordinated Notes are outstanding. Holders of Outstanding Notes do not have any appraisal or dissenters' rights in connection with the Exchange Offers. Outstanding Notes which are not tendered for, or are tendered but not accepted in connection with, the Exchange Offers will remain outstanding. See "Risk Factors--Risks of Not Complying With Exchange Offer Procedures." If any tendered Outstanding Notes are not accepted for exchange because of an invalid tender, the occurrence of particular other events shown herein or otherwise, certificates for any such unaccepted Outstanding Notes will be returned, without expense, to the tendering holder thereof promptly after the Expiration Date. Holders who tender Outstanding Notes in connection with the Exchange Offers 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 Outstanding Notes in connection with the Exchange Offers. The Authority will pay all charges and expenses, other than specified applicable taxes. See "--Fees and Expenses." THE AUTHORITY MAKES NO RECOMMENDATION TO THE HOLDERS OF THE OUTSTANDING NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OUTSTANDING NOTES IN THE EXCHANGE OFFERS. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF THE OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFERS, AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITION AND REQUIREMENTS. Expiration Date; Extensions; Amendments The "Expiration Date" for each Exchange Offer is 5:00 p.m., New York City time, on , 1999 unless the Exchange Offer is extended by the Authority. (If the Authority does extend an Exchange Offer, the "Expiration Date" will be the latest date and time to which that Exchange Offer is extended). Because neither Exchange Offer is conditioned on the other Exchange Offer, it is possible that one Exchange Offer could terminate before the other. To the extent practicable, however, the Authority will seek to terminate both Exchange Offers at the same time. The Authority expressly reserves the right in its sole and absolute discretion, subject to applicable law, at any time and from time to time, (1) to delay the acceptance of the Outstanding Notes for exchange, (2) to terminate an Exchange Offer (whether or not any Outstanding Notes have theretofore been accepted for exchange) if the Authority determines, in its sole and absolute discretion, that any of the events or conditions referred to under "-- Conditions to the Exchange Offers" has occurred or exists or has not been satisfied with respect to such Exchange Offer, (3) to extend the Expiration Date of an Exchange Offer and retain all Outstanding Notes tendered pursuant to such Exchange Offer, subject, however, to the right of holders of Outstanding Notes to withdraw their tendered Outstanding Notes as described under "-- Withdrawal Rights," and (4) to waive any condition or otherwise amend the terms of an Exchange Offer in any respect. If an 27 Exchange Offer is amended in a manner determined by the Authority to constitute a material change, or if the Authority waives a material condition of such Exchange Offer, the Authority will promptly disclose such amendment by means of a Prospectus Supplement that will be distributed to the registered holders of the affected Outstanding Notes, and the Authority will extend the Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act. Any such delay in acceptance, termination, extension or amendment will be followed promptly by oral or written notice thereof to the Exchange Agent for such Exchange Offer (any such oral notice to be promptly confirmed in writing) and by making a public announcement, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Authority may choose to make any public announcement, and subject to applicable laws, the Authority shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to an appropriate news agency. Acceptance for Exchange and Issuance of Exchange Notes Upon the terms and subject to the conditions of each Exchange Offer, the Authority will exchange, and will issue to the relevant Exchange Agent, Exchange Notes for Outstanding Notes validly tendered and not withdrawn (pursuant to the withdrawal rights described under "Withdrawal Rights") promptly after the Expiration Date. In all cases, delivery of Exchange Notes in exchange for Outstanding Notes tendered and accepted for exchange pursuant to each Exchange Offer will be made only after timely receipt by the relevant Exchange Agent of (1) Outstanding Notes or a book-entry confirmation of a book-entry transfer of Outstanding Notes into the appropriate Exchange Agent's account at DTC, (2) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and (3) any other documents required by the Letter of Transmittal. Accordingly, the delivery of Exchange Notes might not be made to all tendering holders at the same time, and will depend upon when Outstanding Notes, book-entry confirmations with respect to Outstanding Notes and other required documents are received by the relevant Exchange Agent. The term "book-entry confirmation" means a timely confirmation of a book- entry transfer of Outstanding Notes into the appropriate Exchange Agent's account at DTC. Subject to the terms and conditions of each Exchange Offer, the Authority will be deemed to have accepted for exchange, and thereby exchanged, Outstanding Notes validly tendered and not withdrawn as, if and when the Authority gives oral or written notice to the relevant Exchange Agent (any such oral notice to be promptly confirmed in writing) of the Authority's acceptance of such Outstanding Notes for exchange pursuant to each Exchange Offer. The Authority's acceptance for exchange of Outstanding Notes tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering holder and the Authority upon the terms and subject to the conditions of the Exchange Offers. The Exchange Agents will act as agents for the Authority for the purpose of receiving tenders of Outstanding Notes, Letters of Transmittal and related documents, and as agents for tendering holders for the purpose of receiving Outstanding Notes, Letters of Transmittal and related documents and transmitting Exchange Notes to holders who validly tendered Outstanding Notes. Such exchange will be made promptly after the Expiration Date of each Exchange Offer. If for any reason the acceptance for exchange or the exchange of any Outstanding Notes tendered pursuant to an Exchange Offer is delayed (whether before or after the Authority's acceptance for exchange of Outstanding Notes), or the Authority extends an Exchange Offer or is unable to accept for exchange or exchange Outstanding Notes tendered pursuant to an Exchange Offer, then, without prejudice to the Authority's rights set forth herein, each Exchange Agent may, nevertheless, on behalf of the Authority and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Outstanding Notes and such Outstanding Notes may not be withdrawn except to the extent tendering holders are entitled to withdrawal rights as described under "--Withdrawal Rights." 28 Procedures for Tendering Outstanding Notes Valid Tender Except as set forth below, in order for Outstanding Notes to be validly tendered pursuant to an Exchange Offer, either (1) (a) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must be received by the appropriate Exchange Agent at the address set forth under "--Exchange Agents" prior to the Expiration Date and (b) tendered Outstanding Notes must be received by the Exchange Agents, or such Outstanding Notes must be tendered pursuant to the procedures for book-entry transfer set forth below and a book- entry confirmation must be received by the Exchange Agents, in each case prior to the Expiration Date, or (2) the guaranteed delivery procedures set forth below must be complied with. If less than all of the Outstanding Notes are tendered, a tendering holder should fill in the amount of Outstanding Notes being tendered in the appropriate box on the Letter of Transmittal. The entire amount of Outstanding Notes delivered to the Exchange Agents will be deemed to have been tendered unless otherwise indicated. If any Letter of Transmittal, endorsement, bond power, power of attorney, or any other document required by the Letter of Transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing. Unless waived by the Authority, evidence satisfactory to the Authority of such person's authority to so act must also be submitted. Any beneficial owner of Outstanding Notes that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian is urged to contact such entity promptly if such beneficial holder wishes to participate in the Exchange Offers. The method of delivery of Outstanding Notes, the Letter Of Transmittal and all other required documents is at the option and sole risk of the tendering holder. Delivery will be deemed made only when actually received by the proper Exchange Agent. 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 timely delivery and proper insurance should be obtained. No Letter of Transmittal or Outstanding Notes should be sent to the Authority. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect these transactions for them. Book-Entry Transfer Each Exchange Agent will make a request to establish an account with respect to the applicable Outstanding Notes at DTC for purposes of the applicable Exchange Offer within two business days after the date of this Prospectus. Any financial institution that is a participant in DTC's book-entry transfer facility system may make a book-entry delivery of the Outstanding Notes by causing DTC to transfer such Outstanding Notes into the relevant Exchange Agent's account at DTC in accordance with DTC's procedures for transfers. However, although delivery of Outstanding Notes may be effected through book- entry transfer into the relevant Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other required documents, must in any case be delivered to and received by the relevant Exchange Agent at its address set forth under "--Exchange Agents" prior to the Expiration Date, or the guaranteed delivery procedure set forth below must be complied with. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO AN EXCHANGE AGENT. Signature Guarantees Certificates for Outstanding Notes need not be endorsed and signature guarantees on a Letter of Transmittal or a notice of withdrawal, as the case may be, are unnecessary unless (a) a certificate for 29 Outstanding Notes is registered in a name other than that of the person surrendering the certificate or (b) a registered holder completes the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" in the Letter of Transmittal. In the case of (a) or (b) above, such certificates for Outstanding Notes must be duly endorsed or accompanied by a properly executed bond power, with the endorsement or signature on the bond power and on the Letter of Transmittal or the notice of withdrawal, as the case may be, guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution," including (as such terms are defined therein) (1) a bank, (2) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer, (3) a credit union, (4) a national securities exchange, registered securities association or clearing agency, or (5) a savings association that is a participant in a Securities Transfer Association (each an "Eligible Institution"), unless surrendered on behalf of such Eligible Institution. See Instruction 1 to the Letter of Transmittal. Guaranteed Delivery If a holder desires to tender Outstanding Notes pursuant to an Exchange Offer and the certificates for such Outstanding Notes are not immediately available or time will not permit all required documents to reach the proper Exchange Agent before the Expiration Date, or the procedures for book-entry transfer cannot be completed on a timely basis, such Outstanding Notes may nevertheless be tendered, provided that all of the following guaranteed delivery procedures are complied with (1) such tenders are made by or through an Eligible Institution; (2) prior to the Expiration Date, the relevant Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form accompanying the Letter of Transmittal, setting forth the name and address of the holder of Outstanding Notes and the amount of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Outstanding Notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the proper Exchange Agent. The Notice of Guaranteed Delivery may be delivered by hand, or transmitted by facsimile or mail to the relevant Exchange Agent and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery; and (3) the certificates (or book-entry confirmation) representing all tendered Outstanding Notes, in proper form for transfer, together with a properly completed and duly executed Letter of Transmittal, with any required signature guarantees and any other documents required by the Letter of Transmittal, are received by the relevant Exchange Agent within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. Determination of Validity All questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tendered Outstanding Notes will be determined by the Authority, in its sole discretion, which determination shall be final and binding on all parties. The Authority reserves the absolute right, in its sole and absolute discretion, to reject any and all tenders it determines not to be in proper form or the acceptance for exchange of which may, in the view of counsel to the Authority, be unlawful. The Authority also reserves the absolute right, subject to applicable law, to waive any of the conditions of either Exchange Offer as set forth under "--Conditions to the Exchange Offers" or any defect or irregularity in any tender of Outstanding Notes of any particular holder whether or not similar defects or irregularities are waived in the case of other holders. The Authority's interpretation of the terms and conditions of the Exchange Offers (including the relevant Letter of Transmittal and the instructions thereto) will be final and binding on all parties. No tender of Outstanding Notes will be deemed to have been validly made until all defects or irregularities with respect to such tender 30 have been cured or waived. None of the Authority, any affiliates of the Authority, the Exchange Agents or any other person shall be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Resales of Exchange Notes Based on interpretations by the staff of the Commission, as set forth in no- action letters issued to third parties unrelated to the Authority, the Authority believes that holders of Outstanding Notes who exchange their Outstanding Notes for Exchange Notes may offer for resale, resell and otherwise transfer such Exchange Notes without compliance with the registration and prospectus delivery provisions of the Securities Act. This would not apply, however, to any holder that is a broker-dealer that acquired Outstanding Notes as a result of market-making activities or other trading activities or directly from the Authority for resale under an available exemption under the Securities Act. Also, resale would only be permitted for Exchange Notes that are acquired in the ordinary course of a holder's business, where such holder has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes and such holder is not an "affiliate" of the Authority. The staff of the Commission has not considered the Exchange Offers in the context of a no-action letter, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offers. Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes under the Exchange Offers, where such Outstanding Notes were acquired by such broker-dealer as a result of market- making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." Withdrawal Rights Except as otherwise provided herein, tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date of an Exchange Offer. In order for a withdrawal to be effective, such withdrawal must be in writing and timely received by the relevant Exchange Agent at its address set forth under "--Exchange Agents" prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Outstanding Notes to be withdrawn, the principal amount of Outstanding Notes to be withdrawn, and (if certificates for such Outstanding Notes have been tendered) the name of the registered holder of the Outstanding Notes as set forth on the Outstanding Notes, if different from that of the person who tendered such Outstanding Notes. If certificates for Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, the notice of withdrawal must specify the serial numbers on the particular certificates for the Outstanding Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Outstanding Notes tendered for the account of an Eligible Institution. If Outstanding Notes have been tendered pursuant to the procedures for book-entry transfer set forth in "--Procedures for Tendering Outstanding Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Outstanding Notes and must otherwise comply with the procedures of DTC. Withdrawals of tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly withdrawn will not be deemed validly tendered for purposes of an Exchange Offer, but may be retendered at any subsequent time prior to the Expiration Date of such Exchange Offer by following any of the procedures described above under "--Procedures for Tendering Outstanding Notes." All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Authority, in its sole discretion, which determination shall be final and binding on all parties. Neither the Authority, any affiliates of the Authority, the Exchange Agents or any other person shall be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Outstanding Notes which have been tendered but which are withdrawn will be returned to the holder promptly after withdrawal. Interest on the Exchange Notes Interest on the Senior Exchange Notes will be payable every six months on January 1 and July 1 of each year at a rate of 8 1/8% per annum, commencing July 1, 1999. The Senior Exchange Notes will mature on 31 January 1, 2006. Interest on the Senior Subordinated Exchange Notes will be payable every six months on January 1 and July 1 of each year at a rate of 8 3/4% per annum, commencing July 1, 1999.The Senior Subordinated Exchange Notes will mature on January 1, 2009. Conditions to the Exchange Offers If any of the following conditions has occurred or exists or has not been satisfied prior to the Expiration Date of an Exchange Offer, the Authority will not be required to accept for exchange any Outstanding Notes and will not be required to issue Exchange Notes in exchange for any Outstanding Notes. In addition, the Authority may, at any time and from time to time, terminate or amend an Exchange Offer (whether or not any Outstanding Notes have theretofore been accepted for exchange) or may waive any conditions to or amend an Exchange Offer. . A change in the current interpretation by the staff of the Commission which permits resale of Exchange Notes as described about under "-- Resales of Exchange Notes." . The institution or threat of an action or proceeding in any court or by or before any governmental agency or body with respect to the Exchange Offers which, in the Authority's judgment, would reasonably be expected to impair the ability of the Authority to proceed with the Exchange Offers. . The adoption or enactment of any law, statute, rule or regulation which, in the Authority's judgment, would reasonably be expected to impair the ability of the Authority to proceed with the Exchange Offers. . The issuance of a stop order by the Commission or any state securities authority suspending the effectiveness of the Registration Statement, or proceedings for that purpose. . Failure to obtain any governmental approval, which the Authority considers necessary for the consummation of the Exchange Offers as contemplated hereby. . Any change or development involving a prospective change in the business or financial affairs of the Authority which the Authority thinks might materially impair its ability to proceed with the Exchange Offers. If the Authority determines in its sole and absolute discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied at any time prior to an Expiration Date, the Authority may, subject to applicable law, terminate the applicable Exchange Offer (whether or not any Outstanding Notes have theretofore been accepted for exchange) or may waive any such condition or otherwise amend the terms of an Exchange Offer in any respect. If such waiver or amendment constitutes a material change to an Exchange Offer, the Authority will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to the registered holders of the applicable Outstanding Notes. In this case, the Authority will extend the applicable Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act. 32 Exchange Agents First Union National Bank has been appointed as the Senior Exchange Agent, State Street Bank and Trust Company has been appointed as the Senior Subordinated Exchange Agent. Delivery of the Letters of Transmittal and any other required documents, questions, requests for assistance, and requests for additional copies of this Prospectus or of the Letter of Transmittal should be directed to the appropriate Exchange Agent as follows: Exchanging Outstanding Senior Notes for Senior Exchange Notes By Facsimile (704) 590-7626 Confirm by telephone: (704) 590-7408 By Hand or Overnight Courier First Union National Bank 1525 W.T. Harris Boulevard Charlotte, North Carolina 28288-1153 Attention: Corporate Trust Department By Mail First Union National Bank 1525 W.T. Harris Boulevard Charlotte, North Carolina 28288-1153 Attention: Corporate Trust Department Exchanging Outstanding Senior Subordinated Notes for Senior Subordinated Exchange Notes By Facsimile (617) 664-5290 Attention: Customer Service Confirm by telephone: (617) 664-5249 By Hand or Overnight Courier State Street Bank and Trust Company Corporate Trust Department Two International Place--4th Floor Boston, MA 02110 Attention: Ralph Jones By Mail State Street Bank and Trust Company Corporate Trust Department P.O. Box 778 Boston, MA 02102 Attention: Ralph Jones DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBERS WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERY TO THE WRONG EXCHANGE AGENT WILL NOT CONSTITUTE DELIVERY. 33 Fees and Expenses The expenses of soliciting tenders will be borne by the Authority. The principal solicitation is being made by mail. Additional solicitation may be made personally or by telephone or other means by officers, directors or employees of the Authority. The Authority has not retained any dealer-manager or similar agent in connection with the Exchange Offers and will not make any payments to brokers, dealers or others soliciting acceptances of the Exchange Offers. The Authority has agreed to pay the Exchange Agents reasonable and customary fees for their services and will reimburse them for reasonable out-of-pocket expenses in connection therewith. The Authority will also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this Prospectus and related documents to the beneficial owners of Outstanding Notes, and in handling or tendering for their customers. Holders who tender their Outstanding Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that if Exchange Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Outstanding Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes in connection with the Exchange Offers, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such transfer tax or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer tax will be billed directly to such tendering holder. USE OF PROCEEDS The Exchange Offers are intended to satisfy certain obligations of the Authority under the registration agreements. The Authority will not receive any cash proceeds from the issuance of the Exchange Notes. In consideration for issuing the Exchange Notes as contemplated in this Prospectus, the Authority will receive, in exchange, an equal number of Outstanding Notes in like principal amount. The form and terms of the Exchange Notes are identical in all material respects to the form and terms of the Outstanding Notes, except as otherwise described in the section entiteled "The Exchange Offers--Terms of the Exchange Offers." The Outstanding Notes surrendered in exchange for the Exchange Notes will be retired and cancelled and cannot be reissued. A portion of the proceeds from the offering of the Outstanding Notes has been used to redeem the 13 1/2% Senior Secured Notes and defease junior subordinated notes. The remainder of these proceeds will be used to fund the Mohegan Sun expansion and for general corporate purposes. 34 CAPITALIZATION The following table shows, as of December 31, 1998, the Authority's actual and adjusted cash balance and capitalization, including the application of the net proceeds to the Authority from the offering of the Outstanding Notes. This table should be read in conjunction with the more detailed information and financial statements appearing elsewhere in this Prospectus.
December 31, 1998 ------------------------- Actual As Adjusted(1) --------- -------------- (in thousands) Cash and cash equivalents........................... $ 109,578 $ 244,978 Junior Subordinated Notes defeasance trust assets... -- 135,700 ========= ========= Debt (including current maturities of debt and capital lease obligations) Bank Credit Facility.............................. $ -- $ -- 13 1/2% Senior Secured Notes...................... 175,000 -- Junior Subordinated Notes(2)...................... 125,191 125,191 Outstanding Senior Notes.......................... -- 200,000 Outstanding Senior Subordinated Notes............. -- 300,000 Equipment financing............................... 27,807 27,807 --------- --------- Total debt and capital lease obligations........ 327,998 652,998 Total capital(3).................................... (372,300) (410,200) --------- --------- Total capitalization(4)............................. $ (44,302) $ 242,798 ========= =========
- -------- (1) As adjusted amounts reflect (a) the sale of the Outstanding Notes and the application of the related net proceeds, including the redemption of $175.0 million in aggregate principal amount of the 13 1/2% Senior Secured Notes and the establishment of a defeasance trust account for the junior subordinated notes of the Authority; (b) the release of restricted cash balances to the Authority in the amount of $81.3 million; and (c) the closing of the Bank Credit Facility with no loan amounts drawn. (2) This amount reflects $90.0 million of principal and $35.2 million of accrued and unpaid interest. (3) The Authority, in accordance with FASB 5, has recorded a non-cash expense and liability for the estimated present value of the Authority's future Relinquishment Agreement payment obligations. These payments are based on the amount of gross revenue generated by the Authority. As of September 30, 1998, the present value of this liability was estimated at $549.1 million, of which $419.1 million was reflected as an extraordinary item in the statements of income (loss) and $130.0 million was capitalized on the balance sheet as trademarks and other intellectual property acquired as part of the Relinquishment Agreement. Recording this liability has created negative capital as of September 30, 1998. This liability will be reassessed periodically and may require additional non-cash adjustments to be recorded in the statement of income (loss). The estimated liability has not changed as of December 31, 1998. See the Authority's financial statements and the accompanying notes and "Other Material Agreements-- Relinquishment Agreement with Trading Cove Associates." (4) Total capitalization is the sum of total debt, capital lease obligations and total capital. 35 SELECTED FINANCIAL DATA The selected financial data shown below for the fiscal years ended September 30, 1997 and 1998 have been taken from the audited financial statements of the Authority included in this Prospectus. The selected financial data for the quarters ended December 31, 1997 and 1998 have been taken from the Authority's unaudited interim financial statements included elsewhere in this Prospectus, which in the opinion of the Authority's management include all adjustments (including only normal, recurring adjustments) necessary for a fair presentation of such information. Operating results for interim periods are not necessarily indicative of the results that might be expected for the entire fiscal year. The financial information shown below should be read in conjunction with the financial statements and notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other financial and statistical data included in this Prospectus.
Fiscal Year Ended Quarter Ended September 30, December 31, ------------------- ------------------ 1998 1997(1) 1998 1997 --------- -------- -------- -------- (Dollars in thousands except per diem data) Statements of Income (Loss) Data: Revenues: Gaming............................. $ 543,870 $440,540 $152,672 $119,798 Food and beverage.................. 55,544 46,925 15,013 12,596 Retail and other................... 36,328 21,489 13,287 10,025 Bingo operations................... 5,673 3,148 3,442 929 --------- -------- -------- -------- Gross revenues..................... 641,415 512,102 184,414 143,348 Promotional allowances............. (66,272) (44,265) (20,556) (16,206) --------- -------- -------- -------- Net revenues....................... 575,143 467,837 163,858 127,142 --------- -------- -------- -------- Costs and Expenses: Gaming............................. 237,946 209,086 66,590 56,307 Food and beverage.................. 21,212 24,168 5,386 4,940 Retail and other................... 24,607 16,282 9,113 6,390 Bingo operations................... 3,529 4,508 3,377 703 General and administration......... 87,529 78,366 27,622 23,740 Management fee..................... 47,442 23,243 13,645 7,404 Depreciation and amortization...... 17,528 32,155 4,669 4,800 --------- -------- -------- -------- Total costs and expenses......... 439,793 387,808 130,402 104,284 --------- -------- -------- -------- Income from operations............. 135,350 80,029 33,456 22,858 Other expense, net................. 47,772 43,342 12,195 11,130 --------- -------- -------- -------- Income before extraordinary items.. 87,578 36,687 21,261 11,728 Extraordinary items(2)............. (419,457) -- -- -- --------- -------- -------- -------- Net income (loss)(2)............... $(331,879) $ 36,687 $ 21,261 $ 11,728 ========= ======== ======== ======== Ratio of earnings to fixed charges(3).......................... 2.7x 1.8x 2.6x 1.9x Other Data: EBITDA(4)............................ $ 152,878 $112,184 $ 38,125 $ 27,658 EBITDAM(5)........................... 200,320 135,427 51,770 35,062 Capital expenditures................. 32,731 35,749 6,113 17,909 Slot machine win per day............. 361 319 401 311 Table game win per day............... 2,545 2,401 2,727 2,364 Slot machines........................ 3,029 2,962 3,025 2,996 Table games.......................... 150 149 150 148 Restaurant seats..................... 1,868 1,808 1,888 1,808 Casino square footage................ 176,500 167,500 176,500 167,500
36
September 30, December 31, ------------------- ------------ 1998 1997 1998 --------- -------- ------------ (In thousands) Balance Sheet Data: Cash and cash equivalents(6)......... $ 110,730 $ 88,844 $ 109,578 Total assets............ 554,480 386,974 554,746 Total debt and capital lease obligations...... 326,106 316,146 327,998 Total capital........... (382,300) 21,931 (372,300)
- -------- (1) The Authority commenced operations at Mohegan Sun on October 12, 1996. (2) The Authority, in accordance with FASB 5, has recorded a non-cash expense and liability for the estimated present value of the Authority's future Relinquishment Agreement payment obligations. These payments are based on the amount of gross revenue generated by the Authority. As of September 30, 1998, the present value of this liability was estimated at $549.1 million, of which $419.1 million was reflected as an extraordinary item in the statements of income (loss), and $130.0 million was capitalized on the balance sheet as trademarks and other intellectual property acquired as part of the Relinquishment Agreement. Recording this liability has created negative capital as of September 30, 1998. This liability will be reassessed periodically and may require additional non-cash adjustments to be recorded in the statement of income (loss). The estimated liability has not changed as of December 31, 1998. See the Authority's financial statements and the accompanying notes and "Other Material Agreements-- Relinquishment Agreement with Trading Cove Associates." (3) The ratio of earnings to fixed charges is determined by dividing (a) earnings before extraordinary items and fixed charges by (b) fixed charges. Fixed charges consist of total interest expense, including cash flow participation interest relating to the 13 1/2% Senior Secured Notes. (4) Earnings before extraordinary items, interest, income taxes, depreciation and amortization. EBITDA is presented because we believe it is frequently used by securities analysts, investors and other interested parties in the gaming industry. However, EBITDA should only be read in conjunction with all of the Authority's financial data summarized above and its financial statements, including the notes, prepared in accordance with GAAP appearing elsewhere herein. EBITDA should not be construed as an alternative either to (a) income from operations (as determined in accordance with GAAP) as an indicator of the Authority's operating performance or (b) cash flows from operating activities (as determined according to GAAP) as a measure of liquidity. In addition, because the Authority is an instrumentality of a sovereign Indian nation, it is not subject to federal or state income tax. (5) Earnings before extraordinary items, interest, income taxes, depreciation, amortization and management fees. Management fees are paid by the Authority to Trading Cove Associates pursuant to the terms of its management agreement which terminates on January 1, 2000. Until such termination and because management fees are subordinate to debt service, the Authority believes EBITDAM is a supplemental financial measurement useful in the evaluation of its gaming business. (6) Including restricted cash balances of $74.5 million, $48.5 million, and $81.3 million as of September 30, 1998, September 30, 1997 and December 31, 1998, respectively. 37 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Authority's sole business is the operation of Mohegan Sun, which opened in October 1996. The growth in the Connecticut gaming market continues to expand as well as Mohegan Sun's share in this market. The Authority is currently undertaking an estimated $750 million expansion of Mohegan Sun. Construction on the expansion began in March, 1999, and the expansion is expected to be completed in the fall of 2001. Results of Operations Comparison of Operating Results for the Quarters Ended December 31, 1998 and 1997 For the quarter ended December 31, 1998, the Connecticut slot market grew at a rate of 17.3%, reporting a gross slot win of $273.9 million, an increase of $40.4 million over the period ended December 31, 1997. Mohegan Sun exceeded the market's growth as it experienced a 30.3% increase in slot win over the same period in the prior year. Slot revenues of $111.1 million for the quarter ended December 31, 1998 reflected a slot win per unit per day of $401. Slot win per unit per day for the quarter ended December 31, 1997 was $311. The slot win growth of $25.8 million, or 30.3%, over the previous year reflected Mohegan Sun's growth in slot win market share of 3.8% over the same period in the prior year. Gaming revenues totaled $152.7 million for the quarter ended December 31, 1998, marking an increase of $32.9 million, or 27.4%, over the quarter ended December 31, 1997. The increase in gaming revenues is primarily due to a 17.3% growth in the Connecticut slot market and the continued growth of the Mohegan Sun customer base. Membership in the Mohegan Sun Player's Club totaled 975,933 and 663,932 guests as of December 31, 1998 and 1997, respectively. For the quarter ended December 31, 1998, food and beverage revenues were $15.0 million, indicating a growth of $2.4 million, or 19.2%, over the prior year. Retail and other revenues were $13.3 million, a growth of $3.3 million, or 32.5%, over the same period in the prior year. The increase in non-gaming revenues is primarily attributed to increased utilization of complimentaries, the addition of two new retail outlets to the facility in December 1997 and April 1998 and the opening of the gas station facility in December 1998. Bingo revenues totaled $3.4 million for the quarter ended December 31, 1998, representing a $2.5 million increase over the same period in the prior year. The increase is a result of an improvement in the overall awareness of the bingo operation in the marketplace. Promotional allowances totaled $20.6 million for the quarter ended December 31, 1998, representing a $4.4 million, or 26.8%, increase over the prior year. The increase is attributable to a growth in the Mohegan Sun customer base as well as an increased utilization of the Mohegan Sun Player's Club complimentary program. Promotional allowances as a percentage of gaming revenue remained constant at 13.5% for both the quarters ended December 31, 1998 and 1997. Total costs and expenses were $130.4 million for the quarter ended December 31, 1998, an increase of $26.1 million, or 25.0%, over the prior year. The increase in variable expenses is a direct result of an increase in volume as gross revenues increased by $41.1 million, or 28.6%, partially offset by improved operating efficiencies in costs such as rent expense and cost of goods sold. Gaming costs and expenses were $66.6 million for the quarter ended December 31, 1998, an increase of $10.3 million, or 18.2%, over the same period in the prior year. The slot win contribution for the quarter ended December 31, 1998 totaled $28.4 million. This represents an increase of $6.4 million over the same period in the prior year, which is directly attributable to the $25.8 million increase in slot revenues. 38 General and administrative costs were $27.6 million for the quarter ended December 31, 1998. The increase of $3.9 million, or 16.4%, is partially attributable to marketing and advertising campaigns which increased the length of stay and frequency of patron visits. Management fees earned by Trading Cove Associates totaled $13.6 million for the quarter ended December 31, 1998, an increase of $6.2 million, or 84.3%, over the fees paid in last year's period. The increase in management fees is a direct result of the increase in income from operations. For the quarter ended December 31, 1998, depreciation and amortization decreased by $131,000, or 2.7%, as compared with the same period in the prior year. The decrease is primarily attributable to the expensing of financing fees in fiscal 1998, partially offset by an increase in depreciation for newly acquired capital assets such as the racebook and gas station facilities. Income from operations for the quarter ended December 31, 1998 totaled $33.5 million, compared to $22.9 million in the same period in the prior year. The year over year increase of $10.6 million, or 46.4%, is primarily due to the 27.4% increase in gaming revenues and improved operating efficiencies. Other expense, net is comprised of interest expense minus interest and other income. Interest expense of $12.8 million for the quarter ended December 31, 1998 represented an increase of $1.0 million, or 8.8%, over the same period in the prior year. This increase was mainly attributable to an increase in the cash flow participation interest owed to the holders of the 13 1/2% Senior Secured Notes, which is derived as a percent of increased earnings before extraordinary items, interest, taxes, depreciation, amortization and management fees. The cash flow participation interest is paid to the holders of the 13 1/2% Senior Secured Notes pursuant to the 13 1/2% Senior Secured Notes indenture. Interest and other income was $615,000 for the quarter ended December 31, 1998, a decrease of $33,000, or 5.1%, over the prior year's period. Comparison of Operating Results for the Fiscal Year Ended September 30, 1998 and the Period October 12, 1996 (date of commencement of operations) through September 30, 1997 Net revenues for the fiscal year ended September 30, 1998 were $575.1 million compared with $467.8 million reported for the period ended September 30, 1997. The 22.9% increase in net revenues is primarily attributable to increases in gaming revenue. As the Authority commenced operations on October 12, 1996, fiscal year 1998 included 12 more operating days than the period ended September 30, 1997. Gaming revenues totaled $543.9 million for the fiscal year ended September 30, 1998, marking an increase of $103.4 million, or 23.5%, over the period ended September 30, 1997. The increase in gaming revenues is primarily due to the growth in the Connecticut slot market and the continued growth of the Mohegan Sun customer base. The Connecticut slot market grew at a rate of 18.7%, reporting a gross slot win of $1.1 billion, an increase of $168.8 million from fiscal year 1997. The slot win per unit per day for the fiscal years ended September 30, 1998 and 1997 were $361 and $319, respectively. The slot win growth of $83.9 million, or 26.8%, over the previous fiscal year reflected Mohegan Sun's growth in slot win market share of 2.8% over the prior year. Membership in the Mohegan Sun Player's Club totaled 908,821 and 587,952 guests as of September 30, 1998 and 1997, respectively. For the fiscal year ended September 30, 1998, food and beverage revenues were $55.5 million, indicating a growth of $8.6 million, or 18.4%, over the prior year. Retail and other revenues were $36.3 million, a growth of $14.8 million, or 68.8%, over the prior year. These increases are attributed to increased utilization of complimentaries and the addition of two new retail outlets to the facility. Bingo revenues totaled $5.7 million for the fiscal year ended September 30, 1998, representing a $2.6 million or 83.9%, increase over the prior year. The increase is a result of improved operating efficiencies as well as an increase in the overall awareness of the bingo operation. 39 Promotional allowances totaled $66.3 million for the fiscal year ended September 30, 1998, representing a $22.0 million, or 49.7%, increase over the prior fiscal year. The increase is attributable to an increase in the customer base as well as an increased utilization of the Mohegan Sun Player's Club complimentary program. Additionally, promotional allowance as a percentage of total revenues increased from 8.6% in fiscal 1997 to 10.3% in fiscal 1998. Total costs and expenses were $439.8 million for the fiscal year ended September 30, 1998, an increase of $52.0 million, or 13.4%, over the prior fiscal year. The increase in expenses is a direct result of a 22.9% increase in net revenues partially offset by improved operating efficiencies. Gaming costs and expenses were $237.9 million for fiscal year 1998, an increase of $28.9 million, or 13.8%, over the prior fiscal year. The slot win contribution for the fiscal year ended September 30, 1998 totaled $102.3 million. This represents an increase of $21.6 million over the prior fiscal year, which is directly attributable to increased slot revenues. General and administrative costs were $87.5 million for the fiscal year ended September 30, 1998. The increase of $9.2 million, or 11.7%, is partially attributable to more aggressive marketing campaigns associated with efforts to increase the frequency of patron visits. As a result, food, beverage and retail expenses for the fiscal year increased by $5.4 million from the prior period. For the fiscal year ended September 30, 1998, depreciation and amortization decreased by $14.6 million, or 45.5%, over the prior period. The decrease is primarily attributable to pre-opening expenditures of $18.2 million that were fully depreciated over the first 12 months of business operations, partially offset by an increase in depreciation for newly acquired capital assets. The Authority incurred $47.4 million in management fees to Trading Cove Associates for the fiscal year ended September 30, 1998, an increase of $24.2 million, or 104.1%, over fiscal year 1997. The increase in management fees was a direct result of the increase in operating income. Income from operations for the fiscal year ended September 30, 1998 totaled $135.3 million, compared to $80.0 million in the previous period. The year over year increase is primarily due to an increase in gaming revenues and improved operating efficiencies. Other expense, net is comprised of interest expense minus interest and other income. Interest expense of $50.2 million for the fiscal year ended September 30, 1998 represented an increase of $5.0 million, or 11.2%, over the prior year. This increase was mainly attributable to an increase in the cash flow participation interest owed to the holders of the 13 1/2% Senior Secured Notes, which is derived as a percent of increased earnings before extraordinary items, interest, taxes, depreciation, amortization and management fees. The cash flow participation interest is paid to the holders of the 13 1/2% Senior Secured Notes pursuant to the 13 1/2% Senior Secured Notes indenture. Interest and other income was $2.4 million for the fiscal year ended September 30, 1998, an increase of $605,000, or 33.7%, over the prior year. Extraordinary items include a loss on the early extinguishment of debt of $332,000 due to the retirement of a capital lease and a $419.1 million expense associated with an agreement with Trading Cove Associates whereby the Authority will assume management control of Mohegan Sun. The relinquishment expense was recorded as a one-time, non-cash charge pursuant to FASB 5 which requires that the present value of future expenses be recorded as liabilities once they become reasonably identifiable and quantifiable. This expense is based upon the Authority's agreement to pay Trading Cove Associates 5% of gross revenues (as determined under the terms of the Relinquishment Agreement) generated from Mohegan Sun and from the planned expansion, beginning January 1, 2000 and ending December 31, 2014. This amount was derived by discounting the present value of 5% of projected revenues by the Authority's risk free investment rate. Future payment obligations to Trading Cove Associates will be recorded as adjustments to cash flow rather than expensed as 40 incurred. However, future "centering" of the estimated present value of this liability may require additional non-cash charges or credits similar in nature to this one-time charge. Liquidity, Capital Resources and Capital Spending As of December 31, 1998, the Authority held cash and cash equivalents of $28.3 million. Cash provided by operating activities for the quarters ended December 31, 1998 and 1997 were $18.0 million and $10.0 million, respectively. As of September 30, 1998 and 1997, cash and cash equivalents were $36.3 million and $40.4 million, respectively. Cash provided by operating activities for the fiscal year ended September 30, 1998 was $134.6 million, compared with $117.2 million for the fiscal year ended September 30, 1997. The Authority's capital expenditures for the quarters ended December 31, 1998 and 1997 were $6.1 million and $17.9 million, respectively. For the quarter ended December 31, 1998, capital expenditures included $2.9 million for facility improvements and the acquisition of new capital assets, and $3.2 million for construction costs for the on-site gas station facility and the preliminary stages of the planned expansion of Mohegan Sun. Capital spending for the quarter ended December 31, 1997 of $17.9 million was comprised of $1.7 million for the purchase of new capital assets, $3.6 million in the settlement of construction claims with Morse Diesel, Inc., related to the initial construction of Mohegan Sun, and $12.6 million for the purchase of assets previously held under operating leases. During the quarters ended December 31, 1998 and 1997, the Authority, after meeting its operating expenses and required deposits to reserve funds under the indenture for the 13 1/2% Senior Secured Notes distributed a total of $11.3 million and $6.4 million, respectively, to the Tribe. As required under the indenture for the 13 1/2% Senior Secured Notes, the Authority made an excess cash purchase offer of $51.2 million to all holders of the 13 1/2% Senior Secured Notes on December 30, 1998. The excess cash purchase offer expired, by its terms, on January 29, 1999, and none of the holders of the 13 1/2% Senior Secured Notes accepted the offer. On February 1, 1999, as required, the Authority made an offer to repurchase in the amount of the excess cash purchase offer to the holders of the junior subordinated notes. On February 1, 1999, the holders of junior subordinated notes also rejected the offer. On February 2, 1999, as permitted by the 13 1/2% Senior Secured Notes indenture, the Authority distributed the excess cash purchase offer amount of $51.2 million to the Tribe. On November 15, 1998 and 1997, the Authority made interest payments of $11.8 million each to the holders of the 13 1/2% Senior Secured Notes and payments of $5.8 million and $4.1 million, respectively, in cash flow participation interest. There were no cash interest payment requirements on the Junior Subordinated Notes as interest is accrued and deferred until 50% of the 13 1/2% Senior Secured Notes are offered to be repurchased or retired. Capital expenditures were $32.7 million in fiscal year 1998, versus $35.7 million in fiscal year 1997. Capital expenditures for furniture, fixtures and equipment were $14.0 million and $35.7 million in 1998 and 1997, respectively. Additional capital expenditures made during 1998 of $8.4 million related to the commencement of the renovation of the casino's north entry and construction of the race book and gas station facilities, $0.3 million for preliminary spending on Mohegan Sun's expansion plans, and $10.0 million for the acquisition of equipment previously leased under operating leases. During fiscal 1998, the Authority, after meeting its operating expenses and required deposits to reserve funds under the indenture for the 13 1/2% Senior Secured Notes, distributed a total of $72.4 million to the Tribe. As required under the 13 1/2% Senior Secured Notes indenture, the Authority made an excess cash purchase offer of $29.1 million to all holders of the 13 1/2% Senior Secured Notes in January 1998. The holders of the 13 1/2% Senior Secured Notes rejected the offer which was subsequently offered to the holders of junior subordinated notes. The holders of junior subordinated notes also rejected the offer, and, as a result, the funds were distributed to the Tribe. 41 On February 7, 1998, the Authority finalized contract negotiations with Trading Cove Associates to move forward with an expansion of Mohegan Sun, as described more fully in this Prospectus. The expansion project is currently estimated to cost $750 million (excluding capitalized interest). The Tribe has issued a formal resolution capping the scope of the project to an expansion budget of $800 million. The proposed development plans include approximately 100,000 square feet of additional gaming space, a luxury hotel facility with approximately 1,500 rooms, an events center with seating for 10,000 guests and a convention center with approximately 100,000 square feet of space. The Authority also plans to include additional retail and restaurant facilities into the design. Current plans would require significant upgrades and additions to the facility's parking and infrastructure systems. The Tribe has chosen a project developer, an architect, a site master planner, cost and scheduling consultants and a retail consultant for the expansion. These firms, in conjunction with the Tribe and the Authority, are in the process of developing a construction budget and schedule. As a result, the estimated project cost is still subject to adjustment. Mohegan Sun's expansion broke ground in March, 1999. Trading Cove Associates will oversee the planning, design and construction of the expansion at Mohegan Sun and will receive compensation of $14 million for such services. Under the terms of the Relinquishment Agreement with Trading Cove Associates, Trading Cove Associates will continue to manage the existing property under its current management agreement until December 31, 1999. On January 1, 2000, the Management Agreement between the Authority and Trading Cove Associates will terminate, and the Authority will assume all day-to-day management of Mohegan Sun. The Authority, as a result of the termination of the Management Agreement, has agreed to pay to Trading Cove Associates 5% of gross revenues (as defined in the Relinquishment Agreement), generated from Mohegan Sun and from the planned expansion, beginning January 1, 2000 and ending December 31, 2014. The liability for these relinquishment payments is estimated at $549.1 million as of September 30, 1998. The Authority has netted against its liability $130.0 million which has been capitalized on the balance sheet as Trademarks and other intellectual property acquired as part of the Relinquishment Agreement. Recording this liability has created negative capital as of September 30, 1998. This liability will be reassessed periodically and may require additional non-cash adjustments to be recorded in the statement of income (loss). The estimated liability has not changed as of December 31, 1998. For the remainder of fiscal 1999, the Authority expects capital expenditures to be approximately $13.4 million on facility improvements and $52.6 million on existing construction projects. These existing construction project expenditures include $1.2 million relating to the completion of the gas station facility and $51.4 million on the expansion of Mohegan Sun. Management believes that existing cash balances and operating cash flow will provide the Authority with sufficient resources to meet its capital expenditure requirements with respect to current operations for at least the next 12 months. On January 15, 1999, the Authority initiated the Tender Offer and Consent Solicitation for the repurchase of all $175.0 million aggregate principal amount outstanding of the 13 1/2% Senior Secured Notes. The offer was extended twice and expired at 11:59 p.m., New York City time on February 26, 1999. The tender offer price for the 13 1/2% Senior Secured Notes was $219.9 million. Holders of 100% of the 13 1/2% Senior Secured Notes accepted the Tender Offer and Consent Solicitation. The Tribe established a $40.0 million construction reserve account that, in specific circumstances, will be used to pay costs in excess of the expansion budget. The Authority also established a segregated defeasance trust account with a defeasance agent with cash equivalent funds estimated to be sufficient to permit redemption of its junior subordinated notes on January 1, 2000. Year 2000 Background Many computer systems and applications currently use two-digit date fields to designate a year. As the century date change occurs, date-sensitive systems will recognize the year 2000 as 1900, or not at all. This 42 inability to recognize, or properly treat, the year 2000 may cause systems to process financial and operational information incorrectly, resulting in system failures and other business problems. Risk Factors The Authority, like many companies, depends on fully operational computer systems in all areas of its operations. Additionally, the Authority is dependent upon many vendors to provide uninterrupted service for its operations to run effectively. Exposure to both of these risk factors are issues for which the Authority is formulating an approach. Approach With the assistance of an outside consultant, the Authority has implemented a Year 2000 program to provide an independent analysis of the Authority's Year 2000 preparedness and the adequacy of the Authority's Year 2000 plans. The program includes inventorying entities, identifying problems, planning compliance, calculating time and cost estimates and generating implementation strategies, attempting to correct the problems and testing the solutions. The consultant will examine the methodology being used to approach risks in the facilities' embedded systems and in products in the Authority's supply chain. While the Authority's efforts are designed to be successful, because of the complexity of the Year 2000 issues and the interdependence of organizations using computer systems, there can be no assurance that the Authority's efforts, or those of a third party with whom the Authority interacts, will be satisfactorily completed in a timely fashion. This could result in a material adverse effect on future operations. Status As of March 31, 1999, Mohegan Sun was approximately 75% in conformance with the GartnerGroup Year 2000 best practices model. The Authority anticipates completion of the program by June 1999. If at that time it is determined that the program will not be completed, however, the Authority will develop a contingency plan. Cost The Authority has incurred approximately $100,000 in costs associated with the Year 2000 Program as of December 31, 1998. The Authority does not separately track the internal costs incurred for the Year 2000 program, and the $100,000 of costs incurred through December 31, 1998 are principally related to payroll costs for the Authority's information systems group and outside consulting fees. Although there can be no assurances, it is anticipated that costs associated with the remediation and verification to become Year 2000 compliant will not exceed $1.0 million and will not have a material adverse impact on the Authority's financial position, results of operations, or cash flow. State Compact The Mohegan Compact stipulates that a portion of the revenues earned on slot machines must be paid to the State of Connecticut. This slot win contribution will be the lesser of (1) 30% of gross revenues from slot machines, or (2) the greater of (a) 25% of gross revenues from slot machines or (b) $80.0 million. The slot win contribution payments are linked to an exclusivity clause and will not be required if the State of Connecticut legalizes any other gaming operations with slot machines or other commercial casino table games within Connecticut (except those consented to by the Tribe and the Mashantucket Pequot Tribe). The Authority has reflected $102.3 million and $80.7 million, respectively, of gaming expense on its financial statements for the required slot win contribution to the State of Connecticut for the fiscal years ended September 30, 1998 and 1997. 43 BUSINESS Mohegan Sun The Authority owns and operates Mohegan Sun, a full-service gaming and entertainment complex on a 240-acre site overlooking the Thames River on the Tribe's reservation in southeastern Connecticut. The Authority has entered into a land lease with the Tribe whereby the Tribe leases to the Authority the site on which Mohegan Sun is located. Mohegan Sun opened in October 1996 at a total cost of approximately $303 million. Mohegan Sun and Foxwoods Resort Casino are the only two legally authorized gaming operations offering both traditional slot machines and table games in the Northeastern United States outside of Atlantic City, New Jersey. For its first fiscal year of operations ended September 30, 1997, Mohegan Sun welcomed approximately 6.5 million guests and recorded gross revenues of $512.1 million. During its second fiscal year ended September 30, 1998, Mohegan Sun had approximately 7.5 million guests, an increase of 15.4% over 1997, and its gross revenues were $641.4 million, an increase of 25.2% over the prior year. The Authority's EBITDAM (earnings before extraordinary items, interest, income taxes, depreciation, amortization and management fees) for the 12 months ended September 30, 1997 and 1998 were $135.4 million and $200.3 million, respectively. The Authority's EBITDAM for the quarters ended December 31, 1997 and 1998 were $35.1 million and $51.8 million, respectively. Mohegan Sun is an approximately 634,500 square foot facility which conveys a historical northeastern Indian theme through architectural features and the use of natural design elements such as timber, stone and water. It is comprised of four quadrants, each of which has its own unique entrance and reflects a separate seasonal theme--winter, spring, summer and fall--emphasizing the importance of the seasonal changes to Mohegan Tribal life. Mohegan Sun has approximately 176,500 square feet of gaming space, 3,025 slot machines, 150 table games (including blackjack, roulette, craps, baccarat, caribbean stud poker and let it ride), 42 poker tables, and a high-stakes bingo hall and a recently opened 9,000 square foot simulcasting race book facility. Food and beverage amenities include the 680-seat Seasons buffet, three full- service themed gourmet restaurants, a 24-hour coffee shop, a New York style delicatessen, a 10-station food court featuring international and domestic cuisine, and multiple full and floor service bars for a total of 1,888 restaurant seats. The 350-seat, 10,000 square foot Wolf Den Lounge located in the center of the casino hosts musical entertainment seven days a week. Larger events are currently held in the bingo hall or in temporary facilities constructed on the grounds of the casino, including entertainment and casino marketing activities. Six small retail shops covering 2,276 square feet of space provide shopping opportunities ranging from Mohegan Sun souvenirs to clothing to cigars. For non-gaming entertainment, Mohegan Sun also offers an arcade-type recreation area and a child care facility operated by New Horizons Kids Quest, Inc. The Authority believes ease of access is one of the important factors that differentiate Mohegan Sun from the Foxwoods Resort Casino. Mohegan Sun is located approximately one mile from the interchange of I-395 and Route 2A in Montville, Connecticut, approximately 10 miles west of the Foxwoods Resort Casino. The Authority constructed a four-lane access road and entrance/exit ramps off of Route 2A, giving guests direct access to Interstate 395 and Interstate 95, the main highways connecting Boston, Providence and New York. Mohegan Sun has parking spaces for 7,500 guests and for 1,700 employees. The Authority opened a 4,000-square foot, 16-pump service station and convenience store in December of 1998. The initial construction of Mohegan Sun included infrastructure features designed to accommodate future growth. In addition, the site was master planned to allow for expansion with minimal construction disruption to existing operations. Strategy Our overall strategy is to profit from expanding demand in the Northeast gaming market. Our initial success has resulted primarily from guests living within 100 miles of Mohegan Sun. Based upon Mohegan 44 Sun's results and experience to date, we believe the Northeast gaming market is strong and that there is significant demand for additional amenities. We expect to develop Mohegan Sun into a full-scale entertainment and destination resort and believe that this will increase the number of guests and lengthen their stays at Mohegan Sun. Specifically, we plan to expand Mohegan Sun's facilities using the proceeds from this offering and the Bank Credit Facility, along with internally generated cash flow. The expansion will include additional casino space, a hotel, a large convention facility, entertainment facilities and additional retail establishments. We will build the expansion with an effort to minimize disruption to the existing facility and while Mohegan Sun continues to operate. In preparation for the expansion and to capture existing demand, we have recently widened our marketing efforts to include the entire New York City metropolitan area. We believe that by providing Mohegan Sun with additional capacity and the ability to capture a share of the overnight market in connection with our marketing efforts, we will extend Mohegan Sun's market penetration. We believe that the expansion will create a long-term competitive advantage for Mohegan Sun in the East Coast gaming market. See "Business-- Competition." The Expansion Overview We have approved plans for an expansion which will include an approximately 100,000 square feet of additional gaming space, a luxury hotel with approximately 1,500 rooms, approximately 100,000 square feet of convention space, an entertainment complex with seating for up to 10,000, approximately 6,000 additional guest parking spaces, specialty retail shops and uniquely themed restaurants. The expansion will require significant upgrades and additions to the facility's parking and infrastructure systems. We have master planned the layout of the existing facilities and the expansion design so as to minimize disruption to Mohegan Sun's current operations. The cost of developing, constructing, equipping and opening the expansion is expected to total approximately $750 million (excluding capitalized interest). The Tribe has issued a formal resolution capping the scope of the expansion budget at $800 million (excluding capitalized interest). In addition, the Tribe has established a $40 million construction reserve account that, in specific circumstances, will be used to pay costs in excess of the expansion budget. The following is a summary of some of the key physical attributes of Mohegan Sun before and after expansion.
Casino Retail Convention Guest Space Slot Table Poker Restaurant Hotel Space Event Space Parking (sq. ft.) Machines Games Tables Seats Rooms (sq. ft.) Seating (sq. ft.) Spaces --------- -------- ----- ------ ---------- ----- --------- ------- ---------- ------- Resort before expansion (December 31, 1998).... 176,500 3,025 150 42 1,888 0 2,276 1,800 0 7,500 Resort after expansion (approximately)........ 276,500 5,025 225 42 2,976 1,500 300,000 10,000 100,000 13,500
We believe the market favors expansion now for four reasons: (1) unsatisfied current demand for gaming space at the existing facility; (2) a growing gaming market in the Northeast region; (3) length of stay data indicating the need for a hotel and other amenities; and (4) the need to remain competitive with the Foxwoods Resort Casino. The expansion is intended to attract a greater number of guests to the facility, particularly during mid-week periods, and to increase the amount of time and money guests spend at Mohegan Sun. Historical results show that the market has successfully absorbed both the opening of Mohegan Sun in October 1996 and the expansion of Foxwoods, completed in July 1997. Despite the addition of over 3,400 slot machines and 200 gaming tables to the Connecticut market during Mohegan Sun's first year of operation, Mohegan Sun's win per position for the fiscal year ended September 30, 1997 was $300, over 25% higher than Atlantic City's win per position for the twelve months ended September 30, 1997. Developer The Authority has engaged Trading Cove Associates to oversee the planning, design, construction, furnishing and opening of the expansion. Trading Cove Associates has been working with the Tribe since 1992 45 and assisted the Tribe in obtaining a gaming compact with the State of Connecticut and numerous governmental approvals for Mohegan Sun. Trading Cove Associates is 50% owned by Sun Cove Limited, a 100% controlled affiliate of Sun International Hotels Limited, and 50% by Waterford Gaming L.L.C., whose principals are primarily engaged in hotel management and real estate development. Sun International Hotels Limited has extensive experience in the development, construction, marketing and management of casinos and hotels throughout the world. Senior management personnel of Sun International Hotels Limited have been actively engaged in the gaming and lodging industries for the last 25 years and are responsible for the development and operation of several world-renowned resorts and casinos including Sun City, The Lost City, The Carousel Casino, Entertainment World in South Africa and the Atlantis Resort and Casino in the Bahamas. See "Other Material Agreements--Expansion Development Services Agreement with Trading Cove Associates." Other Members of the Development Team Together with Trading Cove Associates, the Authority is assembling a team of experienced individuals and firms to develop and build Mohegan Sun's expansion. In addition to the firms listed below, the Tribe and the project developer are currently in the process of selecting a construction manager and a retail developer/manager. In an effort to minimize cost overruns, the Authority plans to enter into only fixed price contracts with the professionals chosen to plan, develop, design and build the expansion. Construction is not scheduled to commence until the spring of 1999 so as to allow the architects to complete all construction drawings and thereby minimize change orders. The Authority will also implement other measures seeking to minimize the number of change orders that could increase the cost of the project. The Authority has chosen the following firms to assist with the expansion: . Kohn Pedersen Fox Associates PC will coordinate the architectural design of the expansion facilities. Kohn Pedersen Fox Associates PC is an internationally recognized firm and has won numerous design awards, including New Construction Building of the Year (1995), Federal Design Achievement Award (1995) and the Dallas Urban Design Award (1993). Major recent projects include the U.S. Courthouse in Foley Square, New York, the Samsung Rodin Museum in Seoul, South Korea and the World Bank Headquarters in Washington, D.C. . Hanscomb Limited will provide cost, scheduling, planning and other consulting services for the expansion. Hanscomb Limited has provided cost and scheduling management services since 1946 on national and international projects, including the Trump Taj Mahal Convention Center Casino and Hotel in Atlantic City and the Lester B. Pearson International Airport in Toronto, Canada. . EDAW, Inc. has master planned the project to provide for expansion with minimal construction disruption to the existing operations. EDAW is an internationally recognized architectural firm and has worked on a number of well known projects including the Centennial Olympic Park in Atlanta, Georgia, Coors Field in Denver, Colorado and the Asia and Pacific Trade Center in Fukuoka, Japan. . Gordon Brant LV, LLC will be the retail consultant for the expansion. Gordon Brant is headed by Sheldon Gordon, who is nationally recognized for his ability to create high-profile retail complexes including the ancient-Roman themed Forum Shops at Ceasar's Palace in Las Vegas, the five level San Francisco Centre and the Beverly Center in Los Angeles, California. Budget Trading Cove Associates, in consultation with the project architect, construction manager, cost estimator and retail consultant, will prepare the formal budget for Mohegan Sun's expansion subject to the Authority's final approval. The budget will include all costs related to the design, construction and equipping of the project, plus a contingency of 10% of the hard construction costs. There will be no allocation of the contingency without approval by the Authority. In addition, the Authority will be required to approve any change orders in excess of (1) $750,000 in a single instance; (2) $3.0 million in the aggregate in any one month; or (3) $12.0 million in the aggregate for the life of the project. 46 Construction Schedule The Authority began construction of the expansion in the March, 1999, with openings scheduled in phases. Phase I, which is expected to be completed in January of 2000, will include the construction of new patron and employee parking facilities. Phase II, which is expected to be completed in the summer of 2001, will include the construction of new casino space and the expansion's retail component. Phase III, the final phase of the expansion, which is expected to be completed in the fall of 2001, will include the construction of the convention and hotel facilities. Trading Cove Associates, and in particular Sun International Hotels Limited, has demonstrated an ability to fast track casino development projects. Sun International Hotels Limited's management team built the $300 million Lost City project in South Africa in 26 months and completed the $480 million development of Atlantis in the Bahamas in approximately 28 months, despite the fact that the resort remained open throughout the construction period. Mohegan Sun was designed, developed, constructed and opened in 12 months. The Authority can give no assurance, however, that the expansion will be completed as anticipated. Regulatory Approvals The Authority anticipates receiving all necessary approvals for the agreements relating to the expansion from the federal agencies that oversee Indian affairs. See "Government Regulation--BIA and NIGC Approvals." In addition, as described below, the Authority is in the process of obtaining certain other permits and approvals for the expansion of Mohegan Sun. . Plans have been submitted to the U.S. Army Corps of Engineers for regulatory activities within an inland wetland. The application has been reviewed and the Authority has been informally notified that the application complies with all requirements of the general programmatic permit. Plans of wetlands mitigation have been submitted and accepted and verbal approval has been granted. Final permitting is pending submission of an overall site development plan to confirm that no additional wetlands impacts will result as a part of this project. The Authority expects to receive the necessary permits in a timely fashion. . Permits are required for work associated with the upgrade of an existing culvert beneath railroad properties located to the east of the expansion site. Plans have been submitted to the Connecticut Department of Environmental Protection. The Authority expects to receive the necessary permits in a timely fashion. . The Authority has obtained the necessary approvals for permits from the Connecticut Traffic Commission relating to the expansion of Mohegan Sun. In connection with the issuance of these permits, the Authority may be required to make certain improvements to nearby local roadways. The Authority believes these improvements will not cost in excess of $1.5 million. Management Transition The Authority engaged Trading Cove Associates to operate, manage and market Mohegan Sun under a seven-year management contract commencing upon the casino's opening in October 1996. In anticipation of the expansion of Mohegan Sun, the Authority and Trading Cove Associates are now mutually terminating the management and related agreements and are entering into certain new agreements. Under the Relinquishment Agreement between the Authority and Trading Cove Associates, the Authority will assume the management, operation and maintenance of Mohegan Sun beginning on January 1, 2000. The Authority has previously assumed many of Mohegan Sun's day-to-day management functions, and, under the Relinquishment Agreement, Trading Cove Associates has committed to work closely with the Authority to facilitate a smooth and effective transition. The Authority expects that the senior management of Mohegan Sun, the top three of whom collectively have 45 years of experience in the gaming and hotel industry, will remain in place as employees of the Authority with long-term employment contracts. See "The Authority" and "Other Material Agreements--Relinquishment Agreement with Trading Cove Associates." 47 Since the beginning of operations at Mohegan Sun, members of the Authority's Management Board have gained experience with the gaming business through membership on the Business Board of Mohegan Sun. The Business Board consists of four members, two from the Authority and two from Trading Cove Associates. The Authority believes this Business Board experience, coupled with the retention of Mohegan Sun's current management will enable it to successfully manage Mohegan Sun once Trading Cove Associates' tenure officially ends. Market The Authority believes that Mohegan Sun's location, ease of access, unique design and reputation, together with the development and marketing of the expansion, should enable Mohegan Sun to capture a significant share of the gaming market in the Northeastern United States. The current market for Mohegan Sun is primarily day-trip customers from New England and New York. According to market research reports, in 1998 there were approximately 2.5 million adults living within 50 miles of Mohegan Sun with an average household income of $56,000, 10.3 million adults within 100 miles with an average household income of $67,000 and 22.1 million adults within 150 miles with an average household income of $64,000. The metropolitan areas of Hartford, New Haven, Springfield, Worcester, Boston and Providence are within two hours driving time by interstate highway. New York City is approximately 125 miles from Mohegan Sun. Marketing Strategy The Authority employs a comprehensive marketing program aimed at establishing Mohegan Sun as a premier entertainment facility in the Northeastern United States. Mohegan Sun seeks to distinguish itself by emphasizing its uniquely themed gaming environment, its superior food experience in a variety of settings, ease of access and attention to personal service. The Authority will market the expanded facilities along these same lines. With the addition of hotel and entertainment amenities, the Authority will be able to market the Mohegan Sun as a premier destination resort complex. In the past, the Authority has marketed primarily to guests living within 100 miles of Mohegan Sun. This excludes most of the New York City metropolitan area. The Authority has recently begun a substantial marketing effort to tap a wider market, including the entire New York City metropolitan area. As a result of this marketing effort, the number of guests from New York State has grown over 50% from the last fiscal year as measured by Mohegan Sun's guest database. The Authority believes the majority of this increase can be attributed to guests residing within the New York City metropolitan area and believes the New York City market shows significant potential for additional growth. The Authority also believes the expansion, particularly a large hotel, should draw many additional customers from this and other more distant markets. See "Business--Marketing Strategy." Consistent with the current emphasis on the day-trip market, the Authority organizes regular line and charter bus service to the major metropolitan areas to attract gaming guests at all levels of play. The development of the casino expansion, which will add substantial hotel and retail facilities as well as the increased gaming capacity, will broaden Mohegan Sun's market to include overnight customers. The Authority has begun to target this overnight market. The Authority estimates that the current average length of time that guests spend at Mohegan Sun is 110 minutes. Our strategy is to increase this time significantly. The Authority creates market awareness and customer loyalty through a wide variety of activities such as those listed below: . Direct mail to Mohegan Sun's . Public relations programs; guest database; . Sports arena and public . Mohegan Sun Player's Club; transportation signage; and . Print and broadcast . Billboard signage. advertisements; . Consumer promotions; 48 The Authority spent a total of $23.3 million on marketing programs during fiscal year 1998. Of this amount, $2.8 million was spent on print advertising, $3.5 million on television advertisements, $2.1 million on radio advertising, $10.7 million on marketing promotions and $4.2 million was spent on various other advertising media. The Authority believes its marketing activities contributed to the substantial growth in the Mohegan Sun Player's Club in fiscal year 1998 as compared to fiscal year 1997. Total membership increased by 65% and active membership increased (defined as one visit per year) by 17%, with the largest percentage growth coming from guests residing in the New York metropolitan area. [INSERT MAP] [A portion of this page contains an untitled map of the Northeastern United States from Delaware to Vermont. Mohegan Sun is located in the center of the map with three concentric circles going out from Mohegan Sun showing geographic locations that are fifty, one hundred and one hundred and fifty miles from the casino. The map also shows in bold text the location of certain major metropolitan areas including Albany, Boston and New York City.] In addition to the fun and excitement of casino action, the Authority promotes superior customer service and the quality and value of Mohegan Sun's food offerings to attract repeat guests. Although Mohegan Sun seeks to accommodate premium high-stakes players, the Authority does not spend significant resources targeting the more demanding and costly premium player market. With the addition of hotel rooms and suites, the Authority may target higher end domestic customers. 49 The Authority also promotes Mohegan Sun through special events held from time to time, such as weekly fireworks displays, concerts by nationally known performers and premier sporting events. The Authority believes it has been innovative in terms of offering successful entertainment events that attract guests to Mohegan Sun without the existence of a large dedicated entertainment venue. The Authority has successfully established the 350-seat "Wolf Den Lounge," situated strategically in the center of the casino as a popular musical venue, hosting such artists as INXS, Duran Duran and the Brian Setzer Orchestra. Performances by nationally known acts such as Ringo Starr, Lyle Lovett and Tony Bennett were held in the bingo hall. In addition, the "Uncas Pavillion," a temporary structure erected in Mohegan Sun's parking lot during the fall months of 1998, hosted sold-out performances by Lynyrd Skynyrd and the Steve Miller Band and a pay-for-view heavyweight title fight between Lennox Lewis and Zeljko Mavrovic. We believe these events significantly enhanced our revenue and profits. With new entertainment, convention, retail and restaurant facilities provided by the expansion, the Authority anticipates substantially enhanced promotional marketing opportunities. Competition The gaming industry is highly competitive. Mohegan Sun currently competes primarily with the Foxwoods Resort Casino and, to a lesser extent, with casinos in Atlantic City, New Jersey. Foxwoods is approximately 10 miles from Mohegan Sun and is the largest gaming facility in the United States in terms of total gaming positions. It is owned and operated by the Mashantucket Pequot Tribe under a separate compact with the State of Connecticut. Foxwoods offers a number of amenities that Mohegan Sun does not offer, including hotel accommodations, extensive retail shopping and more expansive non-gaming entertainment offerings. Foxwoods has been in operation for nearly seven years and may have greater financial resources than the Authority or the Tribe. Upon the completion of the expansion, the Authority intends to broaden Mohegan Sun's market beyond day-trip customers to include guests making overnight or extended stays. This means that Mohegan Sun will begin to compete for customers with casinos in Atlantic City, New Jersey and, to a lesser extent, gaming resorts such as those on the Gulf Coast of Mississippi and Las Vegas, Nevada. Many of these casinos and other gaming resorts have greater resources and greater name recognition than Mohegan Sun. Outside of Atlantic City, New Jersey, casino gaming in the northeastern United States may be conducted only by federally recognized Indian tribes operating under federal Indian gaming law. Currently, (1) the Oneida Indian Nation operates Turning Stone Casino Resort in Verona, New York, approximately 270 miles from Mohegan Sun and (2) the St. Regis Mohawk Tribe has initiatives to develop gaming facilities both on its reservation in Hogansburg, New York near the Canadian border and at the Monticello raceway in the Catskills, located approximately 90 miles from New York City. In addition, at least two other federally recognized tribes in New England are each seeking to establish gaming operations. Several other tribes in New England are seeking federal recognition to establish gaming operations. A number of states, including Connecticut, have also investigated legalizing casino gaming by non-Indians in one or more locations. The Authority cannot predict whether any of these other tribes or other efforts to legalize casino gaming will be successful in establishing gaming operations, and if established, whether such gaming operations will have a material adverse effect on the Authority's operations. See "Government Regulation." The following is an assessment of the competitive prospects in Connecticut, certain neighboring states and other states in the Northeast. Connecticut Currently, only the Tribe and the Mashantucket Pequot Tribe are authorized to conduct gaming in Connecticut. As required by their state compacts, the Tribe and the Mashantucket Pequots make semi-annual payments to the State of Connecticut based on 25% of annual slot win. These payments, which totaled $276.2 million for the 12 months ended December 31, 1998, are linked to an exclusivity clause and will terminate if Connecticut legalizes other gaming operations with slot machines or other casino table games within 50 Connecticut, unless both tribes consent to such operations. There are currently at least four tribes in Connecticut that are attempting to gain federal recognition, a lengthy process managed by the Bureau of Indian Affairs. Two of these are the Eastern Pequot and/or the Paucatuck Eastern Pequot Tribe, who share a reservation located next to that of the Mashantucket Pequots. The federal recognition process for these tribes is proceeding, but it is not clear if or when recognition will be achieved. Even upon gaining recognition, a tribe must have land taken into trust by the federal government, negotiate a compact with the state and construct a facility before it can commence gaming operations. Rhode Island There is no commercial gaming in Rhode Island although the state's two pari- mutuel facilities, Lincoln Greyhound Park and Newport Grand Jai Alai, offer approximately 1,800 video slot machines and have petitions pending before the Rhode Island Lottery Commission for additional machines. In November 1994, Rhode Island voters defeated numerous local and state-wide gaming referenda and passed a referendum, which requires that any new gaming proposals will have to be approved in a state-wide referendum. The Narragansett Tribe is the only federally recognized Indian tribe in Rhode Island, but under specific federal legislation the Narragansett Tribe is legally barred from opening a gaming facility without obtaining both local and state-wide approvals. There is one pending federal recognition petition from another Rhode Island tribe, filed by the Pokanoket Tribe of the Wampanoag, located in Bristol, Rhode Island. It is not clear if or when federal recognition for the Pokanoket Tribe will be achieved. Massachusetts No commercial casinos operate in Massachusetts, and no significant initiatives to legalize such casinos are currently underway. The Wampanoag Tribe, located on the island of Martha's Vineyard, is currently the only federally recognized Indian tribe in the state. This tribe has determined that a casino on the island would not be economically feasible, and the State Legislature has rejected proposals to locate an Indian casino off tribal lands. This tribe originally announced plans to open a high-stakes bingo facility in Fall River, Massachusetts, but due to significant hurdles, including the failure to obtain approval from the state legislature, the Wampanoags have recently been considering other sites in southeastern Massachusetts. In addition, approximately five other petitions for federal recognition are pending in Massachusetts. The Tribe believes potential recognition for any of these tribes is at least several years away. New York No non-Indian casinos currently operate in New York and the establishment of commercial casino operations would require the approval of two successive state legislatures followed by the voters in a state-wide referendum. However, gambling boats began operating out of the New York City area in January 1998. These "cruises to nowhere" during which gaming activities are conducted on board once the boat is in international waters, three miles offshore, are permitted under federal law unless prohibited by the state from which they operate. New York to date has not prohibited such operations. Only a small number of operators have applied for licenses for off-shore gambling cruises, and currently these cruises occur primarily in the summer and early fall months, between June and October. Due to the difference in the gaming experience, the Authority does not believe the "cruises to nowhere" are significant competition to Mohegan Sun. New York has seven federally recognized Indian tribes with reservations. Two tribes, the Oneida Tribe and the St. Regis Mohawk Tribe, have executed compacts with the state. These compacts allow casino table games, but no conventional slot machines. The Oneida Tribe opened the Turning Stone Casino in July 1993 on its reservation in Verona, near Syracuse. The facility has 3,500 video lottery machines which operate on a pari-mutuel system as opposed to the traditional fixed odds reel-type machines operated by most casinos, 150 table games, 285 hotel rooms, a conference center and a golf course. Turning Stone currently draws primarily from the Syracuse, New York market. The Authority believes Turning Stone does not pose a material direct 51 competition with Mohegan Sun for customers. The St. Regis Mohawk Tribe, which has a reservation in Hogansburg on the Canadian border, has not yet opened an on reservation gaming facility. However, this tribe's agreement with a third party to manage such gaming activities has been approved by the National Indian Gaming Commission. In addition, the St. Regis Mohawk Tribe and officials from Sullivan County have also signed an agreement that contemplates the establishment of a tribally operated casino at Monticello Raceway in the Catskills, located approximately 170 miles from Mohegan Sun and 90 miles north of New York City. This estimated $500 million project would require land to be taken into trust with specific approval from the Bureau of Indian Affairs and the Governor of New York. While the St. Regis Mohawks have received initial approval from the Eastern Area Office of the Bureau of Indian Affairs for the project, final approval from the Central Office of the Bureau of Indian Affairs is still pending. Furthermore, the Governor has not announced his support for this project. In addition, the Seneca Nation of Indians have bingo operations on two of their three reservations in western New York. These bingo halls are located in Vandalia, and Gowanda, New York, both over 400 miles from Mohegan Sun. Although preliminary discussions have occurred, the Seneca Indians have not entered into a compact with the state of New York which would allow this tribe to expand their gaming operations to include casino games. Maine There are no commercial casinos allowed in Maine, and there are no significant initiatives currently underway to legalize such casinos. There are four federally recognized tribes in Maine, one of which (the Penobscot Tribe) has opened a high stakes bingo facility in the township of Albany in western Maine. None of the federally recognized tribes has negotiated a tribal-state compact or otherwise significantly begun the process of developing casino operations. New Hampshire There are no casinos allowed in New Hampshire, and there are no significant initiatives currently underway to legalize casinos. A bill to allow the state's racetracks to offer slot machines was defeated in a House committee in May 1997, the fourth consecutive time that New Hampshire legislators voted against gaming expansion. There are no federally recognized Indian tribes in the state and no petitions for recognition pending. Vermont There are no casinos allowed in Vermont, and there are no significant initiatives currently underway to legalize casinos. There are no federally recognized tribes in the state, but there is a petition pending from the St. Francis/Sokoki Band of Abenakis, in Swanton. We believe any approval is still several years away. Employees and Labor Relations As of December 31, 1998, Mohegan Sun employed 5,070 full-time employees and 414 seasonal and part-time employees. Pursuant to its Management Agreement with the Authority, Trading Cove Associates has been responsible for recruiting and training employees to operate Mohegan Sun. In recruiting personnel, Trading Cove Associates has been 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. Trading Cove Associates has developed and implemented training programs to teach Mohegan Sun employees necessary technical skills as well as to instill a commitment to the highest levels of service in the industry. Training responsibilities and training programs have been transitioned to the Authority. The Authority believes that it will be able to hire and train employees to operate Mohegan Sun during and after the expansion. Mohegan Sun employees are not covered by any collective bargaining agreement. The Authority believes its relationship with its employees is good. 52 Environmental Matters The Authority currently incurs and may continue to incur costs to comply with environmental requirements such as those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste, and the cleanup of properties affected by hazardous substances. The site of Mohegan Sun was formerly occupied by United Nuclear Corporation, a naval products manufacturer of, among other things, nuclear reactor fuel components. United Nuclear's facility was officially decommissioned on June 8, 1994 when the Nuclear Regulatory Commission confirmed that all licensable quantities of such nuclear material had been removed from the site and that any residual contamination from such material was remediated according to the Nuclear Regulatory Commission approved decommissioning plan. In addition, environmental requirements address the impacts of development on wetlands areas. See "Business--The Expansion." From 1991 through 1993, United Nuclear commissioned environmental audits and soil sampling programs which detected, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. The Connecticut Department of Environmental Protection (DEP) reviewed the environmental audits and reports and established cleanup requirements for the site. In December 1994, the DEP approved United Nuclear's remedial plan, which determined that groundwater remediation was unnecessary because although the groundwater beneath the site was contaminated, it met the applicable groundwater criteria given the classification of the groundwater under the site. In addition, 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. Initial construction at the site also involved extensive soil excavation. According to the data gathered in a 1995 environmental report commissioned by United Nuclear, remediation is complete and is consistent with the applicable Connecticut cleanup requirements. The DEP has reviewed and approved the cleanup activities at the site, and, as part of the DEP's approval, United Nuclear was required to perform post-closure groundwater monitoring at the site to insure the adequacy of the cleanup. In addition, under the terms of United Nuclear's environmental certification and indemnity agreement with the Department of the Interior (which took the former United Nuclear land into trust for the Mohegan Tribe), United Nuclear agreed to indemnify the Department for environmental actions and expenses based on acts or conditions existing or occurring as a result of United Nuclear's activities on the property. Notwithstanding the foregoing, no assurance can be given that any existing environmental studies reveal all environmental liabilities, or that future laws, ordinances or regulations will not impose any material environmental liability, or that a material environmental condition does not otherwise currently exist or will be exposed due to the expansion. Should soil or groundwater contamination be identified during the course of the expansion, Connecticut remediation standard requirements will have to be met, in addition to any other applicable environmental remediation requirements. Under the Clean Air Act, the State of Connecticut has developed a State Implementation Plan to ensure the achievement of air quality standards in the state. In 1995, the Tribe and Trading Cove Associates commissioned a Draft Environmental Assessment of Mohegan Sun, which concluded that emissions from Mohegan Sun should not cause significant air quality impacts. The Environmental Assessment's projection was based in part on the Tribe's and Trading Cove Associates' pollution prevention plans and ability to obtain emission reduction credits to offset emissions. Pursuant to the Connecticut State Implementation Plan, the Tribe and the State of Connecticut in 1996 entered into a voluntary agreement to offset volatile organic compound and nitrogen oxide emissions resulting from transportation activity associated with the facility. The Tribe currently purchases nitrogen oxide emission credits to offset these emissions. Certain federal, state and local requirements govern the removal, encapsulation and disturbance of asbestos-containing materials when those materials are in poor condition or in the event of renovation, remodeling or demolition. These requirements may impose liability for releases of asbestos- containing materials and may enable third parties to seek recovery from owners or operators of properties for personal 53 injury associated with such materials. While there is no known asbestos- containing material on the property, and there is only one remaining unrenovated building, a full asbestos survey has not been conducted. In addition to federal, state and local laws relating to hazardous or toxic substances, the National Environmental Policy Act requires that, before taking any federal action that may significantly affect the quality of the human environment, the responsible federal agency must prepare an environmental impact statement describing and quantifying, to the extent possible, such effects. Upon the initial construction of Mohegan Sun, the Bureau of Indian Affairs and the National Indian Gaming Commission determined that an environmental impact statement was not necessary. The Authority does not anticipate an environmental impact statement being required for the expansion. Legal Proceedings The Authority is involved in certain litigation incurred in the normal course of business. In the opinion of the Authority, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on its financial position or results of operations. 54 THE AUTHORITY General The Tribe established the Authority in July 1995 to exercise all governmental and proprietary powers of the Tribe over all gaming related development. The Authority is governed by a nine-member Management Board which consists of the same nine members as those of the Tribal Council (the governing body of the Tribe). Any change in the composition of the Tribal Council results in a corresponding change in the Authority's Management Board. See "Mohegan Tribe of Indians of Connecticut." The Authority has two major functions. The first, delegated to the Management Board, is to direct the development, operation, management, promotion and construction of the gaming enterprise and all related development. The second major function 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. The Director of Regulation employs a staff that is responsible for performing background investigation into gaming license applicants. The Director of Regulation is also responsible for the issuance and revocation of gaming licenses. The individual members of the Management Board do not receive any direct compensation from the Authority. Management Board salaries are paid by the Tribe. Management Board and Executive Officers The following table provides information as of December 31, 1998 with respect to (1) the members of the Management Board, (2) each of the executive officers of Mohegan Sun and (3) the Director of Regulation.
Name Age Position ---- --- -------- Mark F. Brown........... 41 Member, Management Board Mitchell Grossinger Etess.................. 40 Senior Vice President, Marketing, Mohegan Sun Jayne G. Fawcett........ 63 Vice Chair and Member, Management Board Carlisle M. Fowler...... 70 Treasurer and Member, Management Board Courtland C. Fowler..... 71 Member, Management Board Roland J. Harris........ 51 Chairman and Member, Management Board Jeffrey E. Hartmann..... 37 Senior Vice President, Finance and Chief Financial Officer, Mohegan Sun Glenn R. LaVigne........ 38 Member, Management Board Francis M. Mullen....... 64 Director of Regulation Loretta F. Roberge...... 67 Corresponding Secretary and Member, Management Board Maynard L. Strickland... 59 Member, Management Board William J. Velardo...... 43 Executive Vice President and General Manager, Mohegan Sun Shirley M. Walsh........ 54 Recording Secretary and Member, Management Board
Mark F. Brown--Mr. Brown has been a member of the Management Board since October 1995 and serves as the security liaison for the Tribal Council. Before joining the Management Board, he served as a Law Enforcement officer and has over ten years experience in this capacity. Mr. Brown worked with the Tribe's historian during the period in which the Tribe was obtaining federal recognition and also served on the Tribe's Constitutional Review Board from 1993 to 1994. Mr. Brown is a Tribal Council Member. Mitchell Grossinger Etess--Mr. Etess has been Senior Vice President, Marketing of Mohegan Sun since November 1995 and has 17 years experience in the casino and hotel industry. Before his employment with the Authority, Mr. Etess was Vice President of Marketing at Players Island and, from 1989 to 1994, was Senior Vice President of Marketing and Hotel Operations at Trump Plaza Hotel and Casino. Before that, Mr. Etess held various management positions in the casino and hotel industry. Jayne G. Fawcett--Ms. Fawcett has been Vice Chair of the Management Board since December 1995 and a member of the Management Board since its inception in July 1995. Ms. Fawcett is the Vice Chair of the 55 Tribal Council and worked as a social worker for the State of Connecticut in 1987 and is a retired teacher after 27 years of service. Ms. Fawcett was a Chairman of the Tribe's Constitutional Review Board from 1992 to 1993. Currently, she oversees the Tribe's public relations. Carlisle M. Fowler--Mr. Fowler has been the Treasurer and a member of the Management Board since its inception in July 1995 and has been active in the Tribe's government for over 30 years. Mr. Fowler is a Tribal Council Member. Before his retirement in 1989, Mr. Fowler was an electronics technician for the State of Connecticut and operated his own electronics business. Mr. Carlisle Fowler is the brother of Mr. Courtland Fowler. Courtland C. Fowler--Mr. Fowler has been a member of the Management Board since its inception in July 1995 and was a major contributor to the cultural research that led to the federal recognition of the Tribe. Mr. Fowler is a Tribal Council Member and was previously employed as a chemical operator and assistant foreman at Pfizer, Inc. until his retirement in 1990. He has served as Vice Chairman of the Management Board, and as a member of the Tribe's Constitutional Review Board. 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. Roland J. Harris--Mr. Harris has been Chairman and a member of the Management Board since October 1995. He is also Chairman of the Tribal Council. Mr. Harris was the founder of the firm Harris and Clark, Inc., civil engineers, land surveyors and land planners, which he subsequently sold to McFarland Johnson, Inc. in May, 1998. Mr. Harris has served as First Selectman of the Town of Griswold, Connecticut from 1993 to 1999. He has also served as Deputy Chief of the Griswold Fire Department and as Fire Marshal of the Town of Griswold. Before assuming the Chairmanship of the Management Board, Mr. Harris served as the Tribal Planner. Jeffrey E. Hartmann--Mr. Hartmann has been Senior Vice President of Finance and the Chief Financial Officer of Mohegan Sun since December 1996 and has seven years of experience in the casino and hotel industry. Before joining the Authority, Mr. Hartmann worked for Foxwoods Resort Casino from August 1991 to December 1996, most recently as Vice President of Finance for Foxwoods Management Company. Mr. Hartmann was employed by PriceWaterhouseCoopers, formerly Coopers and Lybrand, LLP, as an Audit Manager from 1984 to 1991. Mr. Hartmann is a certified public accountant. Glenn R. LaVigne--Mr. LaVigne has been a member of the Management Board since January 1996. Mr. LaVigne is a Tribal Council Member and was previously employed by the Town of Montville, Connecticut and oversaw building and maintenance for Montville's seven municipal buildings. Francis M. Mullen--Mr. Mullen has been Director of Regulation since October 1995 and has regulatory responsibility for the Tribal gaming operation. Mr. Mullen had a 20-year FBI career, last serving in Washington, D.C. as Executive Assistant Director of all FBI investigations. He later served as Director of the United States Drug Enforcement Administration for four years before leaving government service. Loretta F. Roberge--Ms. Roberge has been Corresponding Secretary and a member of the Management Board since its inception in July 1995. Ms. Roberge is a Tribal Council Member and 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, Ms. Roberge assisted in the Tribe's federal recognition effort and previously served as Secretary of the Tribe. Ms. Roberge currently chairs the Mohegan Burial Committee. Maynard L. Strickland--Mr. Strickland has been a member of the Management Board since October 1995. Before that, Mr. Strickland owned and operated several restaurants in Norwich, Connecticut and Florida. He is a Tribal Council Member and serves as the Tribal Council liaison to Bingo. Mr. Strickland was involved in the restructuring of Bingo which has resulted in a profitable Bingo business. 56 William J. Velardo--Mr. Velardo has been Executive Vice President, General Manager of Mohegan Sun since October 1995 and has 21 years of experience in gaming operations. Before his employment with the Authority, Mr. Velardo was Chief Operating Officer for River City, a riverboat gaming joint venture in New Orleans, Louisiana. From 1991 to 1994, Mr. Velardo served as Senior Vice President, Casino Operations at Trump Plaza Hotel and Casino in New Jersey. Mr. Velardo participated in the opening of the Mirage in Las Vegas where he served as Vice President, Table Games from 1989 to 1991. Mr. Velardo also worked as Assistant Casino Manager and Pit Manager for Caesar's Tahoe and Caesar's Palace in Las Vegas. Shirley M. Walsh--Ms. Walsh has been the Recording Secretary of the Management Board since October 1995 and has been a member of the Management Board since its inception in July 1995. Ms. Walsh is a Tribal Council Member and serves as the social services liaison for the Tribe and has worked for the Tribe in various capacities for seven years. Ms. Walsh chaired the Tribe's Election Committee from 1994 to 1995 and has served on several other committees for the Tribe. Summary Compensation Table The following table provides certain summary information concerning compensation paid by the Authority to its senior executive officers.
Annual Compensation ----------------- Name and Principal Position Fiscal Year Salary Bonus --------------------------- ----------- -------- -------- William J. Velardo............................... 1998 $400,000 $150,000 Executive Vice President and General Manager 1997 353,000 175,000 Mitchell Grossinger Etess........................ 1998 262,500 100,000 Senior Vice President, Marketing 1997 223,000 110,000 Jeffrey E. Hartmann.............................. Senior Vice President, Finance, and Chief 1998 210,000 100,000 Financial Officer 1997(1) 130,000 60,000
- -------- (1) Mr. Hartmann commenced employment with the Authority on December 30, 1996. Business Board The Authority and Trading Cove Associates have overseen the management of Mohegan Sun through a Business Board, which reports directly to the Management Board of the Authority. The Business Board consists of four members, two from the Authority and two from Trading Cove Associates. The Authority's Business Board members for the past two years have been (1) the Tribe's Chief of Staff (with the Deputy Chief of Staff as an alternate) and (2) a member of the Authority's Management Board. The latter position rotates every six months so as to give direct gaming enterprise experience to a number of members of the Authority's Management Board. Trading Cove Associates' Business Board Members have been the same individuals, one each from Sun International Hotels Limited and Waterford Gaming L.L.C., for the past two years. As part of the Relinquishment Agreement, the Business Board will terminate on January 1, 2000. See "Other Material Agreements--Relinquishment Agreement with Trading Cove Associates." 57 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Tribe provides governmental and administrative services to the Authority in conjunction with the operation of Mohegan Sun. For the fiscal year ended September 30, 1998, the Authority incurred $7.7 million of expenses for such services. The Tribe, through two limited liability companies, has entered into various land lease agreements with the Authority for access, parking and related purposes for Mohegan Sun. These lease payments are approximately $636,000 per year. The Tribe, through Little People L.L.C., one of its limited liability companies, has sold approximately $413,000 worth of Native American related goods to the Authority for resale at its retail location. Under terms of its agreements with the Authority, Trading Cove Associates must award service contracts or purchase services from qualified members of the Tribe if the costs of these services are competitive with the local market and give hiring preference first to members of the Tribe then to other Native Americans. The Authority uses McFarland Johnson, Inc. for surveyance, civil engineering and professional design services. Roland Harris, Chairman of the Management Board, is a consultant for this firm for a fixed fee. For the fiscal year ended September 30, 1998, the Authority paid $54,354 in fees to McFarland Johnson, Inc. The Authority believes the terms of this engagement are comparable to those that would pertain to an arms length engagement of an unaffiliated firm. As of September 30, 1998, 190 employees of the Authority were Mohegan tribal members. See "Other Material Agreements." The Tribe has established a $40 million construction reserve account that, in certain circumstances, will be used to pay costs in excess of the expansion budget. 58 MOHEGAN TRIBE OF INDIANS OF CONNECTICUT General The Mohegan Tribe of Indians of Connecticut became a federally recognized Indian tribe in 1994. The Tribe currently has approximately 1,300 members and approximately 750 adult voting members. Although it only recently received federal recognition, the Tribe has lived in a cohesive community for hundreds of years 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 Mohegan Sun. Although the Tribe is a sovereign entity, it has sought to work with, and gain the support of, local communities in establishing Mohegan Sun. For example, the Tribe gave up its claim to extensive tracts of land that had 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 Mohegan Sun. This philosophy of cooperation, rather than confrontation, has enabled the Tribe to build a solid alliance among local, state and federal officials to achieve its goal of building Mohegan Sun. Governance of the Tribe The Tribe's Constitution provides for the governance of the Tribe by a Tribal Council, consisting of nine members and a Council of Elders, consisting of seven members. All members of the Tribal Council and the Council of Elders are elected by the registered voters of the Tribe and serve terms of five years. Members of the Tribal Council must be at least 18, and members of the Council of Elders must be at least 55 when elected. The current terms for the Tribal Council and the Council of Elders expire in October 2000. The members of the Tribal Council are the same individuals who serve on the Management Board of the Authority. See "The Authority--Management Board and Executive Officers." The Tribe's Constitution vests all legislative and executive powers of the Tribe in the Tribal Council. These powers include the powers to establish an executive branch departmental structure with agencies and sub-divisions and delegate appropriate powers to such agencies and sub-divisions. The Council of Elders acts in the capacity of an appellate court of final review and may hear appeals of any case or controversy arising under the Tribe's Constitution, except those matters which relate to Mohegan Sun, including the Notes, which are required to be submitted to the Gaming Disputes Court. Gaming Disputes Court The Tribal Council has established the Gaming Disputes Court by Tribal ordinance and vested it with exclusive jurisdiction for the Tribe over all disputes related to gaming at Mohegan Sun. The Gaming Disputes Court is composed of a Trial Division and an Appellate Branch. A single judge presides over cases at the trial level. Trial Division 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. The Gaming Disputes Court has jurisdiction over all disputes or controversies related to gaming between any person or entity and the Authority, the Tribe or Trading Cove Associates. The Gaming Disputes Court also has jurisdiction of all disputes arising out of the Authority's regulatory powers, including licensing actions. The Tribe has adopted the substantive law of the State of Connecticut as the applicable law of the Gaming Disputes Court to the extent such law is not in conflict with Mohegan Tribal Law. Also, the Tribe has adopted all of Connecticut's rules of civil and appellate procedure, professional and judicial conduct to govern the Gaming Disputes Court. 59 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, who are appointed by the Chief Justice of the Connecticut Supreme Court, each of whom must remain licensed to practice law in the State of Connecticut. Judges are selected sequentially from this 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 Tribe at an agreed rate of pay commensurate with their duties and responsibilities. Such rate cannot be diminished during a judge's tenure. Below is a description of certain information regarding judges currently serving on the Gaming Disputes Court, each of whom has been serving since 1996: Jane W. Freeman, Chief Judge. Age: 48. Judge, Mashantucket Pequot Tribal Court, 1992 to 1995; professional law practice for 22 years. Judge Freeman is a Connecticut Attorney Trial Referee. Emmet L. Cosgrove, Judge. Age: 50. Professional law practice for 23 years. Judge Cosgrove is a Connecticut Attorney Trial Referee. F. Owen Eagan, Judge. Age: 68. U.S. Magistrate Judge from 1975 to 1996. Formerly, Assistant U.S. Attorney for the District of Connecticut and U.S. Attorney for the District of Connecticut, and member and chairman of Draft Appeal Board. Adjunct law faculty member at Western New England School from 1978 to the present. Paul M. Guernsey, Judge. Age: 48. Fact Finder for the New London Judicial District from 1990 to 1992. Special Master at the Special Masters Pre-Trial Conference Program in 1985. State Attorney Trial Referee, Judicial District of New London, 1992 to the present. Chairman of the Criminal Law and Public Defender Committee. Professional law practice for 23 years. Thomas B. Wilson, Judge. Age: 59. Partner/director at Suisman, Shapiro, Wool, Brennan & Gray, P.C. for 31 years. State Attorney Trial Referee from 1988 to the present. Member of the New London County Standing Committee on Recommendations for Admission to the Bar. Town Attorney for the Town of Ledyard from 1971 to 1979; 1983 to 1991; and 1995 to the present. 60 OTHER MATERIAL AGREEMENTS The following discussion summarizes significant terms of certain material agreements to which either the Tribe or the Authority are parties. This summary does not purport to be complete and is qualified in its entirety by reference to each of the full agreements. The Authority will provide you a copy of any of these agreements without charge upon written or oral request by contacting the Authority at 1 Mohegan Sun Boulevard, Uncasville, CT 06382, Tel: (860) 204- 8000, attention: Roland Harris, Chairman. Gaming Compact with the State of Connecticut The Tribe and the State of Connecticut agreed in April 1994 to resolve all land disputes and differences and enter into a gaming compact to authorize and regulate the Tribe's conduct of gaming on the Tribe's lands. This agreement, the Mohegan Compact, is substantively similar to the agreement governing gaming operations of the Mashantucket Pequot Tribe in Connecticut and provides, among other things, as follows: (1) The Tribe is authorized to conduct certain Class III gaming activities on its reservation. The forms of Class III gaming authorized under the Mohegan Compact include (i) certain games of chance, (ii) video facsimiles of such authorized games of chance (i.e., slot machines), (iii) off-track pari-mutuel betting on animal races, (iv) pari-mutuel betting, through simulcasting, on animal races and (v) certain types of pari-mutuel betting on games and races conducted at the gaming facility (some types of which currently are, together with off-track pari-mutuel telephone betting on animal races, under a moratorium). (2) The Tribe must establish standards of operations and management of all gaming operations to protect the public interest, insure the fair and honest operation of gaming activities and maintain the integrity of all Class III gaming activities. The first of such standards were shown in the Mohegan Compact and approved by the State gaming agency. State gaming agency approval is required for any revision to such standards. The Tribe must supervise the implementation of these standards by regulation through a Tribal gaming agency. (3) Law enforcement matters relating to the Tribe's Class III gaming activities will be under the jurisdiction of both the State and the Tribe. (4) All gaming employees must obtain and maintain a gaming license issued by the State gaming agency. (5) Any enterprise providing gaming services or gaming equipment to the Tribe is required to hold a current valid registration issued by the Connecticut Division of Special Revenue. (6) The State will assess the Tribe annually for the costs attributable to the State's regulation of the Tribe's gaming operations and for the provision of law enforcement at the Tribe's gaming facilities. (7) Net revenues from the Tribe's gaming operations may be applied only for the certain purposes related to Tribal operations and welfare, charitable contributions and payments to local governmental agencies. (8) Tribal ordinances and regulations governing health and safety standards at the gaming facilities may be no less rigorous than the applicable laws and regulations of the State. (9) Service of alcoholic beverages within the Tribe's gaming facilities is subject to regulation by the State. (10) The Tribe waives any defense which it may have by virtue of sovereign immunity with respect to any action in United States District Court to enforce the Mohegan Compact. 61 In addition, together with the Mohegan Compact, the Tribe and the State entered into a memorandum of understanding providing for the payment of a portion of the Authority's slot machine revenues to the State. Commencing July 1, 1995, for each fiscal year such payment to the State must 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) $80.0 million. These payments will not be required if there is a change in the law to permit the operation of commercial casino games by any other person in the State (other than the Mashantucket Pequot Tribe and the Mohegan Tribe). The Authority expensed $102.3 million for the slot win contribution to the State for the fiscal year ended September 30, 1998. Agreement with the Town of Montville In June 1994, the Tribe and the neighboring town of Montville entered into an agreement whereby the Tribe makes annual payments of $500,000 to the town to minimize the impact to Montville resulting from decreased tax revenues on the land taken into trust for the Tribe's reservation. The Tribe also agreed to pay Montville $3.0 million for infrastructure improvements to the town's water system and to pay for its use of the town's disposal and wastewater collection and treatment systems. Finally, the Tribe agreed to make payments instead of taxes to Montville on lands that the Tribe acquires outside of its current reservation. The Tribe has assigned its rights and obligations under this agreement to the Authority. Land Lease from the Tribe to the Authority The land in Uncasville, Connecticut upon which Mohegan Sun is situated and the expansion will be constructed is held in trust for the Tribe by the United States of America. The Tribe and the Authority have entered into a land lease under which the Tribe is leasing to the Authority the property and all buildings, improvements and related facilities (e.g., Mohegan Sun and the expansion) constructed or installed on the property. The lease was approved by the Secretary of the Interior. Below we summarize certain key provisions of this lease. Term The term of the lease is for 25 years with an option, exercisable by the Authority, to extend the term for one additional 25-year period. Upon the termination of the lease, the Authority will be required to surrender to the Tribe possession of the property and improvements, excluding any equipment, furniture, trade fixtures or other personal leased property. Rent; Expenses The Authority is required to pay to the Tribe annual rent in the amount of $1.00. For any period when the Tribe or another agency or instrumentality of the Tribe is not the tenant under the lease, the rent will be 8% of the tenant's gross revenues from the premises. The Authority is responsible for the payment of all costs of owning, operating, constructing, maintaining, repairing, replacing and insuring the leased property. Use of Leased Property The Authority may use the leased property and improvements solely for the construction and operation of Mohegan Sun, 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 or any transfer of such interest to the holder of such mortgage instead of foreclosure, the leased property and improvements may be used for any lawful purposes, subject only to applicable codes and governmental regulations; provided, however, that a non-Indian holder of the leased property may in no event conduct gaming operations thereon. 62 Permitted Mortgages and Rights of Permitted Mortgagees The Authority may not mortgage, pledge or otherwise encumber its leasehold estate in the leased property except to a holder of a permitted mortgage. Under the lease, a "permitted mortgage" includes the leasehold mortgage securing the Authority's obligations under the Bank Credit Facility as well as any other mortgage granted by the Authority that provides, among other things, that (1) the Tribe shall have the right to notice of, and to cure, any default of the Authority thereunder, (2) the Tribe shall have the right to prior notice of an intention by the holder to foreclose on such permitted mortgage and the right to purchase such mortgage instead of any foreclosure, and (3) such permitted mortgage is subject and subordinated to any and all access and utility easements granted by the Tribe under the lease. As provided in the lease, each holder of a permitted mortgage has the right to notice of any default of the Authority under the lease and the opportunity to cure such default within any applicable cure period. 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 holder of a permitted mortgage under (1) a foreclosure by such holder, (2) a transfer instead of foreclosure, (3) the exercise of any right or remedy granted by such holder or (4) any purchase by a third party at a foreclosure or other sale. In no event, however, will a holder of a permitted mortgage (or any assignee, sublessee, purchaser or transferee of such holder) be permitted to transfer any interest in the lease or its leasehold interest in the leased property and improvements to any person or entity engaged by the Tribe or the Authority to manage a gaming enterprise. Default; Remedies The Authority will be in default under the lease if, subject to certain notice provisions, it fails to make lease payments or to comply with its covenants under the lease or if it pledges, encumbers or conveys its interest in the lease in violation of the terms of the lease. Following a default, the Tribe may, with approval from the Secretary of the Interior, terminate the Lease unless a permitted mortgage remains outstanding with respect to the leased property. In that case, the Tribe may not (1) terminate the lease or the Authority's right to possession of the leased property, (2) exercise any right of re-entry, (3) take possession of and/or relet the leased property or any portion thereof, or (4) enforce any other right or remedy which may materially and adversely affect the rights of the holder of the permitted mortgage, unless the default triggering such rights was a monetary default which such holder failed to cure after notice. Expansion Development Services Agreement with Trading Cove Associates General The Authority entered into a Development Services Agreement with Trading Cove Associates on February 7, 1998 whereby Trading Cove Associates agreed to oversee the design, construction, furnishing, equipping and staffing of the casino expansion for a $14.0 million development fee. Design Phase--Architect and Construction Manager Selection; Plans and Specifications During the design phase, Trading Cove Associates will assist the Authority in the engagement of the architect and the construction manager, the preparation of design, construction, and furnishings budgets, preliminary program evaluation, design development and the approval of final detailed plans and specifications prepared by the architect. The Authority has chosen Kohn Pedersen Fox Associates PC as the architect for the expansion. The Authority has agreed to assign to Trading Cove Associates its responsibilities under any architectural and/or engineering agreements to allow Trading Cove Associates to supervise and administer directly the duties of the architect and/or engineer thereunder. The Development Agreement provides that the design and construction of the expansion must comply with all federal and Connecticut statutes and regulations that otherwise would apply if the expansion were located outside the jurisdictional boundaries of the Tribe's land. 63 Construction Phase During the construction phase, Trading Cove Associates will be responsible for the administration and supervision of the construction manager and the entire construction process. Trading Cove Associates will act as the Authority's representative in connection with construction contracts that are approved by the Authority. Specifically, Trading Cove Associates will be responsible for overseeing all persons performing work on the expansion site, inspecting the progress of construction, determining completion dates and reviewing contractor payment requests submitted to the Authority. The Development Agreement specifically gives Trading Cove Associates the right to include provisions in construction contracts that impose liquidated damage payments in the event of failure to meet construction schedules. Retail Facilities As permitted by the Development Agreement, the Authority has elected to engage a retail consultant to oversee the design and construction of the retail facilities in the expansion. This work will be under the overall supervision of Trading Cove Associates, which will integrate the design and construction of the retail facilities with that of the other components of the expansion. Engagement of Certified Entities; Staffing the Expansion The Development Agreement requires Trading Cove Associates to implement procedures described in the Tribal Employment Rights Ordinance. In effect, this requires Trading Cove Associates to give preference to business entities or persons which have been approved by the Authority in the selection of all contractors, vendors and suppliers engaged in the development of the expansion. In addition, in staffing the operation of the expansion, the Development Agreement requires that Trading Cove Associates give preference to qualified members of the Tribe (and their spouses and children) and thereafter to enrolled members of other federally recognized Indian tribes. Equipping the Expansion The Authority will purchase equipment, furniture and furnishings required to operate the expanded facilities from vendors selected by Trading Cove Associates or lease such equipment, furniture and furnishings on terms arranged by Trading Cove Associates and approved by the Authority. Payment of the Development Fee The Authority will pay a portion of the development fee to Trading Cove Associates quarterly beginning on January 15, 2000 until the completion date of the expansion, such quarterly payment to be based on incremental completion of the expansion as of each payment date. Termination and Disputes The Development Agreement terminates after the earlier of completion of the expansion or 10 years. In addition, each party has the right to terminate the Development Agreement if there is a default or failure to perform by the other party. The parties must submit disputes arising under the agreement to arbitration and have agreed that punitive damages may not be awarded to either party by any arbitrator. The Authority has also waived sovereign immunity for the purposes of permitting, compelling or enforcing arbitration and has agreed to be sued by Trading Cove Associates in any court of competent jurisdiction for the purposes of compelling arbitration or enforcing any arbitration or judicial award arising out of the Development Agreement. 64 Relinquishment Agreement with Trading Cove Associates General Under a relinquishment agreement dated February 7, 1998, the Authority and Trading Cove Associates have agreed to terminate the existing agreement with Trading Cove Associates under which Trading Cove Associates manages the Authority's gaming operations (described in greater detail in the following section). This termination will occur as of January 1, 2000, at which time the Authority will assume day-to-day management of Mohegan Sun. To compensate Trading Cove Associates for terminating its management rights, the Authority has agreed to pay to Trading Cove Associates 5% of the gross revenues generated by Mohegan Sun and the planned expansion during the 15-year period commencing on January 1, 2000. Relinquishment Payments The payments under the Relinquishment Agreement will be divided into Senior Relinquishment Payments and Junior Relinquishment Payments, each of which will be 2.5% of "Revenues," as defined in the Relinquishment Agreement. Senior Relinquishment Payments will be payable quarterly in arrears commencing on April 25, 2000 and the Junior Relinquishment Payments will be payable semi- annually in arrears commencing on July 25, 2000. "Revenues" are defined as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including, without limitation, hotel revenues, food and beverage sales, parking revenues, ticket revenues and other fees or receipts from the convention/events center in the expansion and all rental or other receipts from lessees, licensees and concessionaires operating in the facility but not the gross receipts of such lessees, licensees and concessionaires). Subordination of Relinquishment Payments/Minimum Priority Distribution to the Tribe The Relinquishment Agreement provides that each of the Senior and Junior Relinquishment Payments are subordinated in right of payment to payment of senior secured obligations, including the Bank Credit Facility, and that the Junior Relinquishment Payments are further subordinated to payment of all other senior obligations, including the Senior Exchange Notes. The Relinquishment Agreement also provides that all relinquishment payments are subordinated in right of payment to an annual minimum priority distribution of $14 million to the Tribe from the operations of Mohegan Sun. The minimum priority distribution will be adjusted annually to reflect the cumulative increase in the Consumer Price Index. Covenants of the Authority Under the Relinquishment Agreement, the Authority makes certain covenants for the benefit of Trading Cove Associates, including the following. (1) Payments to Tribe. Except for payments of the minimum priority distributions and reasonable charges for utilities or other governmental services supplied by the Tribe to the Authority, the Authority may not make any distributions to the Tribe or its members at any time any Relinquishment Payments are outstanding. (2) Affiliate Transactions. Except for payments of the minimum priority distributions and reasonable charges for utilities or other governmental services supplied by the Tribe to the Authority, the Authority agrees to abide by certain restrictions on transactions with the Tribe and its members, all as shown in the Relinquishment Agreement. (3) Replacement/Restoration of Mohegan Sun. If any portion of Mohegan Sun's facilities is damaged by fire or other casualty, the Authority shall replace or restore such facilities to substantially the same condition as before such casualty, but only to the extent insurance proceeds are available to do so. If sufficient insurance proceeds are not available, the Authority will use reasonable efforts to obtain the required financing, on commercially reasonable terms, to undertake and complete such replacement or restoration. 65 (4) Business Purpose. The Authority has agreed that during the term of the Relinquishment Agreement it will only engage in the casino gaming and resort business (and any incidental business or activity) and will continue to operate Mohegan Sun as currently operated. Orderly Transition/Employee Solicitation Under the Relinquishment Agreement, the Authority and Trading Cove Associates agree to cooperate with each other to effect an orderly transition of the operations of Mohegan Sun to the Authority. Each of the parties also agrees that it will not solicit any employee of the other party or any affiliate of the other party for five years. Marks Trading Cove Associates has granted to the Authority an exclusive and perpetual license with respect to trademarks and other similar rights, including the "Mohegan Sun" name, used at or developed for Mohegan Sun. The Authority has agreed, however, that it will only use the word "Sun" in conjunction with the Mohegan Sun resort and together with "Mohegan" or "Mohegan Tribe." Waiver of Immunity from Unconsented Suit With certain limitations shown in the Relinquishment Agreement, both the Tribe and the Authority waive immunity from unconsented suit for certain enforcement rights of Trading Cove Associates arising under the Relinquishment Agreement. Existing Management Agreement with Trading Cove Associates General Until January 1, 2000, Trading Cove Associates will continue as the exclusive manager of Mohegan Sun. Under the Management Agreement, Trading Cove Associates is responsible for the day-to-day management, operation and maintenance of Mohegan Sun. Trading Cove Associates is obligated to manage and operate the facility in compliance with all Tribal legal requirements and other applicable laws. Certain major decision-making and oversight duties have been delegated to the Business Board, a committee comprised of an equal number of representatives of the Authority and of Trading Cove Associates. Actions by the Business Board require the unanimous approval of its members or their respective designees. Staffing the Facility Trading Cove Associates has the exclusive responsibility and authority to select, retain, train and discharge all employees hired to perform services at Mohegan Sun; however, all employees are the employees of the Authority and not Trading Cove Associates. It is anticipated that substantially all of these employees will remain in place following termination of the Management Agreement. Members of the Tribe are to be given preference in the recruiting, employment and training of personnel in all job categories in connection with the operation of Mohegan Sun. Operating and Capital Budgets; Replacement Reserve Fund Trading Cove Associates must annually submit to the Tribal Council, for its approval, a detailed proposed annual operating budget for the facility. In addition to an annual operating budget, Trading Cove Associates must annually submit to the Tribal Council, for its approval, a recommended annual capital budget for the furnishings, equipment and ordinary capital replacement items required to operate Mohegan Sun. Trading Cove Associates must manage and operate the facility according to the then-current approved operating budget and capital reserve budget. The Management Agreement further requires Trading Cove Associates to establish a 66 replacement reserve fund for the purpose of funding approved budgeted capital expenditures. This Reserve Fund is funded monthly by the Authority and Trading Cove Associates according to a schedule determined by the Business Board, with all required amounts (up to an aggregate total of $3 million) being funded 60% by the Authority and 40% by Trading Cove Associates. The Authority's deposits to the Reserve Fund are deemed capital expenditures and do not reduce Net Revenues (as defined in the Management Agreement); deposits made on behalf of Trading Cove Associates reduce monthly management fee amounts distributable to Trading Cove Associates. Books and Records; Accounting Procedures The Management Agreement requires Trading Cove Associates to maintain, according to generally accepted accounting principles, books and records reflecting the operations of Mohegan Sun and to prepare monthly, quarterly and annual statements for the Authority. An annual audit of Mohegan Sun is required by a nationally-recognized independent certified public accounting firm with experience in the casino industry. Management Fee The Management Agreement authorizes Trading Cove Associates to pay itself a management fee in monthly installments based on 30% to 40% of Net Revenues depending on profitability levels. "Net Revenues" are generally defined as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues, less operating expenses other than the management fee. The management fees for the 12 months ended September 30, 1998 and for the quarter ended December 31, 1998 were $47.4 million and $13.6 million, respectively. 67 GOVERNMENT REGULATION General The Authority is subject to special federal, state and tribal laws applicable to both commercial relationships with Indians generally and to Indian gaming and the management and financing of Indian casinos specifically. In addition, the Authority is regulated by federal and state laws 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 operates is only a summary and not a complete recitation of all applicable law. Moreover, since this particular regulatory environment is more susceptible to changes in public policy considerations than others, it is impossible to predict how certain provisions will be interpreted from time to time or whether they will remain intact. Changes in such laws 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 Mohegan Sun. Waiver of Sovereign Immunity; Jurisdiction; Exhaustion of Tribal Remedies Indian tribes enjoy sovereign immunity from unconsented suit similar to that of the states and the United States. To sue an Indian tribe (or an agency or instrumentality of an Indian tribe, such as the Authority), 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 in 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 jurisdiction of the tribal forum exists, the tribal court must first rule as to the limits of its own jurisdiction. In connection with the offering of the Outstanding Notes and the Exchange Offers for the Exchange Notes, the Tribe has 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 Trustees under the Indentures or, as to the Authority, under certain circumstances by the holders of the Exchange Notes to enforce repayment of the Exchange Notes. The Tribe has also adopted a constitutional restraint against any action by the Tribe or its officers which impairs contractual obligations. If such waiver of 68 sovereign immunity is held to be ineffective, the Trustees and the Exchange Note holders could be precluded from judicially enforcing their rights and remedies against the Tribe or the Authority. If the waiver of the rule requiring exhaustion of tribal remedies is held to be ineffective, the Trustees and the Exchange 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 operation of casinos and of all gaming on Indian land is subject to the Indian Gaming Regulatory Act of 1988. The Indian Gaming Regulatory Act (IGRA) is administered by the National Indian Gaming Commission, an independent agency, within the U.S. Department of Interior, exercising primary federal regulatory responsibility over Indian gaming. The National Indian Gaming Commission (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 Bureau of Indian Affairs. The BIA also has responsibility to review and approve land leases and other agreements relating to Indian lands. 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 Class II Indian gaming, to hold hearings, issue subpoenas, take depositions, adopt regulations and assess fees and impose civil penalties for violations of IGRA. IGRA also prohibits illegal gaming on Indian land and theft from Indian gaming facilities. The NIGC has adopted 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 their facilities in a manner that adequately protects the environment and the public health and safety. These rules also set out review and reporting procedures for tribal licensing of gaming operation employees. 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 a 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 (1) the ownership, security, personnel background, recordkeeping, and auditing of a tribe's gaming enterprises; (2) the use of the revenues from such gaming; and (3) the protection of the environment and the public health and safety. The Tribe adopted its gaming ordinance in July 1994, and the NIGC approved the gaming ordinance in November 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 69 individuals as part of, or in connection with, tribal ceremonies or celebrations. "Class II Gaming" includes bingo, pulltabs, lotto, punch boards, tip jars, certain non-banked card games (if such games are played legally elsewhere in the state), 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 pari-mutuel wagering). Class I Gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes and is not subject to IGRA. Class II Gaming is permitted on Indian lands if (1) the state in which the Indian lands lie permits such gaming for any purpose by any person, organization or entity; (2) the gaming is not otherwise specifically prohibited on Indian lands by federal law; (3) the gaming is conducted according to a tribal ordinance or resolution which has been approved by the NIGC; (4) an Indian tribe has sole proprietary interest and responsibility for the conduct of gaming; (5) the primary management officials and key employees are tribally licensed; and (6) 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 tribal-state Compact (a written agreement between the tribal government and the government of the state within whose boundaries the tribe's lands lie). 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 gaming activities in amounts comparable to those amounts assessed by the state for comparable activities, remedies for breach of compacts, standards for the operation of gaming and maintenance of the gaming facility, including licensing, and any other subjects that are directly related to the operation of gaming activities. While the terms of tribal-state compacts vary from state to 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, approved by the Secretary of the Interior in 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. Tribal-state compacts have been the subject of litigation in a number of states, including Alabama, California, Florida, Kansas, Michigan, Mississippi, New Mexico, New York, Oklahoma, Oregon, South Dakota, Wisconsin and Washington. Among the issues litigated have been the constitutionality of the provision of IGRA which entitles tribes to sue in federal court to force states to negotiate tribal-state compacts. Federal district courts in Alabama, Michigan and Washington recently have held that the Eleventh Amendment to the United States Constitution immunizes states from suit by Indian tribes in federal court unless the state consents to such suit. Federal appellate courts have divided over this issue. The United States Supreme Court recently held that the Indian commerce clause of IGRA does not grant Congress authority to abrogate a state's sovereign immunity. Accordingly, IGRA does not grant jurisdiction over a state that did not consent to be sued. 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 and Kansas 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 and Kansas cases, the courts held that compacting is a legislative function under the respective state constitutions. The court in the New Mexico case also held that state law does not permit casino-style gaming. 70 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 the New Mexico or Kansas cases would apply. The Connecticut Attorney General has issued a formal opinion 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 Mashantucket Pequot Tribe, that Connecticut law authorizes casino gaming. After execution of the Mohegan Compact, the Connecticut Legislature passed a law requiring that future gaming compacts 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. While there have been a number of technical amendments to the law, to date there have been no material changes to the IGRA. Any amendment of IGRA could change the governmental structure and requirements within which the Tribe could conduct gaming. BIA and NIGC Approvals Mohegan Sun is built on lands held in trust for the Tribe by the United States of America, which are leased by the Tribe to the Authority. See "Other Material Agreements--Land Lease from the Tribe to the Authority." Such lease, and modifications or amendments to such lease, must be and have been approved by the BIA. In addition, federal law requires that all contracts "by any person with any tribe of Indians" which are "relative to their lands" must be approved by the BIA. Federal courts can void agreements that have not been approved by the BIA and grant full restitution of all amounts paid to the non-Indian party by the tribe. BIA approved the Indentures and the Bank Credit Facility in February, 1999 in connection with the closing of the offering of the Outstanding Notes. Before 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 jurisdiction. The full scope of required review and approval for gaming management agreements is not fully or precisely defined. The regulations and guidelines which the NIGC and the BIA use to interpret their respective responsibilities are incomplete and evolving. The federal law in this area has been the subject of litigation and may be subject to further judicial or legislative interpretation. 71 DESCRIPTION OF OTHER INDEBTEDNESS Bank Credit Facility The Authority has a $425 million reducing, revolving, secured credit facility with a syndicate of lenders led by Bank of America National Trust and Savings Association ("Bank of America"). The Bank Credit Facility is currently undrawn, with reductions to the total amounts available under the Bank Credit Facility to begin on the earlier of March 31, 2002 or the end of the first fiscal quarter after the completion date. In addition, the Authority has the right, within two years following the closing of the Bank Credit Facility, to arrange for increases in the Bank Credit Facility to an aggregate amount of $500 million. The Authority will use the Bank Credit Facility for (1) the Mohegan Sun expansion, (2) general working capital, and (3) general corporate purposes of the Authority. The Bank Credit Facility is secured by, among other things, a lien on substantially all of the Authority's assets. This indebtedness is effectively senior in right of payment to the Exchange Notes. The loan agreement subjects the Authority to a number of restrictive covenants including financial covenants. These financial covenants relate to the permitted maximums of the Authority's total debt and senior debt leverage ratios, its minimum fixed charge coverage ratio, and maximum capital expenditures. The Bank Credit Facility includes other affirmative and negative covenants customarily found in loan agreements for similar transactions, many of which will be similar to those included in the indenture for the Senior Exchange Notes. Such covenants include provisions that: . the Tribe preserve its existence as a federally recognized Indian Tribe; . the Authority continually operate Mohegan Sun in compliance with all applicable laws; . except under certain conditions, the Authority not sell or dispose of assets, incur other debt or contingent obligations, extend credit, make investments, or commingle its assets with other tribal assets of the Tribe; and . permit a construction monitoring services group to inspect and review the proposed expansion and all budgets, plans, designs and specifications on a quarterly basis. At the Authority's option, interest will accrue on the basis of a base rate formula or a Reserve Adjusted LIBOR based formula plus applicable spreads. The base rate is the higher of the rate as publicly announced by Bank of America as its "Reference Rate" or the Federal Funds Rate plus one-half of one percent per annum. The Reserve Adjusted LIBOR Rate is the London Interbank Offered Rate for one, two, three or six month dollar deposits as offered by Bank of America to prime international banks in the offshore dollar market, adjusted for reserve requirements. The Bank Credit Facility will terminate and all outstanding amounts will become due on March 3, 2004. Lines of Credit The Authority currently has a $2.5 million line of credit and letter of credit arrangement with Fleet National Bank, an affiliate of Fleet Securities, Inc. Borrowings are collateralized by a security interest in all of the Authority's cash deposit accounts with Fleet National Bank. The line of credit provides for interest based on various floating indexes. As of September 30, 1998, the Authority had outstanding letters of credit totalling $1.9 million and had no other borrowings outstanding under the line of credit. No further borrowings will be made under the line of credit. The first extension of credit under the Bank Credit Facility, which will include the issuance of letters of credit to replace the letters of credit outstanding under the line of credit. The line of credit and the security interests collateralizing the line of credit will be terminated at that time. Equipment Financing The Authority currently has three agreements for equipment financing with CIT Group/Equipment Financing, Inc. or its affiliates: (1) The Authority has $23.0 million of gaming equipment financing. Principal payments are over 48 months and commenced December 1996. 72 (2) The Authority has a second agreement for equipment financing of $5.0 million. Principal payments are over 48 months and commenced December 1996. (3) The Authority has a third agreement for equipment financing of an aggregate amount of $10.0 million. The principal payments are made over 48 months from the commencement of each draw. The Authority has also received equipment financing of $4.0 million from Phoenixcor, Inc. The principal payments are over 48 months and commenced November 1996. The Authority received equipment financing of $3.0 million from Fleet Capital Corporation, an affiliate of Fleet Securities, Inc. The principal payments are over 48 months and commenced July 1997. As of September 30, 1997 this agreement has been assigned to KeyCorp Leasing. The Authority's equipment financing bears a weighted average interest of 9.1%. As of December 31, 1998, the future minimum lease payments, including principal and interest, of the Authority's equipment financing are as follows (in thousands):
Fiscal Year Ending September 30 ------------------------------- 1999............................................................. $ 9,756 2000............................................................. 13,008 2001............................................................. 5,557 2002............................................................. 2,358 2003............................................................. 64 ------- $30,743 =======
Junior Subordinated Notes In conjunction with its initial opening of Mohegan Sun, the Authority obtained a total of $90.0 million of subordinated financing from Sun International Hotels Limited and Waterford Gaming L.L.C. including (1) $20.0 million of junior subordinated notes to each of Sun International Hotels Limited and Waterford Gaming L.L.C., bearing interest at 15.0% per year, and (2) $50.0 million of junior subordinated notes to Sun International Hotels Limited evidencing draws made by the Authority under a secured completion guarantee provided by Sun International Hotels Limited relating to the original development of Mohegan Sun. Each junior subordinated note issued under the Sun International Hotels Limited secured completion guarantee bears interest at the rate per annum then most recently announced by Chase Manhattan Bank of New York as its prime rate plus 1%, which shall be set and revised at intervals of six months. The interest rates were 9.5% at both September 30, 1998 and September 30, 1997. Interest on junior subordinated notes is payable semi-annually. Accrued and deferred interest payable on junior subordinated notes was $31.5 million and $17.9 million at September 30, 1998 and 1997, respectively. All junior subordinated notes are due 2003 but may be redeemed at the Authority's discretion commencing on January 1, 2000. During October 1998 and October 1997, a total of $5.0 million of junior subordinated notes issued to Sun International Hotels Limited pursuant to its secured completion guarantee were purchased by Waterford Gaming L.L.C. from Sun International Hotels Limited. The Authority decided to redeem its junior subordinated notes on January 1, 2000. To accomplish this, the Authority effected a defeasance of the junior subordinated notes on March 3, 1999. The Authority established a segregated trust account with a defeasance agent with cash equivalent funds estimated to be sufficient to permit a redemption of its junior subordinated notes on January 1, 2000. All junior subordinated notes are currently held by Sun International Hotels Limited, the parent company of a partner in Trading Cove Associates, and Waterford Gaming L.L.C., also a partner in Trading Cove Associates. 73 DESCRIPTION OF THE EXCHANGE NOTES The Authority issued the Outstanding Senior Notes under the Senior Notes Indenture among itself, the Tribe and First Union National Bank, as trustee (the "Senior Trustee"), and the Outstanding Senior Subordinated Notes under the Senior Subordinated Notes Indenture among itself, the Tribe and State Street Bank and Trust Company, as trustee (the "Senior Subordinated Trustee", and together with the Senior Trustee, the "Trustees"). The terms of the Outstanding Notes included and the terms of the Exchange Notes will be those stated in their respective Indentures and those made part of the Indentures by reference to the Trust Indenture Act of 1939. The terms of the Exchange Notes are identical in all material respects to the Outstanding Notes, except that (1) the Exchange Notes will have been registered under the Securities Act and therefore will not be subject to certain restrictions on transfer applicable to the Outstanding Notes and (2) Holders of the Exchange Notes will not be entitled to certain rights of Holders of Outstanding Notes under the registration rights agreement. The terms of the Exchange Notes include those stated in the Indentures and those made a part of the Indentures by reference to the Trust Indenture Act of 1939 as in effect on the date of the Indentures (the "Trust Indenture Act"). The Exchange Notes are subject to all such terms, and Holders of the Exchange Notes are referred to the Indentures and the Trust Indenture Act for a complete statement of such terms. Copies of the Indentures are available from the Authority on request. The statements and definitions of terms under this caption relating to the Exchange Notes and the Indentures are summaries and do not purport to be complete. Such summaries make use of certain terms defined in the Indentures and are qualified in their entirety by express reference to the Indentures. Certain terms used herein are defined below under "--Certain Definitions." The following description is a summary of the material provisions of the Indentures and the registration rights agreements. It does not restate those agreements in their entirety. We urge you to read the Indentures and the registration rights agreements because they, and not this description, define your rights as holders of the Notes. Copies of the forms of Indentures and registration rights agreements are available from the Authority upon request. You can find the definitions of certain terms used in this section under the subheading "--Certain Definitions." Reference is made to the Indentures for all of such terms, as well as any other capitalized terms used herein for which no definition is provided. Description of the Senior Exchange Notes Ranking These Senior Exchange Notes . are unsecured general obligations of the Authority; . are effectively subordinated to up to $500 million of secured indebtedness under the Loan Agreement; and . are senior in right of payment to all future subordinated Indebtedness of the Authority (including the Senior Subordinated Exchange Notes). Subsidiaries As of the date of the Senior Notes Indenture, the Authority will have no Subsidiaries. However, the Senior Notes Indenture will permit the Authority to create Subsidiaries and will generally require that these Subsidiaries be designated as Restricted Subsidiaries (i.e., subject to the terms of the Senior Notes Indenture) unless certain conditions are met. If these conditions are met, the Authority will be permitted to designate a Subsidiary as an Unrestricted Subsidiary, and Unrestricted Subsidiaries will not be subject to many of the restrictive covenants of the Senior Notes Indenture. 74 Principal, Maturity and Interest The Senior Exchange Notes will be limited to a maximum aggregate principal amount of $200 million. The Authority will issue Senior Exchange Notes without coupons and in fully registered form only, in minimum denominations of $1,000 and integral multiples of $1,000. The Senior Exchange Notes will mature on January 1, 2006. Interest on the Senior Exchange Notes will accrue at the rate of 8 1/8% per annum and will be payable semi-annually in arrears on January 1 and July 1, beginning on July 1, 1999. The Authority will make each interest payment to the holders of record of these Senior Exchange Notes on the immediately preceding December 15 and June 15. Interest on the Senior Exchange Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Optional Redemption Except as otherwise shown in this section, the Authority will not have the right to redeem the Senior Exchange Notes. If, at any time after the Issue Date, any Gaming Regulatory Authority requires a holder to be licensed or otherwise qualified under applicable gaming laws in order for the Authority to maintain any of its gaming licenses or franchises and the holder does not obtain such license or qualification within the time periods described in the Senior Notes Indenture and at its own cost and expense, then the Authority will have the right to either . require the holder to dispose of its Senior Exchange Notes within the time period specified by the Gaming Regulatory Authority or 30 days, whichever is shorter; or . redeem the holder's Senior Exchange Notes at a price equal to the lesser of (1) the principal amount of the Senior Exchange Notes held by the holder, (2) the price paid for the Senior Exchange Notes by the holder, and (3) the current market price of the Senior Exchange Notes, in each case, including all accrued and unpaid interest and Additional Interest, if any, to the redemption date or the date a finding of unsuitability is made by the applicable Gaming Regulatory Authority, if earlier. The Authority will comply with the redemption procedures for the Senior Exchange Notes described in the Senior Notes Indenture unless otherwise required by a Gaming Regulatory Authority. In addition, the Authority may redeem all or a part of these Senior Exchange Notes upon not less than 30 nor more than 60 days' notice, at a redemption price (expressed as percentages of principal amount) equal to 100% of the principal amount thereof plus the Applicable Premium, if any, plus accrued and unpaid interest thereon, if any, to the applicable redemption date. The "Applicable Premium" of any redeemed Senior Note equals the excess of (a) the present value at the date of redemption of 100% of the principal amount of such Senior Exchange Note plus all required interest payments due on such Senior Exchange Note through its Stated Maturity date (excluding accrued but unpaid interest), calculated using a discount rate equal to the Treasury Rate plus 50 basis points over (b) the principal amount of such Senior Exchange Note, if greater. If the period from the date of redemption to the Stated Maturity date is greater than one year, the "Treasury Rate" will be equal to the yield to maturity as of such date of redemption of United States Treasury securities with a constant maturity (as complied and published in the most recent Federal Reserve Statistical Release H.15 (519) that became publicly available at least two business days prior to the date of redemption (or, if the Federal Reserve Statistical Release H.15 (519) is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the date of redemption to the Stated Maturity date. 75 If the period from the date of redemption to the Stated Maturity date is less than one year, the "Treasury Rate" will be equal to the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year. Selection and Notice If less than all of the Senior Exchange Notes are to be redeemed at any time, the Senior Trustee will select Senior Exchange Notes for redemption as follows: (1) if the Senior Exchange Notes are listed, in compliance with the requirements of the principal national securities exchange on which the Senior Exchange Notes are listed; or (2) if the Senior Exchange Notes are not so listed, on a pro rata basis, by lot or by such method as the Senior Trustee shall deem fair and appropriate. No Senior Exchange Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of Senior Exchange Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Senior Exchange Note is to be redeemed in part only, the notice of redemption that relates to that Senior Exchange Note shall state the portion of the principal amount thereof to be redeemed. A new Senior Note in principal amount equal to the unredeemed portion of the original Senior Exchange Note will be issued in the name of the holder thereof upon cancellation of the original Senior Exchange Note. Senior Exchange Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Senior Exchange Notes or portions of them called for redemption. Repurchase at the Option of Holders Change of Control If a Change of Control occurs, each holder of the Senior Exchange Notes will have the right to require the Authority to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that holder's Senior Exchange Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Authority will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Senior Exchange Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, thereon, to the date of purchase. Within 20 business days following any Change of Control, the Authority will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Exchange Notes on the Change of Control Payment Date specified in such notice, pursuant to the procedures required by the Senior Notes Indenture and described in such notice. 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 and regulations are applicable in connection with the repurchase of the Senior Exchange Notes as a result of a Change of Control. On the Change of Control Payment Date, the Authority will, to the extent lawful (1) accept for payment all Senior Exchange Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Exchange Notes or portions thereof so tendered; and (3) deliver or cause to be delivered to the Senior Trustee the Senior Exchange Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Senior Exchange Notes or portions thereof being purchased by the Authority. 76 The Paying Agent will promptly mail to each holder of Senior Exchange Notes so tendered the Change of Control Payment for such Senior Exchange Notes, and the Senior Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Senior Exchange Note equal in principal amount to any unpurchased portion of the Senior Exchange Notes surrendered, if any; provided that each such new Senior Exchange Note will be in a principal amount of $1,000 or an integral multiple thereof. The Authority will notify the Senior Trustee and will instruct the Senior Trustee to notify the holders of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Except as described above with respect to a Change of Control, the Senior Notes Indenture does not contain provisions that permit the holders of the Senior Exchange Notes to require that the Authority repurchase or redeem the Senior Exchange Notes in the event of a takeover, recapitalization or similar transaction. The Loan Agreement will prohibit the Authority from purchasing any Senior Exchange Notes and also will provide that certain change of control events with respect to the Authority will constitute a default under the Loan Agreement. Any future credit agreements or other agreements relating to secured indebtedness to which the Authority becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Authority is prohibited from purchasing Senior Exchange Notes, the Authority could seek the consent of its lenders to the purchase of Senior Exchange Notes or could attempt to refinance the borrowings that contain such prohibition. If the Authority does not obtain such a consent or repay such borrowings, the Authority will remain prohibited from purchasing Senior Exchange Notes. In such case, the Authority's failure to purchase tendered Senior Exchange Notes would constitute an Event of Default under the Senior Notes Indenture which would, in turn, constitute a default under the Loan Agreement. The Authority will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements shown in the Senior Notes Indenture applicable to a Change of Control Offer made by the Authority and purchases all Senior Exchange Notes validly tendered and not withdrawn under such Change of Control Offer. Asset Sales The Authority will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (1) the Authority (or its Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Management Board and evidenced by a resolution shown in an Officers' Certificate delivered to the Senior Trustee) of the assets sold or otherwise disposed of; and (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Authority or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following shall be deemed to be cash: (a) any liabilities that would appear on the Authority's or such Restricted Subsidiary's balance sheet prepared according to GAAP (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Exchange Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Authority or such Restricted Subsidiary from further liability; and (b) any securities, notes or other obligations received by the Authority or any such Restricted Subsidiary from such transferee that are converted by the Authority or such Restricted Subsidiary into cash (to the extent of the cash received) within 30 days of the receipt thereof, provided, however, that the Authority will not be permitted to make any Asset Sale of Key Project Assets. 77 Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Authority may apply such Net Proceeds, at its option, to: (1) repay permanently term Indebtedness under Credit Facilities of the Authority or any Restricted Subsidiary; (2) repay revolving credit Indebtedness under Credit Facilities and correspondingly permanently reduce commitments with respect thereto; (3) acquire a majority of the assets of, or a majority of the Voting Stock of, an entity engaged in the Principal Business or a Related Business; (4) make capital expenditures or acquire other long-term assets that are used or useful in the Principal Business or a Related Business; (5) make an investment in the Principal Business or a Related Business or in tangible long-term assets used or useful in the Principal Business or a Related Business; or (6) reduce permanently Indebtedness that is not Subordinated Indebtedness. Pending the final application of any such Net Proceeds, the Authority may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Senior Notes Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority will make an Asset Sale Offer to all holders of Senior Exchange Notes and all holders of other Indebtedness containing provisions similar to those shown in the Senior Notes Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Senior Exchange Notes and such other Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase and will be payable in cash, according to the procedures shown in the Senior Notes Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Authority may use such Excess Proceeds for any purpose not otherwise prohibited by the Senior Notes Indenture. If the aggregate principal amount of Senior Exchange Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by holders thereof exceeds the amount of Excess Proceeds, the Senior Trustee shall select the Senior Exchange Notes and such other Indebtedness (to the extent that such other Indebtedness permits such selection) to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Certain Covenants Restricted Payments The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries, directly or indirectly, to (1) make any payment on or with respect to any of the Authority's or any of its Restricted Subsidiaries' Equity Interests; (2) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interest in the Authority held by the Tribe or any Affiliate of the Tribe; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness (other than the defeasance and ultimate redemption of the junior subordinated notes according to their terms and the terms of the Defeasance Trust), except a payment of interest or principal at Stated Maturity thereof; 78 (4) 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 (other than Government Service Payments); or (5) make any Restricted Investment; (all such payments and other actions shown in clauses (1) through (5) above are collectively referred to as "Restricted Payments") unless, at the time of and after giving effect to such Restricted Payment (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) the Authority would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test shown in the first paragraph of the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Authority and its Restricted Subsidiaries after the date of the Senior Notes Indenture (excluding Restricted Payments permitted by clauses (2), (3), (4) and (5) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Authority for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Senior Notes Indenture to the end of the Authority's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds or fair market value (as determined in good faith by the Management Board and evidenced by a resolution shown in an Officers' Certificate delivered to the Senior Trustee) of assets or property (other than cash) received by the Authority from capital contributions from the Tribe that bear no mandatory obligation to repay the Tribe and other than from a Restricted Subsidiary of the Authority, plus (iii) to the extent that any Restricted Investment that was made after the date of the Senior Notes Indenture is sold, liquidated or otherwise disposed of for cash or an amount equal to the fair market value thereof (as determined in good faith by the Management Board and evidenced by a resolution shown in an Officers' Certificate delivered to the Senior Trustee), the lesser of (a) the cash return of capital or fair market value amount, as the case may be, with respect to such Restricted Investment (less the cost of disposition, if any) and (b) the initial amount of such Restricted Investment, plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of the Senior Notes Indenture, the lesser of (a) the fair market value of the Authority's Investment in such Subsidiary as of the date of such redesignation or (b) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit (1) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (2) the payment of any dividend by a Restricted Subsidiary of the Authority to the holders of its common Equity Interests on a pro rata basis; (3) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Authority held by any member of the Authority's (or any of its Restricted Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of the Senior Notes Indenture; provided that (a) the aggregate price paid 79 for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any 12-month period and (b) the aggregate amount of all such repurchased, redeemed, acquired or retired Equity Interests shall not in the aggregate exceed $3.0 million; (4) the redemption or purchase of Subordinated Indebtedness of the Authority if the holder of such Subordinated Indebtedness has failed to qualify or be found suitable or otherwise be eligible by any Gaming Regulatory Authority to remain a holder of such Subordinated Indebtedness; (5) the redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness with the net cash proceeds from a substantially concurrent capital contribution from the Tribe (provided that such capital contribution is not counted for purposes of clause (C)(ii) above); and (6) any other Restricted Payments in an amount not to exceed $20.0 million at any one time outstanding. The Authority may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall (i) any entity (including any Subsidiary of the Authority or the Authority or any operating division thereof) engaged in a Principal Business be transferred to or held by an Unrestricted Subsidiary or (ii) any Key Project Assets or Gaming Licenses be transferred to an Unrestricted Subsidiary. In the event of such designation, all outstanding Investments owned by the Authority and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant unless the Investment constitutes a Permitted Investment. All such outstanding Investments will be deemed to constitute Restricted Payments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Authority may redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary if such redesignation would not otherwise cause a Default. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Authority or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Management Board whose resolution with respect thereto shall be delivered to the Senior Trustee. Not later than the date of making any Restricted Payment, the Authority shall deliver to the Senior Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "--Restricted Payments" were computed. Subordination of Junior Payments Under the Relinquishment Agreement All Obligations under the Senior Exchange Notes shall be "Senior Obligations" as defined in the Relinquishment Agreement and will not be on parity with, or subordinated in right of payment to, the Junior Relinquishment Payments (as defined in the Relinquishment Agreement) and the Authority will not amend Section 6.2 of the Relinquishment Agreement in a manner adverse to the holders of the Senior Exchange Notes. Incurrence of Indebtedness and Issuance of Preferred Stock The Authority will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Indebtedness) and the Authority will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Authority may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and the Authority's Subsidiaries may incur Indebtedness or issue preferred stock if the Fixed Charge Coverage Ratio for the Authority's most recently ended four full fiscal quarters for which 80 internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1 if such Indebtedness is incurred before September 30, 2001 and 2.5 to 1 if such indebtedness is incurred thereafter, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. Notwithstanding the foregoing, the Authority will not issue any Disqualified Stock or any type of Capital Stock that would violate IGRA. So long as no Default or Event of Default shall have occurred and be continuing, or would be caused thereby, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness: (1) the incurrence by the Authority or its Restricted Subsidiaries of Indebtedness and letters of credit pursuant to Credit Facilities; provided that the aggregate principal amount of all such Indebtedness and letters of credit outstanding under all Credit Facilities, after giving effect to such incurrence (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Authority thereunder), does not exceed $500 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Authority or any of its Restricted Subsidiaries since the date of the Senior Notes Indenture to repay Indebtedness under Credit Facilities pursuant to the covenant described above under the caption "--Repurchase at the Option of Holders--Asset Sales"; (2) the incurrence by the Authority and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by the Authority of Indebtedness represented by the Senior Exchange Notes and the Senior Exchange Notes; (4) the incurrence by the Authority of Indebtedness represented by the Senior Subordinated Exchange Notes and the Senior Subordinated Exchange Notes; (5) the incurrence by the Authority or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price of furniture, fixtures, equipment or similar assets used or useful in the business of the Authority or such Restricted Subsidiary not to exceed 100% of the lesser of cost or fair market value of the assets financed and, in an aggregate principal amount under this clause not to exceed $25.0 million at any time outstanding; (6) the incurrence by the Authority or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, renew, extend, defease or replace Indebtedness that was permitted by the Senior Notes Indenture to be incurred under the first paragraph of this covenant or clauses (1), (2) (other than the junior subordinated notes), (3), (4) or (5) of this paragraph; (7) the incurrence by the Authority or any of its Restricted Subsidiaries of 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 Senior Notes Indenture to be outstanding; (8) the guarantee by the Authority or any of its Restricted Subsidiaries of any Indebtedness of the Authority or any of its Restricted Subsidiaries that was permitted to be incurred by another provision of this covenant; (9) the incurrence by a Wholly Owned Restricted Subsidiary of Indebtedness owed to another Wholly Owned Restricted Subsidiary or to the Authority; provided that if at any time any such Wholly Owned Restricted Subsidiary ceases to be a Wholly Owned Restricted Subsidiary, any such Indebtedness shall be deemed to be an incurrence of Indebtedness for the purposes of this covenant; (10) the incurrence by the Authority or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (10), not to exceed $25.0 million; or 81 (11) the incurrence by the Authority's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Authority that was not permitted by this clause (11). For purposes of determining compliance with this "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, if an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (11) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Authority shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence in any manner that complies with this covenant. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries The Authority (i) will not, and will not permit any Wholly Owned Restricted Subsidiary of the Authority to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Wholly Owned Restricted Subsidiary of the Authority to any Person (other than the Authority or another Wholly Owned Restricted Subsidiary of the Authority), unless (a) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied according to the covenant described above under the caption "--Repurchase at the Option of Holders--Asset Sales," and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Authority to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Authority or a Wholly Owned Restricted Subsidiary of the Authority. Liens The Senior Notes Indenture will provide that the Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of its property or assets, now owned or hereafter acquired, unless all payments due under the Senior Notes Indenture and the Senior Exchange Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (1) pay dividends or make any other distributions on its Capital Stock to the Authority or any of the Authority's Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Authority or any of the Authority's Restricted Subsidiaries; (2) make loans or advances to the Authority or any of the Authority's Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Authority or any of the Authority's Restricted Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of (1) Existing Indebtedness as in effect on the date of the Senior Notes Indenture and any amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, extensions, 82 increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness, as in effect on the date of the Senior Notes Indenture; (2) the Senior Notes Indenture and the Senior Exchange Notes; (3) the Senior Subordinated Notes Indenture and the Senior Subordinated Exchange Notes; (4) the Credit Facilities; (5) applicable law; (6) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Authority or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Senior Notes Indenture to be incurred; (7) customary non-assignment provisions in leases or other contracts entered into in the ordinary course of business and consistent with past practices; (8) purchase money obligations (including, without limitation, Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the preceding paragraph; (9) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending its sale or other disposition; (10) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (11) Liens securing Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption "--Liens" that limit the right of the Authority or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien; (12) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; and (13) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Transactions with Affiliates The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries to, make any payment to, or 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 or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (1) such Affiliate Transaction is on terms that are no less favorable to the Authority or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Authority or such Restricted Subsidiary with an unrelated Person; and (2) the Authority delivers to the Senior Trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Management Board shown in an Officers' Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Management Board; and 83 (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Authority or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraphs: (1) any employment agreement or arrangement entered into by the Authority or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Authority or such Restricted Subsidiary; (2) transactions between or among the Authority and/or its Restricted Subsidiaries; (3) payment of reasonable Management Board fees to members of the Management Board; (4) transactions with Persons in whom the Authority owns any Equity Interests, so long as the remaining equity holders of such Person are not Affiliates of the Authority or any of its Subsidiaries; (5) Government Service Payments; (6) transactions pursuant to the Development Services Agreement, the Relinquishment Agreement and the Side Letters; (7) Restricted Payments or Permitted Investments that are made in compliance with the provisions of the Senior Notes Indenture described above under the caption "--Restricted Payments;" and (8) contractual arrangements existing on the date of the Senior Notes Indenture and any renewals, extensions and modifications thereof that are not materially adverse to holders. Subsidiary Guarantees The Senior Notes Indenture provides that if the Authority acquires or creates any Restricted Subsidiary after the date of the Senior Notes Indenture, then that newly acquired or created Restricted Subsidiary must become a Subsidiary Guarantor and execute a supplemental indenture satisfactory to the Senior Trustee and deliver an Opinion of Counsel to the Senior Trustee within 20 business days of the date on which it is acquired or created. The obligations of each Subsidiary Guarantor under its Senior Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. No Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Senior Trustee; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. The Senior Notes Indenture will permit the merger of one or more Subsidiary Guarantors with or into another Subsidiary Guarantor or with or into the Authority; provided that in the case of a merger with or into the Authority, the Authority is the surviving entity. In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary 84 Guarantor, or, if a Subsidiary Guarantor is designated as an Unrestricted Subsidiary, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of or a redesignation of such Subsidiary Guarantor) or the entity acquiring the property (in the event of a sale or other disposition of all of the assets of such Subsidiary Guarantor) will be released and relieved of any obligations under its Senior Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with or the redesignation is accomplished in accordance with the applicable provisions of the Senior Notes Indenture. See "--Repurchase at the Option of Holders-- Asset Sales." The Authority currently has no Subsidiaries. Sale and Leaseback Transactions The Senior Notes Indenture will provide that the Authority will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction involving the Resort; provided that the Authority or any of its Restricted Subsidiaries may enter into a sale and leaseback transaction if (1) the Authority or such Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test shown in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption "-- Liens"; (2) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Management Board and shown in an Officers' Certificate delivered to the Senior Trustee, of the property that is subject of such sale and leaseback transaction; and (3) the transfer of assets in such sale and leaseback transaction is permitted by, and the Authority applies the proceeds of such transaction in compliance with, the covenant described above under the caption "-- Repurchase at the Option of Holders--Asset Sales"; provided that, upon the occurrence of a Rating Event Date and for so long as the covenants shown under the caption entitled "--Changes in Covenants when Senior Exchange Notes Rated Investment Grade" continue to be Suspended Covenants, the following provisions shall replace the foregoing provisions with respect to sale and leaseback transactions by the Authority and its Restricted Subsidiaries: The Senior Notes Indenture will provide that Authority will not, and will not permit any of its Restricted to Subsidiaries to, enter into any sale and leaseback transaction involving the Resort; provided that the Authority or any Restricted Subsidiary may enter into any sale and leaseback transaction with an Attributable Value (when taken together with all other sale and leaseback transactions of the Authority and its Restricted Subsidiaries) that, at the time of such transaction, after giving effect thereto, does not exceed 10% of Consolidated Net Tangible Assets. Construction The Authority will use its commercially reasonable best efforts to cause construction of the Expansion Project to be prosecuted with diligence and continuity in good and workmanlike manner materially in accordance with the plans relating to the Expansion Project as more fully described in this Prospectus. Restrictions on Leasing and Dedication of Property Except as provided below, the Authority will not lease, sublease, or grant a license, concession or other agreement to occupy, manage or use any material portion of the Authority's property and assets owned or leased by the Authority (each, a "Lease Transaction"). 85 The first paragraph of this covenant will not prohibit any of the following Lease Transactions: (1) The Authority may enter into a Lease Transaction with respect to any space with any Person (including, without limitation, a lease in connection with the Expansion Project for the purpose of developing, constructing, operating and managing retail establishments within the Resort), provided that: (a) such Lease Transaction will not materially interfere with, impair or detract from the operations of the Resort; (b) such Lease Transaction contains rent and such other terms such that the Lease Transaction, taken as a whole is commercially reasonable in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues; and (c) such Lease Transaction complies with all applicable law, including obtaining any consent of the BIA, if required; (2) The Lease and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the holders; (3) The Authority may enter into a management or operating agreement with respect to any of the Authority's property and assets with any Person; provided that (a) the manager or operator has experience in managing or operating similar operations; and (b) such management or operating agreement is on commercially reasonable and fair terms to the Authority; and (4) The Relinquishment Agreement, the Development Services Agreement and the Side Letters with the Manager and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the holders. 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, and no person other than the Authority may conduct gaming or casino operations on any property which is the subject of a Lease Transaction. Covenants of the Tribe The Tribe shall not, and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, except as required by federal or state law, to do any of the following: (1) increase or impose any tax or other payment obligation on the Authority or on any patrons of, or any activity at, the Resort other than: (a) payments which are due under any agreement in effect on the Closing Date or payments which are not materially adverse to the economic interests of holders; (b) payments which the Authority has agreed to reimburse each holder for the economic effect thereof, if any; (c) payments which correspondingly reduce the Restricted Payments otherwise payable to the Tribe; (d) pursuant to the Tribal Tax Code; or (e) Government Service Payments; (2) amend the terms of the Lease in any material manner that would be materially adverse to the economic interests of holders; 86 (3) amend the Tribal Gaming Ordinance in effect on the Closing Date (unless any such amendment is a legitimate effort to ensure that the Authority and the Resort conduct gaming operations in a manner that is consistent with applicable laws, rules and regulations or that protects the environment, the public health and safety, or the integrity of the Authority or the Resort), restrict or eliminate the exclusive right of the Authority to conduct gaming operations on any property owned or controlled by the Tribe in a manner that would be materially adverse to the economic interests of holders; or (4) take any other action, enter into any agreement, amend its constitution or enact any ordinance, law, rule or regulation that would have a material adverse effect on the economic interests of holders. The Tribe shall comply with all material terms of a construction reserve disbursement agreement and shall not amend and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, to amend, except as required by federal or state law, such construction reserve agreement in a manner that would have a material adverse effect on the economic interests of holders. Moreover, except with the consent of a majority in interest of holders 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 impose, tax or otherwise make a charge on the Senior Exchange Notes, the Senior Notes Indenture or any payments or deposits to be made thereunder. 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 Senior Exchange Notes shall be entitled to receive payment in full in respect to all principal, premium, interest and other amounts owing in respect of the Notes before any payment or any distribution to the Tribe. Changes in Covenants when Senior Exchange Notes Rated Investment Grade Following the first date upon which the Senior Exchange Notes are rated Baa3 or better by Moody's Investors Service, Inc. ("Moody's") and BBB- or better by Standard & Poor's Ratings Group ("S&P") (or, in either case, if such person ceases to rate the Senior Exchange Notes for reasons outside of the control of the Authority, the equivalent investment grade credit rating from any other "nationally recognized statistical rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act) selected by the Authority as a replacement agency) (the "Rating Event Date") and provided no Event of Default or event that with notice or the passage of time would constitute an Event of Default shall exist on the Rating Event Date, the covenants specifically listed under "--Repurchase at the Option of Holders--Asset Sales," "--Incurrence of Indebtedness and Issuance of Preferred Stock," "--Restricted Payments," "-- Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries," "--Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries," "--Construction," "--Restrictions on Leasing and Dedication of Property," "--Provisions Common to Both Senior Exchange Notes and Senior Subordinated Exchange Notes--Certain Common Covenants--Maintenance of Insurance" and "--Transactions with Affiliates" in this Prospectus (collectively, the "Suspended Covenants") will no longer be applicable to the Senior Exchange Notes; provided however that if at any time after a Rating Event Date, the Senior Exchange Notes shall be rated lower than Baa3 by Moody's or lower than BBB- by S&P, or any equivalent rating by a successor agency to Moody's or S&P, the Suspended Covenants shall be automatically reinstated (the "Reinstated Covenants") and all transactions by the Authority that occurred during the time that such covenants were suspended and that would have violated such covenants had such covenants been in effect at the time shall be deemed not to constitute a Default or an Event of Default, as the case may be, and shall be deemed to have been in compliance with such covenants for all purposes; provided further that thereafter all transactions by the Authority occurring on or after the date on which the Suspended Covenants have been reinstated shall be required to be in compliance with the Reinstated Covenants. For purposes of interpreting the definition of "Permitted Liens" during the time any Suspended Covenants are suspended, the definition should be read as if the Suspended Covenants were not so suspended. 87 There can be no assurance that a Rating Event Date will occur or, if one occurs, that the Senior Exchange Notes will continue to maintain an investment grade rating. Description of the Senior Subordinated Exchange Notes Ranking These Senior Subordinated Exchange Notes . are unsecured general obligations of the Authority; and . are subordinated in right of payment to all existing and future Senior Indebtedness of the Authority, including without limitation, up to $500 million of indebtedness under the Loan Agreement and $200 million in principal amount of Senior Exchange Notes. Subsidiaries As of the date of the Senior Subordinated Notes Indenture, the Authority had no Subsidiaries. However, the Senior Subordinated Notes Indenture permits the Authority to create Subsidiaries and generally requires that these Subsidiaries be designated as Restricted Subsidiaries (i.e., subject to the terms of the Senior Subordinated Notes Indenture) unless certain conditions are met. If these conditions are met, the Authority will be permitted to designate a Subsidiary as an Unrestricted Subsidiary, and Unrestricted Subsidiaries will not be subject to many of the restrictive covenants of the Senior Subordinated Notes Indenture. Principal, Maturity and Interest The Authority will issue Senior Subordinated Exchange Notes with a maximum aggregate principal amount of $300 million. The Authority will issue Senior Subordinated Exchange Notes in denominations of $1,000 and integral multiples of $1,000. The Senior Subordinated Exchange Notes will mature on January 1, 2009. Interest on these Senior Subordinated Exchange Notes will accrue at the rate of 8 3/4% per annum and will be payable semi-annually in arrears on January 1 and July 1, beginning on July 1, 1999. The Authority will make each interest payment to the holders of record of these Senior Subordinated Exchange Notes on the immediately preceding December 15 and June 15. Interest on these Senior Subordinated Exchange Notes accrues from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months. Subordination The payment of principal, premium and interest, if any, on the Senior Subordinated Exchange Notes and the Senior Subordinated Subsidiary Guarantees, if any, is subordinated to the prior payment in full of all Senior Indebtedness of the Authority including, without limitation, the Senior Exchange Notes and the Loan Agreement. In the event of any distribution to creditors (1) in a liquidation or dissolution of the Authority or the Tribe; (2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Authority, the Tribe or their respective property; (3) in an assignment for the benefit of creditors; or (4) in any marshalling of the Authority's or the Tribe's assets and liabilities; 88 the holders of Senior Indebtedness will be entitled to receive payment in full of all Obligations due in respect of Senior Indebtedness (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Indebtedness) before the holders of Senior Subordinated Exchange Notes will be entitled to receive any payment with respect to the Senior Subordinated Exchange Notes (except that holders of Senior Subordinated Exchange Notes may receive and retain Permitted Junior Securities and payments made from the trust described under "--Provisions Common to Both Senior Exchange Notes and Senior Subordinated Exchange Notes--Legal Defeasance and Covenant Defeasance"). The Authority also may not make any payment in respect of the Senior Subordinated Exchange Notes (except in Permitted Junior Securities or from the trust described under "--Provisions Common to Both Senior Exchange Notes and Senior Subordinated Exchange Notes--Legal Defeasance and Covenant Defeasance") if (1) a payment default on Designated Senior Indebtedness occurs and is continuing beyond any applicable grace period; or (2) any other default occurs and is continuing on Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness to accelerate its maturity and the Senior Subordinated Trustee receives a notice of such default (a "Payment Blockage Notice") from the Authority or the holders of any Designated Senior Indebtedness. Payments on the Senior Subordinated Exchange Notes may and shall be resumed (1) in the case of a payment default, upon the date on which all Senior Indebtedness is paid in full in cash or such default is cured or waived in writing; and (2) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Indebtedness has been accelerated. No new Payment Blockage Notice may be delivered unless and until (1) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice; and (2) all scheduled payments of principal, premium and interest on the Senior Subordinated Exchange Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Senior Subordinated Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. The Authority must promptly notify holders of Senior Indebtedness if payment of the Senior Subordinated Exchange Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Authority or the Tribe, holders of these Senior Subordinated Exchange Notes may recover less ratably than holders of Senior Indebtedness. See "Risk Factors--Unsecured Ranking and Subordination to Existing Indebtedness--Senior Subordinated Exchange Notes." Optional Redemption If, at any time after the Issue Date, any Gaming Regulatory Authority requires a holder to be licensed or otherwise qualified under applicable gaming laws in order for the Authority to maintain any of its gaming licenses or franchises and the holder does not obtain such license or qualification within the time periods 89 described in the Senior Subordinated Notes Indenture and at its own cost and expense, then the Authority will have the right to either . require the holder to dispose of its Senior Subordinated Exchange Notes within the time period specified by the Gaming Regulatory Authority or 30 days, whichever is shorter; or . redeem the holder's Senior Subordinated Exchange Notes at a price equal to the lesser of (1) the principal amount of the Senior Subordinated Exchange Notes held by the holder, (2) the price paid for the Senior Subordinated Exchange Notes by the holder, and (3) the current market price of the Senior Subordinated Exchange Notes, in each case, including all accrued and unpaid interest and Additional Interest, if any, to the redemption date or the date a finding of unsuitability is made by the applicable Gaming Regulatory Authority, if earlier. The Authority will comply with the redemption procedures for the Senior Subordinated Exchange Notes described in the Senior Subordinated Notes Indenture unless otherwise required by a Gaming Regulatory Authority. Except as described above, the Senior Subordinated Exchange Notes will not be redeemable at the Authority option before January 1, 2004. On or after January 1, 2004, the Authority may redeem all or a part of these Senior Subordinated Exchange Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) shown below plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the 12-month period beginning on January 1 of the years indicated below:
Year Percentage ---- ---------- 2004.............................. 104.375% 2005.............................. 102.917% 2006.............................. 101.458% 2007 and thereafter............... 100.000%
Selection and Notice If less than all of the Senior Subordinated Exchange Notes are to be redeemed at any time, the Senior Subordinated Trustee will select Senior Subordinated Exchange Notes for redemption as follows: (1) if the Senior Subordinated Exchange Notes are listed, in compliance with the requirements of the principal national securities exchange on which the Senior Subordinated Exchange Notes are listed; or (2) if the Senior Subordinated Exchange Notes are not so listed, on a pro rata basis, by lot or by such method as the Senior Subordinated Trustee shall deem fair and appropriate. No Senior Subordinated Exchange Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of Senior Subordinated Exchange Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Senior Subordinated Exchange Note is to be redeemed in part only, the notice of redemption that relates to that Senior Subordinated Exchange Note shall state the portion of the principal amount thereof to be redeemed. A new Senior Subordinated Exchange Note in principal amount equal to the unredeemed portion of the original Senior Subordinated Exchange Note will be issued in the name of the holder thereof upon cancellation of the original Senior Subordinated Exchange Note. Senior Subordinated Exchange Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Senior Subordinated Exchange Notes or portions of them called for redemption. 90 Repurchase at the Option of Holders Change of Control If a Change of Control occurs, each holder of the Senior Subordinated Exchange Notes will have the right to require the Authority to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that holder's Senior Subordinated Exchange Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Authority will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Senior Subordinated Exchange Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, thereon, to the date of purchase. Within 20 business days following any Change of Control, the Authority will mail a notice to each holder (and, unless the Senior Subordinated Trustee makes the mailing on behalf of the Authority, to the Senior Subordinated Trustee) describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Subordinated Exchange Notes on the Change of Control Payment Date specified in such notice, pursuant to the procedures required by the Indenture and described in such notice. If the Authority wishes the Senior Subordinated Trustee to do the mailing, it will give the Senior Subordinated Trustee adequate prior notice so that the Senior Subordinated Trustee may do so. 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 and regulations are applicable in connection with the repurchase of the Senior Subordinated Exchange Notes as a result of a Change of Control. On the Change of Control Payment Date, the Authority, to the extent lawful will, (1) accept for payment all Senior Subordinated Exchange Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Subordinated Exchange Notes or portions thereof so tendered; and (3) deliver or cause to be delivered to the Senior Subordinated Trustee the Senior Subordinated Exchange Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Senior Subordinated Exchange Notes or portions thereof being purchased by the Authority. The Paying Agent will promptly mail to each holder of Senior Subordinated Exchange Notes so tendered the Change of Control Payment for such Senior Subordinated Exchange Notes, and the Senior Subordinated Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Senior Subordinated Note equal in principal amount to any unpurchased portion of the Senior Subordinated Exchange Notes surrendered, if any; provided that each such new Senior Subordinated Note will be in a principal amount of $1,000 or an integral multiple thereof. The Authority will notify the Senior Subordinated Trustee and will instruct the Senior Subordinated Trustee to notify the holders of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Except as described above with respect to a Change of Control, the Senior Subordinated Notes Indenture does not contain provisions that permit the holders of the Senior Subordinated Exchange Notes to require that the Authority repurchase or redeem the Senior Subordinated Exchange Notes in the event of a takeover, recapitalization or similar transaction. The Loan Agreement will prohibit and the Senior Note Indenture may prohibit the Authority from purchasing any Senior Subordinated Exchange Notes upon a Change of Control. The Loan Agreement will also provide that certain change of control events with respect to the Authority will constitute a default under the Loan Agreement. Any future credit agreements or other agreements relating to secured indebtedness to which 91 the Authority becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Authority is prohibited from purchasing Senior Subordinated Exchange Notes, the Authority could seek the consent of its lenders and other creditors to the purchase of Senior Subordinated Exchange Notes or could attempt to refinance the borrowings that contain such prohibition. If the Authority does not obtain such a consent or repay such borrowings, the Authority will remain prohibited from purchasing Senior Subordinated Exchange Notes. In such case, the Authority's failure to purchase tendered Senior Subordinated Exchange Notes would constitute an Event of Default under the Senior Subordinated Notes Indenture which would, in turn, constitute a default under the Loan Agreement and the Senior Subordinated Notes Indenture. The Authority will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements shown in the Senior Subordinated Notes Indenture applicable to a Change of Control Offer made by the Authority and purchases all Senior Subordinated Exchange Notes validly tendered and not withdrawn under such Change of Control Offer. Asset Sales The Authority will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (1) the Authority (or its Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Management Board and evidenced by a resolution shown in an Officers' Certificate delivered to the Senior Subordinated Trustee) of the assets sold or otherwise disposed of; and (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Authority or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following shall be deemed to be cash: (a) any liabilities that would appear on the Authority's or such Restricted Subsidiary's balance sheet prepared in accordance with GAAP (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Subordinated Exchange Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Authority or such Restricted Subsidiary from further liability; and (b) any securities, notes or other obligations received by the Authority or any such Restricted Subsidiary from such transferee that are converted by the Authority or such Restricted Subsidiary into cash (to the extent of the cash received) within 30 days of the receipt thereof, provided, however, that the Authority will not be permitted to make any Asset Sale of Key Project Assets. Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Authority may apply such Net Proceeds, at its option, to (1) repay permanently term Indebtedness under Credit Facilities of the Authority or any Restricted Subsidiary; (2) repay revolving credit Indebtedness under Credit Facilities and correspondingly permanently reduce commitments with respect thereto; (3) acquire a majority of the assets of, or a majority of the Voting Stock of, an entity engaged in the Principal Business or a Related Business; (4) make capital expenditures or acquire other long-term assets that are used or useful in the Principal Business or a Related Business; 92 (5) make an investment in the Principal Business or a Related Business or in tangible long-term assets used or useful in the Principal Business or a Related Business; or (6) reduce permanently Indebtedness (including the Senior Exchange Notes) that is not Subordinated Indebtedness. Pending the final application of any such Net Proceeds, the Authority may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Senior Subordinated Notes Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority will make an Asset Sale Offer to all holders of Senior Subordinated Exchange Notes and all holders of other Indebtedness containing provisions similar to those shown in the Senior Subordinated Notes Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Senior Subordinated Exchange Notes and such other Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase and will be payable in cash, in accordance with the procedures shown in the Senior Subordinated Notes Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Authority may use such Excess Proceeds for any purpose not otherwise prohibited by the Senior Subordinated Notes Indenture. If the aggregate principal amount of Senior Subordinated Exchange Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by holders thereof exceeds the amount of Excess Proceeds, the Senior Subordinated Trustee shall select the Senior Subordinated Exchange Notes and such other Indebtedness (to the extent that such other Indebtedness permits such selection) to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Certain Covenants Restricted Payments The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries, directly or indirectly, to (1) make any payment on or with respect to any of the Authority's or any of its Restricted Subsidiaries' Equity Interests; (2) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interest in the Authority held by the Tribe or any Affiliate of the Tribe; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness (other than the defeasance and ultimate redemption of the junior subordinated notes in accordance with their terms and the terms of the Defeasance Trust, except a payment of interest or principal at Stated Maturity thereof; (4) 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 (other than Government Service Payments); or (5) make any Restricted Investment; (all such payments and other actions shown in clauses (1) through (5) above are collectively referred to as "Restricted Payments") unless, at the time of and after giving effect to such Restricted Payment (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; 93 (B) the Authority would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test shown in the first paragraph of the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Authority and its Restricted Subsidiaries after the date of the Senior Subordinated Notes Indenture (excluding Restricted Payments permitted by clauses (2), (3), (4) and (5) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Authority for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Senior Subordinated Notes Indenture to the end of the Authority's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds or fair market value (as determined in good faith by the Management Board and evidenced by a resolution shown in an Officers' Certificate delivered to the Senior Subordinated Trustee) of assets or property (other than cash) received by the Authority from capital contributions from the Tribe that bear no mandatory obligation to repay the Tribe and other than from a Restricted Subsidiary of the Authority, plus (iii) to the extent that any Restricted Investment that was made after the date of the Senior Subordinated Notes Indenture is sold, liquidated or otherwise disposed of for cash or an amount equal to the fair market value thereof (as determined in good faith by the Management Board and evidenced by a resolution shown in an Officers' Certificate delivered to the Senior Subordinated Trustee), the lesser of (a) the cash return of capital or fair market value amount, as the case may be, with respect to such Restricted Investment (less the cost of disposition, if any) and (b) the initial amount of such Restricted Investment plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of the Senior Subordinated Notes Indenture, the lesser of (a) the fair market value of the Authority's Investment in such Subsidiary as of the date of such redesignation or (b) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit (1) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (2) the payment of any dividend by a Restricted Subsidiary of the Authority to the holders of its common Equity Interests on a pro rata basis; (3) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Authority held by any member of the Authority's (or any of its Restricted Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of the Senior Subordinated Notes Indenture; provided that (a) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any 12-month period and (b) the aggregate amount of all such repurchased, redeemed, acquired or retired Equity Interests shall not in the aggregate exceed $3.0 million; (4) the redemption or purchase of Subordinated Indebtedness of the Authority if the holder of such Subordinated Indebtedness has failed to qualify or be found suitable or otherwise be eligible by any Gaming Regulatory Authority to remain a holder of such Subordinated Indebtedness; (5) the redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness with the net cash proceeds from a substantially concurrent capital contribution from the Tribe (provided that such capital contribution is not counted for purposes of clause (C)(ii) above); and 94 (6) any other Restricted Payments in an amount not to exceed $20.0 million at any one time outstanding. The Authority may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall (i) any entity (including any Subsidiary of the Authority or the Authority or any operating division thereof) engaged in a Principal Business be transferred to or held by an Unrestricted Subsidiary or (ii) any Key Project Assets or Gaming Licenses be transferred to an Unrestricted Subsidiary. In the event of such designation, all outstanding Investments owned by the Authority and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant unless the Investment constitutes a Permitted Investment. All such outstanding Investments will be deemed to constitute Restricted Payments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Authority may redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary if such redesignation would not otherwise cause a Default. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Authority or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Management Board whose resolution with respect thereto shall be delivered to the Senior Subordinated Trustee. Not later than the date of making any Restricted Payment, the Authority shall deliver to the Senior Subordinated Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "--Restricted Payments" were computed. Ranking of Payments Under the Relinquishment Agreement The Authority will not designate the Senior Relinquishment Payments (as defined in the Relinquishment Agreement) as Designated Senior Indebtedness and the Authority will not amend Section 6.2 of the Relinquishment Agreement in a manner adverse to the holders of the Senior Subordinated Exchange Notes. Incurrence of Indebtedness and Issuance of Preferred Stock The Authority will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Indebtedness) and the Authority will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Authority may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and the Authority's Subsidiaries may incur Indebtedness or issue preferred stock if 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 on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. Notwithstanding the foregoing, the Authority will not issue any Disqualified Stock or any type of Capital Stock that would violate IGRA. So long as no Default or Event of Default shall have occurred and be continuing, or would be caused thereby, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness: 95 (1) the incurrence by the Authority or its Restricted Subsidiaries of Indebtedness and letters of credit pursuant to Credit Facilities; provided that the aggregate principal amount of all such Indebtedness and letters of credit outstanding under all Credit Facilities, after giving effect to such incurrence (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Authority thereunder), does not exceed $500 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Authority or any of its Restricted Subsidiaries since the date of the Senior Subordinated Notes Indenture to repay Indebtedness under Credit Facilities pursuant to the covenant described above under the caption "--Repurchase at the Option of Holders--Asset Sales"; (2) the incurrence by the Authority and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by the Authority of Indebtedness represented by the Outstanding Senior Notes and the Senior Exchange Notes; (4) the incurrence by the Authority of Indebtedness represented by the Outstanding Senior Subordinated Notes and the Senior Subordinated Exchange Notes; (5) the incurrence by the Authority or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price of furniture, fixtures, equipment or similar assets used or useful in the business of the Authority or such Restricted Subsidiary not to exceed 100% of the lesser of cost or fair market value of the assets financed and, in an aggregate principal amount under this clause not to exceed $25.0 million at any time outstanding; (6) the incurrence by the Authority or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, renew, extend, defease or replace Indebtedness that was permitted by the Senior Subordinated Notes Indenture to be incurred under the first paragraph of this covenant or clauses (1), (2) (other than the junior subordinated notes), (3), (4) or (5) of this paragraph; (7) the incurrence by the Authority or any of its Restricted Subsidiaries of 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 Senior Subordinated Notes Indenture to be outstanding; (8) the guarantee by the Authority or any of its Restricted Subsidiaries of any Indebtedness of the Authority or any of its Restricted Subsidiaries that was permitted to be incurred by another provision of this covenant; (9) the incurrence by a Wholly Owned Restricted Subsidiary of Indebtedness owed to another Wholly Owned Restricted Subsidiary or to the Authority; provided that if at any time any such Wholly Owned Restricted Subsidiary ceases to be a Wholly Owned Restricted Subsidiary, any such Indebtedness shall be deemed to be an incurrence of Indebtedness for the purposes of this covenant; (10) the incurrence by the Authority or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (10), not to exceed $25.0 million; or (11) the incurrence by the Authority's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Authority that was not permitted by this clause (11). For purposes of determining compliance with this "--Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, if an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (11) above or is entitled to be incurred 96 pursuant to the first paragraph of this covenant, the Authority shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence in any manner that complies with this covenant. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries The Authority (i) will not, and will not permit any Wholly Owned Restricted Subsidiary of the Authority to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Wholly Owned Restricted Subsidiary of the Authority to any Person (other than the Authority or another Wholly Owned Restricted Subsidiary of the Authority), unless (a) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with the covenant described above under the caption "--Repurchase at the Option of Holders--Asset Sales," and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Authority to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Authority or a Wholly Owned Restricted Subsidiary of the Authority. Liens The Senior Subordinated Notes Indenture will provide that the Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of its property or assets, or any proceeds therefrom, which secure either (a) Subordinated Indebtedness, unless the Senior Subordinated Exchange Notes are secured by a Lien on such property, assets or proceeds, which Lien is senior in priority to the Liens securing such Subordinated Indebtedness or (b) pari passu Indebtedness, unless the Senior Subordinated Exchange Notes are equally and ratably secured with the Liens securing such pari passu Indebtedness. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (1) pay dividends or make any other distributions on its Capital Stock to the Authority or any of the Authority's Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Authority or any of the Authority's Restricted Subsidiaries; (2) make loans or advances to the Authority or any of the Authority's Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Authority or any of the Authority's Restricted Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of (1) Existing Indebtedness as in effect on the date of the Senior Subordinated Notes Indenture and any amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness, as in effect on the date of the Senior Subordinated Notes Indenture; (2) the Senior Subordinated Notes Indenture and the Senior Subordinated Exchange Notes; 97 (3) the Senior Notes Indenture and the Senior Exchange Notes; (4) the Credit Facilities; (5) applicable law; (6) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Authority or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Senior Subordinated Notes Indenture to be incurred; (7) customary non-assignment provisions in leases or other contracts entered into in the ordinary course of business and consistent with past practices; (8) purchase money obligations (including, without limitation, Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the preceding paragraph; (9) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending its sale or other disposition; (10) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (11) Liens securing Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption "--Liens" that limit the right of the Authority or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien; (12) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; and (13) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Transactions with Affiliates The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries to, make any payment to, or 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 or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (1) such Affiliate Transaction is on terms that are no less favorable to the Authority or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Authority or such Restricted Subsidiary with an unrelated Person; and (2) the Authority delivers to the Senior Subordinated Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Management Board shown in an Officers' Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Management Board; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Authority or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. 98 The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraphs: (1) any employment agreement or arrangement entered into by the Authority or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Authority or such Restricted Subsidiary; (2) transactions between or among the Authority and/or its Restricted Subsidiaries; (3) payment of reasonable Management Board fees to members of the Management Board; (4) transactions with Persons in whom the Authority owns any Equity Interests, so long as the remaining equity holders of such Person are not Affiliates of the Authority or any of its Subsidiaries; (5) Government Service Payments; (6) transactions pursuant to the Development Services Agreement, the Relinquishment Agreement and the Side Letters; (7) Restricted Payments or Permitted Investments that are made in compliance with the provisions of the Senior Subordinated Notes Indenture described above under the caption "--Restricted Payments;" and (8) contractual arrangements existing on the date of the Senior Subordinated Notes Indenture and any renewals, extensions and modifications thereof that are not materially adverse to holders. Subordinated Subsidiary Guarantees The Senior Subordinated Notes Indenture will provide that if the Authority acquires or creates any Restricted Subsidiary after the date of the Senior Subordinated Notes Indenture, then that newly acquired or created Restricted Subsidiary must become a Subsidiary Guarantor and execute a supplemental indenture satisfactory to the Senior Subordinated Trustee and deliver an Opinion of Counsel to the Senior Subordinated Trustee within 20 business days of the date on which it is acquired or created. The obligations of each Subsidiary Guarantor under its Senior Subordinated Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. Any Senior Subordinated Subsidiary Guarantees will be subordinated to Senior Indebtedness in the same manner and to the same extent as the Senior Subordinated Exchange Notes. No Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Senior Subordinated Trustee; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. The Senior Subordinated Notes Indenture will permit the merger of one or more Subsidiary Guarantors with or into another Subsidiary Guarantor or with or into the Authority; provided that in the case of a merger with or into the Authority, the Authority is the surviving entity. In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor or if a Subsidiary Guarantor is designated as an Unrestricted Subsidiary, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock or a redesignation of such Subsidiary Guarantor) or the entity acquiring the property (in the event of a sale or other disposition of all of the assets of such Subsidiary Guarantor) will be released and 99 relieved of any obligations under its Senior Subordinated Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with or the redesignation is accomplished in accordance with the applicable provisions of the Senior Subordinated Notes Indenture. See "-- Repurchase at the Option of Holders--Asset Sales." The Authority currently has no Subsidiaries. Sale and Leaseback Transactions The Senior Subordinated Notes Indenture will provide that the Authority will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction involving the Resort; provided that the Authority or any of its Restricted Subsidiaries may enter into a sale and leaseback transaction if (1) the Authority or such Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test shown in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption "-- Liens"; (2) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Management Board and shown in an Officers' Certificate delivered to the Senior Subordinated Trustee, of the property that is subject of such sale and leaseback transaction; and (3) the transfer of assets in such sale and leaseback transaction is permitted by, and the Authority applies the proceeds of such transaction in compliance with, the covenant described above under the caption "-- Repurchase at the Option of Holders--Asset Sales." Construction The Authority will use its commercially reasonable best efforts to cause construction of the Expansion Project to be prosecuted with diligence and continuity in good and workmanlike manner materially in accordance with the plans relating to the Expansion Project as more fully described in this Prospectus. Restrictions on Leasing and Dedication of Property Except as provided below, the Authority will not lease, sublease, or grant a license, concession or other agreement to occupy, manage or use any material portion of the Authority's property and assets owned or leased by the Authority (each, a "Lease Transaction"). The first paragraph of this covenant will not prohibit any of the following Lease Transactions: (1) The Authority may enter into a Lease Transaction with respect to any space with any Person (including, without limitation, a lease in connection with the Expansion Project for the purpose of developing, constructing, operating and managing retail establishments within the Resort), provided that: (a) such Lease Transaction will not materially interfere with, impair or detract from the operations of the Resort; (b) such Lease Transaction contains rent and such other terms such that the Lease Transaction, taken as a whole is commercially reasonable in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues; and (c) such Lease Transaction complies with all applicable law, including obtaining any consent of the BIA, if required; 100 (2) The Lease and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the holders; (3) The Authority may enter into a management or operating agreement with respect to any of the Authority's property and assets with any Person; provided that (a) the manager or operator has experience in managing or operating similar operations; and (b) such management or operating agreement is on commercially reasonable and fair terms to the Authority; and (4) The Relinquishment Agreement, the Development Services Agreement and the Side Letters with the Manager and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the holders. 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, and no person other than the Authority may conduct gaming or casino operations on any property which is the subject of a Lease Transaction. No Senior Subordinated Indebtedness The Authority will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of the Authority and senior in any respect in right of payment to the Senior Subordinated Exchange Notes. No Subordinated Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of such Subordinated Guarantor and senior in any respect in right of payment to such Subordinated Guarantor's Subsidiary Subordinated Guarantee. Covenants of the Tribe The Tribe shall not, and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, except as required by federal or state law, to do any of the following: (1) increase or impose any tax or other payment obligation on the Authority or on any patrons of, or any activity at, the Resort other than: (a) payments which are due under any agreement in effect on the Closing Date or payments which are not materially adverse to the economic interests of holders; (b) payments which the Authority has agreed to reimburse each holder for the economic effect thereof, if any; (c) payments which correspondingly reduce the Restricted Payments otherwise payable to the Tribe; (d) pursuant to the Tribal Tax Code; or (e) Government Service Payments; (2) amend the terms of the Lease in any material manner that would be materially adverse to the economic interests of holders; (3) amend the Tribal Gaming Ordinance in effect on March 3, 1999 (unless any such amendment is a legitimate effort to ensure that the Authority and the Resort conduct gaming operations in a manner that is consistent with applicable laws, rules and regulations or that protects the environment, the public health and safety, or the integrity of the Authority or the Resort), restrict or eliminate the exclusive right of the Authority to conduct gaming operations on any property owned or controlled by the Tribe in a manner that would be materially adverse to the economic interests of holders; or 101 (4) take any other action, enter into any agreement, amend its constitution or enact any ordinance, law, rule or regulation that would have a material adverse effect on the economic interests of holders. The Tribe shall comply with all material terms of the construction reserve agreement and shall not amend and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, to amend, except as required by federal or state law, such a construction reserve agreement in a manner that would have a material adverse effect on the economic interests of holders. Moreover, except with the consent of a majority in interest of holders 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 impose, tax or otherwise make a charge on the Senior Subordinated Exchange Notes, the Senior Subordinated Notes Indenture or any payments or deposits to be made thereunder. 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 in respect to all principal, premium, interest and other amounts owing in respect of the Notes before any payment or any distribution to the Tribe. Provisions Common to Both Senior Exchange Notes and Senior Subordinated Exchange Notes Methods of Receiving Payments on the Notes If a holder that holds at least $1.0 million in principal amount of Exchange Notes has given wire transfer instructions to the Authority, the Authority will make all principal, premium and interest payments, including Additional Interest payments, if any, on those Exchange Notes in accordance with those instructions. All other payments on these Exchange Notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the Authority elects to make interest payments by check mailed to the holders at their address shown in the register of holders. Paying Agent and Registrar for the Notes The Trustees initially will act as Paying Agent and Registrar. The Authority may change the Paying Agent or Registrar without prior notice to the holders of the Notes, and the Authority may act as Paying Agent or Registrar. Transfer and Exchange A holder may transfer or exchange Exchange Notes in accordance with the Indentures. The Registrar and the Trustees 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 Indentures. The Authority is not required to transfer or exchange any Exchange Note selected for redemption. Also, the Authority is not required to transfer or exchange any Exchange Note for a period of 15 days before a selection of Exchange Notes to be redeemed. The registered holder of an Exchange Note will be treated as the owner of it for all purposes. 102 Certain Common Covenants Use of Proceeds The Authority will use the net proceeds of the Outstanding Notes Offering only for Permitted Proceed Uses. Gaming Licenses The Authority will 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 or any part of the Resort as a result of any noncompliance with the 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 Trustees and provide holders of Exchange Notes 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. Ownership Interests in the Authority Neither the Tribe nor the Authority shall permit any Person other than the Tribe to acquire any Ownership Interest whatsoever in the Authority. Existence of the Authority and Maintenance of the Lease The Authority shall, and shall cause each of its Restricted Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect their respective existence, in accordance with their respective organizational documents and their respective rights (contractual, charter and statutory), licenses and franchises; provided, however, that neither the Authority nor any Restricted Subsidiary shall be required to preserve, with respect to itself, any license, right or franchise and, with respect to its Restricted Subsidiaries, any such existence, license, right or franchise, if its Management Board or Board of Directors, or other governing body or officers authorized to make such determination, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Authority or any Restricted Subsidiary, and that the loss thereof is not adverse in any material respect to the holders. In addition, the Authority shall do, or cause to be done, all things necessary to perform any material covenants shown in the Lease to keep the Lease in full force and effect. 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. Limitations on Lines of Business The Authority shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than the Principal Business or a Related Business. Maintenance of Insurance The Indentures provide that, until the Exchange 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, set insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, including, without limitation, property and casualty. 103 Customary insurance coverage shall be deemed to include the following: (1) 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; (2) comprehensive general liability insurance with minimum limits of $2.0 million; (3) umbrella or bumbershoot liability insurance providing excess liability coverages over and above the foregoing underlying insurance policies up to a minimum limit of $100.0 million; and (4) property insurance protecting the property against loss or damage by fire, lightning, wind-storm, 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)). Payments for Consent The Authority will not and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, to or for the benefit of any holder of any Senior Exchange Notes or Senior Subordinated Exchange Notes, as the case may be, for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of either of the Indentures or the Senior Exchange Notes or Senior Subordinated Exchange Notes, as the case may be, unless such consideration is offered to be paid or is paid to all holders of the Senior Exchange Notes or Senior Subordinated Exchange Notes, as the case may be, that consent, waive or agree to amend in the time frame shown in the solicitation documents relating to such consent, waiver or agreement. Required Defeasance and Redemption of the Junior Subordinated Notes The Authority will have established, as of the date of the Indentures, the Defeasance Trust and deposit into the Defeasance Trust cash or government securities estimated to be sufficient to pay all principal, premium and interest on the Junior Subordinated Notes less $500,000 on January 1, 2000, the first redemption date. The Authority will redeem the Junior Subordinated Notes from the proceeds of the Defeasance Trust on January 1, 2000 at a price of 100% of the principal amount, plus accrued and unpaid interest thereon, less $500,000. Designation of Designated Senior Indebtedness Under the Relinquished Agreement The Authority will not designate any indebtedness as "Designated Senior Indebtedness" under the Relinquishment Agreement that is not also designated as Designated Senior Indebtedness under the Senior Subordinated Notes Indenture. Reports Whether or not required by the Commission, so long as any Exchange Notes are outstanding, the Authority will furnish to the holders of Notes and the Trustees within 15 days after the end of the time periods specified in the Commission's rules and regulations for filings of current, quarterly and annual reports: (1) 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 Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Authority and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes 104 thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Authority and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Authority, to the extent that would be required by the rules, regulations or interpretive positions of the Commission) and, with respect to the annual information only, a report thereon by the Authority's independent public accountants; and (2) all current 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, if the Authority consummates the Exchange Offers, whether or not required by the rules and regulations of the Commission, the Authority will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Authority has agreed that, for so long as any Exchange Notes remain outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Authority shall file with the Trustees and provide to holders of Exchange 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. Events of Default and Remedies With respect to each of the Senior Exchange Notes and the Senior Subordinated Exchange Notes, respectively, each of the following is an Event of Default: (1) default for 30 days in the payment when due of interest on, or Additional Interest with respect to, such Notes; (2) default in payment when due of the principal of or premium, if any, on such Exchange Notes; (3) failure by the Authority or any of its Restricted Subsidiaries to comply with the provisions described under the captions "--Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Asset Sales," "--Description of the Senior Subordinated Exchange Notes-- Repurchase at the Option of Holders--Asset Sales" or "--Certain Common Covenants--Liquidation or Dissolution"; (4) failure by the Authority or any of its Restricted Subsidiaries for (i) 30 days after notice to comply with the provisions described under "-- Description of the Senior Exchange Notes--Certain Covenants--Restricted Payments," "--Description of the Senior Subordinated Exchange Notes-- Certain Covenants--Restricted Payments," "--Description of the Senior Exchange Notes--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and "Description of the Senior Subordinated Exchange Notes--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" or (ii) 60 days after notice to comply with any of the other agreements in the respective Indentures or the Exchange Notes; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Authority or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Authority or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, if that default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness before the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or 105 (b) results in the acceleration of such Indebtedness before its express maturity; and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (6) failure by the Authority or any of its Restricted Subsidiaries to pay final judgments in amounts not covered by insurance or not adequately reserved for in accordance with GAAP aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed (by reason of pending appeal or otherwise) for a period of 60 days; (7) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (8) 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; (9) 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); (10) the Lease ceases to be in full force and effect; and (11) failure by the Tribe to comply with the provisions described under "Covenants of the Tribe" for 30 days after notice to comply. In the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Authority, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, a Trustee or the holders of at least 25% in principal amount of the then outstanding Exchange Notes may declare all the Exchange Notes to be due and payable immediately. Holders of the Exchange Notes may not enforce their respective Indentures or the Exchange Notes except as provided in the Indentures. Subject to certain limitations, holders of a majority in principal amount of the then outstanding Exchange Notes may direct a Trustee in its exercise of any trust or power. A Trustee may withhold from holders of the Exchange 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) if it determines that withholding notice is in their interest. The holders of a majority in aggregate principal amount of the Exchange Notes then outstanding by notice to a Trustee may on behalf of the holders of all of the Exchange Notes waive any existing Default or Event of Default and its consequences under the respective Indentures except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Exchange Notes. In the case of any Event of Default occurring 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 Subordinated Exchange Notes pursuant to the optional redemption provisions of the Senior Subordinated Notes Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Senior Subordinated Exchange Notes. If an Event of Default occurs before January 1, 2004 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 Subordinated Exchange Notes before January 1, 2004, then the premium specified in the Senior Subordinated Notes Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Senior Subordinated Exchange Notes. 106 The Authority will be required to deliver to each Trustee annually a statement regarding compliance with the Indenture, and the Authority will be required upon becoming aware of any Default or Event of Default, to deliver to each Trustee a statement specifying such Default or Event of Default. No Personal Liability of Limited Partners, Directors, Officers, Employees and Stockholders Neither the Tribe nor any director, officer, office holder, employee, agent, representative or member of the Authority or the Tribe or holder of an Ownership Interest of the Authority, any Subsidiary Guarantor or the Tribe, as such, shall have any liability for any obligations of the Authority under the Exchange Notes or the Indentures or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Exchange Notes by accepting an Exchange Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Exchange Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. Legal Defeasance and Covenant Defeasance The Authority may, at its option and at any time, elect to have all of its obligations discharged with respect to either or both of the outstanding Senior Exchange Notes and Senior Subordinated Exchange Notes, ("Legal Defeasance") except for (1) the rights of holders of outstanding Exchange Notes to receive payments in respect of the principal of, premium, if any, and interest and Additional Interest, if any, on such Exchange Notes when such payments are due from the trust referred to below; (2) the Authority's obligations with respect to the Exchange Notes concerning issuing temporary Exchange Notes, registration of Outstanding Notes, mutilated, destroyed, lost or stolen Exchange Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the Trustees, and the Authority's obligations in connection with those rights, powers, trusts, duties and immunities; and (4) the Legal Defeasance provisions of the Indentures. 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 Indentures ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Exchange Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "--Events of Default and Remedies" will no longer constitute an Event of Default with respect to the Exchange Notes. To exercise either Legal Defeasance or Covenant Defeasance (1) the Authority shall have irrevocably deposited with the appropriate Trustee, in trust, for the benefit of the holders of the Exchange 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, to pay the principal of, premium, if any, and interest and Additional Interest on the outstanding Exchange Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Authority must specify whether the Exchange Notes are being defeased to maturity or to a particular redemption date; (2) in the case of Legal Defeasance, the Authority shall have delivered to the Trustees an opinion of counsel in the United States reasonably acceptable to the Trustees confirming that (a) the Authority has received from, or there has been published by, the Internal Revenue Service a ruling; or 107 (b) since the date of the Indentures, 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, the holders of the Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to 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; (3) in the case of Covenant Defeasance, the Authority shall have delivered to the Trustees an opinion of counsel in the United States reasonably acceptable to the Trustees confirming that the holders of the Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to 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; (4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indentures) to which the Authority or any of the Authority's Restricted Subsidiaries is a party or by which the Authority or any of the Authority's Restricted Subsidiaries is bound; (6) the Authority must have delivered to the Trustees an opinion of counsel that after the 91st day 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; (7) the Authority shall have delivered to the Trustees an Officers' Certificate stating that the deposit was not made by the Authority with the intent of preferring the holders of Exchange Notes over the other creditors of the Authority with the intent of defeating, hindering, delaying or defrauding creditors of the Authority or others; and (8) the Authority shall have delivered to the Trustees an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Amendment, Supplement and Waiver Except as provided in this section, the Authority, the Tribe and the Trustee may amend or supplement the Exchange Notes with the consent of the holders of at least a majority of the aggregate outstanding principal amount of each of the Senior Exchange Notes or the Senior Subordinated Exchange Notes, as applicable, provided that without the consent of each holder affected, an amendment or waiver (with respect to any Exchange Notes held by a non- consenting holder) may not (1) reduce the principal amount of Exchange Notes whose holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any Exchange Note or alter the provisions with respect to the redemption of the Exchange Notes (other than provisions relating to the covenants described above under the captions "--Description of the Senior Exchange Notes--Repurchase at the Option of Holders" and "--Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders"); (3) reduce the rate of or change the time for payment of interest on any Exchange Note; 108 (4) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Exchange Notes (except a rescission of acceleration of the Exchange Notes by the holders of at least a majority in aggregate principal amount of the Exchange Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Exchange Note payable in money other than that stated in the Exchange Notes; (6) make any change in the provisions of the Indentures relating to waivers of past Defaults or the rights of holders of Exchange Notes to receive payments of principal of or premium, if any, or interest on the Exchange Notes; (7) waive a redemption payment with respect to any Exchange Note (other than a payment required by one of the covenants described above under the captions "--Description of the Senior Exchange Notes--Repurchase at the Option of Holders" and "--Description of the Senior Subordinated Exchange Notes--Repurchase at the Option of Holders"); or (8) make any change in the preceding amendment and waiver provisions. Without the consent of holders of at least 66 2/3% of the aggregate outstanding principal amount of each of the Senior Exchange Notes and the Senior Subordinated Exchange Notes, as applicable, the Authority may not amend, alter or waive the provisions shown in the sections entitled "--Description of the Senior Exchange Notes--Repurchase at the Option of Holders--Change of Control" and "--Description of the Senior Subordinated Exchange Notes-- Repurchase at the Option of Holders--Change of Control." In addition, any amendment to the provisions of Article X of the Senior Subordinated Indenture (which relate to subordination) will require the consent of holders of at least 75% in aggregate principal amount of Senior Subordinated Exchange Notes then outstanding. Notwithstanding the foregoing, without the consent of any holder of Exchange Notes, and provided that any required governmental approval to ensure the enforceability of the Exchange Notes and the Indentures, including that of the NIGC or the BIA, is obtained, the Authority and the Trustee may amend or supplement the Indentures or the Exchange Notes to (1) cure any ambiguity, defect or inconsistency; (2) provide for uncertificated Exchange Notes in addition to or in place of certificated Exchange Notes; (3) provide for the assumption of the Authority's obligations to holders of Exchange Notes in the case of a merger or consolidation or sale of all or substantially all of the Authority's assets; (4) make any change that would provide any additional rights or benefits to the holders of Exchange Notes or that does not adversely affect the legal rights under the Indentures of any such holder; or (5) comply with requirements of the Commission to effect or maintain the qualification of the Indentures under the Trust Indenture Act. Concerning the Trustees If a Trustee becomes a creditor of the Authority or any Guarantor, the Indentures limit its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. Such 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 Commission for permission to continue or resign. 109 The holders of a majority in principal amount of the then outstanding Exchange Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to a Trustee, subject to certain exceptions. The Indentures provide that in case an Event of Default shall occur and be continuing, the Trustees will be required, in the exercise of their power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustees will be under no obligation to exercise any of their rights or powers under the Indentures at the request of any holder of Exchange Notes, unless such holder shall have offered to the Trustees security and indemnity satisfactory to each of them against any loss, liability or expense. Governing Law The Indentures and the Notes will be, subject to certain exceptions, governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the conflicts of law principles thereof (other than Section 5-1401 of the New York General Obligations Law). Additional Information Anyone who receives this Prospectus may obtain a copy of the Indentures and registration rights agreements without charge by writing to the Authority at 1 Mohegan Sun Boulevard, Uncasville, CT 06382 attention: Roland Harris. Book-Entry, Delivery and Form The Exchange Notes will initially be issued in registered, global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof, held in book-entry form. The Exchange Notes will be deposited with the Trustees as custodian for The Depository Trust Authority ("DTC"), and DTC or its nominee will initially be the sole registered holder of the Exchange Notes for all purposes under the Indentures. Except as shown below, the Global Senior Notes (as defined in the Senior Indenture) and Global Senior Subordinated Notes (as defined in the Senior Subordinated Notes Indenture), (collectively, the "Global Notes") may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. The Global Notes will be deposited upon issuance with the respective Trustee as custodian for The Depository Trust Authority ("DTC"), in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below. Beneficial interests in the Global Notes may not be exchanged for Exchange Notes in certificated form except in the limited circumstances described below. See "--Exchange of Books-Entry Notes for Certificated Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of the Certificated Notes (as defined below). Initially, the Trustees will act as Paying Agent and Registrar. The Exchange Notes may be presented for registration of transfer and exchange at the offices of the Registrar. Depository Procedures The following description of the operations and procedures of DTC are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them from time to time. The Authority takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters. 110 DTC has advised the Authority that DTC is a limited-purpose trust Authority created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book- entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the Initial Purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised the Authority that, pursuant to procedures established by it, (i) upon deposit of the Global Notes, DTC will credit the accounts of Participants designated by the Initial Purchasers with portions of the principal amounts of the Global Notes and (ii) ownership of such interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes). All interests in a Global Note, may be subject to the procedures and requirements of DTC. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in Global Note to such persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants and certain banks, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. Except as described below, owners of interest in the Global Notes will not have Exchange Notes registered in their names, will not receive physical delivery of Exchange Notes in certificated form and will not be considered the registered owners or "holders" thereof under the Indentures for any purpose. Payments in respect of the principal of, and premium, if any Additional Interest, if any, and interest on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the Indentures. Under the terms of the Indentures, the Authority and the Trustees will treat the persons in whose names the Exchange Notes, including the Global Notes are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither the Authority, the Trustees nor any agent of the Authority or the Trustees has or will have any responsibility or liability for (i) any aspect of DTC's records or any Participant's or Indirect participant's records relating to or payments made on account of beneficial ownership interests in the Global Notes, or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Notes or (ii) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advise the Authority that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interests), is to credit the accounts of the relevent Participants with the payment on the payment date, in amounts proportionate to their respective holdings in the principal amount of the beneficial interest in the relevent security as shown on the records of DTC unless DTC has reason to believe it will not receive payment on such payment date. Payments by the Participants and the Indirect Participants to the beneficial owners of the Exchange Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of the DTC, the Trustees or the Authority. Neither the Authority nor the Trustees will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Exchange Notes, and the Authority and the Trustees may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes. 111 Interest in the Global Notes are expected to be eligible to trade DTC's Same-Day Funds Settlement System and secondary market trading activity in such interests will, therefor, settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its Participants. See "--Same Day Settlement and payment." Subject to the transfer restrictions shown under "Notice to Investors, " transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same day funds. DTC has advised the Authority that it will take any action permitted to be taken by a holder of Exchange Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Exchange Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Exchange Notes, DTC reserves the right to exchange the Global Notes for legended Exchange Notes in certificated form, and to distribute such Exchange Notes to its Participants. Exchange of Book-Entry Exchange Notes for Certificated Notes A Global Note is exchangeable for definitive Exchange Notes in registered certificated form ("Certificated Notes") if (i) DTC (x) notifies the Authority that it is unwilling or unable to continue as depositary for the Global Notes and the Authority thereupon fails to appoint a successor depositary or (y) has ceased to be a clearing agency registered under the Exchange Act, (ii) the Authority, at its option, notifies the applicable Trustee in writing that it elects to cause the issuance of the Certificated Notes or (iii) there shall have occurred and be continuing a Default or Event of Default with respect to the Exchange Notes. In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon request but only upon prior written notice given to the applicable Trustee by or on behalf of DTC in accordance with the Indentures. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in "Notice to Investors," unless the Authority determines otherwise in compliance with applicable law. Exchange of Certificated Exchange Notes for Book-Entry Notes Exchange Notes in certificated form may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the applicable Trustee a written certificate (in the form provided in the Indentures) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Exchange Notes. See "Notice to Investors." Same Day Settlement and Payment The Indentures require that payments in respect of the Exchange Notes represented by the Global Notes (including principal, premium, if any, interest and Additional Interest, if any) be made by wire transfer of immediately available funds to the accounts specified by the Global Note holder. With respect to Exchange Notes in certificated form, the Authority will make all payments of principal, premium, if any, interest and Additional Interest, if any, by wire transfer of immediately available funds to the accounts specified by the holders thereof that holds at least $1.0 million in principal amount of Exchange Notes or, if no such account is specified, by mailing a check to each such holder's registered address. Registration Rights; Additional Interest The Authority and the Initial Purchasers entered into registration rights agreements, pursuant to which, the Authority is filing with the Commission this Exchange Offer Registration Statement under the Securities Act with respect to the Exchange Notes. Upon the effectiveness of the Exchange Offer Registration Statement, the Authority will offer to the holders of Transfer Restricted Securities pursuant to the Exchange Offers who are 112 able to make certain representations the opportunity to exchange their Transfer Restricted Securities for Exchange Notes. If (i) the Authority is not required to file the Exchange Offer Registration Statement or permitted to consummate an Exchange Offer because such Exchange Offer is not permitted by applicable law or Commission policy or (ii) any holder of Transfer Restricted Securities notifies the Authority before the 20th day following consummation of an Exchange Offer that (A) it is prohibited by law or Commission policy from participating in such Exchange Offer or (B) that it may not resell the Exchange Notes acquired by it in the Exchange Offers 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 owns Outstanding Notes acquired directly from the Authority or an affiliate of the Authority, the Authority will file with the Commission a Shelf Registration Statement to cover resales of the Outstanding Notes by the holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. The Authority will use its best efforts to cause the applicable registration statement to be declared effective as promptly as possible by the Commission. For purposes of the foregoing, "Transfer Restricted Securities" means each Outstanding Note until (i) the date on which such Outstanding Note has been exchanged by a person other than a broker-dealer for an Exchange Note in the Exchange Offers, (ii) following the exchange by a broker-dealer in an Exchange Offer of an Outstanding Note for a Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or before the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act. The registration rights agreements each provide that (i) the Authority will file an Exchange Offer Registration Statement with the Commission on or before 90 days after the Closing Date, (ii) the Authority will use its best efforts to have the Exchange Offer Registration Statement declared effective by the Commission on or before 150 days after the Closing Date, (iii) unless the Exchange Offers would not be permitted by applicable law or Commission policy, the Authority will commence the Exchange Offers and use its best efforts to issue on or before 30 business days after the date on which the Exchange Offer Registration Statement was declared effective by the Commission, Exchange Notes in exchange for all Outstanding Notes tendered prior thereto in the Exchange Offers and (iv) if obligated to file the Shelf Registration Statement, the Authority will use its best efforts to file the Shelf Registration Statement with the Commission on or before 30 days after such filing obligation arises and to cause the Shelf Registration to be declared effective by the Commission on or before 90 days after such obligation arises. If (a) the Authority fails to file any of the Registration Statements required by the registration rights agreements on or before the date specified for such filing, (b) any of such Registration Statements is not declared effective by the Commission on or before the date specified for such effectiveness (the "Effectiveness Target Date"), or (c) the Authority fails to consummate the Exchange Offers within 30 business days of the Effectiveness Target Date with respect to the Exchange Offer Registration Statement, or (d) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the registration rights agreements (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Authority will pay Additional Interest to each holder of Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Notes held by such holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Notes. All accrued Additional Interest will be paid by the Authority on each date on which the payment of Additional Interest is due (which date shall be the next Interest Payment Date as provided in the Notes) to the Global Note holder by wire transfer of immediately available funds or by federal funds check and to holders of Certificated Securities by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of Additional Interest will cease. 113 Holders of Outstanding Notes will be required to make certain representations to the Authority (as described in the registration rights agreement) to participate in the Exchange Offers and will be required to deliver information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods shown in the registration rights agreements to have their Outstanding Notes included in the Shelf Registration Statement and benefit from the provisions regarding Additional Interest shown above. Certain Definitions Shown below are certain defined terms used in the Indentures. Reference is made to the Indentures for all of such terms, as well as any other capitalized terms used herein for which no definition is provided. Cross references to captions shall means the respective caption, as appropriate, under the subsections "--Description of the Senior Exchange Notes" and "--Description of the Senior Subordinated Exchange Notes." "Acquired Indebtedness" means, with respect to any specified Person, (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person; and (2) Indebtedness secured by a Lien 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," 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. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings. "Asset Sale" means (1) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Authority and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the respective Indentures described above under the captions "--Repurchase at the Option of Holders--Change of Control" and not by the provisions of the Asset Sale covenant; and (2) the issuance by the Authority or any of its Restricted Subsidiaries of Equity Interests of any of the Authority's or its Restricted Subsidiaries' Restricted Subsidiaries or the sale by the Authority or any of its Subsidiaries of any Equity Interests in any of their respective Subsidiaries. Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales: (1) any single transaction or series of related transactions that: (a) involves assets having a fair market value of less than $1.0 million; or (b) results in net proceeds to the Authority and its Restricted Subsidiaries of less than $1.0 million; (2) a transfer of assets between or among the Authority and its Wholly Owned Restricted Subsidiaries; (3) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Authority or to another Wholly Owned Restricted Subsidiary; (4) a Restricted Payment or Permitted Investment that is permitted by the covenant described above under the captions "--Certain Covenants-- Restricted Payments;" 114 (5) any Event of Loss; and (6) any lease or sublease permitted under the covenant described under the captions entitled "--Certain Covenants--Restrictions on Leasing and Dedication of Property." The Authority is prohibited from making an Asset Sale of Key Project Assets. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended (or may, at the option of the lessor, be extended). Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Attributable Value" means, with respect to any sale and leaseback transaction, as of the time of determination, the total obligation (discounted to present value at the rate of interest equal to that of the terms of the Senior Exchange Notes, compounded semi-annually) of the lessee for rental payments (other than amounts required to be paid on account of property taxes) during the remaining portion of the base terms of the lease included in such sale and leaseback transaction. "Authority" means the Mohegan Tribal Gaming Authority together with any subdivision, agency or subunit that has no separate legal existence from the Mohegan Tribal Gaming Authority, and any successor and assignee thereto. "BIA" means the Bureau of Indian Affairs. "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 on a balance sheet in accordance with GAAP. "Capital Stock" means (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) 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, the issuing Person; but excluding any interest under the Relinquishment Agreement. "Cash Equivalents" means (1) United States dollars; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition; (3) 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 lender party to the Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or better, 115 (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within six months after the date of acquisition; and (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1)-(5) of this definition. "Change of Control" means the occurrence of any of the following: (1) the Authority ceases to be a wholly-owned unit, instrumentality or subdivision of the government of the Tribe; (2) the Authority ceases to have the exclusive legal right to operate gaming operations of the Tribe; (3) 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, or (4) the Authority sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its assets to, or consolidates or merges with or into any other person. "Code" means the Internal Revenue Code of 1986, as amended. "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. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (1) an amount equal to any extraordinary loss (including without limitation any non-cash charges or losses arising from adjustments relating to the Relinquishment Agreement) plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (2) provision for taxes based on the income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income; plus (3) consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments, if any, pursuant to Hedging Obligations), but excluding interest expense on the Junior Subordinated Notes, to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (4) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period), non-cash charges associated with equity option plans and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus 116 (5) non-cash items increasing such Consolidated Net Income for such period (including without limitation any non-cash items arising from adjustments relating to the Relinquishment Agreement), minus (6) to the extent not included in computing such Consolidated Net Income, any revenues received or accrued by the Authority or any of its Subsidiaries from any Person (other than the Authority or any of its Subsidiaries) in respect of any Investment for such period, all determined on a consolidated basis and in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Subsidiary of a Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (1) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Wholly Owned Restricted Subsidiary thereof; (2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (3) the Net Income of any Person acquired in a pooling of interests transaction for any period before the date of such acquisition shall be excluded; (4) the cumulative effect of a change in accounting principles shall be excluded; (5) the Net Income shall be reduced by the amount of payments pursuant to the Relinquishment Agreement, paid or payable, for such period based on 5% of the revenues (as defined in the Relinquishment Agreement) generated in such period; and (6) both the interest income related to the Defeasance Trust and the interest expense on the Junior Subordinated Notes shall be excluded so long as the payment of principal, premium and interest on the Junior Subordinated Notes at redemption on January 1, 2000 is fully covered by the amounts of the Defeasance Trust. "Consolidated Net Tangible Assets" means, with respect to the Authority and its Restricted Subsidiaries, taken as a whole, the aggregate amount of assets (less applicable reserves and other items deducted in accordance with GAAP) after deducting therefrom (a) all liabilities (other than liabilities incurred with respect to the Relinquishment Agreement) and (b) all goodwill, trade names, trademarks, patents, organization expenses and other like intangibles of the Authority and its Restricted Subsidiaries, in each case, to the extent included in the total amount of assets, all as shown on the most recent consolidated balance sheet of the Authority and its Restricted Subsidiaries and calculated in accordance with GAAP excluding assets in the Defeasance Trust and the liabilities represented by the Junior Subordinated Notes. 117 "Consumer Price Index" means The Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-1984=100 as compiled and released by the Bureau of Labor Statistics. "Credit Facilities" means, with respect to the Authority or any Restricted Subsidiary, one or more debt facilities (including, without limitation, the Loan Agreement) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which the Notes are first issued and authenticated under the Indentures shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the covenant described under the captions entitled "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." "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. "Defeasance Trust" means that certain trust established pursuant to Section 12.04(a) of the Note Purchase Agreement under which the Junior Subordinated Notes were issued for the covenant defeasance of the Junior Subordinated Notes to their redemption date on January 1, 2000. "Designated Senior Indebtedness" means Indebtedness under the Loan Agreement and any other Indebtedness permitted under the Indentures the principal amount of which is $20.0 million or more and that has been designated by the Authority as "Designated Senior Indebtedness." "Development Services Agreement" means that certain Development Services Agreement dated February 7, 1998 among the Authority, the Tribe and TCA. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or before the date that is after the date on which the Senior Exchange Notes or Senior Subordinated Exchange Notes, as the case may be, mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Authority to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Authority may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "--Certain Covenants--Restricted Payments." "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). "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 instead of clause (ii) or (iii) above. "Exchange Notes" means, collectively, the Senior Exchange Notes and the Senior Subordinated Exchange Notes. "Existing Indebtedness" means up to $617.8 million in aggregate original principal amount of Indebtedness of the Authority (other than Indebtedness under the Loan Agreement) in existence on the date of the Indentures, until such amounts are repaid. 118 "Existing Secured Notes" means the Authority's 13 1/2% Senior Secured Notes due 2002 with Cash Flow Participation Interest. "Expansion Project" means the project to expand the existing Mohegan Sun casino as more fully described in this Prospectus. "Financing Lease" means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments, if any, pursuant to Hedging Obligations, but excluding interest expense on the Junior Subordinated Notes so long as the principal, premium and interest thereon at redemption on January 1, 2000 are covered by amounts in the Defeasance Trust.; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus (4) the product of (a) all cash dividend payments or other distributions (and non-cash dividend payments in the case of a Person that is a Restricted Subsidiary) on any series of preferred equity of such Person, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. If the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock after the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but before the date on which 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, repayment or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or after such reference period and on or before the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (3) of the proviso shown in the definition of Consolidated Net Income; (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of before the Calculation Date, shall be excluded; and 119 (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of before the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date. "GAAP" means generally accepted accounting principles shown 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 ("FASB") or in such other statements by such other entity as have been approved by a significant segment of the accounting profession which are in effect on the date of the Indentures. "Gaming" means any and all activities defined as Class II or Class III Gaming under IGRA or authorized under the Compact. "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. "Government Service Payments" means (1) an annual payment to the Tribe by the Authority in the amount of $14.0 million, which amount shall be adjusted annually on the last day of each calendar year commencing with the year 2000 by the Consumer Price Index as published for the applicable year and (2) amounts equal to those reflected on each annual audited income statement of the Authority as prepared in accordance with GAAP relating to payment for governmental services (including charges for utilities, police and fire department services, health and emergency medical services, the pro rata portion of Tribal Council costs and salaries attributable to the operations of the Authority, and similar pro rata costs of other tribal departments, in each case, to the extent that the costs of such departments are attributable to the operations of the Authority) by the Authority to the Tribe or any of its representatives, political subunits, councils, agencies or instrumentalities. "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, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person, (1) the obligations of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and (2) the obligations of such Person under other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "IGRA" means the Indian Gaming Regulatory Act of 1988, PL 100-497, U.S.C. 2701 et seq. as same may, from time to time, be amended. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of (1) borrowed money; 120 (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) banker's acceptances; (4) Capital Lease Obligations; (5) the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (6) any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by such Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indentures" means, collectively, the Senior Notes Indenture and the Senior Subordinated Notes Indenture. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), 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, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Authority or any Subsidiary of the Authority sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Authority such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Authority, the Authority shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the captions "--Restricted Payments." "Junior Subordinated Notes" means the $90.0 million in aggregate original principal amount (plus any accrued and unpaid interest) of junior subordinated notes of the Authority. "Key Project Assets" means (1) the Lease and any real property or interest in real property comprising the Resort held in trust for the Tribe by the United States, (2) any improvements (including, without limitation the Resort) to the leasehold estate under the Lease or such real property comprising the Resort (but excluding any obsolete personal property or real property improvements determined by the Authority to be no longer useful to the operations of the Resort), and (3) any business records of the Authority or the Tribe relating to the operation of the Resort. "Lease" means the Land Lease between the Tribe and the Authority, as the same may be amended in accordance with the terms thereof and of the Indentures. 121 "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). "Loan Agreement" means that certain Loan Agreement, to be dated as of March 3, 1999, by and among the Authority, the Tribe, the lenders thereunder and Bank of America National Trust and Savings Association as Administrative Agent and the Documentation Agent and Syndication Agent referred to therein, including any related notes, guarantees, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time. "Management Agreement" means the Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 by and between the Authority and TCA 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 Indentures. "Management Fee" means the Management Fee under the Management Agreement. "Net Income" means, with respect to any Person for any period, the net income (loss) of such Person for such period, determined in accordance with GAAP and before any reduction in respect of dividends on preferred interests, excluding, however, (1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (A) any Asset Sale (including, without limitation, dispositions pursuant to sale leaseback transactions) or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss, less (3) in the case of any Person that is a partnership or a limited liability company, the amount of withholding for tax purposes of such Person for such period. "Net Proceeds" means the aggregate cash proceeds received by the Authority or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale including, without limitation, legal, accounting and investment banking fees, and sales commissions and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements and amounts required to be applied to the repayment of Indebtedness (other than, in the case of the Senior Subordinated Exchange Notes only, the repayment of Senior Indebtedness), secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "NIGC" means the National Indian Gaming Commission. "Non-Recourse Debt" means Indebtedness (1) as to which neither the Authority nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); 122 (2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Authority or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable before its stated maturity; and (3) as to which such Indebtedness specifies that the lenders thereunder will not have any recourse to the stock or assets of the Authority or any of its Restricted Subsidiaries. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "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. "Permitted Asset Swap" means the exchange by the Authority or any Restricted Subsidiary of any assets for other assets from a Person; provided that, the assets received in such exchange are believed by the Authority in good faith to be of substantially equivalent value and substantially all of which are either (i) long term assets that are used or useful in the Principal Business, (ii) cash or (iii) any combination of the foregoing clauses (i) and (ii). "Permitted Investments" means (1) any Investment in the Authority or in a Restricted Subsidiary of the Authority that is engaged in a Principal Business or a Related Business; (2) any Investment in cash or Cash Equivalents; (3) any Investment by the Authority or any Restricted Subsidiary of the Authority in a Person, if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Authority and a Subsidiary Guarantor, and is engaged in a Principal Business or a Related Business or (b) is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Authority or a Restricted Subsidiary of the Authority; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the captions "-- Repurchase at the Option of Holders--Asset Sales"; (5) any Investment in any Person engaged in the Principal Business or a Related Business having an aggregate fair market value (as determined in good faith by the Management Board and measured as of the date of such Investment, without giving effect to any subsequent increases or decreases in value) not to exceed $25.0 million at any one time outstanding; (6) Government Service Payments; (7) payroll advances to employees of the Authority or its Restricted Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount not to exceed $250,000 at any one time outstanding; (8) accounts and notes receivable if created or acquired in the ordinary course of business and which are payable or dischargeable in accordance with customary trade terms; (9) Investments related to Hedging Obligations, so long as such Hedging Obligations are not used for speculative purposes; and (10) any investment in government securities to be held in the Defeasance Trust to defease the Junior Subordinated Notes in accordance with their terms. 123 "Permitted Liens" means (1) Liens securing Indebtedness that was permitted by the terms of the respective Indenture to be incurred under clauses (1), (2), (5), (6), (7), (8) (to the extent that the Indebtedness so guaranteed is permitted to be secured by the respective Indenture) and (10) of the second paragraph of the covenant described under the captions entitled "--Certain Covenants-- Incurrence of Indebtedness and Issuance of Preferred Stock"; (2) Liens in favor of the Authority or a Restricted Subsidiary; (3) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature (including, without limitation, pledges or deposits made in connection with obligatory workers' compensation laws, unemployment insurance or similar laws) incurred in the ordinary course of business; (4) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (5) of the second paragraph of the covenant entitled "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with such Indebtedness; (5) Liens existing on the date of the Indentures; (6) Liens arising as a result of survey exceptions, title defects, encumbrances, easements, reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes or zoning or other restrictions as to the use of real property not interfering with the ordinary conduct of the business of the Authority or any of its Restricted Subsidiaries; (7) Liens arising by operation of law in favor of carriers, warehousemen, landlords, mechanics, materialmen, laborers, employees or suppliers, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof; (8) Liens incurred as a result of any interest or title of a lessor or lessee under any lease of property (including any Lien granted by such lessor or lessee but excluding any Lien arising in respect of a Financing Lease); (9) Liens in favor of the Tribe representing the ground lessor's interest under the Lease; (10) Liens on property existing at the time or acquisition thereof by the Authority or a Restricted Subsidiary; provided, that such Liens were in existence before the contemplation of such acquisition; (11) Liens for taxes, assessments or governmental charges, claims or rights 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; (12) Liens securing Indebtedness permitted under clause (7) of the second paragraph of the covenant described under the captions entitled "-- Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock"; provided that such Liens are no more extensive that the liens securing the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded thereby; and (13) Liens incurred in the ordinary course of business of the Authority or a Restricted Subsidiary with respect to obligations that do not exceed $500,000 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; 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, 124 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, 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; (14) Liens created by or resulting from any legal proceeding with respect to which the Authority or a Restricted Subsidiary is prosecuting an appeal proceeding for review and the Authority or such Restricted Subsidiary is maintaining adequate reserves in connection with GAAP; and (15) any Lien on the assets in the Defeasance Trust with respect to the obligations of the Junior Subordinated Notes. "Permitted Proceed Uses" means (1) uses of the proceeds described in this Prospectus under "Use of Proceeds;" and (2) payments of principal, premium or interest on the Senior Exchange Notes and the Senior Subordinated Exchange Notes. "Permitted Refinancing Indebtedness" means any Indebtedness of the Authority or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Authority or any of its Restricted Subsidiaries; provided that (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of prepayment premiums and reasonable expenses incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has 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, defeased or refunded; provided that if the original maturity date of such Indebtedness is after the Stated Maturity of the Senior Exchange Notes, then such Permitted Refinancing Indebtedness shall have a maturity at least 180 days after the Senior Exchange Notes; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Senior Exchange Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Senior Exchange Notes on terms at least as favorable to the holders of Senior Exchange Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Authority or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "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. "Related Business" means any business related to the Principal Business. "Relinquishment Agreement" means the Relinquishment Agreement dated February 7, 1998 between the Authority and TCA. 125 "Resort" means the multi-amenity gaming and entertainment resort located in Uncasville, Connecticut and the convention center, retail facilities, arena, hotel and improvements proposed to be constructed adjacent thereto, as described in this Prospectus 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 and (ii) any equipment leased from a third party in the ordinary course of business. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Senior Exchange Notes" means the Authority's 8 1/8% Senior Exchange Notes due 2006 issued pursuant to the Senior Notes Registration Rights Agreement. "Senior Indebtedness" means (1) all Indebtedness outstanding under the Credit Facilities and all Hedging Obligations with respect thereto including, without limitation, all principal, interest, fees and other amounts payable with respect thereto, including any interest which accrues following any bankruptcy or insolvency of the Authority, the Tribe or any Subsidiary Guarantor; (2) any other Indebtedness permitted to be incurred by the Authority under the terms of the Indentures, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Senior Subordinated Exchange Notes; (3) all Obligations with respect to the foregoing; and (4) at anytime, the Senior Relinquishment Payments (as defined in the Relinquishment Agreement) to the extent then due and owing pursuant to the terms of the Relinquishment Agreement at such time. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include (1) any Indebtedness of the Authority to any of its Restricted Subsidiaries or other Affiliates; or (2) any Indebtedness that is incurred in violation of the Indentures. "Senior Exchange Notes" means the Authority's 8 1/8% Senior Exchange Notes due 2006. "Senior Subordinated Exchange Notes" means the Authority's 8 3/4% Senior Subordinated Exchange Notes due 2009 issued pursuant to the Senior Subordinated Notes Registration Rights Agreement. "Senior Subsidiary Guarantee" means the joint and several guarantee by the Authority's Subsidiaries of the Authority's obligations under the Senior Exchange Notes, in substantially the form of such Senior Subsidiary Guarantee attached as Exhibit E to the Senior Notes Indenture. "Senior Subordinated Exchange Notes" means the Authority's 8 3/4% Senior Subordinated Exchange Notes due 2009. "Senior Subordinated Subsidiary Guarantee" means the joint and several guarantee by the Authority's Subsidiaries of the Authority's obligations under the Senior Subordinated Exchange Notes, in substantially the form of such Senior Subordinated Subsidiary Guarantee attached as Exhibit E to the Senior Subordinated Notes Indenture. "Side Letters" means (i) that certain Side Letter, dated February 7, 1998 regarding the Junior Subordinated Notes, as amended; (ii) that certain Side Letter, dated February 7, 1998 relating to various waivers under the existing Management Agreement; (iii) that certain Side Letter, dated February 7, 1998, regarding the use of TCA personnel following this termination of the Management Agreement; (iv) that certain Side Letter, dated February 22, 1999, regarding the previously proposed exchange of Junior Subordinated Notes for Senior Subordinated Exchange Notes and (v) that certain Side Letter, dated February 22, 1999, regarding the earlier Side Letters, in connection with the defeasance of the Junior Subordinated Notes. 126 "Significant Subsidiary" means any subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid including as a result of any mandatory sinking fund payment or mandatory redemption in the documentation governing such Indebtedness in effect on the date hereof or, if such Indebtedness is incurred after the date of the Indentures, in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal before the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means any Indebtedness which by its terms is expressly subordinate in right of payment in any respect to the payment of any obligation on, in the case of the Senior Exchange Notes, the Senior Exchange Notes and, in the case of the Senior Subordinated Exchange Notes, the Senior Subordinated Exchange Notes. "Subsidiary" means: (1) any instrumentality or subdivision or subunit of the Authority that has a separate legal existence or status or whose property and assets would not otherwise be bound to the terms of the Indentures; or (2) with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of the 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. "Subsidiary Guarantor" means any Subsidiary of the Authority that executes a Senior Subsidiary Guarantee or a Senior Subordinated Subsidiary Guarantee, as the case may be, in accordance with the provisions of the respective Indentures. "Sun International" means Sun International Hotels Limited, a Bahamian corporation or any of its affiliates. "TCA" means Trading Cove Associates. "Tender Offer" means the Tender Offer and the Consent Solicitation with respect to $175.0 million aggregate principal amount of the Existing Secured Notes. "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 or authorize and regulate gaming on the Mohegan Reservation pursuant to IGRA. "Tribal Tax Code" means any sales, use, room occupancy and related excise taxes, including admissions and cabaret taxes and any other tax (other than income tax) that may be imposed by the State of Connecticut that the Tribe may impose on the Authority, its patrons or operations; provided, however, that the rate and scope of such taxes shall not be more onerous than those imposed by the State of Connecticut. "Tribal Council" means the Tribe's nine member elected council which exercises all the legislative and executive powers of the Tribe. "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. (S) 83. 127 "Unrestricted Subsidiary" means any Subsidiary that is designated in writing by the Authority as an Unrestricted Subsidiary, but only to the extent that such Subsidiary (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the Authority or any Restricted Subsidiary of the Authority unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Authority or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Authority; (3) is a Person with respect to which neither the Authority nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Authority or any of its Restricted Subsidiaries; and (5) has at least one director on its board of directors that is not a director or executive officer of the Authority or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Authority or any of its Restricted Subsidiaries. Any such designation by the Management Board shall be evidenced to the Trustees by filing with the Trustees a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenant described above under the captions "--Certain Covenants-- Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indentures and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Authority as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the Authority shall be in default of such covenant). The Authority may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Authority of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the captions "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Management Board or Board of Directors, as the case may be, of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) 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 (b) the number of years (calculated to the nearest one- twelfth) that will elapse between such date and the making of such payment, by (2) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. 128 PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired as a result of market-making activities or other trading activities. The Authority has agreed that, starting on the Expiration Date and ending on the close of business on the first anniversary of the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. The Authority will not receive any proceeds from any sale or Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own accounts pursuant to the Exchange Offers may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices. Any such resale may be made 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 Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offers and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such resale of Exchange Notes and any commissions 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 acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of one year after the Expiration Date, the Authority will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Authority has agreed to pay all expenses incident to the Exchange Offers (including the expenses of one counsel for the holders of the Outstanding Notes), other than commissions or concessions of any brokers or dealers, and will indemnify the holders of the Outstanding Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain legal matters with regard to the validity of the Exchange Notes will be passed upon for the Authority by Hogan & Hartson L.L.P., Washington, D.C. Latham & Watkins, New York, New York, has acted as counsel for the initial purchasers of the Outstanding Notes. INDEPENDENT AUDITORS The financial statements of the Authority at September 30, 1998 and September 30, 1997, and for the fiscal years then ended, appearing in this Prospectus have been audited by Arthur Andersen LLP, independent auditors, as stated in their report, which is included herein. 129 WHERE YOU CAN GET MORE INFORMATION The Authority, although not subject to the informational requirements of the Securities Exchange Act of 1934, has agreed, according to the terms of the identures governing our Exchange Notes and which will govern the Exchange Notes, to subject itself to the reporting requirements of the Exchange Act, and, in conformance with our indentures, files information with the Securities and Exchange Commission (the "SEC" or the "Commission"). You may read and copy any of this information at the SEC's public reference rooms at: Public Reference Room New York Regional Office Chicago Regional Office 450 Fifth Street, NW 7 World Trade Center Citicorp Center Washington, DC 200549 Suite 1300 500 West Madison Street New York, New York 10048 Suite 1400 Chicago, Illinois 60661- 2511 You may call the SEC at 1-800-SEC-0330 130 INDEX TO FINANCIAL STATEMENTS
Page ---- Report of Independent Public Accountants.................................. F-2 Financial Statements Balance Sheets as of September 30, 1998 and 1997........................ F-3 Statements of Income (Loss) for the Year ended September 30, 1998 and the Period October 12, 1996 (date of commencement of operations) through September 30, 1997............................................. F-4 Statements of Capital for the Year ended September 30, 1998 and the Period October 12, 1996 (date of commencement of operations) through September 30, 1997..................................................... F-5 Statements of Cash Flows for the Years ended September 30, 1998 and 1997................................................................... F-6 Notes to Financial Statements........................................... F-7 Review Report of Independent Public Accountants........................... F-17 Unaudited Financial Statements Balance Sheets as of December 31, 1998 and September 30, 1998 (audit- ed).................................................................... F-18 Statements of Income for the Quarter Ended December 31, 1998 and 1997... F-19 Statements of Capital for the Quarter Ended December 31, 1998 and 1997.. F-20 Statements of Cash Flows for the Quarter Ended December 31, 1998 and 1997................................................................... F-21 Notes to Financial Statements........................................... F-22
F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Mohegan Tribal Gaming Authority: We have audited the accompanying balance sheets of the Mohegan Tribal Gaming Authority (the Authority) as of September 30, 1998 and 1997, and the related statements of income (loss) and capital for the year ended September 30, 1998 and for the period October 12, 1996 (date of commencement of operations), through September 30, 1997 and statements of cash flows for the years ended September 30, 1998 and 1997. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Mohegan Tribal Gaming Authority as of September 30, 1998 and 1997, and the results of its operations for the year ended September 30, 1998 and for the period October 12, 1996 (date of commencement of operations), through September 30, 1997 and its cash flows for the years ended September 30, 1998 and 1997, in conformity with generally accepted accounting principles. Arthur Andersen LLP Hartford, Connecticut December 21, 1998 F-2 MOHEGAN TRIBAL GAMING AUTHORITY BALANCE SHEETS (in thousands)
September 30, September 30, 1998 1997 ------------- ------------- ASSETS Current Assets: Cash and cash equivalents (Note 3)............... $ 36,264 $ 40,387 Restricted cash (Note 4)......................... 74,466 48,457 Receivables, net (Note 5)........................ 3,067 1,140 Inventories...................................... 5,027 4,516 Other current assets............................. 2,136 1,263 --------- -------- Total current assets........................... 120,960 95,763 Non-Current Assets: Property and equipment, net (Note 6)............. 296,380 280,216 Trademark........................................ 130,000 -- Other assets..................................... 7,140 10,995 --------- -------- Total assets................................... $ 554,480 $386,974 ========= ======== LIABILITIES AND CAPITAL Current Liabilities: Current portion of capital lease obligations (Note 9)........................................ $ 11,004 $ 9,200 Accounts payable and accrued expenses (Note 7)... 46,857 35,985 Accrued interest payable (Note 8)................ 14,692 12,912 --------- -------- Total current liabilities...................... 72,553 58,097 Non-Current Liabilities: Long-term debt (Note 8).......................... 296,539 282,909 Relinquishment liability (Note 13)............... 549,125 -- Capital lease obligations, net of current portion (Note 9)........................................ 18,563 24,037 --------- -------- Total liabilities.............................. 936,780 365,043 --------- -------- Commitments and Contingencies (Note 12) Capital: Total capital.................................... (382,300) 21,931 --------- -------- Total liabilities and capital.................... $ 554,480 $386,974 ========= ========
The accompanying notes are an integral part of these financial statements. F-3 MOHEGAN TRIBAL GAMING AUTHORITY STATEMENTS OF INCOME (LOSS) (in thousands)
For the period October 12, 1996 (date of commencement For the Fiscal of operations) Year Ended through September 30, September 30, 1998 1997 -------------- -------------- Revenues: Gaming.......................................... $ 543,870 $440,540 Food and beverage............................... 55,544 46,925 Retail and other................................ 36,328 21,489 Bingo operations................................ 5,673 3,148 --------- -------- Gross revenues.................................. 641,415 512,102 Less--Promotional allowances.................... (66,272) (44,265) --------- -------- Net revenues.................................... 575,143 467,837 --------- -------- Costs and Expenses: Gaming.......................................... 237,946 209,086 Food and beverage............................... 21,212 24,168 Retail and other................................ 24,607 16,282 Bingo operations................................ 3,529 4,508 General and administration...................... 87,529 78,366 Management fee.................................. 47,442 23,243 Depreciation and amortization................... 17,528 32,155 --------- -------- Total costs and expenses...................... 439,793 387,808 --------- -------- Income from operations.......................... 135,350 80,029 --------- -------- Other income (expense): Interest and other income....................... 2,400 1,795 Interest expense................................ (50,172) (45,137) --------- -------- (47,772) (43,342) --------- -------- Income before extraordinary items............... 87,578 36,687 Extraordinary items (Note 14)................... (419,457) -- --------- -------- Net income (loss)............................... $(331,879) $ 36,687 ========= ========
The accompanying notes are an integral part of these financial statements. F-4 MOHEGAN TRIBAL GAMING AUTHORITY STATEMENTS OF CAPITAL (in thousands)
For the period October 12, 1996 (date of commencement For the Fiscal of operations) Year Ended through September 30, September 30, 1998 1997 -------------- -------------- Beginning balance................................ $ 21,931 $ -- Net income (loss)................................ (331,879) 36,687 Distributions to Tribe........................... (72,352) (14,756) --------- -------- Ending balance................................... $(382,300) $ 21,931 ========= ========
The accompanying notes are an integral part of these financial statements. F-5 MOHEGAN TRIBAL GAMING AUTHORITY STATEMENTS OF CASH FLOWS (in thousands)
For the For the Fiscal Fiscal Year Ended Year Ended September 30, September 30, 1998 1997 ------------- ------------- Cash flows provided by operating activities: Net income (loss)................................ $(331,879) $ 36,687 Adjustments to reconcile net income (loss) to net cash flow provided by operating activities: Depreciation and amortization.................. 17,528 32,155 Relinquishment expense......................... 419,125 -- Loss on early extinguishment of debt........... 332 -- Loss on asset disposal......................... 124 -- Provision for losses on receivables............ 523 231 Changes in operating assets and liabilities: (Increase) decrease in receivables and other assets........................................ (1,064) 177 Increase in accounts payable and accrued ex- penses........................................ 29,886 47,970 --------- -------- Net cash flows provided by operating activi- ties.......................................... 134,575 117,220 --------- -------- Cash flows used in investing activities: Purchase of property and equipment............... (32,731) (13,010) Decrease in construction payable................. (3,604) (40,646) --------- -------- Net cash flows used in investing activities.... (36,335) (53,656) --------- -------- Cash flows (used in) provided by financing activi- ties: Distributions to Tribe........................... (72,352) (14,756) Increase in short-term borrowings................ -- 7,056 Proceeds from equipment financing................ 9,772 17,439 Payment on equipment financing and short-term borrowings...................................... (13,774) (19,996) Additional borrowing under Secured Completion Guarantee....................................... -- 23,000 --------- -------- Net cash flows (used in) provided by financing activities.................................... (76,354) 12,743 --------- -------- Net increase in cash and cash equivalents........ 21,886 76,307 Cash and cash equivalents at beginning of peri- od.............................................. 88,844 12,537 --------- -------- Cash and cash equivalents at end of period....... $ 110,730 $ 88,844 ========= ======== Supplemental disclosures: Cash paid during the period for interest......... $ 34,763 $ 30,140 Debt assumed from acquisition of property........ $ -- $ 22,739 Trademark........................................ $ 130,000 $ --
The accompanying notes are an integral part of these financial statements. F-6 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 Note 1--Organization and Basis of Presentation 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 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, 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 "Mohegan Compact") that has been approved by the U.S. Secretary of the Interior. On October 12, 1996, the Authority opened a casino known as Mohegan Sun ("Mohegan Sun"). The Authority is governed by a Management Board, which consists of the nine members of the Tribal Council. The Management Board has engaged Trading Cove Associates ("TCA"), a Connecticut general partnership, to manage the operation of Mohegan Sun pursuant to a seven-year contract (the "Management Agreement"). TCA is 50% owned by Sun Cove Limited, an affiliate of Sun International Hotels Limited ("Sun International"), and 50% owned by Waterford Gaming L.L.C. (See Note 13 for discussion of Relinquishment Agreement between the Tribe and TCA). Note 2--Summary of Significant Accounting Policies Management's Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Authority classifies as cash all highly liquid investments with a maturity of three months or less when purchased. Cash equivalents are carried at cost, which approximates market value. Inventories Inventories are stated at the lower of the cost or market value. Cost is determined by using the first-in, first-out method. Property and Equipment Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line basis over the estimated useful lives of the assets as follows: Buildings and land improvements.................................... 40 years Furniture and equipment............................................ 3-7 years
The costs of significant improvements are capitalized. Costs of normal repairs are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the determination of income. Long-Lived Assets The Authority adopted the provisions of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets," ("SFAS 121"). SFAS 121 requires, among other F-7 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) things, that an entity review its long-lived assets and certain related intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. As a result of its review, the Authority does not believe that any asset impairment exists in the recoverability of its long-lived assets as of September 30, 1998. Fair Value of Financial Instruments The fair value amounts disclosed below have been reported to meet the disclosure requirements of SFAS No. 107, "Disclosures about Fair Values of Financial Instruments" and are not necessarily indicative of the amounts that the Authority could realize in a current market exchange. The carrying amount of cash and cash equivalents, receivables, accounts payables and accrued expenses, and capital lease obligations approximate fair value. At September 30, 1998, the fair value of the Authority's financing facilities and related deferred interest ($31.5 million at September 30, 1998) is as follows: Existing Secured Notes......................................... $207 million Junior Subordinated Notes...................................... $106 million
Revenue Recognition The Authority recognizes casino revenue as gaming wins less gaming losses. Revenues from food and beverage, retail and special events are recognized at the time the service is performed. Promotional Allowances The retail value of food and beverage and other services furnished to casino guests without charge is included in gross revenue and then deducted as promotional allowances. The estimated value of providing such promotional allowances was included in revenues as follows (in thousands):
For the period October 12, 1996 (date of commencement For the year ended of operations) through September 30, 1998 September 30, 1997 ------------------ ---------------------- Food and beverage.................. $34,783 $26,871 Retail............................. 28,027 15,955 Other.............................. 3,462 1,439 ------- ------- $66,272 $44,265 ======= =======
Advertising The Authority expenses the production costs of advertising the first time the advertising takes place, except for billboard advertising which is capitalized and amortized over its expected period of future benefits. The capitalized costs of the advertising are amortized over the terms of the contract following the month in which it appears. Trademarks Trademarks are amortized on a straight-line basis over the estimated periods benefited, but not exceeding 40 years. F-8 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) 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 such, the Authority has tax-exempt status with respect to federal and state income taxes. New Accounting Pronouncements In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive Income." This statement establishes standards for reporting and displaying of comprehensive income and its components in the financial statements. Adoption of SFAS No. 130 is required for fiscal years beginning after December 15, 1997. Management believes the adoption of SFAS No. 130 will not have a material impact on the Authority's financial position or results of operations. In June 1997, Statement of Financial Accounting Standards No. 131 ("SFAS No. 131"), "Disclosures about Segments of an Enterprise and Related Information" was issued. This statement requires that public business enterprises report certain information about operating segments in complete sets of financial statements of the enterprise and in condensed financial statements of interim periods issued to shareholders. It also requires that public business enterprises report certain information about their products and services, the geographic areas in which they operate, and their major customers. Adoption of SFAS No. 131 is required for fiscal years beginning after December 15, 1997. The Authority currently discloses financial data in accordance with existing accounting and disclosure requirements. At the appropriate time the Authority will modify its current presentation, if necessary, to meet the requirements of SFAS No. 131. Management believes the adoption of SFAS No. 131 will have no impact on the Authority's financial position or results of operations. In June 1998, Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities" was issued. This statement revises the accounting for derivative financial instruments. The Authority is currently analyzing the impacts of this statement which management does not expect to have a material impact on the Authority's financial position or results of operations. In April 1998, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-Up Activities," which revises the accounting for start-up costs and will require the expensing of certain costs which the Authority has historically capitalized. The Authority is currently analyzing the impacts of this statement, which is effective for fiscal years beginning after December 15, 1998. Management does not expect this statement to have a material impact on the Authority's financial position or results of operations. Reclassifications Certain amounts in the 1997 financial statements have been reclassified to conform with the 1998 presentation. Note 3--Cash and Cash Equivalents At September 30, 1998 and 1997, the Authority had $5.3 million and $14.0 million, respectively invested in commercial paper. For reporting purposes, cash equivalents include all operating cash as well as in-house funds. F-9 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) Note 4--Restricted Cash Components of restricted cash were as follows (in thousands):
September 30, September 30, 1998 1997 ------------- ------------- Replacement reserve.............................. $ 250 $ 1,500 Cash maintenance................................. 10,000 4,500 Interest and excess cash flow.................... 64,216 42,457 ------- ------- $74,466 $48,457 ======= =======
Replacement Reserve Fund Pursuant to terms of the Management Agreement, TCA is required to establish a Replacement Reserve Fund, which may be used to pay any approved budgeted capital expenditures. Any portion of the Replacement Reserve Fund which remains unused at the end of any fiscal year will be carried forward to the following year. TCA and the Tribe are each required to make monthly contributions to the Replacement Reserve Fund at the rate of 60% from the Tribe and 40% from TCA up to a combined total of $3.0 million per year from both parties. As of September 30, 1998 and 1997, the unused balance in the Replacement Reserve Fund totaled $250,000 and $1.5 million, respectively. Cash Maintenance Account The Existing Secured Notes provide that the Authority shall deposit into the Cash Maintenance Account, on a monthly basis, 1/2 of $6.0 million, for each calendar year, plus any amounts deferred from any prior month, no later than 25 days after the end of such calendar month. As required under the Existing Secured Notes, $10.0 million and $4.5 million have been deposited in the Cash Maintenance Account as of September 30, 1998 and 1997, respectively. Interest and Excess Cash Flow Account The Existing Secured Notes provide that the Authority shall 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 Secured Notes, 50% of the Excess Cash Flow (as defined) for the prior month on the Existing Secured Notes, 100% of all Deferred Subordinated Interest for the prior month, and the amount of Cash Flow Participation Interest accrued for the prior month. Amounts deposited into the Interest and Excess Cash Flow Account are invested only in cash or cash equivalents (See Note 8). Note 5--Accounts Receivable The Authority maintains an allowance for doubtful accounts which is based on management's estimate of the amount expected to be uncollectible considering historical experience and the information management obtains regarding the credit worthiness of the customer. The collectibility of these receivables could be affected by future business or economic trends. Although management believes the allowance is adequate, it is possible that the estimated amount of cash collections could change. At September 30, 1998 and 1997, the Authority established $348,000 and $187,000, respectively in allowance for doubtful accounts. F-10 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) Note 6--Property and Equipment, Net Components of property and equipment were as follows (in thousands):
September 30, September 30, 1998 1997 ------------- ------------- Land............................................. $ 28,581 $ 28,581 Land improvements................................ 47,350 41,016 Buildings........................................ 176,514 162,651 Furniture and equipment.......................... 64,153 55,014 Construction in progress......................... 8,576 5,445 -------- -------- 325,174 292,707 Less: accumulated depreciation................... (28,794) (12,491) -------- -------- $296,380 $280,216 ======== ========
Note 7--Accounts Payable and Accrued Expenses Components of accounts payable and accrued expenses were as follows (in thousands):
September 30, September 30, 1998 1997 ------------- ------------- Trade payables.......... $ 7,558 $ 5,054 Accrued payroll and re- lated taxes and bene- fits................... 9,931 9,955 Accrued gaming taxes.... 9,242 7,017 Other accrued liabili- ties................... 20,126 13,959 ------- ------- $46,857 $35,985 ======= =======
Note 8--Financing Facilities The Authority has a $2.5 million line-of-credit and letter of credit arrangement with Fleet National Bank. Interest is payable at the bank's base rate or LIBOR option. Borrowings are collateralized by substantially all assets of the Authority. This arrangement expires on March 31, 2000. As of September 30, 1998, the Authority has issued letters of credit of $1.9 million and has no borrowings outstanding under the line of credit. Financing facilities, as described below, consisted of the following (in thousands):
September 30, September 30, 1998 1997 ------------- ------------- Existing Secured Notes........................... $175,000 $175,000 Junior Subordinated Notes........................ 121,539 107,909 -------- -------- $296,539 $282,909 ======== ========
Existing Secured Notes On September 29, 1995, the Authority issued $175 million in senior secured notes (the "Existing Secured Notes") with fixed interest payable at a rate of 13.50% per annum and Cash Flow Participation Interest, as defined therein, in an aggregate amount of 5.0% of the Authority's Cash Flow up to, during any two consecutive semi-annual periods, ending September 30, $250 million of the Authority's Cash Flow. Fixed interest is payable semi-annually and commenced May 15, 1996. The aggregate amount of Cash Flow F-11 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) Participation Interest payable will be reduced pro rata for reductions in outstanding principal amount of Existing Secured Notes. The payment of Cash Flow Participation Interest may be deferred if the Authority's Fixed Charge Coverage Ratio, as defined, is less than 2.0 to 1.0. For the year ended September 30, 1998 and for the period from October 12, 1996 (date of commencement of operations) through September 30, 1997, the Authority's Fixed Charge Coverage Ratio was 4.0 and 3.0 respectively. The Existing Secured Notes are redeemable at set prices as set forth in the Existing Secured Notes after November 15, 1999, at the option of the Authority. Upon the occurrence of certain events (as specified in the Existing Secured Notes) each holder of Existing Secured Notes can require the Authority to repurchase the notes at prices specified. Beginning with the fiscal year ending September 30, 1997, the Authority is required within 120 days, under certain circumstances, to offer to purchase, at set prices, certain amounts of Existing Secured Notes then outstanding, under the Excess Cash Purchase Offer, as defined in the Existing Secured Notes (See Excess Cash Purchase Offer below). Subordinated Notes The Authority has obtained $90.0 million of subordinated financing from Sun International and Waterford Gaming L.L.C. in the form of notes ("Junior Subordinated Notes"). The Authority has issued $20.0 million of Junior Subordinated Notes to each of Sun International and Waterford Gaming L.L.C., which notes bear interest at 15.0% per year. The Authority also has issued $50.0 million of Junior Subordinated Notes to Sun International evidencing draws made by the Authority under the secured completion guarantee provided by Sun International ("Secured Completion Guarantee"). Each Junior Subordinated Note issued under the Secured Completion Guarantee bears interest at the rate per annum then most recently announced by Chase Manhattan Bank (f/k/a Chemical Bank of New York) as its prime rate plus 1% which shall be set and revised at intervals of six months. The interest rates were 9.5% at September 30, 1998 and September 30, 1997. Interest on the Junior Subordinated Notes is payable semi- annually, provided, however that all such interest is deferred and will not be paid until at least half of the Existing Secured Notes have been offered to be repurchased or retired, pursuant to the terms of the Existing Secured Notes, and certain other conditions have been fulfilled. Accrued and deferred interest payable on the Junior Subordinated Notes is $31.5 million and $17.9 million at September 30, 1998 and 1997, respectively. All Junior Subordinated Notes are due 2003; however, principal cannot be paid until the Existing Secured Notes have been paid in full, unless certain conditions are met. During October 1998 and October 1997, a total of $5.0 million of Junior Subordinated Notes issued to Sun International pursuant to the Secured Completion Guarantee were purchased by Waterford Gaming L.L.C. In the event that the holders of the Existing Secured Notes reject all or any portion of the Excess Cash Purchase Offer, as defined in the Existing Secured Notes Indenture, the Authority is required to offer to purchase, at par, certain amounts of the Junior Subordinated Notes then outstanding. See Excess Cash Purchase Offer below for such offer made by the Authority. Excess Cash Purchase Offer Pursuant to the Existing Secured Notes, the Authority is required to make an Excess Cash Purchase Offer to all holders of the Existing Secured Notes within 120 days after each fiscal year end of the Authority, commencing September 30, 1997. The Excess Cash Purchase Offer equals 50% of the Excess Cash Flow, as defined, plus 100% of the Deferred Subordinated Interest. An Excess Cash Purchase Offer of $29.1 million was made on January 28, 1998 for the period October 12, 1996 (date of commencement of operations) through September 30, 1997. In accordance with the Existing Secured Notes Indenture, the Authority offered to purchase the Existing Secured Notes at 113.5% of the principal amount of the Existing Secured Notes plus accrued and unpaid interest to the purchase date. The F-12 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) Excess Cash Purchase Offer expired, by its terms, on February 25, 1998, and none of the holders of the Existing Secured Notes accepted the offer. On March 12, 1998, pursuant to the Junior Subordinated Notes purchase agreement, an offer to repurchase in the amount of the Excess Cash Purchase Offer was made to the holders of the Junior Subordinated Notes. The offer period concluded on April 2, 1998, and the holders of the Junior Subordinated Notes also rejected the offer. On April 3, 1998, as permitted by the Existing Secured Notes Indenture, the Authority distributed the Excess Cash Purchase Offer of $29.1 million to the Tribe. The Authority will make an Excess Cash Purchase Offer to all holders of the Existing Secured Notes within 120 days of September 30, 1998, pursuant to the Existing Secured Notes. For the fiscal year ended September 30, 1998, it is estimated that this offer will be approximately $51.2 million. Note 9--Leases At September 30, 1998, the Authority was obligated under non-cancelable operating leases and capital leases to make future minimum lease payments as follows:
Operating Capital Fiscal Year Ending September 30, Leases Leases -------------------------------- --------- -------- (In thousands) 1999..................................................... $3,600 $ 13,215 2000..................................................... 2,680 13,215 2001..................................................... 84 4,835 2002..................................................... -- 1,965 ------ -------- Total minimum lease payment.............................. $6,364 33,230 ====== Amount representing interest............................. (3,663) -------- Total obligation under capital leases.................... 29,567 Less: Amount due within one year......................... (11,004) -------- Amount due after one year................................ $ 18,563 ========
Rent expense on the non-cancelable operating leases was $3.6 million and $11.1 million for the year ended September 30, 1998 and the period from October 12, 1996 (date of commencement of operations) through September 30, 1997, respectively. The Authority's debt agreements require, among other restrictions, the maintenance of various financial covenants and terms including a fixed charge coverage ratio, a debt to adjusted net worth ratio, and a debt service coverage ratio. Note 10--Related Party Transactions The Tribe provided governmental and administrative services to the Authority in conjunction with the operation of Mohegan Sun. For both the year ended September 30, 1998 and for the period October 12, 1996 (date of commencement of operations) through September 30, 1997, the Authority incurred $7.7 million of expenses for such services, of which $7.4 million and $6.9 million was paid as of September 30, 1998 and 1997, respectively. The Tribe, through one of its limited liability companies, has provided goods to the Authority for resale at its retail location. F-13 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) The Tribe, through two other limited liability companies, has entered into various land lease agreements with the Authority for access, parking and related purposes for Mohegan Sun. The Authority engages McFarland Johnson, Inc. for surveyance, civil engineering, and professional design services. Roland Harris, Chairman of the Management Board is a consultant for this corporation for a fixed fee. For the fiscal year ended September 30, 1998, the Authority incurred $54,354 for such services. Under terms of the Management Agreement, the Authority may award service contracts or purchase services from qualified members of the Tribe if the costs of services are competitive in the local market. As of September 30, 1998, 190 employees of the Authority are Mohegan tribal members. The executive officers of Mohegan Sun have been granted stock options from Sun International. The options vest over a seven-year period. Note 11--Employee Benefit Plans Effective February 10, 1997, the Authority adopted a retirement savings plan for its employees under Section 401 of the Internal Revenue Code. The plan allows employees of the Authority to defer up to the lesser of the maximum amount prescribed by the Internal Revenue Code or 15% of their income on a pre- tax basis, through contributions to this plan. The Authority matches 50% of eligible employees' contributions up to a maximum of 4% of their individual earnings. The Authority recorded matching contributions of approximately $1.4 million and $792,000, respectively, to this plan for the year ended September 30, 1998 and the period ended September 30, 1997. Effective September 1, 1998, the Authority adopted the MTGA Non-Qualified Deferred Compensation Plan. This plan allows highly compensated employees, as defined in Section 414(q) of the Internal Revenue Code, to defer up to 100% of their income to the plan. As of September 30, 1998 there have been no contributions by eligible employees to this plan. Note 12--Commitments and Contingencies The Mohegan Compact The Mohegan Compact stipulates that a portion of the revenues earned on slot machines must be paid to the State of Connecticut ("Slot Win Contribution"). For each 12-month period commencing July 1, 1995, the Slot Win Contribution 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 million. The Slot Win Contribution payments will not be required if the State of Connecticut legalizes any other (except those consented to by the Mashantucket Pequot Tribe and Mohegan Tribe) gaming operations with slot machines or other commercial casino table games within Connecticut. The Authority has reflected $102.3 million and $80.7 million, respectively of gaming expense in its financial statements for the required Slot Win Contribution for the year ended September 30, 1998 and for the period from October 12, 1996 (date of commencement of operations) through September 30, 1997. Town of Montville Agreement On June 16, 1994, the Tribe and the Town of Montville (the "Town") entered into an agreement whereby the Tribe agreed to pay to the Town an annual payment of $500,000 to minimize the impact to the Town F-14 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) resulting from decreased tax revenues on reservation land held in trust. Two annual $500,000 payments payable beginning one year after the commencement of slot machine gaming activities, were remitted to the Town of Montville in October 1998 and 1997, respectively. Additionally, the Tribe agreed to make a one-time payment of $3.0 million towards infrastructure improvements to the Town's water system. The Tribe has assigned its rights and obligations in this agreement to the Authority. The Town is billing the Authority for the infrastructure improvements as the Town's costs are incurred. As of September 30, 1998, the Authority has paid $1.1 million to the Town of Montville towards improvements to the municipal water system, which has been included in other assets in the accompanying balance sheet and will be amortized over 40 years. Litigation The Authority is a defendant in certain litigation incurred in the normal course of business. In the opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Authority's financial position or results of operations. Note 13--TCA Agreements Management Agreement The Tribe and TCA 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 independent contractor basis, to operate, manage and market Mohegan Sun. The Tribe has assigned its rights and obligations under the Management Agreement to the Authority. The term of the Management Agreement is seven years. TCA holds responsibility to manage Mohegan Sun in exchange for payments ranging from 30% to 40% of net income, before management fees, as defined, depending upon profitability levels. Management fees totaled $47.4 million and $23.2 million, respectively, for the year ended September 30, 1998 and for the period ended September 30, 1997. As of September 30, 1998, $4.1 million was owed to TCA in connection with the Management Agreement. Relinquishment Agreement In February 1998, the Authority and TCA entered into an agreement, (the "Relinquishment Agreement"). The Relinquishment Agreement supersedes the Management Agreement effective the later of January 1, 2000 (the "Relinquishment Date"), or the date the existing Existing Secured Notes are refinanced or repaid, and provides that the Authority shall make certain payments to TCA out of, and determined as a percentage of, the gross revenues generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments ("Senior Relinquishment Payments" and the "Junior Relinquishment Payments"), each of which are calculated as 2.5% of revenues, as defined, have their own payment schedule and priority. Senior Relinquishment Payments commence at the end of the first three-month period following the Relinquishment Date and continue at the end of each three-month period occurring thereafter until the fifteenth anniversary of the Relinquishment Date. Junior Relinquishment Payments commence at the end of the first six-month period following the Relinquishment Date and continue at the end of each six- month period occurring thereafter until the fifteenth anniversary of the Relinquishment Date. Each Senior Relinquishment Payment and Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues generated by Mohegan Sun over the immediately preceding three-month or six-month payment period, as the case may be. "Revenues" are defined as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including, without limitation, hotel revenues, fees or receipts from convention/events center in the expansion and all rental or other receipts from lessees and concessionaires operating in the facility but not the gross receipts of such F-15 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) lessees, licenses and concessionaires). The Authority, in accordance with Financial Accounting Standards Board Statement No. 5, "Accounting for Contingencies", has recorded a relinquishment liability of the estimated present value of its obligations under the Relinquishment Agreement. The liability was estimated at $549.1 million as of September 30, 1998 and will be reassessed periodically. This amount was derived by discounting the present value of 5% of projected gross revenues by the Authority's risk free investment rate. The Authority has also recognized the value of the trademarks associated with the Mohegan Sun brand name as of the September 30, 1998. The Mohegan Sun trademarks, which were appraised by an independent consultant, are valued at $130.0 million. TCA's services will be retained, however, in the development and construction of the Phase II expansion (See "Development Agreement"). Development Agreement The Authority has also negotiated a second agreement with TCA (the "Development Agreement"), which will make TCA the exclusive developer of the planned expansion of Mohegan Sun. Under the Development Agreement, TCA will oversee the planning, design and construction of the expansion of Mohegan Sun and will receive compensation of $14 million for such services. Note 14--Extraordinary Items The Authority incurred $419.5 million of extraordinary items for the year ended September 30, 1998. Included in the expense is $332,000 related to the early extinguishment of debt and $419.1 million related to the Relinquishment Agreement discussed in Note 13. Note 15--Subsequent Events On December 7, 1998, the Authority opened a 4,000 square foot gas station facility. The facility consists of 16 gasoline pumps, one diesel fuel pump, and a convenience store that offers fresh baked goods and retail items. The cost of the facility was approximately $5.9 million and is being financed through equipment leasing and internally generated funds. On December 23, 1998, the Authority borrowed the final $878,000 available in equipment financing from CIT Group at an interest rate of 7.75% over 48 months. The Tribe has announced an expansion of Mohegan Sun consisting of 100,000 square feet of additional gaming space, a luxury hotel with approximately 1,500 rooms, a convention/events center with seating for 10,000 patrons and 100,000 square feet of convention space. The expansion is estimated to cost $750 million (excluding capitalized interest and excluding a $50 million project contingency). The Tribe has chosen a site master planning firm, an architect and a project developer for the expansion. In connection with the expansion, the Existing Secured Notes and Junior Subordinated Notes will be refinanced. It is anticipated that a loss on the extinguishment of the Existing Secured Notes and Junior Subordinated Notes will be reflected in the Authority's second quarter financial statements for fiscal 1999. Effective January 1, 1999, the Authority will change the employer contribution match of its retirement savings plan to 100% of eligible employee contributions up to a maximum of 3% of their individual earnings. This retirement savings plan as discussed in Note 11, is pursuant to Section 401 of the Internal Revenue Code. F-16 REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Mohegan Tribal Gaming Authority: We have reviewed the accompanying balance sheet of the Mohegan Tribal Gaming Authority (the Authority) as of December 31, 1998, and the related statements of income, capital and cash flows for the three-month periods ended December 31, 1998 and 1997. These financial statements are the responsibility of the Authority's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheets of the Mohegan Tribal Gaming Authority as of September 30, 1998 and 1997, and the related statements of income (loss) and capital for the year ended September 30, 1998 and for the period October 12, 1996 (date of commencement of operations) through September 30, 1997 (not presented herein) and statements of cash flows for the years ended September 30, 1998 and 1997 (not presented herein) and in our report dated December 21, 1998, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet of the Mohegan Tribal Gaming Authority as of September 30, 1998, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. Arthur Andersen LLP Hartford, Connecticut February 2, 1999 F-17 MOHEGAN TRIBAL GAMING AUTHORITY BALANCE SHEETS (in thousands)
December 31, September 30, 1998 1998 ------------ ------------- (unaudited) ASSETS Current Assets: Cash and cash equivalents......................... $ 28,328 $ 36,264 Restricted cash................................... 81,250 74,466 Receivables, net.................................. 1,735 3,067 Inventories....................................... 5,776 5,027 Other current assets.............................. 2,349 2,136 -------- -------- Total current assets............................ 119,438 120,960 Non-Current Assets: Property and equipment, net....................... 298,181 296,440 Trademark......................................... 130,000 130,000 Other assets, net................................. 7,127 7,080 -------- -------- Total assets.................................... $554,746 $554,480 ======== ======== LIABILITIES AND CAPITAL Current Liabilities: Current portion of capital lease obligations (Note 3)............................................... $ 11,463 $ 11,004 Accounts payable and accrued expenses............. 44,382 46,857 Accrued interest payable (Note 2)................. 5,541 14,692 -------- -------- Total current liabilities....................... 61,386 72,553 -------- -------- Non-Current Liabilities: Long-term debt (Note 2)........................... 300,191 296,539 Relinquishment liability (Note 6)................. 549,125 549,125 Capital lease obligations, net of current portion (Note 3)......................................... 16,344 18,563 -------- -------- Total liabilities............................... 927,046 936,780 -------- -------- Commitments and Contingencies (Note 4) Capital: Total capital..................................... (372,300) (382,300) -------- -------- Total liabilities and capital..................... $554,746 $554,480 ======== ========
The accompanying accountants' review report and notes to financial statements should be read in conjunction with these financial statements F-18 MOHEGAN TRIBAL GAMING AUTHORITY STATEMENTS OF INCOME (in thousands)
For the Quarter For the Quarter Ended Ended December 31, 1998 December 31, 1997 ----------------- ----------------- (unaudited) (unaudited) Revenues: Gaming.................................... $152,672 $119,798 Food and beverage......................... 15,013 12,596 Retail and other.......................... 13,287 10,025 Bingo operations.......................... 3,442 929 -------- -------- Gross revenues............................ 184,414 143,348 Less--Promotional allowances.............. (20,556) (16,206) -------- -------- Net revenues.............................. 163,858 127,142 -------- -------- Costs and Expenses: Gaming.................................... 66,590 56,307 Food and beverage......................... 5,386 4,940 Retail and other.......................... 9,113 6,390 Bingo operations.......................... 3,377 703 General and administration................ 27,622 23,740 Management fee............................ 13,645 7,404 Depreciation and amortization............. 4,669 4,800 -------- -------- Total costs and expenses.................. 130,402 104,284 -------- -------- Income from operations.................... 33,456 22,858 -------- -------- Other income (expense): Interest and other income................. 615 648 Interest expense.......................... (12,810) (11,778) -------- -------- (12,195) (11,130) -------- -------- Net income................................ $ 21,261 $ 11,728 ======== ========
The accompanying accountants' review report and notes to financial statements should be read in conjunction with these financial statements F-19 MOHEGAN TRIBAL GAMING AUTHORITY STATEMENTS OF CAPITAL (in thousands)
For the Quarter Ended For the Quarter Ended December 31, 1998 December 31, 1997 --------------------- --------------------- (unaudited) (unaudited) Beginning balance.................. $(382,300) $21,931 Net income......................... 21,261 11,728 Distributions to Tribe............. (11,261) (6,395) --------- ------- Ending balance..................... $(372,300) $27,264 ========= =======
The accompanying accountants' review report and notes to financial statements should be read in conjunction with these financial statements F-20 MOHEGAN TRIBAL GAMING AUTHORITY STATEMENTS OF CASH FLOWS (in thousands)
For the Quarter For the Quarter Ended Ended December 31, 1998 December 31, 1997 ----------------- ----------------- (unaudited) (unaudited) Cash flows provided by operating activi- ties: Net income............................... $ 21,261 $ 11,728 Adjustments to reconcile net income to net cash flow provided by operating activities: Depreciation and amortization.......... 4,669 4,800 Provision for losses on receivables.... 83 19 Changes in operating assets and liabili- ties: (Increase) decrease in receivables and other assets.......................... (56) 534 Decrease in accounts payable and ac- crued expenses........................ (7,974) (7,120) -------- -------- Net cash flows provided by operating activities............................ 17,983 9,961 -------- -------- Cash flows used in investing activities: Purchase of property and equipment....... (6,113) (17,909) Decrease in construction payable......... -- (3,604) -------- -------- Net cash flows used in investing activ- ities................................. (6,113) (21,513) -------- -------- Cash flows used in financing activities: Distributions to Tribe................... (11,261) (6,395) Increase in short-term borrowings........ -- 650 Proceeds from equipment financing........ 878 -- Payment on equipment financing and short- term borrowings......................... (2,639) (2,212) -------- -------- Net cash flows used in financing activ- ities................................. (13,022) (7,957) -------- -------- Net decrease in cash and cash equiva- lents................................. (1,152) (19,509) Cash and cash equivalents at beginning of period.................................. 110,730 88,844 -------- -------- Cash and cash equivalents at end of peri- od...................................... $109,578 $ 69,335 ======== ======== Supplemental disclosures of cash flow in- formation: Cash paid during the period for inter- est..................................... $ 18,309 $ 16,700 ======== ========
The accompanying accountants' review report and notes to financial statements should be read in conjunction with these financial statements F-21 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 1998 (Unaudited) 1. Basis of Presentation: 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 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, 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 "Mohegan Compact") that has been approved by the Secretary of the Interior. On October 12, 1996, the Authority opened a casino known as Mohegan Sun Casino ("Mohegan Sun"). The Authority is governed by a Management Board, which consists of the nine members of the Tribal Council. The Management Board has engaged Trading Cove Associates ("TCA"), a Connecticut general partnership, to manage the operation of Mohegan Sun pursuant to a seven year contract (the "Management Agreement"). TCA is 50% owned by Sun Cove Limited, an affiliate of Sun International Hotels Limited ("Sun International"), and 50% owned by Waterford Gaming L.L.C. (See Note 6 for discussion of Relinquishment Agreement between the Tribe and TCA). The accompanying financial statements have been prepared in accordance with the accounting policies described in the Authority's 1998 Annual Report on Form 10-K and should be read in conjunction with the Notes to Financial Statements which appear in that report. The Balance Sheet at September 30, 1998, contained herein, was taken from the audited financial statements, but does not include all disclosures contained in the Form 10-K and required by generally accepted accounting principles. Certain amounts in the financial statements have been reclassified. The reclassification has no effect on the Authority's net income. In the opinion of the Authority, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods have been included. The results reflected in the financial statements for the quarter ended December 31, 1998 are not necessarily indicative of expected results for the full year, as the casino industry in Connecticut is seasonal in nature. 2. Financing Facilities: Line of Credit The Authority has a $2.5 million line-of-credit and letter of credit arrangement with Fleet National Bank. Interest is payable at the bank's base rate or LIBOR option. Borrowings are collateralized by a security interest in all of the Authority's cash deposit accounts with Fleet National Bank. This arrangement expires on March 31, 2000. As of December 31, 1998, the Authority has issued letters of credit of $1.9 million and has no borrowings outstanding under the line-of-credit. Financing facilities, as described below, consisted of the following (in thousands):
December 31, 1998 September 30, 1998 ----------------- ------------------ (unaudited) Existing Secured Notes.................. $175,000 $175,000 Junior Subordinated Notes............... 125,191 121,539 -------- -------- $300,191 $296,539 ======== ========
F-22 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1998 (Unaudited) Existing Secured Notes On September 29, 1995, the Authority issued $175 million in senior secured notes (the "Existing Secured Notes") with fixed interest payable at a rate of 13.5% per annum and Cash Flow Participation Interest, as defined therein, in an aggregate amount of 5% of the Authority's Cash Flow up to, during any two consecutive semi-annual periods, ending September 30, $250 million of the Authority's Cash Flow. Fixed interest is payable semi-annually and commenced May 15, 1996. The aggregate amount of Cash Flow Participation Interest payable will be reduced pro rata for reductions in the outstanding principal amount of Existing Secured Notes. The payment of Cash Flow Participation Interest may be deferred if the Authority's Fixed Charge Coverage Ratio, as defined, is less than 2.0. For the quarters ended December 31, 1998 and 1997, the Authority's Fixed Charge Coverage Ratio was 4.0 and 3.0, respectively. The Existing Secured Notes are redeemable at set prices set forth in the Existing Secured Notes, after November 15, 1999, at the option of the Authority (see Note 8 for a discussion of the tender offer and consent solicitation). Upon the occurrence of certain events (as specified in the Existing Secured Notes) each holder of Existing Secured Notes can require the Authority to repurchase the notes at prices specified. Beginning with the fiscal year ended September 30, 1997, the Authority was required within 120 days, under certain circumstances, to offer to purchase, at set prices, certain amounts of Existing Secured Notes then outstanding, under the Excess Cash Purchase Offer, as defined in the Existing Secured Notes. See "Excess Cash Purchase Offer" below. Junior Subordinated Notes The Authority has obtained $90 million of subordinated financing from Sun International and Waterford Gaming L.L.C. in the form of notes ("Junior Subordinated Notes"). The Authority has issued $20 million of Junior Subordinated Notes to each of Sun International and Waterford Gaming L.L.C., which notes bear interest at 15% per year. The Authority also has issued $50 million in Junior Subordinated Notes to Sun International evidencing draws made by the Authority under the secured completion guarantee provided by Sun International ("Secured Completion Guarantee"). Each Junior Subordinated Note issued under the Secured Completion Guarantee bears interest at the rate per annum then most recently announced by the Chase Manhattan Bank (f/k/a Chemical Bank of New York) as its prime rate plus 1%, which shall be set and revised at intervals of six months. The interest rates were 8.75% and 9.5% at December 31, 1998 and 1997, respectively. Interest on the Junior Subordinated Notes is payable semi-annually, provided, however that all such interest is deferred and will not be paid until at least half of the Existing Secured Notes have been offered to be repurchased or retired, pursuant to the terms of the Existing Secured Notes, and certain other conditions have been fulfilled. Accrued and deferred interest payable on the Junior Subordinated Notes was $35.2 million and $21.2 million as of December 31, 1998 and 1997, respectively. All Junior Subordinated Notes are due 2003; however, principal cannot be paid until the Existing Secured Notes have been paid in full, unless certain conditions are met. During October 1998 and October 1997, a total of $5.0 million of Junior Subordinated Notes, issued to Sun International pursuant to the Secured Completion Guarantee were purchased by Waterford Gaming L.L.C. In the event that the holders of the Existing Secured Notes reject all or any portion of the Excess Cash Purchase Offer, as defined in the Existing Secured Notes Indenture, the Authority is required to offer to purchase, at par, certain amounts of the Junior Subordinated Notes then outstanding. See "Excess Cash Purchase Offer" below. F-23 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1998 (Unaudited) Excess Cash Purchase Offer Pursuant to the Existing Secured Notes, the Authority is required to make an Excess Cash Purchase Offer to all holders of the Existing Secured Notes within 120 days after each fiscal year end of the Authority, commencing September 30, 1997. The Excess Cash Purchase Offer equals 50% of the Excess Cash Flow, as defined, plus 100% of the Deferred Subordinated Interest. An Excess Cash Purchase Offer of $51.2 million was made on December 30, 1998 for the year ended September 30, 1998. In accordance with the Existing Secured Notes, the Authority offered to purchase the Existing Secured Notes at 112% of the principal amount of the Existing Secured Notes plus accrued and unpaid interest to the purchase date. The Excess Cash Purchase Offer expired, by its terms, on January 29, 1999, and none of the holders of the Existing Secured Notes accepted the offer. On February 1, 1999, pursuant to the Junior Subordinated Note purchase agreement, an offer to repurchase in the amount of the Excess Cash Purchase Offer was made to the holders of the Junior Subordinated Notes. On February 1, 1999, the holders of the Junior Subordinated Notes rejected the offer. On February 2, 1999, as permitted by the Existing Secured Notes Indenture, the Authority distributed the Excess Cash Purchase Offer of $51.2 million to the Tribe. 3. Leases: At December 31, 1998, the Authority was obligated under non-cancelable operating leases and capital leases to make future minimum lease payments as follows (unaudited):
Operating Capital Fiscal Year Ending September 30, Leases Leases -------------------------------- --------- ------- (In thousands) 1999...................................................... $2,700 $ 9,756 2000...................................................... 2,680 13,008 2001...................................................... 84 5,557 2002...................................................... -- 2,358 2003...................................................... -- 64 ------ ------- Total minimum lease payment............................... $5,464 30,743 ====== Amount representing interest.............................. (2,937) ------- Total obligation under capital leases..................... 27,806 Less: Amount due within one year.......................... (11,463) ------- Amount due after one year................................. $16,344 =======
Rent expense on the non-cancelable operating leases was $900,000 for each of the quarters ended December 31, 1998 and 1997. The Authority's debt agreements require, among other restrictions, the maintenance of various financial covenants and terms including a fixed charge coverage ratio, a debt to adjusted net worth ratio, and a debt service coverage ratio. F-24 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1998 (Unaudited) 4. Commitments and Contingencies: The Mohegan Compact The Mohegan Compact stipulates that a portion of the revenues earned on slot machines must be paid to the State of Connecticut ("Slot Win Contribution"). For each 12-month period commencing July 1, 1995, the Slot Win Contribution 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 million. The Slot Win Contribution payments will not be required if the State of Connecticut legalizes any other (except those consented to by the Mashantucket Pequot Tribe and the Mohegan Tribe) gaming operations with slot machines or other commercial casino games within Connecticut. The Authority has reflected $28.4 million and $22.0 million of gaming expense in its financial statements for the required Slot Win Contribution for the quarters ended December 31, 1998 and 1997, respectively. Litigation The Authority is a defendant in certain litigation incurred in the normal course of business. In the opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Authority's financial position or results of operations. Town of Montville Agreement On June 16, 1994, the Tribe and the Town of Montville (the "Town") entered into an agreement whereby the Tribe agreed to pay to the Town an annual payment of $500,000 to minimize the impact to the Town resulting from decreased tax revenues on reservation land held in trust. Two annual $500,000 payments payable beginning one year after the commencement of slot machine gaming activities, were remitted to the Town of Montville in October 1998 and 1997, respectively. Additionally, the Tribe agreed to make a payment of $3.0 million towards infrastructure improvements to the Town's water system. The Tribe has assigned its rights and obligations in this agreement to the Authority. The Town is billing the Authority for the infrastructure improvements as the Town's costs are incurred. As of December 31, 1998, the Authority has paid $1.6 million to the Town of Montville towards improvements to the municipal water system, which has been included in other assets in the accompanying balance sheet and will be amortized over 40 years. 5. Related Party Transactions: The Tribe provides governmental and administrative services to the Authority in conjunction with the operation of Mohegan Sun. For the quarters ended December 31, 1998 and 1997, the Authority incurred expenses of $1.7 million and $1.3 million, respectively, for such services. 6. TCA Agreements: Management Agreement The Tribe and TCA 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 independent contractor basis, to operate, manage and market Mohegan Sun. F-25 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1998 (Unaudited) The Tribe has assigned its rights and obligations under the Management Agreement to the Authority. The term of the Management Agreement is seven years. TCA holds responsibility to manage Mohegan Sun in exchange for payments ranging from 30% to 40% of net income, before management fees, as defined, depending upon profitability levels. Management fees totaled $13.6 million and $7.4 million, respectively, for the quarters ended December 31, 1998 and 1997. At December 31, 1998, $3.7 million was owed to TCA in connection with the Management Agreement. Relinquishment Agreement In February 1998, the Authority and TCA entered into an agreement, (the "Relinquishment Agreement"). The Relinquishment Agreement supercedes the Management Agreement effective the later of January 1, 2000, or the date the Existing Secured Notes are refinanced or repaid (the "Relinquishment Date"), and provides that the Authority shall make certain payments to TCA out of, and determined as a percentage of, the gross revenues generated by the Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments ("Senior Relinquishment Payments" and "Junior Relinquishment Payments"), are calculated as 2.5% of Revenues each, as defined, but each has its own payment schedule and priority. Senior Relinquishment Payments commence at the end of the first three-month period following the Relinquishment Date and continue at the end of each three-month period occurring thereafter until the fifteenth anniversary of the Relinquishment Date. Junior Relinquishment Payments commence at the end of the first six-month period following the Relinquishment Date and continue at the end of each six-month period occurring thereafter until the fifteenth anniversary of the Relinquishment Date. Each Senior Relinquishment Payment and Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues generated by Mohegan Sun over the immediately preceding three-month or six-month payment period, as the case may be. "Revenues" are defined as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including, without limitation, hotel revenues, fees or receipts from convention/events center in the expansion and all rental or other receipts from lessees and concessionaires operating in the facility but not the gross receipts of such lessees, licenses and concessionaires). The Authority, in accordance with Financial Accounting Standards Board Statement No. 5, ("SFAS No. 5"), "Accounting for Contingencies", has recorded a relinquishment liability of the estimated present value of its obligation under the Relinquishment Agreement. The liability is estimated at $549.1 million as of December 31, 1998 and will be reassessed periodically. This amount was derived by discounting the present value of 5% of projected gross revenues by the Authority's risk free investment rate. The Authority has also recognized the value of the trademarks associated with the Mohegan Sun brand name. The Mohegan Sun trademarks, which were appraised by an independent consultant, were valued at $130.0 million at December 31, 1998. TCA's services will be retained, however, in the development and construction of the expansion (See "Development Agreement"). Development Agreement The Authority has also negotiated a second agreement with TCA (the "Development Agreement"), which will make TCA the exclusive developer of the planned expansion of Mohegan Sun. Under the Development Agreement, TCA will oversee the planning, design and construction of the expansion of Mohegan Sun and will receive compensation of $14 million for such services. 7. Employee Benefits Plans Effective January 1, 1999 pursuant to Section 401 of the Internal Revenue Code, the Authority increased the employer matching contribution to match of its retirement savings plan. The plan allows employees of the F-26 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1998 (Unaudited) Authority to defer up to the lesser of the maximum amount prescribed by the Internal Revenue Code or 15% of their income on a pre-tax basis, through contributions to this plan. The Authority now matches 100% of eligible employees' contributions up to a maximum of 3% of their individual earnings. 8. Subsequent Events: On January 15, 1999, the Authority initiated a Tender Offer and Consent Solicitation for the repurchase of all of the Existing Secured Notes. The offer will expire at 12:00 midnight, New York City time on February 12, 1999, unless extended or terminated earlier. The tender offer price for the Existing Secured Notes is expected to be approximately $214 million. Funding of the Tender Offer and Consent Solicitation will require additional sources of funding, which may include public and private debt and bank financing. There can be no assurance that the Authority will be able to obtain such financing, although the Authority believes that the current operating results of Mohegan Sun make such financing a viable likelihood. As of January 29, 1999, holders of 99.9% of the Existing Secured Notes have accepted the Tender Offer and Consent Solicitation. F-27 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- Prospectus Summary....................................................... 1 Risk Factors............................................................. 15 The Exchange Offers...................................................... 26 Use of Proceeds.......................................................... 34 Capitalization........................................................... 35 Selected Financial Data.................................................. 36 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 38 Business................................................................. 44 The Authority............................................................ 55 Certain Relationships and Related Transactions........................... 58 Mohegan Tribe of Indians of Connecticut.................................. 59 Other Material Agreements................................................ 61 Government Regulation.................................................... 68 Description of other Indebtedness........................................ 72 Description of the Exchange Notes........................................ 74 Plan of Distribution..................................................... 129 Legal Matters............................................................ 129 Independent Auditors..................................................... 129 Where You Can Get More Information....................................... 130
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- $500,000,000 Mohegan Tribal Gaming Authority $200,000,000 8 1/8% Senior Exchange Notes Due 2006 and $300,000,000 8 3/4% Senior Subordinated Exchange Notes Due 2009 [LOGOS] ---------------- PROSPECTUS ---------------- Dated , 1999 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. 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 21. Exhibits and Financial Statement Schedules (a) Exhibits
Exhibit Number Exhibit Description ------- ------------------- 1.1 Purchase Agreement, dated as of February 24, 1999 between Salomon Brothers Inc., as Representative of the Initial Purchasers, and the Mohegan Tribal Gaming Authority. *3.1 Constitution of the Mohegan Tribe of Indians of Connecticut ratified by Tribal vote on April 12, 1996 (filed as Exhibit 3.1 to Registration Statement on Form S-1, File No. 33-80655 (the "1996 Form S-1") and incorporated herein by reference). *3.2 Ordinance No. 95-7/15-1 of the Tribe for Gaming on Tribal Lands, enacted on July 20, 1995 (filed as Exhibit 3.2 to the 1996 Form S-1 and incorporated herein by reference). *4.1 Note Purchase Agreement dated September 29, 1995 between the Mohegan Tribal Gaming Authority and Sun International Hotels Limited (filed as Exhibit 10.10 to 1996 Form S-1 and incorporated herein by reference). *4.2 Form of Junior Subordinated Note due 2003 of the Mohegan Tribal Gaming Authority (contained in the Note Purchase Agreement filed as Exhibit 4.1). 4.3 Indenture dated March 3, 1999 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank, as Trustee, relating to the 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority. 4.4 Form of Global 8 1/8% Senior Note Due 2006 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.2). 4.5 Registration Agreement dated March 3, 1999 among The Mohegan Tribal Gaming Authority, Salomon Smith Barney Inc., NationsBanc Montgomery Securities, LLC, SG Cowen Securities Corporation, Bear, Stearns & Co. Inc., BankBoston Robertson Stephens Inc. and Fleet Securities, Inc. 4.6 Indenture dated as of March 3, 1999 among the Mohegan Tribal Gaming Authority, Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the 8 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority. 4.7 Form of Global 8 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.5). 4.8 Registration Agreement dated March 3, 1999 among the Mohegan Tribal Gaming Authority, Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC, SG Cowen Securities Corporation, Bear, Stearns & Co. Inc., BankBoston Robertson Stephens Inc. and Fleet Securities, Inc.
II-1
Exhibit Number Exhibit Description ------- ------------------- 5.1 Opinion of Hogan & Hartson L.L.P. *10.1 The Mohegan Tribe--State of Connecticut Gaming Compact between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut (filed as Exhibit 10.1 to the 1996 Form S-1 and incorporated herein by reference). *10.2 Agreement dated April 25, 1994 between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut resolving certain land claims (filed as Exhibit 10.2 to the 1996 Form S-1 and incorporated herein by reference). *10.3 Memorandum of Understanding dated April 25, 1994 between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut regarding implementation of the Compact and the Resolution Agreement (filed as Exhibit 10.3 to the 1996 Form S-1 and incorporated herein by reference). *10.4 Agreement dated June 16, 1994 between the Mohegan Tribe of Indians of Connecticut and the Town of Montville, Connecticut (filed as Exhibit 10.4 to the 1996 Form S-1 and incorporated herein by reference). *10.5 Land Lease dated September 29, 1995 between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.5 to the 1996 Form S-1 and incorporated herein by reference). 10.6 Amendment to the Land Lease dated February 19, 1999 between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority. *10.7 Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 between the Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority and Trading Cove Associates (filed as Exhibit 10.8 to the 1996 Form S-1 and incorporated herein by reference). *10.8 Development Services Agreement dated February 7, 1998 by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.15 to Form 10-K, File No. 33-80655 (the "1998 Form 10-K") and incorporated herein by reference). *10.9 Relinquishment Agreement dated February 7, 1998 by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.14 to the 1998 Form 10-K and incorporated herein by reference). 10.10 The Loan Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming Authority, the Tribe, Bank of America National Trust and Savings Associations as administrative agent, and NationsBanc Montgomery Securities as lead arranger. 10.11 Defeasance Escrow Deposit Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank. 10.12 Construction Reserve Disbursement Agreement dated March 3, 1999 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Fleet National Bank. *10.13 The Merrill Lynch Non-Qualified Deferred Compensation Plan Trust Agreement dated September 1, 1998 between the Mohegan Tribal Gaming Authority and Merrill Lynch Trust (filed as Exhibit 10.16 to the 1998 Form 10-K). 23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1). 23.2 Consent of Arthur Andersen LLP. 24.1 Power of attorney (included on signature page). 25.1 Statement on Form T-1 of Eligibility of Senior Trustee. 25.2 Statement of Form T-1 of Eligibility of Senior Subordinated Trustee.
II-2
Exhibit Number Exhibit Description - ------- ------------------- 99.1 Form of Senior Note Letter of Transmittal. 99.2 Form of Notice of Senior Note Guaranteed Delivery. 99.3 Form of Senior Note Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. 99.4 Form of Senior Note Letter to Clients. 99.5 Form of Senior Subordinated Note Letter of Transmittal. 99.6 Form of Notice of Senior Subordinated Note Guaranteed Delivery. 99.7 Form of Senior Subordinated Note Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. 99.8 Form of Senior Subordinated Note Letter to Clients.
- -------- * Previously filed. (b) Financial Statement Schedules. The following financial statement schedule was filed with the Authority's Annual Report on Form 10-K (File No. 033-80655), filed with the Commission on December 22, 1998, and is incorporated herein by reference: Schedule II--Valuation and Qualifying Accounts Schedules not listed above have been omitted because they are inapplicable or the information required to be set forth therein is contained, or incorporated by reference, in the Financial Statements of the Authority or notes thereto. II-3 Item 22. Undertakings 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 foregoing provisions, 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 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 Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of this Registration Statement through the date of responding to the request. The undersigned registrant hereby undertakes to supply by means of a post- effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this Registration Statement when it became effective. The undersigned registrant hereby undertakes 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 of 1933 (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 hereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in this Registration Statement when it becomes effective; 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. The undersigned registrant hereby undertakes 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. The undersigned registrant hereby undertakes to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act that is incorporated by reference in the registration statement 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. II-4 SIGNATURES Pursuant to the requirements of Securities Act, the Authority has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Uncasville, Connecticut, on this 21st day of April, 1999. Mohegan Tribal Gaming Authority /s/ Roland J. Harris By: _________________________________ Roland J. Harris Chairman and Member, Management Board POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Roland J. Harris, jointly and severally, each in his own capacity, his true and lawful attorneys-in-fact, with full power of substitution, for him and his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents with full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons, in the capacities indicated below, on this day of April, 1999.
Signature Title --------- ----- /s/ Roland J. Harris Chairman and Member, ______________________________________ Management Board Roland J. Harris /s/ Jayne G. Fawcett Vice-Chair and Member, ______________________________________ Management Board Jayne G. Fawcett /s/ William J. Velardo Executive Vice President ______________________________________ and General Manager, William J. Velardo Mohegan Sun (Principal Executive Officer) /s/ Jeffrey E. Hartmann Senior Vice President and ______________________________________ Chief Financial Officer, Jeffrey E. Hartmann Mohegan Sun (Principal Financial and Accounting Officer)
II-5
Signature Title --------- ----- /s/ Carlisle M. Fowler Treasurer and Member, ______________________________________ Management Board Carlisle M. Fowler /s/ Loretta F. Roberge Corresponding Secretary ______________________________________ and Member, Management Loretta F. Roberge Board /s/ Shirley M. Walsh Recording Secretary and ______________________________________ Member, Management Board Shirley M. Walsh /s/ Mark F. Brown Member, Management Board ______________________________________ Mark F. Brown /s/ Courtland C. Fowler Member, Management Board ______________________________________ Courtland C. Fowler /s/ Maynard L. Strickland Member, Management Board ______________________________________ Maynard L. Strickland /s/ Glen R. LaVigne Member, Management Board ______________________________________ Glen R. LaVigne
II-6 INDEX TO EXHIBITS Exhibit
Exhibit Number Exhibit Description ------- ------------------- 1.1 Purchase Agreement, dated as of February 24, 1999 between Salomon Brothers Inc., as Representative of the Initial Purchasers, and the Mohegan Tribal Gaming Authority. *3.1 Constitution of the Mohegan Tribe of Indians of Connecticut ratified by Tribal vote on April 12, 1996 (filed as Exhibit 3.1 to Registration Statement on Form S-1, File No. 33-80655 (the "1996 Form S-1") and incorporated herein by reference). *3.2 Ordinance No. 95-7/15-1 of the Tribe for Gaming on Tribal Lands, enacted on July 20, 1995 (filed as Exhibit 3.2 to the 1996 Form S-1 and incorporated herein by reference). *4.1 Note Purchase Agreement dated September 29, 1995 between the Mohegan Tribal Gaming Authority and Sun International Hotels Limited (filed as Exhibit 10.10 to 1996 Form S-1 and incorporated herein by reference). *4.2 Form of Junior Subordinated Note due 2003 of the Mohegan Tribal Gaming Authority (contained in the Note Purchase Agreement filed as Exhibit 4.1). 4.3 Indenture dated March 3, 1999 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank, as Trustee, relating to the 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority. 4.4 Form of Global 8 1/8% Senior Note Due 2006 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.2). 4.5 Registration Agreement dated March 3, 1999 among The Mohegan Tribal Gaming Authority, Salomon Smith Barney Inc., NationsBanc Montgomery Securities, LLC, SG Cowen Securities Corporation, Bear, Stearns & Co. Inc., BankBoston Robertson Stephens Inc. and Fleet Securities, Inc. 4.6 Indenture dated as of March 3, 1999 among the Mohegan Tribal Gaming Authority, Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the 8 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority. 4.7 Form of Global 8 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.5). 4.8 Registration Agreement dated March 3, 1999 among the Mohegan Tribal Gaming Authority, Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC, SG Cowen Securities Corporation, Bear, Stearns & Co. Inc., BankBoston Robertson Stephens Inc. and Fleet Securities, Inc. 5.1 Opinion of Hogan & Hartson L.L.P. *10.1 The Mohegan Tribe--State of Connecticut Gaming Compact between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut (filed as Exhibit 10.1 to the 1996 Form S-1 and incorporated herein by reference). *10.2 Agreement dated April 25, 1994 between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut resolving certain land claims (filed as Exhibit 10.2 to the 1996 Form S-1 and incorporated herein by reference). *10.3 Memorandum of Understanding dated April 25, 1994 between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut regarding implementation of the Compact and the Resolution Agreement (filed as Exhibit 10.3 to the 1996 Form S-1 and incorporated herein by reference).
II-7
Exhibit Number Exhibit Description ------- ------------------- *10.4 Agreement dated June 16, 1994 between the Mohegan Tribe of Indians of Connecticut and the Town of Montville, Connecticut (filed as Exhibit 10.4 to the 1996 Form S-1 and incorporated herein by reference). *10.5 Land Lease dated September 29, 1995 between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.5 to the 1996 Form S-1 and incorporated herein by reference). 10.6 Amendment to the Land Lease dated February 19, 1999 between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority. *10.7 Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 between the Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority and Trading Cove Associates (filed as Exhibit 10.8 to the 1996 Form S-1 and incorporated herein by reference). *10.8 Development Services Agreement dated February 7, 1998 by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.15 to Form 10-K, File No. 33-80655 (the "1998 Form 10-K") and incorporated herein by reference). *10.9 Relinquishment Agreement dated February 7, 1998 by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.14 to the 1998 Form 10-K and incorporated herein by reference). 10.10 The Loan Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming Authority, the Tribe, Bank of America National Trust and Savings Associations as administrative agent, and NationsBanc Montgomery Securities as lead arranger. 10.11 Defeasance Escrow Deposit Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank. 10.12 Construction Reserve Disbursement Agreement dated March 3, 1999 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Fleet National Bank. *10.13 The Merrill Lynch Non-Qualified Deferred Compensation Plan Trust Agreement dated September 1, 1998 between the Mohegan Tribal Gaming Authority and Merrill Lynch Trust (filed as Exhibit 10.16 to the 1998 Form 10-K). 23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1). 23.2 Consent of Arthur Andersen LLP. 24.1 Power of attorney (included on signature page). 25.1 Statement on Form T-1 of Eligibility of Senior Trustee. 25.2 Statement on Form T-1 of Eligibility of Senior Subordinated Trustee. 99.1 Form of Senior Note Letter of Transmittal. 99.2 Form of Notice of Senior Note Guaranteed Delivery. 99.3 Form of Senior Note Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. 99.4 Form of Senior Note Letter to Clients. 99.5 Form of Senior Subordinated Note Letter of Transmittal. 99.6 Form of Notice of Senior Subordinated Note Guaranteed Delivery. 99.7 Form of Senior Subordinated Note Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. 99.8 Form of Senior Subordinated Note Letter to Clients.
- -------- * Previously filed. II-8 EX-1.1 2 EXHIBIT 1.1 Exhibit 1.1 Execution Copy MOHEGAN TRIBAL GAMING AUTHORITY $200,000,000 8 1/8% Senior Notes Due 2006 $300,000,000 8 3/4% Senior Subordinated Notes Due 2009 Purchase Agreement New York, New York February 24, 1999 Salomon Smith Barney Inc. As Representatives of the Initial Purchasers 388 Greenwich Street New York, New York 10013 Ladies and Gentlemen: Mohegan Tribal Gaming Authority (the "Authority"), an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"), proposes to issue and sell to the several parties named in Schedule I hereto (the "Initial Purchasers"), for whom you (the "Representatives") are acting as representatives, $200,000,000 principal amount of its 8 1/8% Senior Notes due 2006 (the "Senior Securities") and $300,000,000 principal amount of its 8 3/4% Senior Subordinated Notes due 2009 (the "Senior Subordinated Securities" and, collectively with the Senior Securities, the "Securities"). The Senior Securities are to be issued under an indenture (the "Senior Indenture") to be dated as of March 3, 1999 among the Authority, the Tribe and First Union National Bank as trustee (the "Senior Trustee"). The Senior Subordinated Securities are to be issued under an indenture (the "Senior Subordinated Indenture") to be dated as of March 3, 1999 among the Authority, the Tribe and State Street Bank and Trust Company as trustee (the "Senior Subordinated Trustee"). The Senior Indenture and the Senior Subordinated Indenture are collectively referred to herein as the "Indentures", and the Senior Trustee and the Senior Subordinated Trustee are collectively referred to herein as the "Trustees". The Securities each have the benefit of a Registration Rights Agreement (the "Senior Registration Rights Agreement" and the "Senior Subordinated Registration Rights Agreement," collectively, the "Registration Rights Agreements"), both to be dated as of March 3, 1999, between the Authority and the Initial Purchasers, pursuant to which the Authority has agreed to register under the Act another series of debt securities of the Authority each with terms substantially identical to the Securities (collectively, the "Exchange Securities") to be offered in exchange for the Securities (the "Exchange Offer"), subject to the terms and conditions therein specified. To the extent there are no additional parties listed on Schedule I other than you, the term Representatives as used herein shall mean you as the Initial Purchasers, and the terms Representatives and Initial Purchasers shall mean either the singular or plural as the context requires. The use of the neuter in this Purchase Agreement shall include the feminine and masculine wherever appropriate. Certain terms used herein are defined in Section 19 hereof. The offering of the Securities is being made in connection with the Tender Offer and Consent Solicitation for the Authority's 13 1/2% Senior Secured Notes with Cash Flow Participation Interest and the arrangement of a senior secured bank credit facility (the "Bank Credit Facility") (the "Concurrent Transactions"). The sale of the Securities to the Initial Purchasers will be made without registration of the Securities under the Act in reliance upon exemptions from the registration requirements of the Act. In connection with the sale of the Securities, the Authority has prepared a preliminary offering memorandum, dated February 3, 1999 (as amended or supplemented at the Execution Time, including any and all exhibits thereto, the "Preliminary Memorandum"), and a final offering memorandum, dated February 24, 1999 (as amended or supplemented at the Execution Time, including any and all exhibits thereto the "Final Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum sets forth certain information concerning the Authority and the Securities. The Authority hereby confirms that it has authorized the use of the Preliminary Memorandum and the Final Memorandum, and any amendment or supplement thereto, in connection with the offer and sale of the Securities by the Initial Purchasers. 1. Representations and Warranties. The Authority represents and warrants to each Initial Purchaser, as set forth below in this Section 1, and the Tribe represents and warrants to each Initial Purchaser with respect to paragraphs 1(l),(o),(p) and (s) as set forth below. (a) The Preliminary Memorandum, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the Execution Time, on the Closing Date or on any settlement date, as the case may be, the Final Memorandum did not, and will not (and any amendment or supplement thereto, at the date thereof, at the Closing Date and on any settlement date, will not), contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Authority makes no representation or warranty as to the information contained in or omitted from the Preliminary Memorandum or the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Authority by or on behalf of the Initial Purchasers through the Representatives specifically for inclusion therein. (b) Neither the Authority nor any of its Affiliates, nor any person acting on its behalf (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf) has, directly or indirectly, made offers or sales of any 2 security, or solicited offers to buy any security, under circumstances that would require the registration of the Securities under the Act. (c) Neither the Authority nor any of its Affiliates, nor any person acting on its behalf (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States. (d) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Act. (e) Neither the Authority nor any of its Affiliates, nor any person acting on its behalf (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf) has engaged in any directed selling efforts with respect to the Securities, and each of them has complied with the offering restrictions requirement of Regulation S under the Act. Terms used in this paragraph have the meanings given to them by Regulation S. (f) The Authority expects to be advised by the NASD's PORTAL Market that as of the Closing Date the Securities will have been designated PORTAL-eligible securities in accordance with the rules and regulations of the NASD. (g) The Authority is not, and after giving effect to the offering and sale of the Securities and the application of the net proceeds thereof as described in the Final Memorandum will not be, an "investment company" within the meaning of the Investment Company Act, without taking account of any exemption arising out of the number of holders of the Authority's securities. (h) The Authority is in compliance with the reporting requirements of Section 13 or 15(d) of the Exchange Act. (i) The Authority has not paid or agreed to pay to any person any compensation for soliciting another to purchase the Securities (except as contemplated by this Purchase Agreement). (j) The Authority has not taken, directly or indirectly, any action designed to cause or which has constituted or which might reasonably be expected to cause or result, under the Exchange Act or otherwise, in the stabilization or manipulation of the price of any security of the Authority to facilitate the sale or resale of the Securities. (k) The information provided by the Authority pursuant to Section 5(h) hereof will not, at the date thereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3 (l) The Tribe is a federally recognized Indian Tribe, with authority to enter into and perform its obligations under the Agreements. The Constitution of the Tribe, amended and restated in its entirety and approved on April 12, 1996 (the "Constitution"), was validly adopted by the Tribe, is effective according to its terms, and is the law of the Tribe. (m) The Authority (A) has been duly established, is validly existing under the Constitution, as amended, (B) has all requisite power and authority to carry on its business as it is currently being conducted and as described in the Final Memorandum and to own, lease and operate its properties, and (C) is duly qualified and authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification except, with respect to this clause (C), where the failure to be so qualified or in good standing does not and could not reasonably be expected to (x) individually or in aggregate, result in a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Authority, (y) interfere with or adversely affect the issuance or marketability of the Securities pursuant hereto or (z) in any manner draw into question the validity of this Purchase Agreement or any agreements or the transactions described in the Final Memorandum under the caption "Use of Proceeds". The Authority will have no direct or indirect subsidiaries as of the Closing Date. (n) The statements in the Final Memorandum under the headings "Certain Federal Income Tax Consequences," "Description of Notes," "Business--The Expansion," "Business--Environmental Matters," "Description of Other Indebtedness," "Mohegan Tribe of Indians of Connecticut," "Government Regulation" and "Other Material Agreements" fairly summarize the matters therein described. (o) This Purchase Agreement has been duly authorized, executed and delivered by the Authority and the Tribe; the Senior Indenture and the Senior Subordinated Indenture have each been duly authorized and, assuming due authorization, execution and delivery thereof by the Trustee, when executed and delivered by the Authority and the Tribe, will constitute legal, valid, binding instruments enforceable against the Authority and the Tribe in accordance with their terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity and public policy provided, however that the Authority makes no representation as to the choice of laws); the Securities have been duly authorized, and, when executed and authenticated in accordance with the provisions of the Senior Indenture or the Senior Subordinated Indenture, as the case may be, and delivered to and paid for by the Initial Purchasers, will have been duly executed and delivered by the Authority and will constitute the legal, valid and binding obligations of the Authority entitled to the benefits of the Senior Indenture or the Senior Subordinated Indenture, as the case may be (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity and public policy provided, however, that the Authority makes no representation as to the choice of laws); and the Senior Registration Rights Agreement and the Senior Subordinated 4 Registration Rights Agreement have been duly authorized and, when executed and delivered by the Authority, will constitute legal, valid, binding and enforceable instruments of the Authority (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity and public policy provided, however, that the Authority makes no representation as to the choice of laws). (p) No consent, approval, authorization, filing with or order of any court or governmental agency or body is required to be obtained or made by the Authority or the Tribe in connection with the transactions contemplated herein or in the Indentures, or the Registration Rights Agreements or the Concurrent Transactions, except (A) such as will be obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Initial Purchasers in the manner contemplated herein and in the Final Memorandum and the Registration Rights Agreements and (B) such as will be obtained from the National Indian Gaming Commission ("NIGC") or its Chairman, the Secretary of the Interior ("Secretary"), or the Bureau of Indian Affairs ("BIA") prior to the Closing Date. (q) None of the execution and delivery of the Indentures, this Purchase Agreement or the Registration Rights Agreements, the issue and sale of the Securities, the consummation of the Concurrent Transactions, or the consummation of any other of the transactions herein or therein contemplated, or the fulfillment of the terms hereof or thereof will conflict with or result in (A) violation any of the organizational, statutory or legal documents of the Authority or the Tribe, (B) default in the performance of any bond, debenture, note, indenture, mortgage, deed of trust note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Authority or the Tribe is bound or any of their respective properties is subject, or (C) violation of any local, tribal, state or federal law, statue, ordinance, rule, regulation, requirement, judgment or court decree (including, without limitation, any requirement, regulation or decree under the Indian Gaming Regulatory Act of 1988 (collectively, "Gaming Regulations") applicable to the Authority or any of its assets or properties (whether owned or leased)), other than, in the case of clauses (B) and (C), any default or violation that could not reasonably be expected to have a material adverse effect on the Authority. To the best knowledge of the Authority, there exists no condition that, with notice, the passage of time or otherwise, would constitute a default under any such document or instrument. (r) The historical financial statements and schedules of the Authority included in the Final Memorandum present fairly in all material respects the financial condition, results of operations and cash flows of the Authority as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of the Act and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein); the selected financial data set forth under the caption "Selected Financial Data" in the Final Memorandum fairly present, on the basis stated in the Final Memorandum, 5 the information included therein; the "As adjusted" financial information included in the Final Memorandum includes assumptions that provide a reasonable basis for presenting the significant effects directly attributable to the transactions and events described therein, the related "As adjusted" adjustments give appropriate effect to those assumptions, and the "As adjusted" adjustments reflect the proper application of those adjustments to the historical financial statement amounts in the "As adjusted" financial information included in the Final Memorandum; the "As adjusted" financial information included in the Final Memorandum complies as to form in all material respects with the applicable accounting requirements of Regulation S-X under the Act; and the "As adjusted" adjustments have been properly applied to the historical amounts in the compilation of that information. (s) There is no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Authority, the Tribe or their respective property is pending or, to the best knowledge of the Authority or the Tribe, threatened that (i) could reasonably be expected to have a material adverse effect on the performance of this Purchase Agreement, the Indentures, the Registration Rights Agreements or the consummation of any of the transactions contemplated hereby or thereby; or (ii) could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Authority, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto entered into after the date hereof). (t) The Authority owns or leases all such properties as are necessary to the conduct of its operations as presently conducted. (u) The Authority is not (A) in violation any of the organizational, statutory or legal documents of the Authority or the Tribe, (B) in default in the performance of any bond, debenture, note, indenture, mortgage, deed of trust note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Authority or the Tribe is bound or any of their respective properties is subject, or (C) in violation of any local, tribal, state or federal law, statue, ordinance, rule, regulation, requirement, judgment or court decree (including, without limitation, any Gaming Regulations applicable to the Authority or any of its assets or properties (whether owned or leased)), other than, in the case of clauses (B) and (C), any default or violation that could not reasonably be expected to have a material adverse effect on the Authority. To the best knowledge of the Authority, there exists no condition that, with notice, the passage of time or otherwise, would constitute a default under any such document or instrument other than a default that could not reasonably be expected to have a material adverse effect. (v) Arthur Andersen LLP, who have certified certain financial statements of the Authority included in the Final Memorandum and delivered their report with respect to the audited financial statements included in the Final Memorandum, are independent public accountants with respect to the Authority within the meaning of the Act and the applicable published rules and regulations thereunder. 6 (w) There are no stamp or other issuance or transfer taxes or duties or other similar fees or charges required to be paid in connection with the execution and delivery of this Purchase Agreement or the issuance or sale by the Authority of the Securities. (x) No action or proceeding with respect to any labor dispute with employees of the Authority exists, or to the Authority's knowledge is threatened or imminent. (y) The Authority is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which it is engaged; all policies of insurance and fidelity or surety bonds insuring the Authority or its business, assets, employees, officers and Management Board Members are in full force and effect; the Authority is in compliance with the terms of such policies and instruments in all material respects; and there are no claims by the Authority under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; the Authority has not been refused any insurance coverage sought or applied for; and the Authority has no reason to believe that it will not be able to renew its existing insurance coverage as and when the coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Authority whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto). (z) The Authority possesses all licenses, certificates, permits and other authorizations issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its business, and the Authority has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Authority, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto). (aa) The Authority maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 7 (bb) The Authority (i) is in compliance with any and all applicable tribal, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"); (ii) has received and is in compliance with all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its businesses; and (iii) has not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants; except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a material adverse effect on the Authority, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto). Except as set forth in the Final Memorandum, the Authority has not been named as a "potentially responsible party" under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. (cc) In the ordinary course of its business, the Authority periodically reviews the effect of Environmental Laws on the business, operations and properties of the Authority, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Authority has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Authority except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto). (dd) The Authority owns, possesses, licenses or has other rights to use on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property necessary for the conduct of its business as now conducted or as proposed in the Final Memorandum to be conducted (collectively, the "Intellectual Property"). Except as set forth in or contemplated by the Final Memorandum (a) there are no rights of third parties to any such Intellectual Property; (b) to the Authority's knowledge there is no material infringement by third parties of any such Intellectual Property; (c) there is no pending or, to the Authority`s knowledge, threatened action, suit, proceeding or claim by others challenging the Authority's rights in or to any such Intellectual Property, and the Authority is unaware of any facts which would form a reasonable basis for any such claim; (d) there is no pending or, to the Authority's knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Authority is unaware of any facts which would form a reasonable basis for any such claim; (e) there is no pending or, the Authority's knowledge threatened action, suit, proceeding or claim by others that the Authority infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Authority is unaware of any 8 other fact which would form a reasonable basis for any such claim; (f) to the Authority's knowledge, there is no U.S. patent or published U.S. patent application which contains claims that dominate or may dominate any Intellectual Property described in the Final Memorandum as being owned by or licensed to the Authority or that interferes with the issued or pending claims of any such Intellectual Property; and (g) there is no prior act of which the Authority is aware that may render any U.S. patent held by the Authority invalid or any U.S. patent application held by the Authority unpatentable which has not been disclosed to the U.S. Patent and Trademark Office. (ee) The Authority has implemented a comprehensive, detailed program to analyze and address the risk that the computer hardware and software used by them may be unable to recognize and properly execute date-sensitive functions involving certain dates prior to and any dates after December 31, 1999 (the "Year 2000 Problem"), and has determined that such risk will be remedied on a timely basis and will not have a material adverse effect upon the financial condition and results of operations of the Authority; and the Authority believes, after due inquiry, that each supplier, vendor, customer or financial service organization used or serviced by the Authority has remedied or will remedy on a timely basis the Year 2000 Problem, except to the extent that a failure to remedy by any such supplier, vendor, customer or financial service organization would not have a material adverse effect on the Authority. The Authority is in compliance with the Commission's staff legal bulletin No. 5 dated January 12, 1998 related to Year 2000 compliance. (ff) The statistical and market-related data included in the Final Memorandum are based on or derived from sources which the Authority believes to be reliable and accurate in all material respects. Any certificate signed by any officer of the Authority and delivered to the Representatives or counsel for the Initial Purchasers in connection with the offering of the Securities shall be deemed a representation and warranty by the Authority (and not individually by such officer), as to matters covered thereby, to each Initial Purchaser. 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Authority agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Authority, at a purchase price of 8 1/8% of the principal amount thereof with respect to the Senior Securities and at a purchase price of 8 3/4% of the principal amount thereof with respect to the Senior Subordinated Securities, in each case plus accrued interest, if any, from February 24, 1999 to the Closing Date, the principal amount of such Securities set forth opposite such Initial Purchaser's name in Schedule I hereto. 3. Delivery and Payment. Delivery of and payment for the Securities shall be made at 9:00 A.M., New York City time, on March 3, 1999, or at such time on such later date (not later than March 10 1999) as the Representatives shall designate, which date and time may be postponed by agreement between the Representatives and the Authority or as provided in Section 9 hereof (such date and time of delivery and payment for the Securities being herein called the "Closing Date"). Delivery of the Securities shall be made to the Representatives for 9 the respective accounts of the several Initial Purchasers against payment by the several Initial Purchasers through the Representatives of the purchase price thereof to or upon the order of the Authority by wire transfer payable in same-day funds to the account specified by the Authority. Delivery of the Securities shall be made through the facilities of The Depository Trust Company unless the Representatives shall otherwise instruct. 4. Offering by Initial Purchasers. Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees with the Authority that: (a) It has not offered or sold, and will not offer or sell, any Securities except (i) to those it reasonably believes after due inquiry to be qualified institutional buyers (as defined in Rule 144A under the Act) and that, in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of such Securities is aware that such sale is being made in reliance on Rule 144A or (ii) in accordance with the restrictions set forth in Exhibit A hereto. (b) Neither it nor any of its Affiliates nor any person acting on its or their behalf has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States. (c) Neither it nor any of its Affiliates nor any person acting on its or their behalf has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of the Securities under the Act. 5. Agreements. The Authority agrees with each Initial Purchaser that: (a) The Authority will furnish to each Initial Purchaser and to counsel for the Initial Purchasers, without charge, during the period referred to in paragraph (c) below, as many copies of the Final Memorandum and any amendments and supplements thereto as it may reasonably request. (b) The Authority will not amend or supplement the Final Memorandum without the prior written consent of the Representatives. (c) If at any time prior to the completion of the sale of the Securities by the Initial Purchasers (as determined by the Representatives), any event occurs as a result of which the Final Memorandum, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it should be necessary to amend or supplement the Final Memorandum to comply with applicable law, the Authority promptly (i) will notify the Representatives of any such event; (ii) subject to the requirements of paragraph (b) of this Section 5, will prepare an amendment or supplement that will correct such statement or omission or effect such compliance; and (iii) will supply any supplemented or amended Final Memorandum to the several Initial Purchasers and counsel for the Initial Purchasers without charge in such quantities as you may reasonably request. 10 (d) The Authority will arrange, if necessary, for the qualification of the Securities for sale by the Initial Purchasers under the laws of such jurisdictions as the Initial Purchasers may designate and will maintain such qualifications in effect so long as required for the sale of the Securities; provided that in no event shall the Authority be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering or sale of the Securities, in any jurisdiction where it is not now so subject. The Authority will promptly advise the Representatives of the receipt by the Authority of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. (e) The Authority will not, and will not permit any of its Affiliates to, resell any Securities that have been acquired by any of them. (f) Neither the Authority nor any of its Affiliates, nor any person acting on its behalf will, directly or indirectly, make offers or sales of any Security, or solicit offers to buy any Security, under circumstances that would require the registration of the Securities under the Act. (g) Neither the Authority, nor any of its Affiliates, nor any person acting on its behalf will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States. (h) So long as any of the Securities are "restricted securities" within the meaning of Rule 144(a)(3) under the Act, the Authority will, during any period in which they are not subject to and in compliance with Section 13 or 15(d) of the Exchange Act or they are not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Act. This covenant is intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted securities. (i) So long as any of the Securities are outstanding, the Authority will furnish to the Initial Purchasers (i) as soon as available, a copy of each report of the Authority mailed to securityholders generally or filed with any stock exchange or regulatory body and (ii) from time to time such other information concerning the Authority as the Initial Purchasers may reasonably request. (j) Neither the Authority nor any of its Affiliates, nor any person acting on its behalf will engage in any directed selling efforts with respect to the Securities, and each of them will comply with the offering restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. 11 (k) The Authority will cooperate with the Representatives and use its best efforts to permit the Securities to be eligible for clearance and settlement through The Depository Trust Company. (l) The Authority will not for a period of 180 days following the Execution Time, without the prior written consent of Salomon Smith Barney Inc., offer, sell or contract to sell, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Authority or any Affiliate of the Authority or any person in privity with the Authority or any Affiliate of the Authority), directly or indirectly, or announce the offering of, any debt securities issued or guaranteed by the Authority (other than the Securities). (m) The Authority will not take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result, under the Exchange Act or otherwise, in stabilization or manipulation of the price of any Security of the Authority to facilitate the sale or resale of the Securities. (n) The Authority agrees to pay the costs and expenses relating to the following matters: (i) the preparation of the Indentures and the Registration Rights Agreements, the issuance of the Securities and the fees of the Trustee; (ii) the preparation, printing or reproduction of the Preliminary Memorandum and Final Memorandum and each amendment or supplement to either of them; (iii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Preliminary Memorandum and Final Memorandum, and all amendments or supplements to either of them, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (iv) the preparation, printing, authentication, issuance and delivery of certificates for the Securities, including any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (v) the printing (or reproduction) and delivery of this Purchase Agreement, any blue sky memorandum and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Securities; (vi) any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable fees and expenses of counsel for the Initial Purchasers relating to such registration and qualification); (vii) admitting the Securities for trading in the PORTAL Market; (viii) the transportation and other expenses incurred by or on behalf of Authority representatives in connection with presentations to prospective purchasers of the Securities; (ix) the fees and expenses of the Authority's accountants and the fees and expenses of counsel (including local and special counsel) for the Authority; and (x) all other costs and expenses incident to the performance by the Authority of its obligations hereunder. (o) The Authority shall use the net proceeds received by it from the sale of the Securities pursuant to this Purchase Agreement in the manner specified in the Final Memorandum under the caption "Use of Proceeds." 12 6. Conditions to the Obligations of the Initial Purchasers. The obligations of the Initial Purchasers to purchase the Securities shall be subject to the accuracy of the representations and warranties on the part of the Authority contained herein at the Execution Time, the Closing Date and any settlement date pursuant to Section 3 hereof to the accuracy of the statements of the Authority made in any certificates pursuant to the provisions hereof, to the performance by the Authority of its obligations hereunder and to the following additional conditions: (a) The Authority shall have requested and caused Hogan & Hartson LLP, counsel for the Authority, to furnish to the Representatives its opinion, dated the Closing Date and addressed to the Representatives, to the effect that: (i) the Tribe is a federally recognized Indian tribe with authority to enter into and perform its obligations under the Agreements. The Constitution of the Tribe, as amended and restated in its entirety and approved on April 12, 1996 (the "Constitution"), is effective according to its terms and is the law of the Tribe; (ii) the Mohegan Tribal Council (the "Tribal Council") is the governing body of the Tribe, with power to bind the Tribe and to cause the Tribe to enter into the Agreements, except insofar as its power regarding agreements relating to gaming was delegated to the Authority by the 1995 Amendment, Article XIII, and Mohegan Ordinance No. 95-7/15-1, "An Ordinance Establishing the Mohegan Tribal Gaming Authority" (the "Gaming Authority Ordinance"), which was adopted and made effective July 15, 1995. The Tribal Council and other officers of the Tribe and the Management Board and the other officers of the Authority that have approved, authorized the execution, and executed the Agreements and possess authority to execute the Agreements and to bind the Tribe and Authority thereto; (iii) the Senior Indenture and the Senior Subordinated Indenture have each been duly authorized, executed and delivered on behalf of the Tribe and the Authority, and each constitutes a valid and binding obligation of the Authority and the Tribe, enforceable against the Authority and the Tribe in accordance with its terms (except, as the enforcement thereof may be limited by bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Senior Indenture or Senior Subordinated Indenture is considered in a proceeding at law or in equity) and conform in all material respects to the descriptions thereof contained in the Final Memorandum under the caption "Description of Notes;" the Senior Securities and the Senior Subordinated Securities have 13 each been duly authorized on behalf of the Authority and, assuming due execution, authentication, issuance and delivery in accordance with the provisions of the Senior Indenture or the Senior Subordinated Indenture, as the case may be, will each constitute a valid and binding obligation of the Authority entitled to the benefits of the Senior Indenture or the Senior Subordinated Indenture, as the case may be, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Senior Securities or Senior Subordinated Securities are considered in a proceeding at law or in equity) and conform in all material respects to the descriptions thereof contained in the Final Memorandum under the caption "Description of Notes;" the Senior Registration Rights Agreement and the Senior Subordinated Registration Rights Agreement have each been duly authorized, executed and delivered on behalf of the Authority and constitute a valid and binding obligation of the Authority, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Senior Registration Rights Agreement or Senior Subordinated Registration Rights Agreement is considered in a proceeding at law or in equity) and conform in all material respects to the description thereof contained in the Final Memorandum under the caption "Description of Notes;" (iv) the information in the Final Memorandum under the headings "Certain Federal Income Tax Consequences," "Business--The Expansion," "Business--Environmental Matters," "Description of Other Indebtedness," "Mohegan Tribe of Indians of Connecticut," "Government Regulation" and "Other Material Agreements" insofar as such information constitutes matters of law or legal conclusions, or purports to describe certain provisions of specified documents, has been reviewed by such counsel and is correct, in all material respects; (v) no consent, approval, authorization, filing with or order of any federal court or governmental agency or body is required to be obtained or made by the Authority or the Tribe in connection with the execution, delivery or performance as of the date hereof by each of the Authority or 14 the Tribe of the Indentures and the Registration Rights Agreements except (A) such as may be required under federal securities laws and regulations or under the blue sky or securities laws of any jurisdiction in connection with the purchase and sale of the Securities by the Initial Purchasers in the manner contemplated in this Purchase Agreement and the Final Memorandum and the Registration Rights Agreements (B) such as may be required to be obtained or made from or to the NIGC or its Chairman, the Secretary, or the BIA and such other approvals (specified in such opinion) as have been obtained; (vi) the execution, delivery and performance as of the date hereof by the Authority and the Tribe of the Indentures, this Purchase Agreement, the Registration Rights Agreements, the issue and sale of the Securities and the consummation as of the date hereof by the Authority and the Tribe of the transactions contemplated thereby do not (i) violate the Constitution, as amended, the Gaming Authority Ordinance, Mohegan Ordinance No. 95-4 (adopted July 20, 1995), "An Ordinance Establishing the Gaming Disputes Court" (the "Gaming Disputes Court Ordinance"), the Mohegan Tribal Gaming Ordinance or the Mohegan Compact; (ii) breach or constitute a default under certain material contracts and agreements as enumerated by such counsel; or (iii) to such counsel's knowledge, violate any federal statute or regulation applicable to the Authority or the Tribe (other than federal securities statutes and regulations, certain matters with respect to which will be addressed elsewhere in such counsel's opinion) or any existing judgment, order or decree of any court or governmental agency that is binding on, the Authority or the Tribe; (vii) assuming (A) the accuracy of the representations and warranties of the Authority set forth in paragraphs (c), (d) and (e) in Section 1 of this Purchase Agreement and the Initial Purchasers set forth in Section 4 of this Purchase Agreement, (B) the due performance by the Authority of the covenants and agreements set forth in paragraphs (e), (f), (g) and (j) of Section 5 of this Purchase Agreement and the due performance by the Initial Purchasers of the covenants and agreements set forth in Section 4 of this Purchase Agreement, (C) the Initial Purchasers' compliance with the offering and transfer procedures described in the Final Memorandum, (D) the accuracy of the representations and warranties made in accordance with this Purchase Agreement and the Final Memorandum by the Initial Purchasers and (E) that each of the Initial Purchasers is either a "qualified institutional buyer" as defined in Rule 144A of the Act or a person who is not "U.S. person," in offers and sales outside the United States made in reliance on Regulation S under the Act, it is not necessary in connection with the offer, sale and delivery of the Securities in the manner contemplated by this Purchase Agreement to register the Securities under the Act or to qualify the Indentures under the Trust Indenture Act of 1939, 15 it being understood that no opinion need be expressed as to any resale of Securities subsequent to the initial resale thereof by the Initial Purchasers; (viii) the Authority is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum, will not be an "investment company" as defined in the Investment Company Act; (ix) the waivers of sovereign immunity from unconsented suit by the Tribe and the Authority contained in the Agreements, as applicable, are in compliance in all material respects with applicable federal and tribal law and constitute valid and binding obligations of the Tribe and the Authority, enforceable against the Tribe and the Authority in accordance with their respective terms (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Agreements are considered in a proceeding at law or in equity); (x) the choice of governing law by the Authority and the Tribe contained in the Agreements is in compliance in all material respects with applicable federal and tribal law and constitutes a valid and binding obligation of the Tribe and the Authority, enforceable against the Tribe and the Authority in accordance with its terms (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Agreements are considered in a proceeding at law or in equity); (xi) there is no requirement, under the Indian Gaming Regulatory Act of 1988 that any Note Holder, solely in his or her capacity as a Note Holder, apply for or receive any individual license, any individual certificate, or any other individual authorization from any federal authority to acquire or retain the rights of a Note Holder under the Indentures; and (xii) the Construction Reserve Disbursement Agreement has been duly authorized, executed and delivered on behalf of the Authority and Tribe and constitutes a valid and binding obligation of both the Authority and the Tribe, enforceable against the Authority and the Tribe in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent 16 transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including, without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Construction Reserve Disbursement Agreement is considered in a proceeding at law or in equity) and conform in all material respects to the description thereof contained in the Final Memorandum under the caption "Description of Notes." Such counsel shall also indicate that while they have not undertaken to determine independently and do not assume any responsibility for, the accuracy, completeness, or fairness of the statements in the Final Memorandum, that no facts have come to their attention which cause them to believe that (i) the Final Memorandum, as of its date and as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) there are any legal or governmental proceedings pending or threatened against the Tribe and the Authority that are required to be disclosed in the Final Memorandum, other than those disclosed therein, or (iii) there are any contracts or documents of a character required to be described in the Final Memorandum that are not described or referred to therein; provided that in making the foregoing statements (which shall not constitute an opinion), such counsel need not express any views as to the financial statements and supporting schedules and other financial and statistical information and data included in or omitted from the Final Memorandum. In rendering such opinion, such counsel may rely as to matters of fact, to the extent they deem proper on certificates of responsible officers of the Authority and the Tribe. References to the Final Memorandum in this Section 6(a) include any amendment or supplement thereto at the Closing Date. (b) The Authority shall have requested and caused Rome McGuigan Sabanosh, P.C., counsel for The Tribe, to furnish to the Representatives its opinion, dated the Closing Date and addressed to the Representatives, to the effect that: (i) the Tribe is a federally recognized Indian tribe, with full authority to enter into, and perform its obligations under, the Agreements. The Constitution of the Tribe, amended and restated in its entirety and approved on April 12, 1996 (the "Constitution"), was validly adopted by the Tribe, is effective according to its terms, and is the law of the Tribe; (ii) the Tribal Council (the "Tribal Council") is the governing body of the Tribe, with full power to bind the Tribe and to cause the Tribe to enter into the Agreements, except insofar as its power regarding agreements relating to gaming was delegated to the Authority by the 1995 Amendment to the Constitution, Article XIII, and Mohegan Ordinance No. 95-7/15-1, "An Ordinance Establishing the Mohegan Tribal Gaming Authority" (the "Gaming Authority Ordinance"), which was adopted and made effective July 15, 1995. The Tribal Council and other officers of the Tribe and the 17 Management Board and the other officers of the Authority that have approved, authorized the execution, and executed the Agreements, are the duly elected or appointed officers of the Tribe and the Authority, and possess full authority to execute the Agreements and to bind the Tribe and Authority thereto; (iii) the Gaming Authority Ordinance was validly adopted by the Tribal Council, and is the governing law of the Tribe. The Authority is a duly established and validly existing instrumentality of the Tribe; (iv) the Mohegan Compact has been duly entered into and validly authorized by the State of Connecticut and the Tribe, has been duly approved by the Secretary of the Interior of the United States, such approval has been duly published in the Federal Register, and no further action is required to make the Mohegan Compact effective; (v) the Mohegan Tribal Gaming Ordinance (the "Gaming Ordinance") was validly adopted by the Tribal Council, and validly approved by the National Indian Gaming Commission, and, as supplemented by the Gaming Authority Ordinance and the Gaming Disputes Court Ordinance, is the governing law of the Tribe; (vi) the Gaming Disputes Court of the Tribe (the "Gaming Disputes Court"), created by the Amendment to the Constitution and by Mohegan Ordinance No. 95-4 (adopted July 20, 1995), "An Ordinance Establishing the Gaming Disputes Court" (the "Gaming Disputes Court Ordinance"), is a validly established judicial entity of the Tribe, having exclusive jurisdiction for the Tribe over all disputes related to gaming on the lands of the Tribe. The adoption by the Tribal Council in the Gaming Disputes Ordinance of the rules of civil and appellate procedure, and professional and judicial conduct, to govern the Gaming Disputes Court, and the further adoption by the Tribal Council in "An Ordinance Concerning Procedures for Appeal to the Gaming Disputes Court," Mohegan Ordinance No. 95-6 (adopted September 21, 1995) of procedures for certain appeals to the Gaming Disputes Court, are valid and effective acts of the Tribal Council, and those rules and procedures are the law of the Tribe; (vii) there is no requirement, under the Mohegan Compact, or the Gaming Authority Ordinance, or the Gaming Ordinance, or any other law of the Tribe, that any Note Holder, solely in his or her capacity as a Note Holder, apply for or receive any individual license, any individual certificate, or any other individual authorization from any federal, state, or tribal governmental authority, to acquire or retain the rights of a Note Holder under the Senior Indenture or the Senior Subordinated Indenture; and 18 (viii) no consent, approval, authorization, filing with or order of any tribal or Connecticut court or governmental agency or body is required to be obtained or made by the Authority or the Tribe in connection with the execution, delivery or performance as of the date hereof by each of the Authority or the Tribe of the Senior Indenture, the Senior Subordinated Indenture, the Senior Registration Rights Agreement, the Senior Subordinated Registration Rights Agreement and the Concurrent Transactions, except (A) such as may be required under federal securities laws and regulations or under the blue sky or securities laws of any jurisdiction in connection with the purchase and sale of the Securities by the Initial Purchasers in the manner contemplated in this Purchase Agreement and the Final Memorandum and the Registration Rights Agreements (B) such as may be required to be obtained or made from or to the NIGC or its Chairman, the Secretary, or the BIA and such other approvals (specified in such opinion) as have been obtained. (c) Representatives shall have received from Latham & Watkins, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date and addressed to the Representatives, with respect to the issuance and sale of the Securities, the Indentures, the Registration Rights Agreements, the Final Memorandum (as amended or supplemented at the Closing Date) and other related matters as the Representatives may reasonably require, and the Authority shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (d) The Authority shall have furnished to the Representatives a certificate of the Authority, signed by the Chairman of the Management Board dated the Closing Date to the effect that he has carefully examined the Final Memorandum, any amendment or supplement to the Final Memorandum and this Purchase Agreement and that: (i) the representations and warranties of the Authority in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date, and the Authority has complied with all the agreements and satisfied all the conditions on their its part to be performed or satisfied hereunder at or prior to the Closing Date; (ii) since the date of the most recent financial statements included in the Final Memorandum (exclusive of any amendment or supplement thereto), there has been no material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Authority, whether or not arising from transactions on the ordinary course of business except as set forth in or contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto); and (iii) no action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency which 19 would, as of the date hereof, prevent the issuance of the Senior Notes and the Senior Subordinated Notes. No action, suit or proceeding had been commenced and is pending against or affecting or, to the best knowledge of the Authority, threatened against the Authority before any court or arbitrator or any governmental body, agency or official that, if adversely determined, could reasonably be expected to result in a material adverse effect on the Authority. (e) At the Execution Time, the Representatives shall have received from Arthur Andersen LLP, a letter, dated as of the Execution Time, in form and substance satisfactory to the Representatives, confirming that they are independent accountants within the meaning of the Act and the Exchange Act and the applicable rules and regulations thereunder, containing statements and information of the type ordinarily included in an accountant's "comfort letters" to Representatives, delivered according to Statement of Auditing Standards Nos. 72 and 76 (or any successor bulletins), with respect to the audited and unaudited financial statements and certain financial information contained in the Final Memorandum. (f) At the Closing Date, the Representatives shall have received from Arthur Andersen LLP, a "bring down comfort letter," dated as of the Closing Date. References to the Final Memorandum in Sections 6(e) - 6(f) include any amendment or supplement thereto at the date of the applicable letter. (g) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Final Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraphs (e) and (f) of this Section 6; or (ii) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Authority, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment of the Representatives, so material and adverse as to make it impractical or inadvisable to market the Securities as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). (h) The Securities shall have been designated as PORTAL-eligible securities in accordance with the rules and regulations of the NASD, and the Securities shall be eligible for clearance and settlement through The Depositary Trust Company. (j) Prior to the Closing Date, the Authority shall have furnished to the Representatives such further information, certificates and documents as the Representatives may reasonably request. (k) The Authority shall have entered into (i) the Bank Credit Facility; (ii) the Registration Rights Agreements; (iii) the Construction Reserve Disbursement 20 Agreement; (iv) the Indentures; and (v) the Initial Purchasers shall have received executed counterparts thereof. (l) The Authority shall have (i) purchased, simultaneous with the Offering, all of the Authority's 13 1/2% Senior Secured Notes due 2002 with Cash Flow Participation Interest (the "Existing Secured Notes") that were tendered pursuant to the Offer to Purchase and Consent Solicitation, dated as of January 15, 1999 (the "Offer to Purchase"), and the Initial Purchasers shall have received such documentation as they may reasonably request to evidence the purchase thereof and (ii) executed the Supplemental Indenture, between the Authority and First Union National Bank, as specified in the Offer to Purchase. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Purchase Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Purchase Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and counsel for the Initial Purchasers, this Purchase Agreement and all obligations of the Initial Purchasers hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Authority in writing or by telephone or facsimile confirmed in writing. The documents required to be delivered by this Section 6 will be delivered at the office of counsel for the Initial Purchasers, at 885 Third Avenue, New York, New York 10022 on the Closing Date. 7. Reimbursement of Expenses. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of any refusal, inability or failure on the part of the Authority to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Initial Purchasers, the Authority will reimburse the Initial Purchasers severally through Salomon Smith Barney Inc. on demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. 8. Indemnification and Contribution. (a) The Authority agrees to indemnify and hold harmless each Initial Purchaser, the directors, officers, employees and agents of each Initial Purchaser and each person who controls any Initial Purchaser within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Memorandum, the Final Memorandum (or in any supplement or amendment thereto) or any information provided by the Authority to any holder or prospective purchaser of Securities pursuant to Section 5(h), or in any amendment 21 thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Authority will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information relating to an Initial Purchaser furnished to the Authority by or on behalf of any Initial Purchaser through the Representatives specifically for inclusion therein; and provided, further, that the foregoing indemnity agreement with respect to the Final Memorandum shall not inure to the benefit of the Purchasers from whom the person asserting or causing any such losses, claims, damages or liabilities purchased Securities (or to the benefit of any person controlling any Initial Purchaser or any directors, officers, employees and agents of any Initial Purchaser), if a copy of the Final Memorandum (or the Final Memorandum as amended or supplemented) (if the Authority shall have timely furnished the Initial Purchasers with sufficient copies thereof) was not sent or given by or on behalf of the Initial Purchasers to such person at or prior to the written confirmation of the sale of the Securities to such person and if the Final Memorandum (or the Final Memorandum as amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability. This indemnity agreement will be in addition to any liability which the Authority may otherwise have. (b) Each Initial Purchaser severally and not jointly agrees to indemnify and hold harmless the Authority, its directors, officers, and each controlling person within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Authority to each Initial Purchaser, but only with reference to written information relating to such Initial Purchaser furnished to the Authority by or on behalf of such Initial Purchaser through the Representatives specifically for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any amendment or supplement thereto). This indemnity agreement will be in addition to any liability which any Initial Purchaser may otherwise have. The Authority acknowledges that (i) the statements set forth in the last paragraph of the cover page regarding the delivery of the Securities, (ii) the legend on page (iii) concerning stabilization, syndicate covering transactions and penalty bids and, the related disclosure under the heading "Plan of Distribution," and (iii) the sentences related to concessions and reallowances in the Preliminary Memorandum and the Final Memorandum, constitute the only information furnished in writing by or on behalf of the Initial Purchasers for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any amendment or supplement thereto). (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, 22 relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel, which counsel shall be reasonably satisfactory to the indemnified party, and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, in which case the indemnifying party may select another counsel subject to this clause (i); (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Authority and the Initial Purchasers agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Authority and one or more of the Initial Purchasers may be subject in such proportion as is appropriate to reflect the relative benefits received by the Authority on the one hand and by the Initial Purchasers on the other from the offering of the Securities; provided, however, that in no case shall any Initial Purchaser (except as may be provided in any agreement among the Initial Purchasers relating to the offering of the Securities) be responsible for any amount in excess of the purchase discount or commission applicable to the Securities purchased by such Initial Purchaser hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Authority and the Initial Purchasers shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Authority on the one hand and of the Initial Purchasers on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. Benefits received by the Authority shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) received by them, and benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions in each case set forth on the 23 cover of the Final Memorandum. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Authority on the one hand or the Initial Purchasers on the other, the intent of the parties and their relative knowledge, information and opportunity to correct or prevent such untrue statement or omission. The Authority and the Initial Purchasers agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls an Initial Purchaser within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of an Initial Purchaser shall have the same rights to contribution as such Initial Purchaser, and each person who controls the Authority within the meaning of either the Act or the Exchange Act and each officer and director of the Authority shall have the same rights to contribution as the Authority subject in each case to the applicable terms and conditions of this paragraph (d). 9. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Purchase Agreement, the remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective proportions which the amount of Securities set forth opposite their names in Schedule I hereto bears to the aggregate amount of Securities set forth opposite the names of all the remaining Initial Purchasers) the Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10% of the aggregate amount of Securities set forth in Schedule I hereto, the remaining Initial Purchasers shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such nondefaulting Initial Purchasers do not purchase all the Securities, this Purchase Agreement will terminate without liability to any nondefaulting Initial Purchaser or the Authority. In the event of a default by any Initial Purchaser as set forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding five Business Days, as the Representatives shall determine in order that the required changes in the Final Memorandum or in any other documents or arrangements may be effected. Nothing contained in this Purchase Agreement shall relieve any defaulting Initial Purchaser of its liability, if any, to the Authority or any nondefaulting Initial Purchaser for damages occasioned by its default hereunder. 10. Termination. This Purchase Agreement shall be subject to termination in the absolute discretion of the Representatives, by notice given to the Authority prior to delivery of and payment for the Securities, if at any time prior to such time (i) trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such Exchange; (ii) a banking moratorium shall have been declared either by Federal or New York State authorities; or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in 24 the sole judgment of the Representatives, impracticable or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). 11. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Authority or its officers and of the Initial Purchasers set forth in or made pursuant to this Purchase Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Initial Purchasers or the Authority or any of the officers, directors or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Purchase Agreement. 12. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to the Salomon Smith Barney Inc. General Counsel (fax no. (212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney Inc. at 388 Greenwich Street, New York, New York 10013 Attention: General Counsel; or, if sent to the Authority, will be mailed, delivered or telefaxed to the Mohegan Tribal Gaming Authority, (fax no. (860) 204-7167), 1 Mohegan Sun Boulevard, Uncasville, CT 06382, Attn: Roland J. Harris. 13. No Personal Liability. Neither the Tribe nor any director, officer, office holder, employee or agent, representative or member of the Authority or the Tribe or holder of an ownership interest of the Authority or the Tribe, as such in their individual capacities, shall have any liability for any obligations of the Authority or the Tribe under this Purchase Agreement. 14. 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 consent to the enforcement and execution of any judgment, whether obtained as a result of judicial, administrative, or arbitrational proceeding, against any assets of the Authority. Subject to the foregoing, the Tribe and Authority waive their respective 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 Purchase Agreement and to enforce and execute any judgment resulting therefrom against the Authority or the assets of the Authority. Notwithstanding any provisions 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 to out of this Purchase 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 Purchase 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 25 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. ss. 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 rule 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 Purchase Agreement and to award and enforce the award of any damages against the Authority 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. 15. Successors. This Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 hereof, and, except as expressly set forth in Section 5(h) hereof, no other person will have any right or obligation hereunder. 16. Applicable Law. This Purchase Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. 17. Counterparts. This Purchase Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. 18. Headings. The section headings used herein are for convenience only and shall not affect the construction hereof. 19. Definitions. The terms which follow, when used in this Purchase Agreement, shall have the meanings indicated. "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Affiliate" shall have the meaning specified in Rule 501(b) of Regulation D. "Agreements" shall mean the Indentures, the Registration Rights Agreements and the Construction Reserve Disbursement Agreement. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in The City of New York. 26 "Closing Date" shall mean March 3, 1999. "Commission" shall mean the Securities and Exchange Commission. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Execution Time" shall mean, the date and time that this Purchase Agreement is executed and delivered by the parties hereto. "Investment Company Act" shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder. "NASD" shall mean the National Association of Securities Dealers, Inc. "Regulation D" shall mean Regulation D under the Act. "Regulation S" shall mean Regulation S under the Act. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Purchase Agreement and your acceptance shall represent a binding agreement between the Authority and the several Initial Purchasers. [Purchase Agreement Signature Pages Follow] 27 Very truly yours, Mohegan Tribal Gaming Authority By -------------------------------------- Name: Roland J. Harris Title: Chairman 28 The foregoing Agreement is hereby confirmed and accepted as of the date first above written. Salomon Smith Barney Inc. By: Salomon Smith Barney Inc. By ------------------------------- Name: Title: For themselves and the other several Initial Purchasers named in Schedule I to the foregoing Agreement. 29 Accepted and Agreed to as of the date above written MOHEGAN TRIBE OF INDIANS OF CONNECTICUT By ------------------------------- Roland J. Harris Chair of Tribal Council 30 SCHEDULE I
Principal Amount of Senior Initial Purchasers Securities to be Purchased - ------------------ -------------------------- Salomon Smith Barney Inc............................ $130,000,000 NationsBanc Montgomery Securities LLC............... $ 35,000,000 SG Cowen Securities Corporation..................... $ 15,000,000 Bear, Stearns & Co. Inc. ........................... $ 10,000,000 BancBoston Robertson Stephens Inc. ................. $ 5,000,000 Fleet Securities, Inc. $ 5,000,000 ------------ Total.................... $200,000,000 Principal Amount of Senior Initial Purchasers Subordinated Securities - ----------------- to be Purchased -------------------------- Salomon Smith Barney Inc............................ $195,000,000 NationsBanc Montgomery Securities LLC............... $ 52,500,000 SG Cowen Securities Corporation..................... $ 22,500,000 Bear, Stearns & Co. Inc............................. $ 15,000,000 BancBoston Robertson Stephens Inc................... $ 7,500,000 Fleet Securities, Inc. $ 7,500,000 ------------ Total.................... $300,000,000
31 EXHIBIT A Selling Restrictions for Offers and Sales outside the United States (1) (a) The Securities have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Act or pursuant to an exemption from the registration requirements of the Act. Each Initial Purchaser represents and agrees that, except as otherwise permitted by Section 4(a)(i) of the Agreement to which this is an exhibit, it has offered and sold the Securities, and will offer and sell the Securities, (i) as part of their distribution at any time; and (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S under the Act. Accordingly, each Initial Purchaser represents and agrees that neither it, nor any of its Affiliates nor any person acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and that it and they have complied and will comply with the offering restrictions requirement of Regulation S. Each Initial Purchaser agrees that, at or prior to the confirmation of sale of Securities (other than a sale of Securities pursuant to Section 4(a)(i) of the Agreement to which this is an exhibit), it shall have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the distribution compliance period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and February __, 1999, except in either case in accordance with Regulation S or Rule 144A under the Act. Terms used above have the meanings given to them by Regulation S." (b) Each Initial Purchaser also represents and agrees that it has not entered and will not enter into any contractual arrangement with any distributor with respect to the distribution of the Securities, except with its Affiliates or with the prior written consent of the Authority. (c) Terms used in this section have the meanings given to them by Regulation S. (2) Each Initial Purchaser represents and agrees that (i) it has not offered or sold, and will not offer or sell, in the United Kingdom, by means of any document, any Securities other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or as agent (except in circumstances which do not constitute an offer to the public within the meaning of the Companies Act 1989 of Great Britain); (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 of the United Kingdom A-1 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Securities to a person who is of a kind described in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the document may otherwise lawfully be issued or passed on. A-2 EX-4.3 3 EXHIBIT 4.3 Exhibit 4.3 - -------------------------------------------------------------------------------- MOHEGAN TRIBAL GAMING AUTHORITY ISSUER $200,000,000 in aggregate principal amount 8 1/8% SENIOR NOTES DUE 2006 ---------- INDENTURE Dated as of March 3, 1999 ---------- Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut Mohegan Tribe of Indians of Connecticut ---------- First Union National Bank Trustee ---------- - -------------------------------------------------------------------------------- Senior Notes 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)(2).................................................... 7.06 (c)....................................................... 7.06; 11.02 (d)....................................................... 7.06 314(a)....................................................... 4.03; 11.05 (c)(1).................................................... 11.04 (c)(2).................................................... 11.04 (c)(3).................................................... N.A. (e)....................................................... 11.05 (f)....................................................... NA 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)....................................................... N.A. (c)....................................................... 2.12 317(a)(1).................................................... 6.08 (a)(2).................................................... 6.09 (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. Senior Notes TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions..................................................................1 Section 1.02. Other Definitions...........................................................20 Section 1.03. Incorporation by Reference of Trust Indenture Act...........................21 Section 1.04. Rules of Construction.......................................................21 ARTICLE 2 THE SENIOR NOTES Section 2.01. Form and Dating.............................................................22 Section 2.02. Execution and Authentication................................................23 Section 2.03. Registrar and Paying Agent..................................................23 Section 2.04. Paying Agent to Hold Money in Trust.........................................24 Section 2.05. Holder Lists................................................................24 Section 2.06. Transfer and Exchange.......................................................24 Section 2.07. Replacement Senior Notes....................................................35 Section 2.08. Outstanding Senior Notes....................................................36 Section 2.09. Treasury Senior Notes.......................................................36 Section 2.10. Temporary Senior Notes......................................................36 Section 2.11. Cancellation................................................................36 Section 2.12. Defaulted Interest..........................................................37 Section 2.13. CUSIP Numbers...............................................................37 ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee..........................................................37 Section 3.02. Selection of Senior Notes to Be Redeemed....................................37 Section 3.03. Notice of Redemption........................................................38 Section 3.04. Effect of Notice of Redemption..............................................38 Section 3.05. Deposit of Redemption Price.................................................39 Section 3.06. Senior Notes Redeemed in Part...............................................39 Section 3.07. Optional Redemption.........................................................39 Section 3.08. Redemption Pursuant to Gaming Law...........................................39 Section 3.09. Mandatory Redemption........................................................40 Section 3.10. Offer to Purchase by Application of Excess Proceeds.........................40 ARTICLE 4 COVENANTS Section 4.01. Payment of Senior Notes.....................................................42 Section 4.02. Maintenance of Office or Agency.............................................42 Section 4.03. Reports.....................................................................42 Section 4.04. Compliance Certificate......................................................43 Section 4.05. Taxes.......................................................................44 Section 4.06. Stay, Extension and Usury Laws..............................................44 Section 4.07. Restricted Payments.........................................................44 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries..............46 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..................47 Section 4.10. Asset Sales.................................................................49 Section 4.11. Transactions with Affiliates................................................50
i Senior Notes
Page Section 4.12. Liens.......................................................................51 Section 4.13. Line of Business............................................................51 Section 4.14. Existence of the Authority and Maintenance of the Lease.....................51 Section 4.15. Offer to Repurchase Upon Change of Control..................................51 Section 4.16. Limitation on Sale and Leaseback Transactions...............................52 Section 4.17. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries...................................53 Section 4.18. Limitation on Issuances of Senior Guarantees of Indebtedness................53 Section 4.19. Payments for Consent........................................................53 Section 4.20. Senior Subsidiary Guarantees................................................53 Section 4.21. Ownership Interests in the Authority........................................54 Section 4.22. Subordination of Junior Payments Under the Relinquishment Agreement.........54 Section 4.23. Construction................................................................54 Section 4.24. Restrictions on Leasing and Dedication of Property..........................54 Section 4.25. Maintenance of Insurance....................................................55 Section 4.26. Changes in Covenants when Senior Notes Rated Investment Grade...............55 Section 4.27. Gaming Licenses.............................................................56 Section 4.28. Required Defeasance and Redemption of the Junior Subordinated Notes.........57 Section 4.29. Designation of Designated Senior Indebtedness Under the Relinquished Agreement...............................................57 ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets....................................56 ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default...........................................................56 Section 6.02. Acceleration................................................................58 Section 6.03. Other Remedies..............................................................59 Section 6.04. Waiver of Past Defaults.....................................................59 Section 6.05. Control by Majority.........................................................59 Section 6.06. Limitation on Suits.........................................................59 Section 6.07. Rights of Holders of Senior Notes to Receive Payment........................60 Section 6.08. Collection Suit by Trustee..................................................60 Section 6.09. Trustee May File Proofs of Claim............................................60 Section 6.10. Priorities..................................................................61 Section 6.11. Undertaking for Costs.......................................................61 ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee...........................................................61 Section 7.02. Rights of Trustee...........................................................62 Section 7.03. Individual Rights of Trustee................................................63 Section 7.04. Trustee's Disclaimer........................................................63 Section 7.05. Notice of Defaults..........................................................63 Section 7.06. Reports by Trustee to Holders of the Senior Notes...........................63 Section 7.07. Compensation and Indemnity..................................................64 Section 7.08. Replacement of Trustee......................................................65 Section 7.09. Successor Trustee by Merger, etc............................................66 Section 7.10. Eligibility; Disqualification...............................................66 Section 7.11. Preferential Collection of Claims Against Authority.........................66
ii Senior Notes ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Page Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....................66 Section 8.02. Legal Defeasance and Discharge..............................................66 Section 8.03. Covenant Defeasance.........................................................67 Section 8.04. Conditions to Legal or Covenant Defeasance..................................67 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions............................................68 Section 8.06. Repayment to Authority......................................................69 Section 8.07. Reinstatement...............................................................69 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Senior Notes..................................70 Section 9.02. With Consent of Holders of Senior Notes.....................................70 Section 9.03. Compliance with Trust Indenture Act.........................................72 Section 9.04. Revocation and Effect of Consents...........................................72 Section 9.05. Notation on or Exchange of Senior Notes.....................................72 Section 9.06. Trustee to Sign Amendments, etc.............................................72 ARTICLE 10 COVENANTS OF THE TRIBE Section 10.01. Covenants of the Tribe.....................................................73 Section 10.02. Additional Covenants of the Tribe..........................................73 ARTICLE 11 MISCELLANEOUS Section 11.01. Trust Indenture Act Controls...............................................75 Section 11.02. Notices....................................................................75 Section 11.03. Communication by Holders of Senior Notes with Other Holders of Senior Notes.................................................76 Section 11.04. Certificate and Opinion as to Conditions Precedent.........................76 Section 11.05. Statements Required in Certificate or Opinion..............................77 Section 11.06. Rules by Trustee and Agents................................................77 Section 11.07. Dispute Resolution and Consent to Suit.....................................77 Section 11.08. No Personal Liability of Directors, Officers, Employees and Stockholders........................................................78 Section 11.09. Governing Law..............................................................78 Section 11.10. No Adverse Interpretation of Other Agreements..............................78 Section 11.11. Successors.................................................................78 Section 11.12. Severability...............................................................79 Section 11.13. Counterpart Originals......................................................79 Section 11.14. Table of Contents, Headings, etc...........................................79
iii Senior Notes Page EXHIBITS Exhibit A-1 FORM OF NOTE Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL SENIOR NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON SENIOR NOTE Exhibit E FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS iv Senior Notes INDENTURE dated as of March 3, 1999 among the Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut (the "Authority"), the Mohegan Tribe of Indians of Connecticut (the "Tribe"), and First Union National Bank, as trustee (the "Trustee"). The Authority and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 81/8% Senior Notes due 2006: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "144A Global Senior Note" means a global senior note substantially in the form of Exhibit A-1 hereto bearing the Global Senior Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Senior Notes sold in reliance on Rule 144A. "Acquired Indebtedness" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person; and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Interest" means all Additional Interest then owing pursuant to the terms of the Senior Notes. "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," 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. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Premium" means, for any redeemed Senior Note, the excess of: (i) the present value at the date of redemption of 100% of the principal amount of such Senior Note plus all required interest payments due on such Senior Note through its Stated Maturity date (excluding accrued but unpaid interest), calculated using a discount rate equal to the Treasury Rate plus 50 basis points over (ii) the principal amount of such Senior Note, if greater. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Senior Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means: (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the 1 Senior Notes ordinary course of business consistent with past practices; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Authority and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and not Section 4.10; and (ii) the issuance by the Authority or any of its Restricted Subsidiaries of Equity Interests of any of the Authority's or its Restricted Subsidiaries' Restricted Subsidiaries or the sale by the Authority or any of its Subsidiaries of any Equity Interests in any of their respective Subsidiaries. Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales: (i) any single transaction or series of related transactions that: (a) involves assets having a fair market value of less than $1.0 million; or (b) results in net proceeds to the Authority and its Restricted Subsidiaries of less than $1.0 million; (ii) a transfer of assets between or among the Authority and its Wholly Owned Restricted Subsidiaries; (iii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Authority or to another Wholly Owned Restricted Subsidiary; (iv) a Restricted Payment or Permitted Investment that is permitted by Section 4.07; (v) any Event of Loss; and (vi) any lease or sublease permitted by Section 4.24. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended (or may, at the option of the lessor, be extended). Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Attributable Value" means, with respect to any sale and leaseback transaction, as of the time of determination, the total obligation (discounted to present value at the rate of interest equal to that of the terms of the Senior Notes, compounded semi-annually) of the lessee for rental payments (other than amounts required to be paid on account of property taxes) during the remaining portion of the base terms of the lease included in such sale and leaseback transaction. "Authority" means the Mohegan Tribal Gaming Authority together with any subdivision, agency or subunit that has no separate legal existence from the Mohegan Tribal Gaming Authority, and any successor and assignee thereto. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "BIA" means the Bureau of Indian Affairs. "Broker-Dealer" has the meaning set forth in the Senior Registration Rights Agreement. "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 on a balance sheet in accordance with GAAP. "Capital Stock" means: (i) in the case of a corporation, corporate stock; (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (iv) any other interest or 2 Senior Notes participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding any interest under the Relinquishment Agreement. "Cash Equivalents" means: (i) United States dollars; (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support 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 lender party to the Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or better; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above; (v) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within six months after the date of acquisition; and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this definition. "Cedel" means Cedel Bank, SA. "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; or (iv) the Authority sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its assets to, or consolidates or merges with or into any other Person. "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. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus: (i) an amount equal to any extraordinary loss (including, without limitation, any non-cash charges or losses arising from adjustments relating to the Relinquishment Agreement) plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (ii) provision for taxes based on the income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income; plus (iii) consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, 3 Senior Notes commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments, if any, pursuant to Hedging Obligations) but excluding interest expense on the Junior Subordinated Notes, to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles, but excluding amortization of prepaid cash expenses that were paid in a prior period), non-cash charges associated with equity option plans and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (v) non-cash items increasing such Consolidated Net Income for such period (including, without limitation, any non-cash items arising from adjustments relating to the Relinquishment Agreement); minus (vi) to the extent not included in computing such Consolidated Net Income, any revenues received or accrued by the Authority or any of its Subsidiaries from any Person (other than the Authority or any of its Subsidiaries) in respect of any Investment for such period, all determined on a consolidated basis and in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Subsidiary of a Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP, provided that: (i) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Wholly Owned Restricted Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, 4 Senior Notes order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded; (iv) the cumulative effect of a change in accounting principles shall be excluded; (v) the Net Income shall be reduced by the amount of payments pursuant to the Relinquishment Agreement, paid or payable, for such period based on 5% of the revenues (as defined in the Relinquishment Agreement) generated in such period; and (vi) both the interest income related to the Defeasance Trust and the interest expense on the Junior Subordinated Notes shall be excluded so long as the payment of principal, premium and interest on the Junior Subordinated Notes at redemption on January 1, 2000 is fully covered by the amounts of the Defeasance Trust. "Consolidated Net Tangible Assets" means, with respect to the Authority and its Restricted Subsidiaries, taken as a whole, the aggregate amount of assets (less applicable reserves and other items deducted in accordance with GAAP) after deducting therefrom (a) all liabilities (other than liabilities incurred with respect to the Relinquishment Agreement) and (b) all goodwill, trade names, trademarks, patents, organization expenses and other like intangibles of the Authority and its Restricted Subsidiaries, in each case, to the extent included in the total amount of all assets, all as set forth on the most recent consolidated balance sheet of the Authority and its Restricted Subsidiaries and calculated in accordance with GAAP. "Construction Reserve Disbursement Agreement" means that certain agreement, dated the date hereof, among the Authority, the Tribe and Fleet National Bank, as escrow agent, regarding the disbursement of a $40 million reserve account to pay certain costs in excess of the construction budget. "Consumer Price Index" means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-1984=100 as compiled and released by the Bureau of Labor Statistics. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Authority. "Credit Facilities" means, with respect to the Authority or any Restricted Subsidiary, one or more debt facilities (including, without limitation, the Loan Agreement) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Senior Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by Section 4.09(b)(i). "Custodian" means the Trustee, as custodian with respect to the Senior Notes in global form, or any successor entity thereto. 5 Senior Notes "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. "Defeasance Trust" means that certain trust established pursuant to Section 12.04(a) of the Note Purchase Agreement under which the Junior Subordinated Notes were issued for the covenant defeasance of the Junior Subordinated Notes to their redemption date on January 1, 2000. "Definitive Senior Note" means a certificated Senior Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A-1 hereto except that such Senior Note shall not bear the Global Senior Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto. "Depositary" means, with respect to the Senior Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Senior Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Development Services Agreement" means that certain Development Services Agreement dated February 7, 1998 among the Authority, the Tribe and TCA. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is after the date on which the Senior Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Authority to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Authority may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Distribution Compliance Period" has the same meaning as defined in Regulation S. "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). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "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. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" has the meaning set forth in the Senior Registration Rights Agreement. 6 Senior Notes "Exchange Offer Registration Statement" has the meaning set forth in the Senior Registration Rights Agreement. "Existing Indebtedness" means up to $617.8 million in aggregate original principal amount of Indebtedness of the Authority (other than Indebtedness under the Loan Agreement) in existence on the date of this Indenture, until such amounts are repaid. "Existing Secured Notes" means the Authority's 13 1/2% Senior Secured Notes due 2002 with Cash Flow Participation Interest. "Expansion Project" means the project to expand the existing Mohegan Sun casino as more fully described in the Authority's Offering Memorandum, dated February 24, 1999. "Financing Lease" means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of: (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments, if any, pursuant to Hedging Obligations but excluding interest expense on the Junior Subordinated Notes so long as the principal, premium and interest thereon at redemption on January 1, 2000 are covered by amounts in the Defeasance Trust; plus (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus (iv) the product of (a) all cash dividend payments or other distributions (and non-cash dividend payments in the case of a Person that is a Restricted Subsidiary) on any series of preferred equity of such Person, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays or redeems any Indebtedness (other than revolving credit borrowings) or 7 Senior Notes issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which 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, repayment or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (i) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income; (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded; and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date. "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 ("FASB") or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Indenture. "Gaming" means any and all activities defined as Class II or Class III Gaming under IGRA or authorized under the Compact. "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 Senior Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Senior Notes issued under this Indenture. 8 Senior Notes "Global Senior Notes" means, individually and collectively, each of the Restricted Global Senior Notes and the Unrestricted Global Senior Notes, substantially in the form of Exhibit A-1 hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Government Service Payments" means: (i) an annual payment to the Tribe by the Authority in the amount of $14.0 million, which amount shall be adjusted annually on the last day of each calendar year commencing with the year 2000 by the Consumer Price Index as published for the applicable year; and (ii) amounts equal to those reflected on each annual audited income statement of the Authority as prepared in accordance with GAAP relating to payment for governmental services (including charges for utilities, police and fire department services, health and emergency medical services, the pro rata portion of Tribal Council costs and salaries attributable to the operations of the Authority, and similar pro rata costs of other tribal departments, in each case, to the extent that the costs of such departments are attributable to the operations of the Authority) by the Authority to the Tribe or any of its representatives, political subunits, councils, agencies or instrumentalities. "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, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person: (i) the obligations of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and (ii) the obligations of such Person under other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Senior Note is registered. "IGRA" means the Indian Gaming Regulatory Act of 1988, PL 100-497, U.S.C. 2701 et seq. as same may, from time to time, be amended. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of: (i) borrowed money; (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (iii) banker's acceptances; (iv) Capital Lease Obligations; (v) the balance, deferred and unpaid, of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (vi) any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by such Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and 9 Senior Notes (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Senior Note through a Participant. "Initial Senior Notes" means the $200,000,000 aggregate principal amount of Senior Notes under this Indenture on the date hereof. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), 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, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Authority or any Subsidiary of the Authority sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Authority such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Authority, the Authority shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in Section 4.07(d). "Junior Subordinated Notes" means the $90.0 million in aggregate original principal amount (plus any accrued and unpaid interest) of junior subordinated notes of the Authority. "Key Project Assets" means: (i) the Lease and any real property or interest in real property comprising the Resort held in trust for the Tribe by the United States; (ii) any improvements (including, without limitation the Resort) to the leasehold estate under the Lease or such real property comprising the Resort (but excluding any obsolete personal property or real property improvements determined by the Authority to be no longer useful to the operations of the Resort); and (iii) any business records of the Authority or the Tribe relating to the operation of the Resort. "Lease" means the Land Lease between the Tribe and the Authority dated September 29, 1995, as the same may be amended in accordance with the terms thereof and of this Indenture. "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 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 such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Authority and sent to all Holders of the Senior Notes for use by such Holders in connection with the Exchange Offer. "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 10 Senior Notes filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Loan Agreement" means that certain Loan Agreement, dated as of March 3, 1999, by and among the Authority, the Tribe, the lenders thereunder and Bank of America National Trust and Savings Association, as Administrative Agent, and the Documentation Agent and Syndication Agent referred to therein, including any related notes, guarantees, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time. "Management Agreement" means the Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 by and between the Authority and TCA 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. "Moody's" means Moody's Investors Service, Inc. "Net Income" means, with respect to any Person for any period, the net income (loss) of such Person for such period, determined in accordance with GAAP and before any reduction in respect of dividends on preferred interests, excluding, however: (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (A) any Asset Sale (including, without limitation, dispositions pursuant to sale leaseback transactions) or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (ii) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss, less (iii) in the case of any Person that is a partnership or a limited liability company, the amount of withholding for tax purposes of such Person for such period. "Net Proceeds" means the aggregate cash proceeds received by the Authority or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements and amounts required to be applied to the repayment of Indebtedness, secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. 11 Senior Notes "NIGC" means the National Indian Gaming Commission. "Non-Recourse Debt" means Indebtedness: (i) as to which neither the Authority nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Authority or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which such Indebtedness specifies that the lenders thereunder will not have any recourse to the stock or assets of the Authority or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering" means the offering of the Senior Notes and the Senior Subordinated 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 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Authority, any Subsidiary of 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. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to DTC, shall include Euroclear and Cedel). "Permitted Asset Swap" means the exchange by the Authority or any Restricted Subsidiary of any assets for other assets from a Person; provided that, the assets received in such exchange are believed by the Authority in good faith to be of substantially equivalent value and substantially all of which are either (i) long term assets that are used or useful in the Principal Business, (ii) cash or (iii) any combination of the foregoing clauses (i) and (ii). 12 Senior Notes "Permitted Investments" means: (i) any Investment in the Authority or in a Restricted Subsidiary of the Authority that is engaged in a Principal Business or a Related Business; (ii) any Investment in cash or Cash Equivalents; (iii) any Investment by the Authority or any Restricted Subsidiary of the Authority in a Person, if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Authority and a Subsidiary Guarantor and is engaged in a Principal Business or a Related Business or (b) is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Authority or a Restricted Subsidiary of the Authority; (iv) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 3.10; (v) any Investment in any Person engaged in the Principal Business or a Related Business having an aggregate fair market value (as determined in good faith by the Management Board and measured as of the date of such Investment, without giving effect to any subsequent increases or decreases in value) not to exceed $25.0 million at any one time outstanding; (vi) Government Service Payments; (vii) payroll advances to employees of the Authority or its Restricted Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount not to exceed $250,000 at any one time outstanding; (viii) accounts and notes receivable if created or acquired in the ordinary course of business and which are payable or dischargeable in accordance with customary trade terms; (ix) Investments related to Hedging Obligations, so long as such Hedging Obligations are not used for speculative purposes; and (x) any Investment in government securities to be held in the Defeasance Trust to defease the Junior Subordinated Notes in accordance with their terms. "Permitted Liens" means: (i) Liens securing Indebtedness permitted by the terms of this Indenture to be incurred under clauses (i), (ii), (v), (vi), (vii), (viii) (to the extent that the Indebtedness so guaranteed is permitted to be secured by this Indenture) and (x) of Section 4.09(b); (ii) Liens in favor of the Authority or a Restricted Subsidiary; (iii) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature (including, without limitation, pledges or deposits made in connection with obligatory workers' compensation laws, unemployment insurance or similar laws) incurred in the ordinary course of business; 13 Senior Notes (iv) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) of Section 4.09(b) covering only the assets acquired with such Indebtedness; (v) Liens existing on the date of this Indenture; (vi) Liens arising as a result of survey exceptions, title defects, encumbrances, easements, reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes or zoning or other restrictions as to the use of real property not interfering with the ordinary conduct of the business of the Authority or any of its Restricted Subsidiaries; (vii) Liens arising by operation of law in favor of carriers, warehousemen, landlords, mechanics, materialmen, laborers, employees or suppliers, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof; (viii) Liens incurred as a result of any interest or title of a lessor or lessee under any lease of property (including any Lien granted by such lessor or lessee but excluding any Lien arising in respect of a Financing Lease); (ix) Liens in favor of the Tribe representing the ground lessor's interest under the Lease; (x) Liens on property existing at the time or acquisition thereof by the Authority or a Restricted Subsidiary; provided that, such Liens were in existence prior to the contemplation of such acquisition; (xi) Liens for taxes, assessments or governmental charges, claims or rights 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; (xii) Liens securing Indebtedness permitted under clause (vii) of Section 4.09(b); provided that such Liens are no more extensive that the liens securing the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded thereby; (xiii) Liens incurred in the ordinary course of business of the Authority or a Restricted Subsidiary with respect to obligations that do not exceed $500,000 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, 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; 14 Senior Notes (xiv) Liens created by or resulting from any legal proceeding with respect to which the Authority or a Restricted Subsidiary is prosecuting an appeal proceeding for review and the Authority or such Restricted Subsidiary is maintaining adequate reserves in connection with GAAP; and (xv) a Lien on the assets in the Defeasance Trust with respect to the obligations of the Junior Subordinated Notes. "Permitted Refinancing Indebtedness" means any Indebtedness of the Authority or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Authority or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of prepayment premiums and reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has 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, defeased or refunded; provided that if the original maturity date of such Indebtedness is after the Stated Maturity of the Senior Notes, then such Permitted Refinancing Indebtedness shall have a maturity at least 180 days after the Senior Notes; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Senior Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Senior Notes on terms at least as favorable to the Holders of Senior Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Authority or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "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. 15 Senior Notes "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Senior Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Senior Note" means a Regulation S Temporary Global Senior Note or Regulation S Permanent Global Senior Note, as appropriate. "Regulation S Permanent Global Senior Note" means a permanent global Senior Note in the form of Exhibit A-1 hereto bearing the Global Senior Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Senior Note upon expiration of the Distribution Compliance Period. "Regulation S Temporary Global Senior Note" means a temporary global Senior Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Senior Notes initially sold in reliance on Rule 903 of Regulation S. "Related Business" means any business related to the Principal Business. "Relinquishment Agreement" means the Relinquishment Agreement dated February 7, 1998 between the Authority and TCA. "Resort" means the multi-amenity gaming and entertainment resort located in Uncasville, Connecticut and the convention center, retail facilities, arena, hotel and improvements proposed to be constructed adjacent thereto, as described in the Offering Memorandum of the Authority dated February 24, 1999 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 and (ii) any equipment leased from a third party in the ordinary course of business. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration department 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 Definitive Senior Note" means a Definitive Senior Note bearing the Private Placement Legend. "Restricted Global Senior Note" means a Global Senior Note bearing the Private Placement Legend. "Restricted Investment" means any Investment other than a Permitted Investment. "Rule 144" means Rule 144 promulgated under the Securities Act. 16 Senior Notes "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "S&P" means Standard & Poor's Ratings Group. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Exchange Notes" means the Authority's 81/8% Senior Notes due 2006 to be issued in exchange for the Initial Senior Notes pursuant to the Senior Registration Rights Agreement and issued under this Indenture pursuant to Section 2.02, a registration rights agreement substantially identical to the Senior Registration Rights Agreement. "Senior Notes" means, collectively, the Initial Senior Notes and the Senior Exchange Notes, treated as a single class of securities as amended or supplemented from time to time in accordance with the terms hereof, in each case as issued pursuant to this Indenture. "Senior Registration Rights Agreement" means the Senior Registration Rights Agreement, dated as of March 3, 1999, by and among the Authority and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Senior Subordinated Note Indenture" means that certain indenture, dated as of the date hereof, among the Authority, the Tribe and State Street Bank and Trust Company, as trustee, as amended or supplemented from time to time, relating to the Senior Subordinated Notes. "Senior Subordinated Notes" means, collectively, the Initial Senior Subordinated Notes and the Senior Subordinated Exchange Notes (as those terms are defined in the Senior Subordinated Note Indenture), treated as a single class of securities as amended or supplemented from time to time in accordance with the terms hereof, in each case as issued pursuant to the Senior Subordinated Note Indenture. "Senior Subsidiary Guarantee" means the joint and several guarantee by the Authority's Restricted Subsidiaries of the Authority's obligations under the Senior Notes, in substantially the form of such Subsidiary Guarantee attached as Exhibit D to this Indenture. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Senior Registration Rights Agreement. "Side Letters" means (i) that certain Side Letter, dated February 7, 1998 regarding the Junior Subordinated Notes, as amended December 15, 1998; (ii) that certain Side Letter, dated February 7, 1998 relating to various waivers under the existing Management Agreement; (iii) that certain Side Letter, dated February 7, 1998, regarding the use of TCA personnel following this termination of the Management Agreement; (iv) that certain Side Letter, dated February 22, 1999 regarding the previously proposed exchange of Junior Subordinated Notes for Senior Subordinated Notes and (v) that certain Side Letter, dated February 22, 1999, regarding the earlier Side Letters, in connection with the defeasance of the Junior Subordinated Notes. 17 Senior Notes "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid including as a result of any mandatory sinking fund payment or mandatory redemption in the documentation governing such Indebtedness in effect on the date hereof or, if such Indebtedness is incurred after the date of this Indenture, in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means any Indebtedness which by its terms is expressly subordinate in right of payment in any respect to the payment of any obligation on the Senior Notes. "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 otherwise be bound to the terms of this Indenture; 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 the 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. "Subsidiary Guarantor" means any Subsidiary of the Authority that executes a Senior Subsidiary Guarantee in accordance with the provisions of this Indenture and its respective successors and assigns. "Sun International" means Sun International Hotels Limited, a Bahamian corporation or any of its affiliates. "TCA" means Trading Cove Associates. "Tender Offer" means the Tender Offer and the Consent Solicitation with respect to $175.0 million aggregate principal amount of the Existing Secured Notes. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Treasury Rate" equals (i) if the period from the date of redemption to the Stated Maturity Date is greater than one year, the yield to maturity as of such date of redemption of United States Treasury securities with a constant maturity (as complied and published in the most recent Federal Reserve Statistical Release H.15 (519) that became publicly available at least two business days prior to the date of redemption (or, if the Federal Reserve Statistical Release H.15 (519) is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the date of redemption to the Stated Maturity Date or (ii) if the period from the date of redemption to the Stated Maturity Date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year. 18 Senior Notes "Tribal Council" means the Tribe's nine member elected council which exercises all the legislative and executive powers of the Tribe. "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 or authorize and regulate gaming on the Mohegan Reservation pursuant to IGRA. "Tribal Tax Code" means any sales, use, room occupancy and related excise taxes, including admissions and cabaret taxes and any other tax (other than income tax) that may be imposed by the State of Connecticut that the Tribe may impose on the Authority, its patrons or operations; provided, however, that the rate and scope of such taxes shall not be more onerous than those imposed by the State of Connecticut. "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. ss. 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. "Unrestricted Definitive Senior Note" means one or more Definitive Senior Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Global Senior Note" means a permanent global Senior Note substantially in the form of Exhibit A-1 attached hereto that bears the Global Senior Note Legend and that has the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Senior Notes that do not bear the Private Placement Legend. "Unrestricted Subsidiary" means any Subsidiary that is designated in writing by the Authority as an Unrestricted Subsidiary, but only to the extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement or understanding with the Authority or any Restricted Subsidiary of the Authority unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Authority or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Authority; (iii) is a Person with respect to which neither the Authority nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (iv) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Authority or any of its Restricted Subsidiaries; and (v) has at least one director on its board of directors that is not a director or executive officer of the Authority or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Authority or any of its Restricted Subsidiaries. Any such designation by the Management Board shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a 19 Senior Notes Restricted Subsidiary of the Authority as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Authority shall be in default of such Section). The Authority may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Authority of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (a) such Indebtedness is permitted by Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (b) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(k) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Management Board or Board of Directors, as the case may be, of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) 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 (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. "Wholly Owned Restricted Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. Section 1.02 Other Definitions. Defined in Term Section ---- --------- "Affiliate Transaction"..................................... 4.11 "Asset Sale"................................................ 4.10 "Asset Sale Offer".......................................... 3.10 "Authentication Order"...................................... 2.02 "Bankruptcy Law"............................................ 4.01 "Change of Control Offer"................................... 4.15 "Change of Control Payment"................................. 4.15 "Change of Control Payment Date"............................ 4.15 "Covenant Defeasance"....................................... 8.03 "DTC"....................................................... 2.03 "Event of Default".......................................... 6.01 20 Senior Notes Defined in Term Section ---- --------- "Excess Proceeds"........................................... 4.10 "incur"..................................................... 4.09 "Lease Transaction"......................................... 4.24 "Legal Defeasance".......................................... 8.02 "Offer Amount".............................................. 3.10 "Offer Period".............................................. 3.10 "Paying Agent".............................................. 2.03 "Payment Default"........................................... 6.01 "Purchase Date"............................................. 3.10 "Rating Event Date"......................................... 4.26 "Registrar"................................................. 2.03 "Reinstated Provisions"..................................... 4.26 "Restricted Payments"....................................... 4.07 "Suspended Provisions"...................................... 4.26 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 Senior Notes; "indenture security Holder" means a Holder of a Senior Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Senior Notes and any Senior Note Guarantees means the Authority and any successor obligor upon the Senior Notes and any Senior Note Guarantees, respectively. 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: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; 21 Senior Notes (e) provisions apply to successive events and transactions; and (f) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2 THE SENIOR NOTES Section 2.01 Form and Dating. (a) General. The Senior Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Senior Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Senior Note shall be dated the date of its authentication. The Senior Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Senior 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. However, to the extent any provision of any Senior Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Senior Notes. Senior Notes issued in global form shall be substantially in the form of Exhibit A-1 or A-2 attached hereto (including the Global Senior Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto). Senior Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the Global Senior Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Senior Note" attached thereto). Each Global Senior Note shall represent such of the outstanding Senior Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Senior Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Senior Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Senior Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Senior Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Temporary Global Senior Notes. Senior Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Senior Note, which shall be deposited on behalf of the purchasers of the Senior Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Authority and authenticated by the Trustee as hereinafter provided. The Distribution Compliance Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Senior Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Distribution Compliance Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Senior Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Authority. Following the termination of the Distribution Compliance Period, beneficial 22 Senior Notes interests in the Regulation S Temporary Global Senior Note shall be exchanged for beneficial interests in Regulation S Permanent Global Senior Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Senior Notes, the Trustee shall cancel the Regulation S Temporary Global Senior Note. The aggregate principal amount of the Regulation S Temporary Global Senior Note and the Regulation S Permanent Global Senior Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Senior Note and the Regulation S Permanent Global Senior Notes that are held by Participants through Euroclear or Cedel Bank. Section 2.02 Execution and Authentication. Two Officers of the Authority shall sign the Senior Notes for the Authority by manual or facsimile signature. If an Officer whose signature is on a Senior Note no longer holds that office at the time a Senior Note is authenticated, the Senior Note shall nevertheless be valid. A Senior Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Senior Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Authority signed by two Officers of the Authority (an "Authentication Order"), authenticate Senior Notes for original issue up to the aggregate principal amount not to exceed $200,000,000 (other than as provided in Section 2.07 hereof) in one or more series, which order shall specify whether such notes are Initial Senior Notes or Senior Exchange Notes. The Senior Notes shall be issued only in fully registered form, without coupons and only in denominations of $1,000 and any integral multiple thereof. All Senior Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Senior Notes will have the right to vote or consent as a separate class on any matter. The Trustee may appoint an authenticating agent acceptable to the Authority to authenticate Senior Notes. An authenticating agent may authenticate Senior 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 Holders or an Affiliate of the Authority. Section 2.03 Registrar and Paying Agent. The Authority shall maintain an office or agency where Senior Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Senior Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Senior Notes and of their transfer and exchange. The Authority may appoint one or more co-registrars and one or more 23 Senior Notes 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 or any of its Restricted Subsidiaries may act as Paying Agent or Registrar. The Authority initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Senior Notes. The Authority initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Senior 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 Additional Interest, if any, or interest on the Senior 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 a Restricted Subsidiary or an Affiliate) shall have no further liability for the money. If the Authority or a Restricted Subsidiary 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. Upon any bankruptcy or reorganization proceedings relating to the Authority, the Trustee shall serve as Paying Agent for the Senior 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 ss. 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 Senior Notes and the Authority shall otherwise comply with TIA ss. 312(a). Section 2.06 Transfer and Exchange. (a) Transfer and Exchange of Global Senior Notes. A Global Senior Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Senior Notes will be exchanged by the Authority for Definitive Senior Notes if (i) the Authority delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Authority within 120 days after the date of such notice from the Depositary or (ii) the Authority in its sole discretion determines that the Global Senior Notes (in whole but not in part) should be exchanged for Definitive Senior Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Senior Note be exchanged by the Authority for Definitive Senior Notes prior to (x) the expiration of the Distribution Compliance 24 Senior Notes Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Senior Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Senior Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Senior Note authenticated and delivered in exchange for, or in lieu of, a Global Senior Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Senior Note. A Global Senior Note may not be exchanged for another Senior Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Senior Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Senior Notes. The transfer and exchange of beneficial interests in the Global Senior Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Senior Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Senior Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Senior Note. Beneficial interests in any Restricted Global Senior Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Senior Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Distribution Compliance Period, transfers of beneficial interests in the Temporary Regulation S Global Senior Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Senior Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Senior Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Senior Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Senior Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Senior Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Senior Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Senior Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Authority in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global 25 Senior Notes Senior Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Senior Notes contained in this Indenture and the Senior Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Senior Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Senior Note. A beneficial interest in any Restricted Global Senior Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Senior Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Senior Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Senior Note or the Regulation S Global Senior Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Senior Note for Beneficial Interests in the Unrestricted Global Senior Note. A beneficial interest in any Restricted Global Senior Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Senior Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Senior Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the 26 Senior Notes form of a beneficial interest in an Unrestricted Global Senior Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Senior Note has not yet been issued, the Authority shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Senior Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Senior Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Senior Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Senior Notes. (i) Beneficial Interests in Restricted Global Senior Notes to Restricted Definitive Senior Notes. If any holder of a beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Senior Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Senior Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to the Authority or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or 27 Senior Notes (F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Senior Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Authority shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Note in the appropriate principal amount. Any Definitive Senior Note issued in exchange for a beneficial interest in a Restricted Global Senior Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Senior Notes to the Persons in whose names such Senior Notes are so registered. Any Definitive Senior Note issued in exchange for a beneficial interest in a Restricted Global Senior Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Beneficial Interests in Regulation S Temporary Global Senior Note to Definitive Senior Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Senior Note may not be exchanged for a Definitive Senior Note or transferred to a Person who takes delivery thereof in the form of a Definitive Senior Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) Beneficial Interests in Restricted Global Senior Notes to Unrestricted Definitive Senior Notes. A holder of a beneficial interest in a Restricted Global Senior Note may exchange such beneficial interest for an Unrestricted Definitive Senior Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private 28 Senior Notes Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iv) Beneficial Interests in Unrestricted Global Senior Notes to Unrestricted Definitive Senior Notes. If any holder of a beneficial interest in an Unrestricted Global Senior Note proposes to exchange such beneficial interest for a Definitive Senior Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Senior Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Senior Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Authority shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Note in the appropriate principal amount. Any Definitive Senior Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Senior Notes to the Persons in whose names such Senior Notes are so registered. Any Definitive Senior Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Senior Notes for Beneficial Interests. (i) Restricted Definitive Senior Notes to Beneficial Interests in Restricted Global Senior Notes. If any Holder of a Restricted Definitive Senior Note proposes to exchange such Senior Note for a beneficial interest in a Restricted Global Senior Note or to transfer such Restricted Definitive Senior Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Senior Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Senior Note proposes to exchange such Senior Note for a beneficial interest in a Restricted Global Senior Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Senior Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Senior Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; 29 Senior Notes (D) if such Restricted Definitive Senior Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Senior Note is being transferred to the Authority or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (F) if such Restricted Definitive Senior Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Restricted Definitive Senior Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Senior Note, in the case of clause (B) above, the 144A Global Senior Note, in the case of clause (C) above, the Regulation S Global Senior Note. (ii) Restricted Definitive Senior Notes to Beneficial Interests in Unrestricted Global Senior Notes. A Holder of a Restricted Definitive Senior Note may exchange such Senior Note for a beneficial interest in an Unrestricted Global Senior Note or transfer such Restricted Definitive Senior Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Senior Notes proposes to exchange such Senior Notes for a beneficial interest in the Unrestricted Global Senior Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Senior Notes proposes to transfer such Senior Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Senior Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and 30 Senior Notes that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Senior Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Senior Note. (iii) Unrestricted Definitive Senior Notes to Beneficial Interests in Unrestricted Global Senior Notes. A Holder of an Unrestricted Definitive Senior Note may exchange such Senior Note for a beneficial interest in an Unrestricted Global Senior Note or transfer such Definitive Senior Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Senior Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Senior Notes. If any such exchange or transfer from a Definitive Senior Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Senior Note has not yet been issued, the Authority shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Senior Notes in an aggregate principal amount equal to the principal amount of Definitive Senior Notes so transferred. (e) Transfer and Exchange of Definitive Senior Notes for Definitive Senior Notes. Upon request by a Holder of Definitive Senior Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Senior Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Senior Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Senior Notes to Restricted Definitive Senior Notes. Any Restricted Definitive Senior Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Senior Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. 31 Senior Notes (ii) Restricted Definitive Senior Notes to Unrestricted Definitive Senior Notes. Any Restricted Definitive Senior Note may be exchanged by the Holder thereof for an Unrestricted Definitive Senior Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Senior Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Registration Rights Agreement; (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Senior Notes proposes to exchange such Senior Notes for an Unrestricted Definitive Senior Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Senior Notes proposes to transfer such Senior Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Senior Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Authority to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Unrestricted Definitive Senior Notes to Unrestricted Definitive Senior Notes. A Holder of Unrestricted Definitive Senior Notes may transfer such Senior Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Senior Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of an Exchange Offer in accordance with the Senior Registration Rights Agreement, the Authority shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Senior Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Senior Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Senior Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Authority, and accepted for exchange in the Exchange Offer and (ii) Definitive Senior Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Senior Notes accepted for 32 Senior Notes exchange in the Exchange Offer. Concurrently with the issuance of such Senior Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Senior Notes to be reduced accordingly, and the Authority shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Senior Notes so accepted Definitive Senior Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Senior Notes and Definitive Senior Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Senior Note and each Definitive Senior Note (and all Senior Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form. "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Senior Note or Definitive Senior Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or 33 Senior Notes (f) to this Section 2.06 (and all Senior Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Senior Note Legend. Each Global Senior Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE AUTHORITY." (iii) Regulation S Temporary Global Senior Note Legend. The Regulation S Temporary Global Senior Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Senior Notes. At such time as all beneficial interests in a particular Global Senior Note have been exchanged for Definitive Senior Notes or a particular Global Senior Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Senior Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Senior Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Note or for Definitive Senior Notes, the principal amount of Senior Notes represented by such Global Senior Note shall be reduced accordingly and an endorsement shall be made on such Global Senior Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Note, such other Global Senior Note shall be increased accordingly and an endorsement shall be made on such Global Senior Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (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 Global Senior Notes and Definitive Senior Notes upon the Authority's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Senior Note or to a Holder of a Definitive Senior Note for any registration of transfer or exchange, but the Authority may require payment 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 34 charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.10, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Senior Note selected for redemption in whole or in part, except the unredeemed portion of any Senior Note being redeemed in part. (iv) All Global Senior Notes and Definitive Senior Notes issued upon any registration of transfer or exchange of Global Senior Notes or Definitive Senior Notes shall be the valid obligations of the Authority, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Senior Notes or Definitive Senior 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 any Senior Notes during a period beginning at the opening of business 15 days before the day of any selection of Senior Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Senior Note so selected for redemption in whole or in part, except the unredeemed portion of any Senior Note being redeemed in part or (C) to register the transfer of or to exchange a Senior 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 Senior Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name any Senior Note is registered as the absolute owner of such Senior Note for the purpose of receiving payment of principal of and interest on such Senior Notes and for all other purposes, and none of the Trustee, any Agent or the Authority shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Senior Notes and Definitive Senior Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Senior Notes. If any mutilated Senior Note is surrendered to the Trustee or the Authority and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Senior Note, the Authority shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Senior Note in accordance with the requirements of the Trustee set forth herein. 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 Senior Note is replaced. The Authority may charge for its expenses in replacing a Senior Note. Every replacement Senior 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 Senior Notes duly issued hereunder. 35 Senior Notes Section 2.08. Outstanding Senior Notes. The Senior Notes outstanding at any time are all the Senior Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Senior Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Senior Note does not cease to be outstanding because the Authority or an Affiliate of the Authority holds the Senior Note. If a Senior 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 Senior Note is held by a bona fide purchaser. If the principal amount of any Senior Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Authority, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Senior Notes payable on that date, then on and after that date such Senior Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Senior Notes. In determining whether the Holders of the required principal amount of Senior Notes have concurred in any direction, waiver or consent, Senior Notes owned by the Authority, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Authority, 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 Senior Notes that the Trustee actually knows are so owned shall be so disregarded. Section 2.10. Temporary Senior Notes. Until certificates representing Senior Notes are ready for delivery, the Authority may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Senior Notes. Temporary Senior Notes shall be substantially in the form of certificated Senior Notes but may have variations that the Authority considers appropriate for temporary Senior Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Authority shall prepare and the Trustee shall authenticate definitive Senior Notes in exchange for temporary Senior Notes. Holders of temporary Senior Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Authority at any time may deliver Senior Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Senior Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Senior Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Senior Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Senior Notes shall be delivered to the Authority. The Authority may not issue new Senior Notes to replace Senior Notes that it has paid or that have been delivered to the Trustee for cancellation. 36 Senior Notes Section 2.12. Defaulted Interest. If the Authority defaults in a payment of interest on the Senior Notes, it shall pay the defaulted interest 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 Senior Notes and in Section 4.01 hereof. The Authority shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Senior 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 to be paid. Section 2.13. CUSIP Numbers. The Authority in issuing the Senior Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Senior Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Senior Notes, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Authority will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Authority elects to redeem Senior Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Senior Notes to be redeemed and (iv) the redemption price. Section 3.02. Selection of Senior Notes to Be Redeemed. If less than all of the Senior Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Senior Notes to be redeemed or purchased among the Holders of the Senior Notes 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 in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Senior Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Senior Notes not previously called for redemption. The Trustee shall promptly notify the Authority in writing of the Senior Notes selected for redemption and, in the case of any Senior Note selected for partial redemption, the principal amount thereof to be redeemed. Senior Notes and portions of Senior Notes selected shall be in amounts of $1,000 or whole multiples of $1,000, except that if all of the Senior Notes of a Holder are to be 37 Senior Notes redeemed, the entire outstanding amount of Senior Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Senior Notes called for redemption also apply to portions of Senior Notes called for redemption. Section 3.03. Notice of Redemption. Subject to the provisions of Section 3.10 hereof, 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 Senior Notes are to be redeemed at its registered address. The notice shall identify the Senior Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Senior Note is being redeemed in part, the portion of the principal amount of such Senior Note to be redeemed and that, after the redemption date upon surrender of such Senior Note, a new Senior Note or Senior Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Senior Note; (d) the name and address of the Paying Agent; (e) that Senior 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 Senior Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Senior Notes and/or Section of this Indenture pursuant to which the Senior 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 Senior 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 (unless a shorter period shall be satisfactory to the Trustee), 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, Senior 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. 38 Senior Notes Section 3.05. Deposit of Redemption Price. One Business Day prior to the redemption date, the Authority shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Senior Notes to be redeemed on that 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 redemption price of, and accrued interest on, all Senior Notes to be redeemed. If the Authority complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Senior Notes or the portions of Senior Notes called for redemption. If a Senior Note is 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 Senior Note was registered at the close of business on such record date. If any Senior Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Authority to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the 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 Senior Notes and in Section 4.01 hereof. Section 3.06. Senior Notes Redeemed in Part. Upon surrender of a Senior Note that is 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 Senior Note equal in principal amount to the unredeemed portion of the Senior Note surrendered. Section 3.07. Optional Redemption. The Authority may redeem all or a part of these Senior Notes upon not less than 30 nor more than 60 days' notice, at a redemption price (expressed as percentages of principal amount) equal to 100% of the principal amount thereof plus the Applicable Premium, if any, plus accrued and unpaid interest thereon, if any, to the applicable redemption date. 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 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) 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 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 (ii) to call for redemption of the Senior Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such 39 Senior Notes Holder or beneficial owner acquired the Senior Notes or (3) the current market price of the Senior Notes, together with, in each case, accrued and unpaid interest and Additional 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 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 Senior Notes who is required to apply for 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 payments with respect to the Senior Notes. Section 3.10. Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Authority shall be required to commence an offer to all Holders to purchase Senior Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale 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 the principal amount of Senior Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Senior Notes tendered in response to the Asset Sale Offer. Payment for any Senior 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 shall be paid to the Person in whose name a Senior Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Senior Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale 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 Senior Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.10 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; 40 Senior Notes (c) that any Senior Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Authority defaults in making such payment, any Senior Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date; (e) that Holders electing to have a Senior Note purchased pursuant to an Asset Sale Offer may elect to have Senior Notes purchased in integral multiples of $1,000 only; (f) that Holders electing to have a Senior Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Senior Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Note completed, or transfer by book-entry transfer, 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; (g) that Holders shall be entitled to withdraw 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 Senior Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Senior Note purchased; (h) that, if the aggregate principal amount of Senior Notes surrendered by Holders exceeds the Offer Amount, the Authority shall select the Senior Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Authority so that only Senior Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Senior Notes were purchased only in part shall be issued new Senior Notes equal in principal amount to the unpurchased portion of the Senior Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Authority shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Senior Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Senior Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Senior Notes or portions thereof were accepted for payment by the Authority in accordance with the terms of this Section 3.10. The Authority, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five Business Days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Senior Notes tendered by such Holder and accepted by the Authority for purchase, and the Authority shall promptly issue a new Senior Note, and the Trustee, upon written request from the Authority shall authenticate and mail or deliver such new Senior Note to such Holder, in a principal amount equal to any unpurchased portion of the Senior Note surrendered. Any Senior 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 Asset Sale 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. 41 Senior Notes ARTICLE 4 COVENANTS Section 4.01. Payment of Senior Notes. (a) The Authority shall pay or cause to be paid the principal of, premium, if any, and interest on the Senior Notes on the dates and in the manner provided in the Senior Notes. Principal, premium, if any, and interest and Additional Interest, if any, shall be considered paid on the date due if the Paying Agent, if other than the Authority or a Subsidiary thereof, 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 and Additional Interest, if any, then due. The Authority shall pay all Additional Interest, if any, in the same manner, on the same dates and in the amounts set forth in the first paragraph of the Senior Notes. (b) 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 Senior 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. (a) 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 Senior 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 Senior 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. (b) The Authority may also from time to time designate one or more other offices or agencies where the Senior 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 designation or rescission and of any change in the location of any such other office or agency. (c) 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. (a) Whether or not required by the SEC, so long as any Senior Notes are outstanding, the Authority will furnish to the Holders of Senior Notes within 15 days after the end of the time periods specified in the SEC's rules and regulations for filings of current, quarterly and annual reports: (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Authority were required to file 42 Senior Notes such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Authority and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Authority and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Authority, to the extent that would be required by the rules, regulations or interpretive positions of the SEC) and, with respect to the annual information only, a report thereon by the Authority's independent public accountants; and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Authority were required to file such reports. (b) In the event that the Authority consummates an Exchange Offer, whether or not required by the rules and regulations of the SEC, the Authority will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. (c) The Authority has agreed that, for so long as any Senior Notes remain outstanding, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (d) The Authority shall 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. (e) The Authority shall at all times comply with TIA ss. 314(a). 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 and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Authority has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Authority has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Authority is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Senior Notes is prohibited or if such event has occurred, a description of the event and what action the Authority is taking or proposes to take with respect thereto. (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 43 Senior Notes (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 has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, 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 Senior Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Authority is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Authority shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Senior 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. (a) The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries, directly or indirectly, to: (i) make any payment on or with respect to any of the Authority's or any of its Restricted Subsidiaries' Equity Interests; (ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interest in the Authority held by the Tribe or any Affiliate of the Tribe; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness (other than the defeasance and the ultimate redemption of the Junior Subordinated Notes in accordance with their terms and the terms of the Defeasance Trust), except a payment of interest or principal at Stated Maturity thereof; (iv) 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 (other than Government Service Payments); or (v) make any Restricted Investment; (all such payments and other actions set forth in clauses (i) through (v) are collectively referred to as "Restricted Payments") unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) the Authority would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the 44 Senior Notes applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a); and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Authority and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv) and (v) of Section 4.07(b)), is less than the sum, without duplication, of (1) 50% of the Consolidated Net Income of the Authority for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Authority's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net cash proceeds or fair market value (as determined in good faith by the Management Board and evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee) of assets or property (other than cash) received by the Authority from capital contributions from the Tribe that bear no mandatory obligation to repay the Tribe and other than from a Restricted Subsidiary of the Authority, plus (3) to the extent that any Restricted Investment that was made after the date of this Indenture is sold, liquidated or otherwise disposed of for cash or an amount equal to the fair market value thereof (as determined in good faith by the Management Board and evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee), the lesser of (I) the cash return of capital or fair market value amount, as the case may be, with respect to such Restricted Investment (less the cost of disposition, if any) and (II) the initial amount of such Restricted Investment, plus (4) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the lesser of (I) the fair market value of the Authority's Investment in such Subsidiary as of the date of such redesignation or (II) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. (b) So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit: (i) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (ii) the payment of any dividend by a Restricted Subsidiary of the Authority to the holders of its common Equity Interests on a pro rata basis; (iii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Authority held by any member of the Authority's (or any of its Restricted Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of this Indenture; provided that (a) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any 12-month period and (b) the aggregate amount of all such repurchased, redeemed, acquired or retired Equity Interests shall not in the aggregate exceed $3.0 million; (iv) the redemption or purchase of Subordinated Indebtedness of the Authority in the event that the holder of such Subordinated Indebtedness has failed to qualify or be found suitable or otherwise be eligible by any Gaming Regulatory Authority to remain a holder of such Subordinated Indebtedness; (v) the redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness with the net cash proceeds from a substantially concurrent capital contribution from the Tribe (provided that such capital contribution is not counted for purposes of Section 4.07(a)(C)(2); and (vi) any other Restricted Payments in an amount not to exceed $20.0 million at any one time outstanding. 45 Senior Notes (c) The Authority may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall (i) any entity (including any Subsidiary of the Authority or the Authority or any operating division thereof) engaged in a Principal Business be transferred to or held by an Unrestricted Subsidiary or (ii) any Key Project Assets or Gaming Licenses be transferred to an Unrestricted Subsidiary. In the event of such designation, all outstanding Investments owned by the Authority and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under Section 4.07(a) unless the Investment constitutes a Permitted Investment. All such outstanding Investments will be deemed to constitute Restricted Payments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Authority may redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary if such redesignation would not otherwise cause a Default. (d) The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Authority or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this Section 4.07 shall be determined by the Management Board whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Authority shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed. Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. (a) Except as set forth in Section 4.08(b), the Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Capital Stock to the Authority or any of the Authority's Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Authority or any of the Authority's Restricted Subsidiaries; (ii) make loans or advances to the Authority or any of the Authority's Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Authority or any of the Authority's Restricted Subsidiaries. (b) The provisions of Section 4.08(a) will not apply to encumbrances or restrictions existing under or by reason of: (i) Existing Indebtedness as in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness, as in effect on the date of this Indenture; (ii) this Indenture and the Senior Notes; (iii) the Senior Subordinated Notes Indenture and the Senior Subordinated Notes; 46 Senior Notes (iv) the Credit Facilities; (v) applicable law; (vi) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Authority or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred; (vii) customary non-assignment provisions in leases or other contracts entered into in the ordinary course of business and consistent with past practices; (viii) purchase money obligations (including, without limitation, Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (iii) of Section 4.08(a); (ix) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending its sale or other disposition; (x) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (xi) Liens securing Indebtedness otherwise permitted to be incurred pursuant to Section 4.12 that limit the right of the Authority or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien; (xii) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; and (xiii) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Authority will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Indebtedness) and the Authority will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Authority may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and the Authority's Subsidiaries may incur Indebtedness or issue preferred stock if 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 on which such additional Indebtedness is incurred would have been at least 2.0 to 1 if such Indebtedness is incurred prior to September 30, 2001 47 Senior Notes and 2.5 to 1 if such indebtedness is incurred thereafter, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. Notwithstanding the foregoing, the Authority will not issue any Disqualified Stock or any type of Capital Stock that would violate IGRA. (b) So long as no Default or Event of Default shall have occurred and be continuing, or would be caused thereby, Section 4.09(a) will not prohibit the incurrence of any of the following items of Indebtedness: (i) the incurrence by the Authority or its Restricted Subsidiaries of Indebtedness and letters of credit pursuant to Credit Facilities; provided that the aggregate principal amount of all such Indebtedness and letters of credit outstanding under all Credit Facilities, after giving effect to such incurrence (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Authority thereunder), does not exceed $500.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Authority or any of its Restricted Subsidiaries since the date of this Indenture to repay Indebtedness under Credit Facilities permitted under Section 4.10; (ii) the incurrence by the Authority and its Restricted Subsidiaries of the Existing Indebtedness; (iii) the incurrence by the Authority of Indebtedness represented by the Senior Notes and the Senior Exchange Notes; (iv) the incurrence by the Authority of Indebtedness represented by the Senior Subordinated Notes and the Senior Subordinated Exchange Notes; (v) the incurrence by the Authority or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price of furniture, fixtures, equipment or similar assets used or useful in the business of the Authority or such Restricted Subsidiary not to exceed 100% of the lesser of cost or fair market value of the assets financed and, in an aggregate principal amount under this clause (v) not to exceed $25.0 million at any time outstanding; (vi) the incurrence by the Authority or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, renew, extend, defease or replace Indebtedness that was permitted by this Indenture to be incurred under Section 4.09(a) or clauses (i), (ii) (other than the Junior Subordinated Notes), (iii), (iv) or (v) of this Section 4.09(b); (vii) the incurrence by the Authority or any of its Restricted Subsidiaries of 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; (viii) the guarantee by the Authority or any of its Restricted Subsidiaries of any Indebtedness of the Authority or any of its Restricted Subsidiaries that was permitted to be incurred by another provision of this Section 4.09; 48 Senior Notes (ix) the incurrence by a Wholly Owned Restricted Subsidiary of Indebtedness owed to another Wholly Owned Restricted Subsidiary or to the Authority; provided that if at any time any such Wholly Owned Restricted Subsidiary ceases to be a Wholly Owned Restricted Subsidiary, any such Indebtedness shall be deemed to be an incurrence of Indebtedness for the purposes of this Section 4.09; (x) the incurrence by the Authority or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (x), not to exceed $25.0 million; or (xi) the incurrence by the Authority's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Authority that was not permitted by this clause (xi). For purposes of determining compliance with this Section 4.09 in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (i) through (xi) above or is entitled to be incurred pursuant to Section 4.09(a), the Authority shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence in any manner that complies with this Section 4.09. Section 4.10. Asset Sales. (a) The Authority will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Authority (or its Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Management Board and evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of; and (ii) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Authority or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following shall be deemed to be cash: (A) any liabilities that would appear on the Authority's or such Restricted Subsidiary's balance sheet prepared in accordance with GAAP (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Authority or such Restricted Subsidiary from further liability; and (B) any securities, notes or other obligations received by the Authority or any such Restricted Subsidiary from such transferee that are converted by the Authority or such Restricted Subsidiary into cash (to the extent of the cash received) within 30 days of the receipt thereof, provided, however, that the Authority will not be permitted to make any Asset Sale of Key Project Assets. (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Authority may apply such Net Proceeds, at its option, to: (i) repay permanently term Indebtedness under Credit Facilities of the Authority or any Restricted Subsidiary; (ii) repay revolving credit Indebtedness under Credit Facilities and correspondingly permanently reduce commitments with respect thereto; (iii) acquire a majority of the assets of, or a majority of the Voting Stock of, an entity engaged in the Principal Business or a Related Business; (iv) make capital expenditures or acquire other long-term assets that are used or useful in the Principal Business or a Related Business; (v) make an investment in the Principal 49 Senior Notes Business or a Related Business or in tangible long-term assets used or useful in the Principal Business or a Related Business; or (vi) reduce permanently Indebtedness that is not Subordinated Indebtedness. Pending the final application of any such Net Proceeds, the Authority may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. (c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b) will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority will make an Asset Sale Offer to all Holders of Senior Notes and all holders of other Indebtedness containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Senior Notes and such other Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase and will be payable in cash, in accordance with the procedures set forth in this Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Authority may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Senior Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Notes and such other Indebtedness (to the extent that such other Indebtedness permits such selection) to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Section 4.11. Transactions with Affiliates. (a) The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries to, make any payment to, or 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 or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless: (i) such Affiliate Transaction is on terms that are no less favorable to the Authority or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Authority or such Restricted Subsidiary with an unrelated Person; and (ii) the Authority delivers to the Trustee: (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Management Board set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Management Board; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Authority or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a): (i) any employment agreement or arrangement entered into by the Authority or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Authority or such Restricted Subsidiary; (ii) transactions between or among the Authority and/or its Restricted Subsidiaries; (iii) payment of reasonable Management Board fees to members of the Management Board; (iv) transactions with Persons in whom the Authority owns any Equity Interests, so long as the remaining equity holders of such Person are not Affiliates 50 Senior Notes of the Authority or any of its Subsidiaries; (v) Government Service Payments; (vi) transactions pursuant to the Development Services Agreement, the Relinquishment Agreement and the Side Letters; (vii) Restricted Payments or Permitted Investments that are made in compliance with the provisions of Section 4.07; and (viii) contractual arrangements existing on the date of this Indenture and renewals, extensions and any modifications thereof that are not materially adverse to Holders. Section 4.12. Liens. The Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of its property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Senior Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. Section 4.13. Line of Business. The Authority shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than the Principal Business or a Related Business. Section 4.14. Existence of the Authority and Maintenance of the Lease. (a) The Authority shall, and shall cause each of its Restricted Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect their respective existence, in accordance with their respective organizational documents and their respective rights (contractual, charter and statutory), licenses and franchises; provided, however, that neither the Authority nor any Restricted Subsidiary shall be required to preserve, with respect to itself, any license, right or franchise and, with respect to its Restricted Subsidiaries, any such existence, license, right or franchise, if its Management Board or Board of Directors, or other governing body or officers authorized to make such determination, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Authority or any Restricted Subsidiary, and that the loss thereof is not adverse in any material respect to the Holders. (b) The Authority shall do, or cause to be done, all things necessary to perform any material covenants set forth in the Lease in order to keep the Lease in full force and effect. Section 4.15. Offer to Repurchase Upon Change of Control. (a) If a Change of Control occurs, each Holder of the Senior Notes will have the right to require the Authority to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder's Senior Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Authority will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Senior Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, thereon, to the date of purchase. (b) Within 20 Business Days following any Change of Control, the Authority will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Notes on the Change of Control Payment Date specified in such notice, pursuant to the procedures required by this Indenture and described in such notice. The Authority will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and 51 Senior Notes regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Senior Notes as a result of a Change of Control. (c) On the Change of Control Payment Date, the Authority will, to the extent lawful: (i) accept for payment all Senior Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Notes or portions thereof so tendered; and (iii) deliver or cause to be delivered to the Trustee the Senior Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Senior Notes or portions thereof being purchased by the Authority. (d) The Paying Agent will promptly mail to each Holder of Senior Notes so tendered the Change of Control Payment for such Senior Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Senior Note equal in principal amount to any unpurchased portion of the Senior Notes surrendered, if any; provided that each such new Senior Note will be in a principal amount of $1,000 or an integral multiple thereof. The Authority will notify the Trustee and will instruct the Trustee to notify the Holders of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (e) Notwithstanding anything to the contrary in this Section 4.15, the Authority shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and Section 3.10 hereof and all other provisions of this Indenture applicable to a Change of Control Offer made by the Authority and purchases all Senior Notes validly tendered and not withdrawn under such Change of Control Offer. Section 4.16. Limitation on Sale and Leaseback Transactions. The Authority will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction involving the Resort; provided that the Authority or any of its Restricted Subsidiaries may enter into a sale and leaseback transaction if: (i) the Authority or such Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12; (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Management Board and set forth in an Officers' Certificate delivered to the Trustee, of the property that is subject of such sale and leaseback transaction; and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and the Authority applies the proceeds of such transaction in compliance with Section 4.10; provided that, upon the occurrence of a Rating Event Date and for so long as the covenants set forth in Section 4.26 continue to be Suspended Provisions, the following provisions shall replace the foregoing provisions with respect to sale and leaseback transactions by the Authority and its Restricted Subsidiaries: The Authority will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction involving the Resort; provided that the Authority or any Restricted Subsidiary may enter into any sale and leaseback transaction with an Attributable Value (when taken together with all other sale and leaseback transactions of the Authority and its Restricted Subsidiaries) that, at the time of such transaction, after giving effect thereto, does not exceed 10% of Consolidated Net Tangible Assets. 52 Senior Notes Section 4.17. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries. The Authority (i) will not, and will not permit any Wholly Owned Restricted Subsidiary of the Authority to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Wholly Owned Restricted Subsidiary of the Authority to any Person (other than the Authority or another Wholly Owned Restricted Subsidiary of the Authority), unless (a) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.10, and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Authority to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Authority or a Wholly Owned Restricted Subsidiary of the Authority. Section 4.18. Limitation on Issuances of Senior Guarantees of Indebtedness. The Authority shall not permit any Subsidiary, directly or indirectly, to guarantee or pledge any assets to secure the payment of any other Indebtedness of the Authority unless such Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for the guarantee of the payment of the Senior Notes by such Subsidiary, which Senior Subsidiary Guarantee shall be senior to or pari passu with such Subsidiary's guarantee of or pledge to secure such other Indebtedness. Notwithstanding the foregoing, any such Senior Subsidiary Guarantee by a Subsidiary of the Senior Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon any sale, exchange or transfer, to any Person not an Affiliate of the Authority, of all of the Authority's stock in, or all or substantially all the assets of, such Subsidiary, which sale, exchange or transfer is made in compliance with the applicable provisions of this Indenture. The form of such Senior Subsidiary Guarantee is attached as Exhibit D hereto. Section 4.19. Payments for Consent. Neither the Authority nor any of its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Senior Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Senior Notes unless such consideration is offered to be paid or is paid to all Holders of the Senior Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.20. Senior Subsidiary Guarantees. If the Authority shall acquire or create a Restricted Subsidiary after the date of this Indenture, then such newly acquired or created Restricted Subsidiary shall execute a Senior Subsidiary Guarantee in the form of a Supplemental Indenture and deliver an Opinion of Counsel, in accordance with the terms of this Indenture, except for (i) all Subsidiaries organized outside of the United States and its territories and (ii) all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with this Indenture for so long as they continue to constitute Unrestricted Subsidiaries. The form of such Senior Subsidiary Guarantee is attached as Exhibit E hereto. 53 Senior Notes Section 4.21. Ownership Interests in the Authority. Neither the Tribe nor the Authority shall permit any Person other than the Tribe to acquire any Ownership Interest whatsoever in the Authority. Section 4.22. Subordination of Junior Payments Under the Relinquishment Agreement. All Obligations under the Senior Notes shall be "Senior Obligations" as defined in the Relinquishment Agreement and will not be on parity with, or subordinated in right of payment to, the Junior Relinquishment Payments (as defined in the Relinquishment Agreement) and the Authority will not amend Section 6.2 of the Relinquishment Agreement in a manner adverse to the Holders of the Senior Notes. Section 4.23. Construction. The Authority will use its commercially reasonable best efforts to cause construction of the Expansion Project to be prosecuted with diligence and continuity in good and workmanlike manner materially in accordance with the plans relating to the Expansion Project as more fully described in the Offering Memorandum of the Authority dated February 24, 1999. Section 4.24. Restrictions on Leasing and Dedication of Property. (a) Except as provided in Section 4.24(b), the Authority will not lease, sublease, or grant a license, concession or other agreement to occupy, manage or use any material portion of the Authority's property and assets owned or leased by the Authority (each, a "Lease Transaction"). (b) Section 4.24(a) will not prohibit any of the following Lease Transactions: (i) The Authority may enter into a Lease Transaction with respect to any space with any Person (including, without limitation, a lease in connection with the Expansion Project for the purpose of developing, constructing, operating and managing retail establishments within the Resort), provided that: (A) such Lease Transaction will not materially interfere with, impair or detract from the operations of the Resort; (B) such Lease Transaction contains rent and such other terms such that the Lease Transaction, taken as a whole is commercially reasonable in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues; and (C) such Lease Transaction complies with all applicable law, including obtaining any consent of the BIA, if required; (ii) the Lease and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the Holders; (iii) the Authority may enter into a management or operating agreement with respect to any of the Authority's property and assets with any Person; provided that (A) the manager or operator has experience in managing or operating similar operations; and (B) such management or operating agreement is on commercially reasonable and fair terms to the Authority; and (iv) the Relinquishment Agreement, the Development Services Agreement and the Side Letters with the Manager and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the Holders. 54 Senior Notes (c) 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, and no person other than the Authority may conduct gaming or casino operations on any property which is the subject of a Lease Transaction. Section 4.25. 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, set insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, including, without limitation, property and casualty. Customary insurance coverage shall be deemed to include the following: (a) 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; (b) comprehensive general liability insurance with minimum limits of $2.0 million; (c) umbrella or bumbershoot liability insurance providing excess liability coverages over and above the foregoing underlying insurance policies up to a minimum limit of $100.0 million; and (d) property insurance protecting the property against loss or damage by fire, lightning, wind-storm, 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)). Section 4.26. Changes in Covenants when Senior Notes Rated Investment Grade. Following the first date upon which the Senior Notes are rated Baa3 or better by Moody's and BBB- or better by S&P (or, in either case, if such person ceases to rate the Senior Notes for reasons outside of the control of the Authority, the equivalent investment grade credit rating from any other "nationally recognized statistical rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act) selected by the Authority as a replacement agency) (the "Rating Event Date") and provided no Event of Default or event that with notice or the passage of time would constitute an Event of Default shall exist on the Rating Event Date, Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.17, 4.23, 4.24 and 4.25 in this Indenture (collectively, the "Suspended Provisions") will no longer be applicable to the Senior Notes; provided, however, that in the event that at any time after a Rating Event Date, the Senior Notes shall be rated lower than Baa3 by Moody's or lower than BBB- by S&P, or any equivalent rating by a successor agency to Moody's or S&P, the Suspended Sections shall be automatically reinstated (the "Reinstated Provisions") and all transactions by the Authority that occurred during the time that such sections were suspended and that would have violated such sections had such sections been in effect at the time shall be deemed not to constitute a Default or an Event of Default, as the case may be, and shall be deemed to have been in compliance with such sections for all purposes; provided 55 Senior Notes further that thereafter all transactions by the Authority occurring on or after the date on which the Suspended Provisions have been reinstated shall be required to be in compliance with the Reinstated Provisions. For purposes of interpreting the definition of "Permitted Liens" during the time any such Sections are suspended, the definition should be read as if the Sections were not so suspended. Section 4.27. Gaming Licenses The Authority will 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 or any part of the Resort as a result of any noncompliance with the 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 Senior Notes 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 4.28. Required Defeasance and Redemption of the Junior Subordinated Notes. The Authority will establish, as of the date of the Indentures, the Defeasance Trust and deposit into the Defeasance Trust cash or government securities estimated to be sufficient to pay all principal, premium and interest on the Junior Subordinated Notes less $500,000 on January 1, 2000, the first redemption date. The Authority will redeem the Junior Subordinated Notes from the proceeds of the Defeasance Trust as of January 1, 2000 at a price of 100% of the principal amount, plus accrued and unpaid interest thereon, less $500,000. Section 4.29. Designation of Designated Senior Indebtedness Under the Relinquished Agreement. The Authority will not designate any indebtedness as "Designated Senior Indebtedness" under the Relinquishment Agreement that is not also designated as Designated Senior Indebtedness under the Senior Subordinated Notes Indenture. ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. The Authority shall not, directly or indirectly, consolidate or merge with or into (whether or not the Authority is the surviving entity), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, another Person. ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default. An Event of Default occurs if: 56 Senior Notes (a) the Authority defaults for 30 days in the payment when due of interest on, or Additional Interest with respect to, the Senior Notes; (b) the Authority defaults in payment when due of the principal of or premium, if any, on the Senior Notes; (c) the Authority or any of its Restricted Subsidiaries fails to comply with any of the provisions of Section 4.10 or 5.01 hereof; (d) the Authority or any of its Restricted Subsidiaries fails to observe or perform (i) any covenant described in Section 4.07 or 4.09 for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class or (ii) any other covenant, representation, warranty or other agreement in this Indenture or the Senior Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Authority or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Authority or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, if that default (i) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (ii) results in the acceleration of such Indebtedness prior to its express maturity; and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (f) failure by the Authority or any of its Restricted Subsidiaries to pay final judgments in amounts not covered by insurance or not adequately reserved for in accordance with GAAP aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed (by reason of pending appeal or otherwise) for a period of 60 days; (g) the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary 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) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or 57 Senior Notes (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a custodian of the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; (i) 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; (j) 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); (k) the Lease ceases to be in full force and effect; (l) except as permitted by this Indenture, any Senior Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subsidiary Guarantee; or (m) failure by the Tribe to comply with the provisions of Article 10 for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Authority, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Notes may declare all the Senior Notes to be due and payable immediately. Upon any such declaration, the Senior Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Authority, any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding 58 Senior Notes Senior 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 Senior 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. 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 Senior Notes or to enforce the performance of any provision of the Senior Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Senior Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Senior 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 Senior Notes by notice to the Trustee may on behalf of the Holders of all of the Senior 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 and Additional Interest , if any, or interest on, the Senior 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 Senior 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 Senior 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. 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 Senior Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Senior Note may pursue a remedy with respect to this Indenture or the Senior Notes only if: (a) the Holder of a Senior Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Senior Notes make a written request to the Trustee to pursue the remedy; 59 Senior Notes (c) such Holder of a Senior Note or Holders of Senior 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 Senior Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Senior Note may not use this Indenture to prejudice the rights of another Holder of a Senior Note or to obtain a preference or priority over another Holder of a Senior Note. Section 6.07. Rights of Holders of Senior Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Senior Note to receive payment of principal, premium and Additional Interest, if any, and interest on the Senior Note, on or after the respective due dates expressed in the Senior Note (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 and Additional Interest, if any, and interest remaining unpaid on the Senior 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 advances of the Trustee, its agents and counsel) and the Holders of the Senior Notes allowed in any judicial proceedings relative to the Authority (or any other obligor upon the Senior 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 60 Senior Notes composition affecting the Senior 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 Senior Notes for amounts due and unpaid on the Senior Notes for principal, premium and Additional Interest, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Senior Notes for principal, premium and Additional Interest, if any, and interest, respectively; and Third: 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 Senior 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 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 Senior Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Senior Notes. 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 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 such person's 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 Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and 61 Senior Notes (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 to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (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 does not limit the effect of paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable 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 Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (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 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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 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. 62 Senior Notes (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 unless such Holders shall 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. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Senior Notes and may otherwise deal with the Authority or any Affiliate of 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 or the Senior Notes, it shall not be accountable for the Authority's use of the proceeds from the Senior Notes or any money paid to the Authority or upon the Authority's direction under any provision of this Indenture, 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 Senior Notes or any other document in connection with the sale of the Senior Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05. Notice 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 Holders of Senior Notes a notice 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 on any Senior Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Senior Notes. Section 7.06. Reports by Trustee to Holders of the Senior Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Senior Notes remain outstanding, the Trustee shall mail to the Holders of the Senior Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Senior Notes shall be mailed to the Authority and filed with the SEC and each stock exchange on which the Senior Notes are listed in accordance with TIA ss. 313(d). The Authority shall promptly notify the Trustee when the Senior 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 Senior Notes to any Gaming Regulatory Authority when requested to do so by the Authority. 63 Senior Notes 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 Senior 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 Senior 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. 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. 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, including the costs and expenses of enforcing this Indenture 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. 64 Senior Notes To secure the Authority's payment obligations in this Section 7.07, the Trustee shall have a Lien prior to the Senior Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Senior 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(g) or (h) 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. 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 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 a majority in principal amount of the then outstanding Senior 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 (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. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Senior Notes may 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 reasonable 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 at least a majority in principal amount of the then outstanding Senior Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by the Holders of a majority in principal amount the then outstanding Senior Notes, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 65 Senior Notes 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. 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. 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 supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 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 ss.310(a)(1), (2) and (5). The Trustee is subject to TIA ss.310(b). Section 7.11. Preferential Collection of Claims Against Authority. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. 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 Management Board, evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Senior Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02. Legal Defeasance and Discharge. 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 its obligations with respect to all outstanding Senior 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 entire Indebtedness represented by the outstanding Senior Notes, 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 Senior Notes 66 Senior 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 Senior Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Senior Notes when such payments are due, (b) the Authority's obligations with respect to such Senior 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 8. Subject to compliance with this Article 8, 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 its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14(b), 4.15, 4.16, 4.17, 4.18, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25 and 4.27 hereof and Section 5.01 hereof with respect to the outstanding Senior Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Senior 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 Senior Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Senior 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, 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 Senior Notes shall be unaffected thereby. In addition, upon the Authority's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(f) and Sections 6.01(i) through 6.01(m) hereof shall not constitute Events of Default. 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 Senior 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 (reasonably acceptable to the Trustee) of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Additional Interest, if any, and interest on the outstanding Senior Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (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 67 Senior Notes that (A) the Authority has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, 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, the Holders of the outstanding Senior Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to 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 the Holders of the outstanding Senior Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to 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 on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Senior Notes pursuant to this Article 8 concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of 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 or any of its Restricted Subsidiaries is a party or by which the Authority or any of its Restricted Subsidiaries is bound; (f) the Authority must have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that after the 91st day 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; (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 of preferring the Holders over any other creditors of the Authority or with the intent 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, 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 Senior Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Senior 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 Senior Notes of 68 Senior Notes all sums due and to become due thereon in respect of principal, premium, if any, and interest, 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 Senior Notes. Anything in this Article 8 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 Senior Note and remaining unclaimed for two years after such principal, and 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 Senior Note shall thereafter 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 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 Senior 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 makes any payment of principal of, premium, if any, or interest on any Senior Note following the reinstatement of its obligations, the Authority shall be subrogated to the rights of the Holders of such Senior Notes to receive such payment from the money held by the Trustee or Paying Agent. 69 Senior Notes ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Senior Notes. Notwithstanding Section 9.02 of this Indenture, provided that any required governmental approval to ensure the enforceability of the Senior Notes and this Indenture, including that of the BIA is obtained, the Authority, the Subsidiary Guarantors, if any, and the Trustee may amend or supplement this Indenture, the Senior Subsidiary Guarantees, if any, or the Senior Notes without the consent of any Holder of a Senior Note to: (a) cure any ambiguity, defect or inconsistency; (b) provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) provide for the assumption of the Authority's or a Subsidiary Guarantor's obligations to the Holders of the Senior Notes by a successor to the Authority or such Subsidiary Guarantor; (d) 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 hereunder of any Holder of the Senior Notes; (e) comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (f) allow any Subsidiary to execute a supplemental indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes. Upon the request of the Authority accompanied by a resolution of its Management Board authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Authority and the Subsidiary Guarantors, if any, in the execution of any amended or supplemental Indenture 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 that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02. With Consent of Holders of Senior Notes. (a) Except as provided below in this Section 9.02, the Authority and the Trustee may amend or supplement this Indenture (including Sections 3.10 and 4.10 hereof), the Senior Subsidiary Guarantees, if any, and the Senior Notes may be amended or supplemented: (i) with the consent of the Holders of at least a majority in principal amount of the Senior Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Notes), 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 on the Senior Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the 70 Senior Notes Senior Subsidiary Guarantees 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 voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Notes); (ii) without the consent of at least 66 2/3% of the aggregate principal amount of Senior Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Senior Notes), no waiver or amendment to this Indenture may make a change in the provisions of Section 4.15 hereof that adversely affects the rights of any Holder of Senior Notes. (b) Section 2.08 hereof shall determine which Senior Notes are considered to be "outstanding" for purposes of this Section 9.02. (c) Upon the request of the Authority accompanied by a resolution of its Management Board authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Senior 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 unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. (d) It shall not be necessary for the consent of the Holders of Senior 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. (e) After an amendment, supplement or waiver under this Section becomes effective, the Authority shall mail to the Holders of Senior 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 or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Senior Notes then outstanding voting as a single class may waive compliance in a particular instance by the Authority with any provision of this Indenture or the Senior Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Senior Notes held by a non-consenting Holder): (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 any of the provisions with respect to the redemption of the Senior Notes except as provided above with respect to Sections 3.10, 4.10 and 4.15 hereof; (iii) reduce the rate of or change the time for payment of interest, including default interest, on any Senior Note; (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest 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); 71 Senior Notes (v) make any Senior Note payable in money other than that stated in the Senior Notes; (vi) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Senior Notes to receive payments of principal of or interest on the Senior Notes; (vii) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.10, 4.10 and 4.15 hereof); (viii) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (ix) release any Subsidiary Guarantor from any of its obligations under its Senior Subsidiary Guarantee or this Indenture, except in accordance with the terms of its Senior Subsidiary Guarantee. Section 9.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Senior Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. 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 Senior Note is a continuing consent by the Holder of a Senior Note and every subsequent Holder of a Senior Note or portion of a Senior Note that evidences the same debt as the consenting Holder's Senior Note, even if notation of the consent is not made on any Senior Note. However, any such Holder of a Senior Note or subsequent Holder of a Senior Note may revoke the consent as to its Senior 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 Senior Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Senior Note thereafter authenticated. The Authority in exchange for all Senior Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Senior Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Senior 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 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 until the Management Board approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. 72 Senior Notes Article 10 Covenants of the Tribe Section 10.01. Covenants of the Tribe. The Tribe shall not, and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, except as required by federal or state law, to do any of the following: (a) increase or impose any tax or other payment obligation on the Authority or on any patrons of, or any activity at, the Resort other than: (i) payments which are due under any agreement in effect on the Closing Date or payments which are not materially adverse to the economic interests of Holders; (ii) payments which the Authority has agreed to reimburse each Holder for the economic effect thereof, if any; (iii) payments which correspondingly reduce the Restricted Payments otherwise payable to the Tribe; (iv) pursuant to the Tribal Tax Code; or (v) Government Service Payments; (b) amend the terms of the Lease in any material manner that would be materially adverse to the economic interests of Holders; (c) amend the Tribal Gaming Ordinance in effect on the Closing Date (unless any such amendment is a legitimate effort to ensure that the Authority and the Resort conduct gaming operations in a manner that is consistent with applicable laws, rules and regulations or that protects the environment, the public health and safety, or the integrity of the Authority or the Resort), restrict or eliminate the exclusive right of the Authority to conduct gaming operations on any property owned or controlled by the Tribe in a manner that would be materially adverse to the economic interests of Holders; or (d) take any other action, enter into any agreement, amend its constitution or enact any ordinance, law, rule or regulation that would have a material adverse effect on the economic interests of Holders. Moreover, except with the consent of a majority in interest of Holders 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 impose, tax or otherwise make a charge on the Senior Notes, this Indenture or any payments or deposits to be made thereunder. Section 10.02. Additional Covenants of the Tribe. (a) Any action taken by the Tribe to comply with federal or state law that would otherwise violate Section 10.01 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 73 Senior Notes extent possible under the federal or state law, the Tribe shall give the Trustee at least 30 days' prior written notice of any such action. (b) 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. (c) 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. (d) 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. (e) 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 Holders provided for in this Indenture or the Senior Notes. (f) 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 Lease (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 affect on the rights of the Trustee or the Holders under this Indenture or the Senior Notes. (g) 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 Senior Notes shall be entitled to receive payment in full in respect to all principal, premium, interest and other amounts owing in respect of the Notes before any payment or any distribution to the Tribe. (h) 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. (i) The Tribe shall comply with all material terms of the Construction Reserve Disbursement Agreement and shall not amend and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, to amend, except as required by federal or state law, such Construction Reserve Disbursement Agreement in a manner that would have a material adverse effect on the economic interests of Holders. Any action taken in violation of this Article 10 shall be deemed in contravention of Article XIV ("Non-Impairment of Contracts") of the Constitution of the Tribe. 74 Senior Notes ARTICLE 11 MISCELLANEOUS Section 11.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall control. Section 11.02. Notices. Any notice or communication by the Authority, any Subsidiary Guarantor 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 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telecopier No.: (860) 204-6153 Attention: Roland J. Harris With a copy to: Hogan & Hartson LLP 555 Thirteenth Street, NW Washington, DC 20004 Telecopier No.: (202) 637-5910 Attention: David B. H. Martin, Jr., Esq. If to the Tribe: The Mohegan Tribe of Indians of Connecticut 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telecopier No.: (860) 204-6153 Attention: Roland J. Harris With a copy to: Rome McGuigan Sabanosh, P.C. One State Street Hartford, CT 06103-3103 Telecopier No.: (203) 724-3921 Attention: Lewis B. Rome, Esq. 75 Senior Notes If to the Trustee: First Union National Bank 10 Statehouse Square Hartford, CT 06103-3698 Telecopier No.: (860) 247-1356 Attention: W. Jeffrey Kramer With a copy to: Edwards & Angell 90 State House Square, 9th Floor Hartford, CT 06104 Telecopier No.: (860) 547-1035 Attention: Justin M. Sullivan Esq. 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 ss. 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 11.03. Communication by Holders of Senior Notes with Other Holders of Senior Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Senior Notes. The Authority, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). Section 11.04. 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 11.05 hereof) stating that, in the opinion of the 76 Senior Notes signers, all conditions precedent and covenants, if any, provided 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 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 11.05. 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 ss. 314(a)(4)) shall comply with the provisions of TIA ss. 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 11.06. 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 11.07. 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 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 or to compel the Tribe to return any prohibited payment made to the Tribe as described in Section 10.02(d). Subject to the foregoing, the Tribe and the Authority waive their respective 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 Indenture or the Senior 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 or the Senior 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 and 77 Senior Notes the Senior 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 Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. ss. 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 and the Senior 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. Section 11.08. No Personal Liability of Directors, Officers, Employees and Stockholders. Neither the Tribe nor any director, officer, office holder, employee, agent, representative or member of the Authority or the Tribe or holder of an Ownership Interest of the Authority, any Subsidiary Guarantor or the Tribe, as such, shall have any liability for any obligations of the Authority or such Subsidiary Guarantor under the Senior Notes, the Senior Subsidiary Guarantees, if any, this Indenture 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. The waiver and release are part of the consideration for issuance of the Senior Notes. Section 11.09. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE SENIOR NOTES AND THE SENIOR SUBSIDIARY GUARANTEES WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Section 11.10. 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 its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.11. Successors. All agreements of the Authority in this Indenture and the Senior Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor in this Indenture shall bind its successors. 78 Senior Notes Section 11.12. Severability. In case any provision in this Indenture or in the Senior 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 11.13. 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 11.14. 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] 79 Senior Notes SIGNATURES Dated as of March ___, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________________ Name: Title: Attest: _______________________________ Name: Title: FIRST UNION NATIONAL BANK By:___________________________________ Name: Title: Attest: _______________________________ Authorized Signatory Date: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT (solely with respect to its obligations under Article 10 and Sections 4.21 and 11.07) By:___________________________________ Name: Title: Attest: _______________________________ Authorized Signatory Date: 80 Senior Notes EXHIBIT A-1 [Face of Note] ================================================================================ CUSIP/CINS 608328 AA8/U60742 AA8 8 1/8% Senior Note due 2006 No. ___ $____________ MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to _____________________________________________________________ or registered assigns, the principal sum of ___________________________________________________________ Dollars on January 1, 2006. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 Dated: March 3, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________________ Name: Title: By:___________________________________ Name: Title: This is one of the Senior Notes referred to in the within-mentioned Indenture: FIRST UNION NATIONAL BANK, as Trustee By: __________________________________ Authorized Signatory ================================================================================ A-1-1 Senior Notes [Back of Note] 8 1/8% Senior Note due 2006 THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE AUTHORITY. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. (a) The Mohegan Tribal Gaming Authority (the "Authority"), promises to pay interest on the principal amount of this Senior Note at 8 1/8% per annum from March 3, 1999 until maturity. The A-1-2 Senior Notes Authority will pay interest and Additional Interest, if any, semi-annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be July 1, 1999. 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 interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (b) The Holder of this Senior Note is entitled to the benefits of the Senior Registration Rights Agreement dated as of the date hereof, among the Authority and the Initial Purchasers named therein (the "Senior Registration Rights Agreement"). If (i) the Authority fails to file any of the Registration Statements required by the Registration Rights Agreements 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 of 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 in connection with resales of Transfer Restricted Securities during 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 will pay Additional Interest to each Holder of Senior Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Senior Notes held by such Holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Senior Notes. (A) Except as expressly provided in this paragraph 1(b), Additional Interest shall be treated as interest and any date on which Additional Interest is due and payable shall be treated as an Interest Payment Date for all purposes under this Senior Note and the Indenture. (B) In the event that the Authority is required to pay Additional Interest pursuant to this paragraph 1(b), the Authority shall notify the Trustee in writing at least 15 days prior to the first Interest Payment Date upon which such Additional Interest is due; provided that, in the event that the obligation to pay such Additional Interest occurs less than 15 days prior to such Additional Interest Date, such notice shall be provided by the Authority to the Trustee as soon as reasonably practicable prior to such Interest Payment Date. 2. METHOD OF PAYMENT. The Authority will pay interest on the Senior Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Senior Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Senior Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Senior Notes will be payable as to principal, premium and Additional Interest, if any, and interest at the office or agency of the Authority maintained for such purpose within or without the City and State of New A-1-3 Senior Notes York, or, at the option of the Authority, payment of interest and Additional Interest 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 Additional Interest on, all Global Senior Notes and all other Senior Notes the Holders of which shall hold at least $1.0 million in principal amount of Senior Notes and 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 Union National Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Authority issued the Senior Notes under an Indenture dated as of March 3, 1999 ("Indenture") between the Authority and the Trustee. The terms of the Senior 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 ss.ss. 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. 5. OPTIONAL REDEMPTION. (a) The Authority may redeem all or a part of these Senior Notes upon not less than 30 nor more than 60 days' notice, at a redemption price (expressed as percentages of principal amount) equal to 100% of the principal amount thereof plus the Applicable Premium, if any, plus accrued and unpaid interest thereon, if any, to the applicable redemption date. (b) 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 Senior 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 Senior Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Notes or (3) the current market price of the Senior Notes, together with, in either case, accrued and unpaid interest and Additional 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 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 shall be the obligation of such Holder or beneficial owner. A-1-4 Senior Notes 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Authority shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Authority shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 20 Business Days following any Change of Control, the Authority shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Authority or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority shall commence an offer to all Holders of Senior Notes (as "Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum principal amount of Senior Notes 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 and Additional Interest thereon, 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 Asset Sale Offer is less than the Excess Proceeds, the Authority (or such Subsidiary) may use such deficiency for any purpose not otherwise permitted by the Indenture. 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 on a pro rata basis. Holders of Senior Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Authority prior to any related purchase date and may elect to have such Senior Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Notes may be registered and Senior 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 Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, the Authority need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. A-1-5 Senior Notes 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Senior Subsidiary Guarantees 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 voting as a single class. Without the consent of any Holder of a Senior Note, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Authority's or Subsidiary Guarantor's obligations to Holders of the Senior Notes by a successor to the Authority or such Subsidiary Guarantor, 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, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes provided that the Authority has obtained any required government approval to ensure the enforceability of the Senior Notes and the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Senior Notes; (ii) default in payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Authority or any of its Restricted Subsidiaries to comply with Section 4.10 or 5.01 of the Indenture; (iv) failure by the Authority or any of its Restricted Subsidiaries to observe or perform (A) any covenant described in Section 4.07 or 4.09 of the Indenture for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class or (B) any other covenant, representation, warranty or other agreement in the Indenture or the Senior Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (v) default under certain other agreements relating to Indebtedness of the Authority or any of its Restricted Subsidiaries which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (viii) 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; (ix) 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); (x) the Lease ceases to be in full force and effect; (xi) except as permitted by the Indenture, any Senior Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subsidiary Guarantee; and (xii) failure by the Tribe to comply with the provisions of Article 10 of the Indenture for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class. 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 Senior Notes may declare all the Senior 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 Senior Notes will become due and payable without further action or notice. Holders 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. The Trustee may withhold from Holders of the Senior Notes notice of any A-1-6 Senior Notes continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. 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 on, or the principal of, the Senior Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required 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 AUTHORITY. 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. A controlling person, director, officer, employee or holder of an Ownership Interest of the Authority, as such, shall not have any liability for any obligations of the Authority under the Senior Notes or the Indenture 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. The waiver and release are part of the consideration for the issuance of the Senior Notes. 15. AUTHENTICATION. This Senior 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 OF RESTRICTED GLOBAL SENIOR NOTES AND RESTRICTED DEFINITIVE SENIOR NOTES. In addition to the rights provided to Holders of Senior Notes under the Indenture, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have all the rights set forth in the Senior Registration Rights Agreement dated as of March 3, 1999, between the Authority and the parties named on the signature pages thereof (the "Senior Registration Rights Agreement"). 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 Senior 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 Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Senior Registration Rights Agreement. Requests may be made to: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Attention: Roland J. Harris A-1-7 Senior Notes ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:______________________________ (Insert assignee's legal name) - -------------------------------------------------------------------------------- (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*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-1-8 Senior Notes OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_______________________ Date:______________________ Your Signature:_______________________________________ (Sign exactly as your name appears on the face of this Note) Tax Indentification No.:______________________________ Signature Guarantee*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-1-9 Senior Notes SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR NOTE The following exchanges of a part of this Global Senior Note for an interest in another Global Senior Note or for a Definitive Senior Note, or exchanges of a part of another Global Senior Note or Definitive Senior Note for an interest in this Global Senior Note, have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Senior Note authorized officer of Principal Amount of Principal Amount of following such decrease Trustee or Senior Date of Exchange this Global Senior Note this Global Senior Note (or increase) Note Custodian ---------------- ----------------------- ----------------------- ---------------------- ---------------------
A-1-10 Senior Notes EXHIBIT A-2 [Face of Regulation S Temporary Global Senior Note] CUSIP/CINS U60742 AA8 8 1/8% Senior Note due 2006 No. ___ $___________ MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to______________________________________________________________ or registered assigns, the principal sum of__________________________________________________ Dollars on January 1, 2006. Interest Payment Dates: January 1, and July 1 Record Dates: December 15, and June 15 Dated: March 3, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________________ Name: Title: By:___________________________________ Name: Title: This is one of the Senior Notes referred to in the within-mentioned Indenture: FIRST UNION NATIONAL BANK, as Trustee By: __________________________________ Authorized Signatory ================================================================================ A-2-1 Senior Notes [Back of Regulation S Temporary Global Senior Note] 8 1/8% Senior Note due 2006 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR NOTES IN DEFINITIVE FORM, THIS SENIOR NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE AUTHORITY 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. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT A-2-2 Senior Notes TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. (a) The Mohegan Tribal Gaming Authority (the "Authority"), promises to pay interest on the principal amount of this Senior Note at 81/8% per annum from March 3 1999 until maturity. The Authority will pay interest and Additional Interest, if any, semi-annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be July 1, 1999. 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 interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (b) The Holder of this Senior Note is entitled to the benefits of the Senior Registration Rights Agreement dated as of the date hereof, among the Authority and the Initial Purchasers named therein (the "Senior Registration Rights Agreement"). If (i) the Authority fails to file any of the Registration Statements required by the Registration Rights Agreements 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 of 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 in connection with resales of Transfer Restricted Securities during 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 will pay Additional Interest to each Holder of Senior Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Senior Notes held by such Holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Senior Notes. (A) Except as expressly provided in this paragraph 1(b), Additional Interest shall be treated as interest and any date on which Additional Interest is due and payable shall be treated as an Interest Payment Date for all purposes under this Senior Note and the Indenture. (B) In the event that the Authority is required to pay Additional Interest pursuant to this paragraph 1(b), the Authority shall notify the Trustee in writing at least 15 days prior to the first Interest A-2-3 Senior Notes Payment Date upon which such Additional Interest is due; provided that, in the event that the obligation to pay such Additional Interest occurs less than 15 days prior to such Additional Interest Date, such notice shall be provided by the Authority to the Trustee as soon as reasonably practicable prior to such Interest Payment Date. 2. METHOD OF PAYMENT. The Authority will pay interest on the Senior Notes (except defaulted interest) and Additional Interest to the Persons who are registered Holders of Senior Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Senior Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Senior Notes will be payable as to principal, premium and Additional Interest, if any, and interest 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 and Additional Interest, if any, 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 Additional Interest on, all Global Senior Notes and all other Senior Notes the Holders of which shall hold at least $1.0 million in principal amount of Senior Notes and 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 Union National Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Authority issued the Senior Notes under an Indenture dated as of March 3, 1999 ("Indenture") between the Authority and the Trustee. The terms of the Senior 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 ss.ss. 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. 5. OPTIONAL REDEMPTION. (a) The Authority may redeem all or a part of these Senior Notes upon not less than 30 nor more than 60 days' notice, at a redemption price (expressed as percentages of principal amount) equal to 100% of the principal amount thereof plus the Applicable Premium, if any, plus accrued and unpaid interest thereon, if any, to the applicable redemption date. (b) 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 Senior 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 A-2-4 Senior Notes Gaming Regulatory Authority); or (ii) to call for redemption of the Senior Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Notes or (3) the current market price of the Senior Notes, together with, in either case, accrued and unpaid interest and Additional 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 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 shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Authority shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Authority shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 20 Business Days following any Change of Control, the Authority shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Authority or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority shall commence an offer to all Holders of Senior Notes (as "Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum principal amount of Senior Notes 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 and Additional Interest thereon, 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 Asset Sale Offer is less than the Excess Proceeds, the Authority (or such Subsidiary) may use such deficiency for any purpose not otherwise permitted by the Indenture. 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 on a pro rata basis. Holders of Senior Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Authority prior to any related purchase date and may elect to have such Senior Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior A-2-5 Senior Notes Notes may be registered and Senior 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 Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, the Authority need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Note. 10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Senior Subsidiary Guarantees 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 voting as a single class. Without the consent of any Holder of a Senior Note, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Authority's or Subsidiary Guarantor's obligations to Holders of the Senior Notes by a successor to the Authority or such Subsidiary Guarantor, 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, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes provided that the Authority has obtained any required government approval to ensure the enforceability of the Senior Notes and the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Senior Notes; (ii) default in payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Authority or any of its Restricted Subsidiaries to comply with Section 4.10 or 5.01 of the Indenture; (iv) failure by the Authority or any of its Restricted Subsidiaries to observe or perform (A) any covenant described in Section 4.07 or 4.09 of the Indenture for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class or (B) any other covenant, representation, warranty or other agreement in the Indenture or the Senior Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (v) default under certain other agreements relating to Indebtedness of the Authority or any of A-2-6 Senior Notes its Restricted Subsidiaries which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (viii) 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; (ix) 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); (x) the Lease ceases to be in full force and effect; (xi) except as permitted by the Indenture, any Senior Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subsidiary Guarantee; and (xii) failure by the Tribe to comply with the provisions of Article 10 of the Indenture for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class. 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 Senior Notes may declare all the Senior 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 Senior Notes will become due and payable without further action or notice. Holders 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. The Trustee may withhold from Holders of the Senior 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) if it determines that withholding notice is in their interest. 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 on, or the principal of, the Senior Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required 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 AUTHORITY. 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. A controlling person, director, officer, employee, or holder of an Ownership Interest of the Authority, as such, shall not have any liability for any obligations of the Authority under the Senior Notes or the Indenture 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. The waiver and release are part of the consideration for the issuance of the Senior Notes. 15. AUTHENTICATION. This Senior 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 OF RESTRICTED GLOBAL SENIOR NOTES AND RESTRICTED DEFINITIVE SENIOR NOTES. In addition to the rights provided to Holders of Senior Notes under the Indenture, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have all the rights set forth in the Senior Registration Rights Agreement dated as of March 3, 1999, between A-2-7 Senior Notes the Authority and the parties named on the signature pages thereof (the "Senior Registration Rights Agreement"). 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 Senior 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 Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Senior Registration Rights Agreement. Requests may be made to: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Attention: Roland J. Harris A-2-8 Senior Notes ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:______________________________ (Insert assignee's legal name) - -------------------------------------------------------------------------------- (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*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-2-9 Senior Notes OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_______________________ Date:______________________ Your Signature:_______________________________________ (Sign exactly as your name appears on the face of this Note) Tax Indentification No.:______________________________ Signature Guarantee*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-2-10 Senior Notes SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL SENIOR NOTE The following exchanges of a part of this Regulation S Temporary Global Senior Note for an interest in another Global Senior Note, or of other Restricted Global Senior Notes for an interest in this Regulation S Temporary Global Senior Note, have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Senior Note authorized officer of Principal Amount of Principal Amount of following such decrease Trustee or Senior Date of Exchange this Global Senior Note this Global Senior Note (or increase) Note Custodian ---------------- ----------------------- ----------------------- ---------------------- ---------------------
A-2-11 Senior Notes EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 First Union National Bank 10 Statehouse Square Hartford, CT 06103-3698 Re: 8 1/8 % Senior Notes due 2006 Reference is hereby made to the Indenture, dated as of March 3, 1999 (the "Indenture"), between the Mohegan Tribal Gaming Authority, as issuer (the "Authority"), and First Union National Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________, (the "Transferor") owns and proposes to transfer the Senior Note[s] or interest in such Senior Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Senior Note[s] or interests (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. |_| Check if Transferee will take delivery of a beneficial interest in the 144A Global Senior Note or a Definitive Senior Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Senior Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Senior Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Senior Note and/or the Definitive Senior Note and in the Indenture and the Securities Act. 2. |_| Check if Transferee will take delivery of a beneficial interest in the Temporary Regulation S Global Senior Note, the Regulation S Global Senior Note or a Definitive Senior Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the B-1 Senior Notes requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act; (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Distribution Compliance Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Senior Note, the Temporary Regulation S Global Senior Note and/or the Definitive Senior Note and in the Indenture and the Securities Act. 3. |_| Check and complete if Transferee will take delivery of a beneficial interest in the Definitive Senior Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Senior Notes and Restricted Definitive Senior Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) |_| such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) |_|such Transfer is being effected to the Authority or a subsidiary thereof; or (c) |_| such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or 4.|_| Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Senior Note or of an Unrestricted Definitive Senior Note. (a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Notes, on Restricted Definitive Senior Notes and in the Indenture. (b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Note will no longer be subject to the restrictions on transfer B-2 Senior Notes enumerated in the Private Placement Legend printed on the Restricted Global Senior Notes, on Restricted Definitive Senior Notes and in the Indenture. (c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Notes or Restricted Definitive Senior Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Authority. ________________________________________ [Insert Name of Transferor] By: ____________________________________ Name: Title: Dated:_____________________ B-3 Senior Notes ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) |_| a beneficial interest in the: (i) |_| 144A Global Senior Note (CUSIP 608328 AA8), or (ii) |_| Regulation S Global Senior Note (CUSIP U60742 AA8), or (b) |_| a Restricted Definitive Senior Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) |_| a beneficial interest in the: (i) |_| 144A Global Senior Note (CUSIP 608328 AA8), or (ii) |_| Regulation S Global Senior Note (CUSIP U60742 AA8), or (iii) |_| Unrestricted Global Senior Note (CUSIP _______); or (b) |_| a Restricted Definitive Senior Note; or (c) |_| an Unrestricted Definitive Senior Note, in accordance with the terms of the Indenture. B-4 Senior Notes EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 First Union National Bank 10 Statehouse Square Hartford, CT 06103-3698 Re: 8 1/8% Senior Notes due 2006 (CUSIP 608328 AA8/U60742 AA8) Reference is hereby made to the Indenture, dated as of March 3, 1999 (the "Indenture"), between the Mohegan Tribal Gaming Authority, as issuer (the "Authority"), and First Union National Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "Owner") owns and proposes to exchange the Senior Note[s] or interest in such Senior Note[s] specified herein, in the principal amount of $____________ in such Senior Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Senior Notes or Beneficial Interests in a Restricted Global Senior Note for Unrestricted Definitive Senior Notes or Beneficial Interests in an Unrestricted Global Senior Note (a) |_| Check if Exchange is from beneficial interest in a Restricted Global Senior Note to beneficial interest in an Unrestricted Global Senior Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Note for a beneficial interest in an Unrestricted Global Senior Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Senior Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Senior Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) |_| Check if Exchange is from beneficial interest in a Restricted Global Senior Note to Unrestricted Definitive Senior Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Note for an Unrestricted Definitive Senior Note, the Owner hereby certifies (i) the Definitive Senior Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Senior Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. C-1 Senior Notes EXHIBIT C (c) |_| Check if Exchange is from Restricted Definitive Senior Note to beneficial interest in an Unrestricted Global Senior Note. In connection with the Owner's Exchange of a Restricted Definitive Senior Note for a beneficial interest in an Unrestricted Global Senior Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) |_| Check if Exchange is from Restricted Definitive Senior Note to Unrestricted Definitive Senior Note. In connection with the Owner's Exchange of a Restricted Definitive Senior Note for an Unrestricted Definitive Senior Note, the Owner hereby certifies (i) the Unrestricted Definitive Senior Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Senior Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. Exchange of Restricted Definitive Senior Notes or Beneficial Interests in Restricted Global Senior Notes for Restricted Definitive Senior Notes or Beneficial Interests in Restricted Global Senior Notes (a) |_| Check if Exchange is from beneficial interest in a Restricted Global Senior Note to Restricted Definitive Senior Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Note for a Restricted Definitive Senior Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Senior Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Senior Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Senior Note and in the Indenture and the Securities Act. (b) |_| Check if Exchange is from Restricted Definitive Senior Note to beneficial interest in a Restricted Global Senior Note. In connection with the Exchange of the Owner's Restricted Definitive Senior Note for a beneficial interest in the [CHECK ONE] 144A Global Senior Note, Regulation S Global Senior Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Senior Note and in the Indenture and the Securities Act. C-2 Senior Notes EXHIBIT C This certificate and the statements contained herein are made for your benefit and the benefit of the Authority. ________________________________________ [Insert Name of Transferor] By: ____________________________________ Name: Title: Dated:_____________________ C-3 Senior Notes EXHIBIT D FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON SENIOR NOTE Each Subsidiary Guarantor (as defined in the Indenture) has jointly and severally unconditionally guaranteed (a) the due and punctual payment of the principal of, premium, if any, and interest on the Senior Notes, whether at maturity or an Interest Payment Date, by acceleration, call for redemption or otherwise, (b) the due and punctual payment of interest on the overdue principal and premium of, and interest, to the extent lawful, on the Senior Notes and (c) that in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, the same will be promptly paid in full when due in accordance with the terms of the extension of renewal, whether at stated maturity, by acceleration or otherwise. Notwithstanding the foregoing, in the event that the Senior Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Subsidiary Guarantor under its Senior Subsidiary Guarantee shall be limited to such amount as will not, after giving effect thereto, and to all other liabilities of the Subsidiary Guarantor, result in such amount constituting a fraudulent transfer or conveyance. The Senior Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Senior Note upon which the Senior Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual or facsimile signature of one of its authorized officers. Dated: ________________, ___________ [SUBSIDIARY GUARANTOR] By:___________________________________ Name: Title: D-1 Senior Notes EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ________________, among __________________ (the "Subsidiary Guarantor"), a subsidiary of the Mohegan Tribal Gaming Authority (or its permitted successor), (the "Authority"), the Authority, the other Subsidiary Guarantors (as defined in the Indenture referred to herein) and ____________________, as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Authority has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of March 3, 1999 providing for the issuance of an aggregate principal amount of up to $200,000,000 of 8 1/8% Senior Notes due 2006 (the "Senior Notes"); WHEREAS, the Indenture provides that under certain circumstances the Subsidiary Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Subsidiary Guarantor shall unconditionally guarantee all of the Authority's Obligations under the Senior Notes and the Indenture on the terms and conditions set forth herein (the "Senior Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. INDENTURE PROVISION PURSUANT TO WHICH GUARANTEE IS GIVEN. This Supplemental Indenture is being executed and delivered pursuant to Section 4.20 of the Indenture. 3. AGREEMENT TO GUARANTEE. The Subsidiary Guarantor hereby agrees as follows: (a) The Subsidiary Guarantor, jointly and severally with all other Subsidiary Guarantors, if any, unconditionally guarantees to each Holder of a Senior Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Senior Notes or the obligations of the Authority hereunder or thereunder, that: (i) the principal of and interest on the Senior Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Notes, if any, if lawful, and all other obligations of the Authority to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Senior Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any E-1 Senior Notes performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Notwithstanding the foregoing, in the event that this Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Subsidiary Guarantor under this Supplemental Indenture and its Senior Subsidiary Guarantee shall be limited to such amount as will not, after giving effect thereto, and to all other liabilities of the Subsidiary Guarantor, result in such amount constituting a fraudulent transfer or conveyance. 4. EXECUTION AND DELIVERY OF SENIOR SUBSIDIARY GUARANTEES (a) To evidence its Senior Subsidiary Guarantee set forth in this Supplemental Indenture, the Subsidiary Guarantor hereby agrees that a notation of such Senior Subsidiary Guarantee substantially in the form of Annex A hereto shall be endorsed by an officer of such Subsidiary Guarantor on each Senior Note authenticated and delivered by the Trustee after the date hereof. (b) Notwithstanding the foregoing, the Subsidiary Guarantor hereby agrees that its Senior Subsidiary Guarantee set forth herein shall remain in full force and effect notwithstanding any failure to endorse on each Senior Note a notation of such Senior Subsidiary Guarantee. (c) If an officer whose signature is on this Supplemental Indenture or on the Senior Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Senior Note on which a Senior Subsidiary Guarantee is endorsed, the Senior Subsidiary Guarantee shall be valid nevertheless. (d) The delivery of the Senior Note by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of the Senior Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of the Subsidiary Guarantor. (e) The Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, regardless of the validity, regularity or enforceability of the Senior Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Authority, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (f) The Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Authority, any right to require a proceeding first against the Authority, protest, notice and all demands whatsoever and covenants that its Senior Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be discharged except by complete performance of the obligations contained in the Senior Notes and the Indenture or pursuant to Section 5(b) of this Supplemental Indenture. (g) If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Supplemental Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, the Subsidiary Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Subsidiary Guarantor, the Trustee and the Holders shall continue as though no such proceeding had been instituted. E-2 Senior Notes (h) The Subsidiary Guarantor hereby waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Authority or any other Subsidiary Guarantor as a result of any payment by such Subsidiary Guarantor under its Senior Subsidiary Guarantee. The Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand: (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of the Senior Subsidiary Guarantee made pursuant to this Supplemental Indenture, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby; and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 6, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purpose of the Senior Subsidiary Guarantee made pursuant to this Supplemental Indenture. (i) The Subsidiary Guarantor shall have the right to seek contribution from any other non-paying Subsidiary Guarantor, if any, so long as the exercise of such right does not impair the rights of the Holders under the Senior Subsidiary Guarantee made pursuant to this Supplemental Indenture. (j) The Subsidiary Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or 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, which may affect the covenants or the performance of the Indenture or this Senior Subsidiary Guarantee; and the Subsidiary Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 5. SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS (a) Nothing contained in the Indenture, this Supplemental Indenture or in the Senior Notes shall prevent any consolidation or merger of the Subsidiary Guarantor with or into the Authority or any other Subsidiary Guarantor or shall prevent any transfer, sale or conveyance of the property of the Subsidiary Guarantor as an entirety or substantially as an entirety, to the Authority or any other Subsidiary Guarantor. (b) Except as set forth in Article 5 of the Indenture, upon the sale or disposition of all of the Capital Stock of the Subsidiary Guarantor by the Authority or a Subsidiary of the Authority, or upon the consolidation or merger of the Subsidiary Guarantor with or into any Person, or if a Subsidiary Guarantor is designated as an Unrestricted Subsidiary, or the sale of all or substantially all of the assets of the Subsidiary Guarantor (in each case, other than with or to an Affiliate of the Authority), or upon a legal defeasance or covenant defeasance of the Notes, such Subsidiary Guarantor shall be deemed automatically and unconditionally released and discharged from all obligations under this Senior Subsidiary Guarantee without any further action required on the part of the Trustee or any Holder if no Default shall have occurred and be continuing; provided that in the event of an Asset Sale, the Net Cash Proceeds therefrom are treated in accordance with Section 4.10 of the Indenture and provided further that in the event of a redesignation of a Subsidiary, that the transaction is in compliance with Section 4.07 of the Indenture. Except with respect to transactions E-3 Senior Notes set forth in the preceding sentence, the Authority and the Subsidiary Guarantor covenant and agree that upon any such consolidation, merger or transfer of assets, the performance of all covenants and conditions of this Supplemental Indenture to be performed by such Subsidiary Guarantor shall be expressly assumed by supplemental indenture satisfactory in form to the Trustee, by the corporation formed by such consolidation, or into which the Subsidiary Guarantor shall have merged, or by the corporation which shall have acquired such property. Upon receipt of an Officer's Certificate of the Authority or the Subsidiary Guarantor, as the case may be, to the effect that the Authority or such Subsidiary Guarantor has complied with the first sentence of this Section 5(b), the Trustee shall execute any documents reasonably requested by the Authority or the Subsidiary Guarantor, at the cost of the Authority or such Subsidiary Guarantor, as the case may be, in order to evidence the release of such Subsidiary Guarantor from its obligations under its Senior Subsidiary Guarantee endorsed on the Senior Notes and under the Indenture and this Supplemental Indenture. 6. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 7. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 8. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not effect the construction hereof. E-4 Senior Notes IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: _______________, ____ [SUBSIDIARY GUARANTOR] By: __________________________________ Name: Title: MOHEGAN TRIBAL GAMING AUTHORITY By: __________________________________ Name: Title: [EXISTING SUBSIDIARY GUARANTORS] By:___________________________________ Name: Title: FIRST UNION NATIONAL BANK, as Trustee By:___________________________________ Authorized Signatory E-5 Senior Notes Attachment to Indenture 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 of Connecticut Address: 1 Mohegan Sun Boulevard Uncasville, CT 06382 Occupation: Indian Tribe Party in Interest: Mohegan Tribal Gaming Authority Address: 1 Mohegan Sun Boulevard Uncasville, CT 06382 Occupation: Tribal Gaming Authority Party in Interest: First Union National Bank 10 State House Square Hartford, CT 06103-3698 Occupation: Commercial Bank and Trust Company Fixed limited time to run: The Senior Notes become due January 1, 2006. The Chairman of the Mohegan Tribe of Indians of Connecticut (the "Tribe") is authorized to execute the attached document by Resolution No. 99-03 of the Tribal Council of the Tribe, dated February 18, 1999. 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 (the "Management Board") is authorized to execute the attached document by Resolution No. TGA 99-04 of the Management Board, dated February 18, 1999. 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 ___ (time) on March __, 1999 at ___________________ (place), for the particular purpose set forth above. The undersigned parties agree that the foregoing agreement is in compliance with 25 U.S.C. ss. 81. Senior Notes WITNESS: Mohegan Tribe of Indians of Connecticut _____________________________ By: __________________________________ Roland J. Harris Title: Mohegan Tribal Gaming Authority _____________________________ By: __________________________________ Roland J. Harris Title: First Union National Bank _____________________________ By: __________________________________ Name: Title: Approved Pursuant to 25 U.S.C. ss. 81 United States Department of Interior Bureau of Indian Affairs: Date: March __, 1999 By: __________________________________ Name: Title: Eastern Area Office Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority Senior Notes EX-4.5 4 EXHIBIT 4.5 Exhibit 4.5 SENIOR REGISTRATION RIGHTS AGREEMENT Dated as of March 3, 1999 by and among MOHEGAN TRIBAL GAMING AUTHORITY and SALOMON SMITH BARNEY INC. NATIONSBANC MONTGOMERY SECURITIES LLC SG COWEN SECURITIES CORPORATION BEAR, STEARNS & CO. INC. BANCBOSTON ROBERTSON STEPHENS INC. FLEET SECURITIES, INC. This Senior Registration Rights Agreement (this "Agreement") is made and entered into as of March 3, 1999, by and among the Mohegan Tribal Gaming Authority (the "Authority") an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"), and Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC, SG Cowen Securities Corporation, Bear, Stearns & Co. Inc., BancBoston Robertson Stephens Inc. and Fleet Securities, Inc. (each an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom has agreed to purchase the Authority's 8 1/8% Initial Senior Notes due 2006 (the "Initial Senior Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated February 24, 1999, (the "Purchase Agreement"), by and among the Authority, the Tribe and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Senior Notes, the Authority has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 6 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Senior Notes Indenture, dated March 3, 1999, between the Authority, the Tribe and First Union National Bank, as Trustee, relating to the Initial Senior Notes and the Senior Exchange Notes (the "Senior Notes Indenture"). The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings. Act: The Securities Act of 1933, as amended. Affiliate: As defined in Rule 144 of the Act. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Business Day: Any day except a Saturday, Sunday or other day in the City of New York, or in the city of the corporate trust office of the Trustee, on which banks are authorized to not open for business. Certificated Securities: Definitive Senior Notes, as defined in the Senior Notes Indenture. Closing Date: The date hereof. Commission: The Securities and Exchange Commission. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Senior Exchange Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Authority to the Registrar under the Senior Notes Indenture of Senior Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Initial Senior Notes tendered by Holders thereof pursuant to the Exchange Offer. Consummation Deadline: As defined in Section 3(b) hereof. Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended. 1 Exchange Notes: The Authority's 8 1/8% Senior Exchange Notes due 2006 to be issued pursuant to the Senior Notes Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. Exchange Offer: (A) The exchange and issuance by the Authority of a principal amount of Senior Exchange Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Initial Senior Notes that are tendered by such Holders in connection with such exchange and issuance and (B) the exchange and issuance by the Authority of a principal amount of Senior Subordinated Exchange Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Initial Senior Subordinated Notes that are tendered by such Holders in connection with such exchange and issuance. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Initial Senior Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act, and pursuant to Regulation S under the Act. Filing Deadline: As defined in Sections 3(a) and 4(a) hereof. Holders: As defined in Section 2 hereof. Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Recommencement Date: As defined in Section 6(d) hereof. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Authority relating to (a) an offering of Senior Exchange Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Regulation S: Regulation S promulgated under the Act. Rule 144: Rule 144 promulgated under the Act. Shelf Registration Statement: As defined in Section 4 hereof. Suspension Notice: As defined in Section 6(d) hereof. TIA: The Trust Indenture Act of 1939, as amended. Transfer Restricted Securities: Each (A) Initial Senior Note, until the earliest to occur of (i) the date on which such Initial Senior Note is exchanged in the Exchange Offer for a Senior Exchange Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (ii) the date on which such Initial Senior Note has been disposed of in 2 accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Senior Exchange Notes), or (iii) the date on which such Initial Senior Note is distributed to the public pursuant to Rule 144 under the Act and each (B) Senior Exchange Note held by a Broker Dealer until the date on which such Senior Exchange Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). Tribe: 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. SECTION 2. HOLDERS A person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Authority shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date (such 90th day being the "Filing Deadline"), (ii) use its best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 150 days after the Closing Date (such 150th day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Senior Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Senior Exchange Notes to be offered in exchange for the Initial Senior Notes that are Transfer Restricted Securities and (ii) resales of Senior Exchange Notes by Broker-Dealers that tendered into the Exchange Offer Initial Senior Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Initial Senior Notes acquired directly from the Authority or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Authority shall use its best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Authority shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Senior Exchange Notes and the Senior Subordinated Exchange Notes shall be included in the Exchange Offer Registration Statement. The Authority shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days thereafter (such 30th day being the "Consummation Deadline"). (c) The Authority shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Initial Senior Notes acquired directly from the Authority or any Affiliate of the Authority), may exchange such Transfer Restricted Securities pursuant to the Exchange 3 Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Senior Exchange Notes received by such Broker-Dealer in the Exchange Offer, the Authority shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of Senior Exchange Notes by Broker-Dealers, the Authority agrees to use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Authority shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Exchange Offer is not permitted by applicable law (after the Authority has complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Authority within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Senior Exchange 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 by such Holder or (C) such Holder is a Broker-Dealer and holds Initial Senior Notes acquired directly from the Authority or any of its Affiliates, then the Authority shall (x) cause to be filed, on or prior to 30 days after the earlier of (i) the date on which the Authority determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Authority receives the notice specified in clause (a)(ii) above, (such earlier date, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "Shelf Registration Statement")), relating to all Transfer Restricted Securities, and (y) shall use its best efforts to cause such Shelf Registration Statement to become effective on or prior to 90 days after the Filing Deadline for the Shelf Registration Statement (such 90th day the "Effectiveness Deadline"). If, after the Authority has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Authority is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e. clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Authority shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). 4 To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Authority shall use its best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Authority in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to additional interest pursuant to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to furnish promptly additional information required to be disclosed in order to make the information previously furnished to the Authority by such Holder not materially misleading. SECTION 5. ADDITIONAL INTEREST If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within 2 days by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective within 5 days of filing such post-effective amendment to such Registration Statement (each such event referred to in clauses (i) through (iv), a "Registration Default"), then the Authority hereby agrees to pay to each Holder of Transfer Restricted Securities affected thereby additional interest in an amount equal to 25 basis points per 90-day period of the principal amount of Transfer Restricted Securities held by such Holder for the 90-day period or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the additional interest shall increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of additional interest of 1% per annum of the principal amount of Transfer Restricted Securities; provided that the Authority shall in no event be required to pay additional interest for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the additional interest payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued additional interest shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Senior Notes Indenture and the Senior Notes, on each Interest Payment Date, as more fully set forth in the Senior Notes Indenture and the Senior Notes. Notwithstanding the fact that any securities for which additional interest is due cease to be Transfer Restricted Securities, all obligations of the Authority to pay additional interest with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Authority shall (x) comply with all applicable provisions of Section 6(c) below, (y) use its best efforts to effect such exchange and to permit the resale of Senior Exchange Notes by Broker-Dealers that tendered in the Exchange Offer Initial Senior Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Initial Senior Notes acquired directly from the Authority or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Authority raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Authority hereby agrees to seek a no-action letter or other favorable decision from the Commission staff allowing the Authority to Consummate a Exchange Offer for such Transfer Restricted Securities. In connection with the foregoing, the Authority hereby agrees to take all actions as may be required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Authority setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker-Dealer) shall furnish, upon the request of the Authority, prior to the Consummation of the Exchange Offer, a written representation to the Authority (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Authority, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Senior Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Senior Exchange Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer, each Holder using the Exchange Offer to participate in a distribution of the Senior Exchange Notes shall acknowledge and agree that, if the resales are of Senior Exchange Notes obtained by such Holder in exchange for Initial Senior Notes acquired directly from the Authority or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Authority shall provide a supplemental letter to the Commission (A) stating that the Authority is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), and Morgan Stanley and Co., Inc. (available 6 June 5, 1991), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that the Authority has not entered into any arrangement or understanding with any person to distribute the Senior Exchange Notes to be received in the Exchange Offer and that, to the best of the Authority's information and belief, each Holder participating in the Exchange Offer is acquiring the Senior Exchange Notes in its ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the Senior Exchange Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Authority shall (i) comply with all the provisions of Section 6(c) below and use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Authority pursuant to Section 4(b) hereof), and pursuant thereto the Authority will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue, upon the request of any Holder or purchaser of Initial Senior Notes covered by any Shelf Registration Statement contemplated by this Agreement, Senior Exchange Notes having an aggregate principal amount equal to the aggregate principal amount of Initial Senior Notes sold pursuant to the Shelf Registration Statement and surrendered to the Authority for cancellation. The Authority shall register Senior Exchange Notes on the Shelf Registration Statement for this purpose and issue the Senior Exchange Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Authority shall (i) use its best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Authority shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use its best efforts to cause such amendment to be declared effective as soon as practicable; (ii) prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be, cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; 7 (iii) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Authority shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to each Holder in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days, and the Authority will use its best efforts to reflect in each such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) when so filed with the Commission, such comments proposed by such Holders. A Holder shall be deemed to have objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder in connection with such exchange or sale, if any, make the Authority's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Holders may reasonably request; (vii) make available, at reasonable times, for inspection by each Holder and any attorney or accountant retained by such Holders, all financial and other records, pertinent corporate documents of the Authority and cause the Authority's officers, board members and employees to supply all information reasonably requested by any such Holder, attorney or accountant in 8 connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (viii) if requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Authority is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Authority hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) upon the request of any Holder, enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Authority shall (A) upon request of any Holder, furnish (or in the case of paragraphs (2) and (3), use its best efforts to cause to be furnished) to each Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, signed on behalf of the Authority by the Chairman of the Management Board confirming, as of the date thereof, the matters set forth in Section 6(d) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Authority covering such matters as such Holder may reasonably request and are customarily given in similar offerings; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Authority's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 6(e) of the Purchase Agreement; and 9 (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Authority pursuant to this clause (xi); (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Authority shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use its best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Senior Notes Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvi) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a 12-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Senior Notes Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Senior Notes Indenture as may be required for such Senior Notes Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Senior Notes Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or 15(d) of the Exchange Act. 10 (d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Authority of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Authority that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Authority with more recently dated Prospectuses or (ii) deliver to the Authority (at the Authority's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. (e) Underwritten Offerings. No Holder may participate in any underwritten Shelf Registration Statement hereunder unless such Holder (i) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements entered into in connection therewith and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Authority's performance of or compliance with this Agreement will be borne by the Authority, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Senior Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Authority and the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Senior Exchange Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Authority (including the expenses of any special audit and comfort letters required by or incident to such performance). The Authority will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Authority. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Authority will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Senior Notes into the Exchange Offer and/or selling or reselling Initial Senior Notes or Senior Exchange Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. Notwithstanding the foregoing, the Holders of any Initial Senior Notes or Exchange Senior Notes being registered on the Shelf Registration Statement shall pay all agency or brokerage fees and commissions and 11 underwriting discounts and commissions attributable to the sale of such Initial Senior Notes or Exchange Senior Notes and the fees and disbursements of any counsel retained by such Holders other than counsel referred to above. SECTION 8. INDEMNIFICATION (a) The Authority agrees to indemnify and hold harmless each Holder, its directors, officers and each person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Authority to any Holder or any prospective purchaser of Senior Exchange Notes or registered Initial Senior Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Authority by any of the Holders. (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Authority and its directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Authority to the same extent as the foregoing indemnity from the Authority set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Authority by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "indemnifying person") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general 12 allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Authority, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than 20 Business Days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Authority, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Authority, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Authority, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Authority, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Authority and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has 13 otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. SECTION 9. RULE 144A and RULE 144 The Authority agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Authority (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. SECTION 10. CONSENT TO SUIT The Authority 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 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 Authority intends 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 Authority waives its immunity from unconsented suit to permit the maintenance of the following actions: (i) Courts. The Authority waives its 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 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 Authority has been improperly granted or unreasonably withheld; (iii) enforce any judgment prohibiting the Authority from taking any action, or mandating or obligating the Authority to take any action, including a judgment compelling the Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. ss. 1302 (or any successor statute). (ii) Arbitration. The Authority waives its 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 Authority, to: (i) enforce and interpret the terms of this Agreement and to award and enforce the award of any damages owing as a consequence thereof; (ii) determine whether any consent or approval of the Authority has been unreasonably withheld; and (iii) enforce any judgment prohibiting the Authority from taking any action, or mandating or obligating the Authority to take any action, including a judgment compelling the Authority to submit to binding arbitration. SECTION 11. MISCELLANEOUS (a) Remedies. The Authority acknowledges and agrees that any failure by the Authority to comply with its obligations under Sections 3 and 4 hereof may result in material irreparable injury to the 14 Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Authority's obligations under Sections 3 and 4 hereof. The Authority further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Authority will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Authority's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 11(c)(i), the Authority has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Authority has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Authority or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Authority, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Senior Notes Indenture, with a copy to the Registrar under the Senior Notes Indenture; and (ii) if to the Authority: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telecopier No.: (860) 204-6153 Attention: Roland J. Harris With a copy to: Hogan & Hartson LLP 555 Thirteenth Street, NW Washington, DC 20004 Telecopier No.: (202) 637-5910 Attention: David B.H. Martin, Jr., Esq. 15 All such notices and communications 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 receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the person giving the same to the Trustee at the address specified in the Senior Notes Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Senior Notes Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 16 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. MOHEGAN TRIBAL GAMING AUTHORITY _______________________________ By: Name: Title: SALOMON SMITH BARNEY INC. By:___________________________________ Name: Title: NATIONSBANC MONTGOMERY SECURITIES LLC By:___________________________________ Name: Title: SG COWEN SECURITIES CORPORATION By:___________________________________ Name: Title: BEAR, STEARNS & CO. INC. By:___________________________________ Name: Title: 17 BANCBOSTON ROBERTSON STEPHENS INC. By:___________________________________ Name: Title: FLEET SECURITIES, INC. By:___________________________________ Name: Title: 18 ================================================================================ CUSIP/CINS 608328 AA8 8 1/8% Senior Note due 2006 No. 1 $197,120,000 MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to Cede & Co. or registered assigns, the principal sum of One Hundred Ninety Seven Million, One Hundred Twenty Thousand Dollars on January 1, 2006. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 Dated: March 3, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________________ Name: Title: By:___________________________________ Name: Title: This is one of the Senior Notes referred to in the within-mentioned Indenture: FIRST UNION NATIONAL BANK, as Trustee By: __________________________________ Authorized Signatory ================================================================================ 8 1/8% Senior Note due 2006 THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE AUTHORITY. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. (a) The Mohegan Tribal Gaming Authority (the "Authority"), promises to pay interest on the principal amount of this Senior Note at 8 1/8% per annum from March 3, 1999 until maturity. The Authority will pay interest and Additional Interest, if any, semi-annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be July 1, 1999. 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 interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (b) The Holder of this Senior Note is entitled to the benefits of the Senior Registration Rights Agreement dated as of the date hereof, among the Authority and the Initial Purchasers named therein (the "Senior Registration Rights Agreement"). If (i) the Authority fails to file any of the Registration Statements required by the Registration Rights Agreements 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 of 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 in connection with resales of Transfer Restricted Securities during 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 will pay Additional Interest to each Holder of Senior Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Senior Notes held by such Holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Senior Notes. (A) Except as expressly provided in this paragraph 1(b), Additional Interest shall be treated as interest and any date on which Additional Interest is due and payable shall be treated as an Interest Payment Date for all purposes under this Senior Note and the Indenture. (B) In the event that the Authority is required to pay Additional Interest pursuant to this paragraph 1(b), the Authority shall notify the Trustee in writing at least 15 days prior to the first Interest Payment Date upon which such Additional Interest is due; provided that, in the event that the obligation to pay such Additional Interest occurs less than 15 days prior to such Additional Interest Date, such notice shall be provided by the Authority to the Trustee as soon as reasonably practicable prior to such Interest Payment Date. 2. METHOD OF PAYMENT. The Authority will pay interest on the Senior Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Senior Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Senior Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Senior Notes will be payable as to principal, premium and Additional Interest, if any, and interest 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 and Additional Interest 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 Additional Interest on, all Global Senior Notes and all other Senior Notes the Holders of which shall hold at least $1.0 million in principal amount of Senior Notes and 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 Union National Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Authority issued the Senior Notes under an Indenture dated as of March 3, 1999 ("Indenture") between the Authority and the Trustee. The terms of the Senior 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 ss.ss. 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. 5. OPTIONAL REDEMPTION. (a) The Authority may redeem all or a part of these Senior Notes upon not less than 30 nor more than 60 days' notice, at a redemption price (expressed as percentages of principal amount) equal to 100% of the principal amount thereof plus the Applicable Premium, if any, plus accrued and unpaid interest thereon, if any, to the applicable redemption date. (b) 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 Senior 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 Senior Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Notes or (3) the current market price of the Senior Notes, together with, in either case, accrued and unpaid interest and Additional 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 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 shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Authority shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Authority shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 20 Business Days following any Change of Control, the Authority shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Authority or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority shall commence an offer to all Holders of Senior Notes (as "Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum principal amount of Senior Notes 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 and Additional Interest thereon, 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 Asset Sale Offer is less than the Excess Proceeds, the Authority (or such Subsidiary) may use such deficiency for any purpose not otherwise permitted by the Indenture. 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 on a pro rata basis. Holders of Senior Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Authority prior to any related purchase date and may elect to have such Senior Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Notes may be registered and Senior 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 Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, the Authority need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Senior Subsidiary Guarantees 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 voting as a single class. Without the consent of any Holder of a Senior Note, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Authority's or Subsidiary Guarantor's obligations to Holders of the Senior Notes by a successor to the Authority or such Subsidiary Guarantor, 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, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes provided that the Authority has obtained any required government approval to ensure the enforceability of the Senior Notes and the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Senior Notes; (ii) default in payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Authority or any of its Restricted Subsidiaries to comply with Section 4.10 or 5.01 of the Indenture; (iv) failure by the Authority or any of its Restricted Subsidiaries to observe or perform (A) any covenant described in Section 4.07 or 4.09 of the Indenture for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class or (B) any other covenant, representation, warranty or other agreement in the Indenture or the Senior Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (v) default under certain other agreements relating to Indebtedness of the Authority or any of its Restricted Subsidiaries which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (viii) 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; (ix) 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); (x) the Lease ceases to be in full force and effect; (xi) except as permitted by the Indenture, any Senior Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subsidiary Guarantee; and (xii) failure by the Tribe to comply with the provisions of Article 10 of the Indenture for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class. 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 Senior Notes may declare all the Senior 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 Senior Notes will become due and payable without further action or notice. Holders 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. The Trustee may withhold from Holders of the Senior 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) if it determines that withholding notice is in their interest. 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 on, or the principal of, the Senior Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required 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 AUTHORITY. 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. A controlling person, director, officer, employee or holder of an Ownership Interest of the Authority, as such, shall not have any liability for any obligations of the Authority under the Senior Notes or the Indenture 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. The waiver and release are part of the consideration for the issuance of the Senior Notes. 15. AUTHENTICATION. This Senior 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 OF RESTRICTED GLOBAL SENIOR NOTES AND RESTRICTED DEFINITIVE SENIOR NOTES. In addition to the rights provided to Holders of Senior Notes under the Indenture, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have all the rights set forth in the Senior Registration Rights Agreement dated as of March 3, 1999, between the Authority and the parties named on the signature pages thereof (the "Senior Registration Rights Agreement"). 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 Senior 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 Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Senior Registration Rights Agreement. Requests may be made to: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Attention: Roland J. Harris ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:______________________________ (Insert assignee's legal name) ________________________________________________________________________________ (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*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_______________________ Date:______________________ Your Signature:_______________________________________ (Sign exactly as your name appears on the face of this Note) Tax Indentification No.:______________________________ Signature Guarantee*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR NOTE The following exchanges of a part of this Global Senior Note for an interest in another Global Senior Note or for a Definitive Senior Note, or exchanges of a part of another Global Senior Note or Definitive Senior Note for an interest in this Global Senior Note, have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Senior Note authorized officer of Principal Amount of Principal Amount of following such decrease Trustee or Senior Date of Exchange this Global Senior Note this Global Senior Note (or increase) Note Custodian ---------------- ----------------------- ----------------------- ---------------------- ---------------------
CUSIP/CINS U60742 AA8 8 1/8% Senior Note due 2006 No. 1 $2,880,000 MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to Cede & Co. or registered assigns, the principal sum of Two Million Eight Hundred Eighty Thousand Dollars on January 1, 2006. Interest Payment Dates: January 1, and July 1 Record Dates: December 15, and June 15 Dated: March 3, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________________ Roland J. Harris Chairman By:___________________________________ Jayne G. Fawcett Vice Chair This is one of the Senior Notes referred to in the within-mentioned Indenture: FIRST UNION NATIONAL BANK, as Trustee By: __________________________________ Authorized Signatory ================================================================================ 8 1/8% Senior Note due 2006 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR NOTES IN DEFINITIVE FORM, THIS SENIOR NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE AUTHORITY 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. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. (a) The Mohegan Tribal Gaming Authority (the "Authority"), promises to pay interest on the principal amount of this Senior Note at 8 1/8% per annum from March 3, 1999 until maturity. The Authority will pay interest and Additional Interest, if any, semi-annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be July 1, 1999. 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 interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (b) The Holder of this Senior Note is entitled to the benefits of the Senior Registration Rights Agreement dated as of the date hereof, among the Authority and the Initial Purchasers named therein (the "Senior Registration Rights Agreement"). If (i) the Authority fails to file any of the Registration Statements required by the Registration Rights Agreements 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 of 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 in connection with resales of Transfer Restricted Securities during 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 will pay Additional Interest to each Holder of Senior Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Senior Notes held by such Holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Senior Notes. (A) Except as expressly provided in this paragraph 1(b), Additional Interest shall be treated as interest and any date on which Additional Interest is due and payable shall be treated as an Interest Payment Date for all purposes under this Senior Note and the Indenture. (B) In the event that the Authority is required to pay Additional Interest pursuant to this paragraph 1(b), the Authority shall notify the Trustee in writing at least 15 days prior to the first Interest Payment Date upon which such Additional Interest is due; provided that, in the event that the obligation to pay such Additional Interest occurs less than 15 days prior to such Additional Interest Date, such notice shall be provided by the Authority to the Trustee as soon as reasonably practicable prior to such Interest Payment Date. 2. METHOD OF PAYMENT. The Authority will pay interest on the Senior Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Senior Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Senior Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Senior Notes will be payable as to principal, premium and Additional Interest, if any, and interest 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 and Additional Interest 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 Additional Interest on, all Global Senior Notes and all other Senior Notes the Holders of which shall hold at least $1.0 million in principal amount of Senior Notes and 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 Union National Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Authority issued the Senior Notes under an Indenture dated as of March 3, 1999 ("Indenture") between the Authority and the Trustee. The terms of the Senior 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 ss.ss. 77aaa-77bbbb). The Senior Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. 5. OPTIONAL REDEMPTION. (a) The Authority may redeem all or a part of these Senior Notes upon not less than 30 nor more than 60 days' notice, at a redemption price (expressed as percentages of principal amount) equal to 100% of the principal amount thereof plus the Applicable Premium, if any, plus accrued and unpaid interest thereon, if any, to the applicable redemption date. (b) 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 Senior 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 Senior Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Notes or (3) the current market price of the Senior Notes, together with, in either case, accrued and unpaid interest and Additional 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 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 shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Authority shall not be required to make mandatory redemption payments with respect to the Senior Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Authority shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 20 Business Days following any Change of Control, the Authority shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Authority or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority shall commence an offer to all Holders of Senior Notes (as "Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum principal amount of Senior Notes 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 and Additional Interest thereon, 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 Asset Sale Offer is less than the Excess Proceeds, the Authority (or such Subsidiary) may use such deficiency for any purpose not otherwise permitted by the Indenture. 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 on a pro rata basis. Holders of Senior Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Authority prior to any related purchase date and may elect to have such Senior Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Notes are to be redeemed at its registered address. Senior Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Notes may be registered and Senior 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 Senior Note or portion of a Senior Note selected for redemption, except for the unredeemed portion of any Senior Note being redeemed in part. Also, the Authority need not exchange or register the transfer of any Senior Notes for a period of 15 days before a selection of Senior Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Note. 10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Senior Subsidiary Guarantees 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 voting as a single class. Without the consent of any Holder of a Senior Note, the Indenture, the Senior Subsidiary Guarantees or the Senior Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes, to provide for the assumption of the Authority's or Subsidiary Guarantor's obligations to Holders of the Senior Notes by a successor to the Authority or such Subsidiary Guarantor, 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, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Senior Subsidiary Guarantee with respect to the Senior Notes provided that the Authority has obtained any required government approval to ensure the enforceability of the Senior Notes and the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Senior Notes; (ii) default in payment when due of principal of or premium, if any, on the Senior Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Authority or any of its Restricted Subsidiaries to comply with Section 4.10 or 5.01 of the Indenture; (iv) failure by the Authority or any of its Restricted Subsidiaries to observe or perform (A) any covenant described in Section 4.07 or 4.09 of the Indenture for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class or (B) any other covenant, representation, warranty or other agreement in the Indenture or the Senior Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class; (v) default under certain other agreements relating to Indebtedness of the Authority or any of its Restricted Subsidiaries which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (viii) 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; (ix) 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); (x) the Lease ceases to be in full force and effect; (xi) except as permitted by the Indenture, any Senior Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subsidiary Guarantee; and (xii) failure by the Tribe to comply with the provisions of Article 10 of the Indenture for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding voting as a single class. 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 Senior Notes may declare all the Senior 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 Senior Notes will become due and payable without further action or notice. Holders 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. The Trustee may withhold from Holders of the Senior 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) if it determines that withholding notice is in their interest. 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 on, or the principal of, the Senior Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required 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 AUTHORITY. 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. A controlling person, director, officer, employee or holder of an Ownership Interest of the Authority, as such, shall not have any liability for any obligations of the Authority under the Senior Notes or the Indenture 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. The waiver and release are part of the consideration for the issuance of the Senior Notes. 15. AUTHENTICATION. This Senior 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 OF RESTRICTED GLOBAL SENIOR NOTES AND RESTRICTED DEFINITIVE SENIOR NOTES. In addition to the rights provided to Holders of Senior Notes under the Indenture, Holders of Restricted Global Senior Notes and Restricted Definitive Senior Notes shall have all the rights set forth in the Senior Registration Rights Agreement dated as of March 3, 1999, between the Authority and the parties named on the signature pages thereof (the "Senior Registration Rights Agreement"). 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 Senior 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 Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Senior Registration Rights Agreement. Requests may be made to: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Attention: Roland J. Harris ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:______________________________ (Insert assignee's legal name) ________________________________________________________________________________ (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*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_______________________ Date:______________________ Your Signature:_______________________________________ (Sign exactly as your name appears on the face of this Note) Tax Indentification No.:______________________________ Signature Guarantee*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR NOTE The following exchanges of a part of this Global Senior Note for an interest in another Global Senior Note or for a Definitive Senior Note, or exchanges of a part of another Global Senior Note or Definitive Senior Note for an interest in this Global Senior Note, have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Senior Note authorized officer of Principal Amount of Principal Amount of following such decrease Trustee or Senior Date of Exchange this Global Senior Note this Global Senior Note (or increase) Note Custodian ---------------- ----------------------- ----------------------- ---------------------- ---------------------
EX-4.6 5 EXHIBIT 4.6 Exhibit 4.6 - -------------------------------------------------------------------------------- MOHEGAN TRIBAL GAMING AUTHORITY ISSUER $300,000,000 in aggregate principal amount 8 3/4% SENIOR SUBORDINATED NOTES DUE 2009 ---------------------------------------- INDENTURE Dated as of March 3, 1999 ---------------------------------------- Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut Mohegan Tribe of Indians of Connecticut ---------------------------------------- State Street Bank and Trust Company Trustee ---------------------------------------- - -------------------------------------------------------------------------------- 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)........................................................ 12.03 (c)........................................................ 12.03 313(a)........................................................ 7.06 (b)(2)..................................................... 7.06 (c)........................................................ 7.06; 12.02 (d)........................................................ 7.06 314(a)........................................................ 4.03; 12.05 (c)(1)..................................................... 12.04 (c)(2)..................................................... 12.04 (c)(3)..................................................... N.A. (e)........................................................ 12.05 (f)........................................................ N.A. 315(a)........................................................ 7.01 (b)........................................................ 7.05, 12.02 (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)........................................................ N.A. (c)........................................................ 2.12 317(a)(1)..................................................... 6.08 (a)(2)..................................................... 6.09 (b)........................................................ 2.04 318(a)........................................................ 12.01 (b)........................................................ N.A. (c)........................................................ 12.01
- ---------- N.A. means not applicable. * This Cross-Reference Table is not part of the Indenture. TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions....................................................................1 Section 1.02. Other Definitions.............................................................20 Section 1.03. Incorporation by Reference of Trust Indenture Act.............................20 Section 1.04. Rules of Construction.........................................................21 ARTICLE 2 THE SENIOR SUBORDINATED NOTES Section 2.01. Form and Dating...............................................................21 Section 2.02. Execution and Authentication..................................................22 Section 2.03. Registrar and Paying Agent....................................................23 Section 2.04. Paying Agent to Hold Money in Trust...........................................23 Section 2.05. Holder Lists..................................................................24 Section 2.06. Transfer and Exchange.........................................................24 Section 2.07. Replacement Senior Subordinated Notes.........................................35 Section 2.08. Outstanding Senior Subordinated Notes.........................................36 Section 2.09. Treasury Senior Subordinated Notes............................................36 Section 2.10. Temporary Senior Subordinated Notes...........................................36 Section 2.11. Cancellation..................................................................36 Section 2.12. Defaulted Interest............................................................37 Section 2.13. CUSIP Numbers.................................................................37 ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee............................................................37 Section 3.02. Selection of Senior Subordinated Notes to Be Redeemed.........................37 Section 3.03. Notice of Redemption..........................................................38 Section 3.04. Effect of Notice of Redemption................................................39 Section 3.05. Deposit of Redemption Price...................................................39 Section 3.06. Senior Subordinated Notes Redeemed in Part....................................39 Section 3.07. Optional Redemption...........................................................39 Section 3.08. Redemption Pursuant to Gaming Law.............................................40 Section 3.09. Mandatory Redemption..........................................................40 Section 3.10. Offer to Purchase by Application of Excess Proceeds...........................40 ARTICLE 4 COVENANTS Section 4.01. Payment of Senior Subordinated Notes..........................................42 Section 4.02. Maintenance of Office or Agency...............................................42 Section 4.03. Reports.......................................................................43 Section 4.04. Compliance Certificate........................................................43 Section 4.05. Taxes.........................................................................44 Section 4.06. Stay, Extension and Usury Laws................................................44 Section 4.07. Restricted Payments...........................................................44 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................46 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock....................48
i Senior Subordinated Notes
Page Section 4.10. Asset Sales...................................................................49 Section 4.11. Transactions with Affiliates..................................................50 Section 4.12. Liens.........................................................................51 Section 4.13. Line of Business..............................................................51 Section 4.14. Existence of the Authority and Maintenance of the Lease.......................51 Section 4.15. Offer to Repurchase Upon Change of Control....................................52 Section 4.16. No Senior Subordinated Debt...................................................52 Section 4.17. Limitation on Sale and Leaseback Transactions.................................53 Section 4.18. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries........................................53 Section 4.19. Payments for Consent..........................................................53 Section 4.20. Senior Subordinated Subsidiary Guarantees.....................................53 Section 4.21. Ownership Interests in the Authority..........................................54 Section 4.22. Subordination of Junior Payments Under the Relinquishment Agreement...........54 Section 4.23. Construction..................................................................54 Section 4.24. Restrictions on Leasing and Dedication of Property............................54 Section 4.25. Maintenance of Insurance......................................................55 Section 4.26. Gaming Licenses...............................................................55 Section 4.27. Required Defeasance and Redemption of the Junior Subordinated Notes..........................................................57 Section 4.28. Designation of Designated Senior Indebtedness Under the Relinquished Agreement......................................................57 ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets......................................56 ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default.............................................................56 Section 6.02. Acceleration..................................................................58 Section 6.03. Other Remedies................................................................59 Section 6.04. Waiver of Past Defaults.......................................................59 Section 6.05. Control by Majority...........................................................59 Section 6.06. Limitation on Suits...........................................................59 Section 6.07. Rights of Holders of Senior Subordinated Notes to Receive Payment.............................................................60 Section 6.08. Collection Suit by Trustee....................................................60 Section 6.09. Trustee May File Proofs of Claim..............................................60 Section 6.10. Priorities....................................................................61 Section 6.11. Undertaking for Costs.........................................................61 ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee.............................................................61 Section 7.02. Rights of Trustee.............................................................62 Section 7.03. Individual Rights of Trustee..................................................63 Section 7.04. Trustee's Disclaimer..........................................................63 Section 7.05. Notice of Defaults............................................................64 Section 7.06. Reports by Trustee to Holders of the Senior Subordinated Notes................64 Section 7.07. Compensation and Indemnity....................................................65 Section 7.08. Replacement of Trustee........................................................65 Section 7.09. Successor Trustee by Merger, etc..............................................66
ii Senior Subordinated Notes
Page Section 7.10. Eligibility; Disqualification.................................................67 Section 7.11. Preferential Collection of Claims Against Authority...........................67 ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance......................67 Section 8.02. Legal Defeasance and Discharge................................................67 Section 8.03. Covenant Defeasance...........................................................68 Section 8.04. Conditions to Legal or Covenant Defeasance....................................68 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...............................69 Section 8.06. Repayment to Authority........................................................70 Section 8.07. Reinstatement.................................................................70 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Senior Subordinated Notes.......................70 Section 9.02. With Consent of Holders of Senior Subordinated Notes..........................71 Section 9.03. Compliance with Trust Indenture Act...........................................73 Section 9.04. Revocation and Effect of Consents.............................................73 Section 9.05. Notation on or Exchange of Senior Subordinated Notes..........................73 Section 9.06. Trustee to Sign Amendments, etc...............................................73 ARTICLE 10 SUBORDINATION Section 10.01. Agreement to Subordinate.....................................................73 Section 10.02. Certain Definitions..........................................................74 Section 10.03. Liquidation; Dissolution; Bankruptcy.........................................74 Section 10.04. Default on Designated Senior Indebtedness....................................74 Section 10.05. Acceleration of Securities...................................................75 Section 10.06. When Distribution Must Be Paid Over..........................................75 Section 10.07. Notice by Authority..........................................................76 Section 10.08. Subrogation..................................................................76 Section 10.09. Relative Rights..............................................................76 Section 10.10. Subordination May Not Be Impaired............................................76 Section 10.11. Distribution or Notice to Representative.....................................77 Section 10.12. Rights of Trustee and Paying Agent...........................................77 Section 10.13. Authorization to Effect Subordination........................................77 Section 10.14. Amendments...................................................................78 Article 11 Covenants of the Tribe Section 11.01. Covenants of the Tribe.......................................................78 Section 11.02. Additional Covenants of the Tribe............................................79 ARTICLE 12 MISCELLANEOUS Section 12.01. Trust Indenture Act Controls.................................................80 Section 12.02. Notices......................................................................80 Section 12.03. Communication by Holders of Senior Subordinated Notes with Other Holders of Senior Subordinated Notes......................81
iii Senior Subordinated Notes
Page Section 12.04. Certificate and Opinion as to Conditions Precedent...........................81 Section 12.05. Statements Required in Certificate or Opinion................................82 Section 12.06. Rules by Trustee and Agents..................................................82 Section 12.07. Dispute Resolution and Consent to Suit.......................................82 Section 12.08. No Personal Liability of Directors, Officers, Employees and Stockholders.................................................83 Section 12.09. Governing Law................................................................83 Section 12.10. No Adverse Interpretation of Other Agreements................................83 Section 12.11. Successors...................................................................83 Section 12.12. Severability.................................................................84 Section 12.13. Counterpart Originals........................................................84 Section 12.14. Table of Contents, Headings, etc.............................................84 EXHIBITS Exhibit A-1 FORM OF NOTE Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON SENIOR SUBORDINATED NOTE Exhibit E FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
iv Senior Subordinated Notes INDENTURE dated as of March 3, 1999 among the Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut (the "Authority"), the Mohegan Tribe of Indians of Connecticut (the "Tribe") and State Street Bank and Trust Company, as trustee (the "Trustee"). The Authority and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 8 3/4% Senior Subordinated Notes due 2009: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "144A Global Senior Subordinated Note" means a global senior subordinated note substantially in the form of Exhibit A-1 hereto bearing the Global Senior Subordinated Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Senior Subordinated Notes sold in reliance on Rule 144A. "Acquired Indebtedness" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person; and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Interest" means all Additional Interest then owing pursuant to the terms of the Senior Subordinated Notes. "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," 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. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Senior Subordinated Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means: (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Authority and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and not Section 4.10; and (ii) the issuance by the Authority or any of its Restricted Subsidiaries of Equity Interests of any of the Authority's or its Senior Subordinated Notes Restricted Subsidiaries' Restricted Subsidiaries or the sale by the Authority or any of its Subsidiaries of any Equity Interests in any of their respective Subsidiaries. Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales: (i) any single transaction or series of related transactions that: (a) involves assets having a fair market value of less than $1.0 million; or (b) results in net proceeds to the Authority and its Restricted Subsidiaries of less than $1.0 million; (ii) a transfer of assets between or among the Authority and its Wholly Owned Restricted Subsidiaries; (iii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Authority or to another Wholly Owned Restricted Subsidiary; (iv) a Restricted Payment or Permitted Investment that is permitted by Section 4.07; (v) any Event of Loss; and (vi) any lease or sublease permitted by Section 4.24. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended (or may, at the option of the lessor, be extended). Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Authority" means the Mohegan Tribal Gaming Authority together with any subdivision, agency or subunit that has no separate legal existence from the Mohegan Tribal Gaming Authority, and any successor and assignee thereto. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "BIA" means the Bureau of Indian Affairs. "Broker-Dealer" has the meaning set forth in the Senior Subordinated Registration Rights Agreement. "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 on a balance sheet in accordance with GAAP. "Capital Stock" means: (i) in the case of a corporation, corporate stock; (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (iv) 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, the issuing Person, but excluding any interest under the Relinquishment Agreement. "Cash Equivalents" means: (i) United States dollars; (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support 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' 2 Senior Subordinated Notes acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or better; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above; (v) commercial paper having one of the two highest ratings obtainable from Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and in each case maturing within six months after the date of acquisition; and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this definition. "Cedel" means Cedel Bank, SA. "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; or (iv) the Authority sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its assets to, or consolidates or merges with or into any other Person. "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. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus: (i) an amount equal to any extraordinary loss (including, without limitation, any non-cash charges or losses arising from adjustments relating to the Relinquishment Agreement) plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (ii) provision for taxes based on the income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income; plus (iii) consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments, if any, pursuant to Hedging Obligations), but excluding interest expense on the Junior Subordinated Notes to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles, but excluding amortization of prepaid cash expenses that were paid in a prior period), non-cash charges associated with equity option plans and other non-cash expenses 3 Senior Subordinated Notes (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (v) non-cash items increasing such Consolidated Net Income for such period (including, without limitation, any non-cash items arising from adjustments relating to the Relinquishment Agreement); minus (vi) to the extent not included in computing such Consolidated Net Income, any revenues received or accrued by the Authority or any of its Subsidiaries from any Person (other than the Authority or any of its Subsidiaries) in respect of any Investment for such period, all determined on a consolidated basis and in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Subsidiary of a Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP, provided that: (i) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Wholly Owned Restricted Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded; (iv) the cumulative effect of a change in accounting principles shall be excluded; 4 Senior Subordinated Notes (v) the Net Income shall be reduced by the amount of payments pursuant to the Relinquishment Agreement, paid or payable, for such period based on 5% of the revenues (as defined in the Relinquishment Agreement) generated in such period; and (vi) both the interest income related to the Defeasance Trust and the interest expense on the Junior Subordinated Notes shall be excluded so long as the payment of principal, premium and interest on the Junior Subordinated Notes at redemption on January 1, 2000 is fully covered by the amounts of the Defeasance Trust. "Construction Reserve Disbursement Agreement" means that certain agreement, dated the date hereof, among the Authority, the Tribe and Fleet National Bank, as escrow agent, regarding the disbursement of a $40 million reserve account to pay certain costs in excess of the construction budget. "Consumer Price Index" means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-1984=100 as compiled and released by the Bureau of Labor Statistics. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Authority. "Credit Facilities" means, with respect to the Authority or any Restricted Subsidiary, one or more debt facilities (including, without limitation, the Loan Agreement) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Senior Subordinated Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by Section 4.09(b)(i). "Custodian" means the Trustee, as custodian with respect to the Senior Subordinated Notes in global form, or any successor entity thereto. "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. "Defeasance Trust" means that certain trust established pursuant to Section 12.04(a) of the Note Purchase Agreement under which the Junior Subordinated Notes were issued for the covenant defeasance of the Junior Subordinated Notes to their redemption date on January 1, 2000. "Definitive Senior Subordinated Note" means a certificated Senior Subordinated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A-1 hereto except that such Senior Subordinated Note shall not bear the Global Senior Subordinated Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto. "Depositary" means, with respect to the Senior Subordinated Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Senior Subordinated Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. 5 Senior Subordinated Notes "Designated Senior Indebtedness" means Indebtedness under the Loan Agreement and any other Indebtedness permitted under this Indenture the principal amount of which is $20.0 million or more and that has been designated by the Authority as "Designated Senior Indebtedness". "Development Services Agreement" means that certain Development Services Agreement dated February 7, 1998 among the Authority, the Tribe and TCA. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is after the date on which the Senior Subordinated Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Authority to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Authority may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Distribution Compliance Period" has the same meaning as defined in Regulation S. "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). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "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. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" has the meaning set forth in the Senior Subordinated Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Senior Subordinated Registration Rights Agreement. "Existing Indebtedness" means up to $617.8 million in aggregate original principal amount of Indebtedness of the Authority (other than Indebtedness under the Loan Agreement) in existence on the date of this Indenture, until such amounts are repaid. "Existing Secured Notes" means the Authority's 13 1/2% Senior Secured Notes due 2002 with Cash Flow Participation Interest. 6 Senior Subordinated Notes "Expansion Project" means the project to expand the existing Mohegan Sun casino as more fully described in the Authority's Offering Memorandum, dated February 24, 1999. "Financing Lease" means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of: (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments, if any, pursuant to Hedging Obligations but excluding interest expense on the Junior Subordinated Notes so long as the principal, premium and interest thereof at redemption on January 1, 2000 are covered by amounts in the Defeasance Trust; plus (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus (iv) the product of (a) all cash dividend payments or other distributions (and non-cash dividend payments in the case of a Person that is a Restricted Subsidiary) on any series of preferred equity of such Person, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which 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, repayment or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (i) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related 7 Senior Subordinated Notes financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income; (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded; and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date. "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 ("FASB") or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Indenture. "Gaming" means any and all activities defined as Class II or Class III Gaming under IGRA or authorized under the Compact. "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 Senior Subordinated Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Senior Subordinated Notes issued under this Indenture. "Global Senior Subordinated Notes" means, individually and collectively, each of the Restricted Global Senior Subordinated Notes and the Unrestricted Global Senior Subordinated Notes, substantially in the form of Exhibit A-1 hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Government Service Payments" means: (i) an annual payment to the Tribe by the Authority in the amount of $14.0 million, which amount shall be adjusted annually on the last day of each calendar year commencing with the year 2000 by the Consumer Price Index as published for the applicable year; 8 Senior Subordinated Notes and (ii) amounts equal to those reflected on each annual audited income statement of the Authority as prepared in accordance with GAAP relating to payment for governmental services (including charges for utilities, police and fire department services, health and emergency medical services, the pro rata portion of Tribal Council costs and salaries attributable to the operations of the Authority, and similar pro rata costs of other tribal departments, in each case, to the extent that the costs of such departments are attributable to the operations of the Authority) by the Authority to the Tribe or any of its representatives, political subunits, councils, agencies or instrumentalities. "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, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any Person: (i) the obligations of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and (ii) the obligations of such Person under other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Senior Subordinated Note is registered. "IGRA" means the Indian Gaming Regulatory Act of 1988, PL 100-497, U.S.C. 2701 et seq. as same may, from time to time, be amended. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of: (i) borrowed money; (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (iii) banker's acceptances; (iv) Capital Lease Obligations; (v) the balance, deferred and unpaid, of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (vi) any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by such Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Senior Subordinated Note through a Participant. "Initial Senior Subordinated Notes" means the $300,000,000 aggregate principal amount of Senior Subordinated Notes issued under this Indenture on the date hereof. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and 9 Senior Subordinated Notes 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, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Authority or any Subsidiary of the Authority sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Authority such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Authority, the Authority shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in Section 4.07(d). "Junior Subordinated Notes" means the $90.0 million in aggregate original principal amount (plus any accrued and unpaid interest) of junior subordinated notes of the Authority. "Key Project Assets" means: (i) the Lease and any real property or interest in real property comprising the Resort held in trust for the Tribe by the United States; (ii) any improvements (including, without limitation the Resort) to the leasehold estate under the Lease or such real property comprising the Resort (but excluding any obsolete personal property or real property improvements determined by the Authority to be no longer useful to the operations of the Resort); and (iii) any business records of the Authority or the Tribe relating to the operation of the Resort. "Lease" means the Land Lease between the Tribe and the Authority dated September 29, 1995, as the same may be amended in accordance with the terms thereof and of this Indenture. "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 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 such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Authority and sent to all Holders of the Senior Subordinated Notes for use by such Holders in connection with the Exchange Offer. "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). "Loan Agreement" means that certain Loan Agreement, dated as of March 3, 1999, by and among the Authority, the Tribe, the lenders thereunder and Bank of America National Trust and Savings Association, as Administrative Agent, and the Documentation Agent and Syndication Agent referred to therein, including any related notes, guarantees, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time. "Management Agreement" means the Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 by and between the Authority and TCA or any successor management agreement thereto. 10 Senior Subordinated Notes "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. "Net Income" means, with respect to any Person for any period, the net income (loss) of such Person for such period, determined in accordance with GAAP and before any reduction in respect of dividends on preferred interests, excluding, however: (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (A) any Asset Sale (including, without limitation, dispositions pursuant to sale leaseback transactions) or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (ii) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss, less (iii) in the case of any Person that is a partnership or a limited liability company, the amount of withholding for tax purposes of such Person for such period. "Net Proceeds" means the aggregate cash proceeds received by the Authority or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale including, without limitation, legal, accounting and investment banking fees, and sales commissions and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements and amounts required to be applied to the repayment of Indebtedness (other than the repayment of Senior Indebtedness), secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "NIGC" means the National Indian Gaming Commission. "Non-Recourse Debt" means Indebtedness: (i) as to which neither the Authority nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Authority or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which such Indebtedness specifies that the lenders thereunder will not have any recourse to the stock or assets of the Authority or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. 11 Senior Subordinated Notes "Offering" means the offering of the Senior Notes and the Senior Subordinated 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 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Authority, any Subsidiary of 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. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to DTC, shall include Euroclear and Cedel). "Permitted Asset Swap" means the exchange by the Authority or any Restricted Subsidiary of any assets for other assets from a Person; provided that, the assets received in such exchange are believed by the Authority in good faith to be of substantially equivalent value and substantially all of which are either (i) long term assets that are used or useful in the Principal Business, (ii) cash or (iii) any combination of the foregoing clauses (i) and (ii). "Permitted Investments" means: (i) any Investment in the Authority or in a Restricted Subsidiary of the Authority that is engaged in a Principal Business or a Related Business; (ii) any Investment in cash or Cash Equivalents; (iii) any Investment by the Authority or any Restricted Subsidiary of the Authority in a Person, if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Authority and a Subsidiary Guarantor and is engaged in a Principal Business or a Related Business or (b) is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Authority or a Restricted Subsidiary of the Authority; (iv) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 3.10; (v) any Investment in any Person engaged in the Principal Business or a Related Business having an aggregate fair market value (as determined in good faith by the Management Board and measured as of the date of such Investment, without giving effect to any 12 Senior Subordinated Notes subsequent increases or decreases in value) not to exceed $25.0 million at any one time outstanding; (vi) Government Service Payments; (vii) payroll advances to employees of the Authority or its Restricted Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount not to exceed $250,000 at any one time outstanding; (viii) accounts and notes receivable if created or acquired in the ordinary course of business and which are payable or dischargeable in accordance with customary trade terms; (ix) Investments related to Hedging Obligations, so long as such Hedging Obligations are not used for speculative purposes; and (x) any Investment in government securities to be held in the Defeasance Trust to defease the Junior Subordinated Notes in accordance with their terms. "Permitted Liens" means: (i) Liens securing Indebtedness permitted by the terms of this Indenture to be incurred under clauses (i), (ii), (v), (vi), (vii), (viii) (to the extent that the Indebtedness so guaranteed is permitted to be secured by this Indenture) and (x) of Section 4.09(b); (ii) Liens in favor of the Authority or a Restricted Subsidiary; (iii) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature (including, without limitation, pledges or deposits made in connection with obligatory workers' compensation laws, unemployment insurance or similar laws) incurred in the ordinary course of business; (iv) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) of Section 4.09(b) covering only the assets acquired with such Indebtedness; (v) Liens existing on the date of this Indenture; (vi) Liens arising as a result of survey exceptions, title defects, encumbrances, easements, reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes or zoning or other restrictions as to the use of real property not interfering with the ordinary conduct of the business of the Authority or any of its Restricted Subsidiaries; (vii) Liens arising by operation of law in favor of carriers, warehousemen, landlords, mechanics, materialmen, laborers, employees or suppliers, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof; (viii) Liens incurred as a result of any interest or title of a lessor or lessee under any lease of property (including any Lien granted by such lessor or lessee but excluding any Lien arising in respect of a Financing Lease); 13 Senior Subordinated Notes (ix) Liens in favor of the Tribe representing the ground lessor's interest under the Lease; (x) Liens on property existing at the time or acquisition thereof by the Authority or a Restricted Subsidiary; provided that such Liens were in existence prior to the contemplation of such acquisition; (xi) Liens for taxes, assessments or governmental charges, claims or rights 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; (xii) Liens securing Indebtedness permitted under clause (vii) of Section 4.09(b); provided that such Liens are no more extensive that the liens securing the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded thereby; (xiii) Liens incurred in the ordinary course of business of the Authority or a Restricted Subsidiary with respect to obligations that do not exceed $500,000 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, 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; (xiv) Liens created by or resulting from any legal proceeding with respect to which the Authority or a Restricted Subsidiary is prosecuting an appeal proceeding for review and the Authority or such Restricted Subsidiary is maintaining adequate reserves in connection with GAAP; and (xv) a Lien on the assets in the Defeasance Trust with respect to the obligations of the Junior Subordinated Notes. "Permitted Refinancing Indebtedness" means any Indebtedness of the Authority or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Authority or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of prepayment premiums and reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, 14 Senior Subordinated Notes refinanced, renewed, replaced, defeased or refunded; provided that if the original maturity date of such Indebtedness is after the Stated Maturity of the Senior Subordinated Notes, then such Permitted Refinancing Indebtedness shall have a maturity at least 180 days after the Senior Subordinated Notes; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Senior Subordinated Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Senior Subordinated Notes on terms at least as favorable to the Holders of Senior Subordinated Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Authority or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "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. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Senior Subordinated Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Senior Subordinated Note" means a Regulation S Temporary Global Senior Subordinated Note or Regulation S Permanent Global Senior Subordinated Note, as appropriate. "Regulation S Permanent Global Senior Subordinated Note" means a permanent global Senior Subordinated Note in the form of Exhibit A-1 hereto bearing the Global Senior Subordinated Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Senior Subordinated Note upon expiration of the Distribution Compliance Period. "Regulation S Temporary Global Senior Subordinated Note" means a temporary global Senior Subordinated Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Senior Subordinated Notes initially sold in reliance on Rule 903 of Regulation S. 15 Senior Subordinated Notes "Related Business" means any business related to the Principal Business. "Relinquishment Agreement" means the Relinquishment Agreement dated February 7, 1998 between the Authority and TCA. "Resort" means the multi-amenity gaming and entertainment resort located in Uncasville, Connecticut and the convention center, retail facilities, arena, hotel and improvements proposed to be constructed adjacent thereto, as described in the Offering Memorandum of the Authority dated February 24, 1999 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 and (ii) any equipment leased from a third party in the ordinary course of business. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration department 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 Definitive Senior Subordinated Note" means a Definitive Senior Subordinated Note bearing the Private Placement Legend. "Restricted Global Senior Subordinated Note" means a Global Senior Subordinated Note bearing the Private Placement Legend. "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means: (i) all Indebtedness outstanding under the Credit Facilities and all Hedging Obligations with respect thereto, including, without limitation, all principal, interest, fees and other amounts payable with respect thereto, including any interest which accrues following any bankruptcy or insolvency of the Authority, the Tribe or any Subsidiary Guarantor; (ii) any other Indebtedness permitted to be incurred by the Authority under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on parity with or subordinated in right of payment to the Senior Subordinated Notes; (iii) all Obligations with respect to the foregoing; and (iv) at anytime the Senior Relinquishment Payments (as defined in the Relinquishment Agreement) to the extent then due and owing pursuant to the terms of the Relinquishment Agreement at such time. 16 Senior Subordinated Notes Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include: (i) any Indebtedness of the Authority to any of its Restricted Subsidiaries or other Affiliates; or (ii) any Indebtedness that is incurred in violation of this Indenture. "Senior Notes" means, collectively, the Authority's 81/8% Initial Senior Notes due 2006 issued pursuant to the Senior Note Indenture and the Authority's Senior Exchange Notes (as such terms are defined in the Senior Note Indenture) issued pursuant to the Exchange Offer. "Senior Subordinated Exchange Notes" means the Authority's 83/4% Senior Subordinated Notes due 2009 to be issued in exchange for the Initial Senior Subordinated Notes pursuant to the Senior Subordinated Registration Rights Agreement. "Senior Subordinated Notes" means, collectively, the Initial Senior Subordinated Notes and the Senior Subordinated Exchange Notes, treated as a single class of securities as amended or supplemented from time to time in accordance with the terms hereof, in each case as issued pursuant to this Indenture. "Senior Note Indenture" means that certain indenture, dated the date hereof, among the Authority, the Tribe and First Union National Bank, as Trustee, as amended or supplemented from time to time, relating to the Senior Notes. "Senior Subordinated Registration Rights Agreement" means the Senior Subordinated Registration Rights Agreement, dated as of March 3, 1999, by and among the Authority and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Senior Subordinated Subsidiary Guarantee" means the joint and several guarantee by the Authority's Restricted Subsidiaries of the Authority's obligations under the Senior Subordinated Notes, in substantially the form of such Subsidiary Guarantee attached as Exhibit D to this Indenture. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Senior Subordinated Registration Rights Agreement. "Side Letters" means (i) that certain Side Letter, dated February 7, 1998 regarding the Junior Subordinated Notes, as amended December 15, 1998; (ii) that certain Side Letter, dated February 7, 1998 relating to various waivers under the existing Management Agreement; (iii) that certain Side Letter, dated February 7, 1998, regarding the use of TCA personnel following this termination of the Management Agreement; (iv) that certain Side Letter, dated February 22, 1999, regarding the previously proposed exchange of Junior Subordinated Notes for Senior Subordinated Notes; and (v) that certain Side Letter, dated February 22, 1999, regarding the earlier Side Letters, in connection with the defeasance of the Junior Subordinated Notes. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid including as a result of any mandatory sinking fund payment or mandatory redemption in the documentation governing such Indebtedness in effect on the date hereof or, if such Indebtedness is incurred after the date of this Indenture, in the original documentation governing such Indebtedness, and 17 Senior Subordinated Notes shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means any Indebtedness which by its terms is expressly subordinate in right of payment in any respect to the payment of any obligation on the Senior Subordinated Notes. "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 otherwise be bound to the terms of this Indenture; 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 the 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. "Subsidiary Guarantor" means any Subsidiary of the Authority that executes a Senior Subordinated Subsidiary Guarantee in accordance with the provisions of this Indenture and its respective successors and assigns. "Sun International" means Sun International Hotels Limited, a Bahamian corporation or any of its affiliates. "TCA" means Trading Cove Associates. "Tender Offer" means the Tender Offer and the Consent Solicitation with respect to $175.0 million aggregate principal amount of the Existing Secured Notes. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Tribal Council" means the Tribe's nine member elected council which exercises all the legislative and executive powers of the Tribe. "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 or authorize and regulate gaming on the Mohegan Reservation pursuant to IGRA. "Tribal Tax Code" means any sales, use, room occupancy and related excise taxes, including admissions and cabaret taxes and any other tax (other than income tax) that may be imposed by the State of Connecticut that the Tribe may impose on the Authority, its patrons or operations; provided, however, that the rate and scope of such taxes shall not be more onerous than those imposed by the State of Connecticut. "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. ss. 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. 18 Senior Subordinated Notes "Unrestricted Definitive Senior Subordinated Note" means one or more Definitive Senior Subordinated Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Global Senior Subordinated Note" means a permanent global Senior Subordinated Note substantially in the form of Exhibit A-1 attached hereto that bears the Global Senior Subordinated Note Legend and that has the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Senior Subordinated Notes that do not bear the Private Placement Legend. "Unrestricted Subsidiary" means any Subsidiary that is designated in writing by the Authority as an Unrestricted Subsidiary, but only to the extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement or understanding with the Authority or any Restricted Subsidiary of the Authority unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Authority or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Authority; (iii) is a Person with respect to which neither the Authority nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (iv) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Authority or any of its Restricted Subsidiaries; and (v) has at least one director on its board of directors that is not a director or executive officer of the Authority or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Authority or any of its Restricted Subsidiaries. Any such designation by the Management Board shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Authority as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Authority shall be in default of such Section). The Authority may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Authority of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (a) such Indebtedness is permitted by Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (b) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(k) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Management Board or Board of Directors, as the case may be, of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) 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 (b) the number of years (calculated 19 Senior Subordinated Notes to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. "Wholly Owned Restricted Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. Section 1.02. Other Definitions.
Defined in Term Section ---- ---------- "Affiliate Transaction"...................................... 4.11 "Asset Sale"................................................. 4.10 "Asset Sale Offer"........................................... 3.10 "Authentication Order"....................................... 2.02 "Bankruptcy Law"............................................. 4.01 "Change of Control Offer".................................... 4.15 "Change of Control Payment".................................. 4.15 "Change of Control Payment Date"............................. 4.15 "Covenant Defeasance"........................................ 8.03 "DTC"........................................................ 2.03 "Event of Default"........................................... 6.01 "Excess Proceeds"............................................ 4.10 "incur"...................................................... 4.09 "Lease Transaction".......................................... 4.24 "Legal Defeasance"........................................... 8.02 "Offer Amount"............................................... 3.10 "Offer Period"............................................... 3.10 "Paying Agent"............................................... 2.03 "Payment Default"............................................ 6.01 "Purchase Date".............................................. 3.10 "Registrar".................................................. 2.03 "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 Senior Subordinated Notes; "indenture security Holder" means a Holder of a Senior Subordinated Note; 20 Senior Subordinated Notes "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Senior Subordinated Notes and any Senior Subordinated Note Guarantees means the Authority and any successor obligor upon the Senior Subordinated Notes and any Senior Subordinated Note Guarantees, respectively. 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: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions; and (f) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2 THE SENIOR SUBORDINATED NOTES Section 2.01. Form and Dating. (a) General. The Senior Subordinated Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Senior Subordinated Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Senior Subordinated Note shall be dated the date of its authentication. The Senior Subordinated Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Senior Subordinated 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. However, to the extent any provision of any Senior Subordinated Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Senior Subordinated Notes. Senior Subordinated Notes issued in global form shall be substantially in the form of Exhibit A-1 or A-2 attached hereto (including the Global Senior Subordinated Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Senior Subordinated Note" attached thereto). Senior Subordinated Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the Global Senior Subordinated Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Senior Subordinated 21 Senior Subordinated Notes Note" attached thereto). Each Global Senior Subordinated Note shall represent such of the outstanding Senior Subordinated Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Senior Subordinated Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Senior Subordinated Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Senior Subordinated Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Senior Subordinated Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Temporary Global Senior Subordinated Notes. Senior Subordinated Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Senior Subordinated Note, which shall be deposited on behalf of the purchasers of the Senior Subordinated Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Authority and authenticated by the Trustee as hereinafter provided. The Distribution Compliance Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Senior Subordinated Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Distribution Compliance Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Senior Subordinated Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Authority. Following the termination of the Distribution Compliance Period, beneficial interests in the Regulation S Temporary Global Senior Subordinated Note shall be exchanged for beneficial interests in Regulation S Permanent Global Senior Subordinated Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Senior Subordinated Notes, the Trustee shall cancel the Regulation S Temporary Global Senior Subordinated Note. The aggregate principal amount of the Regulation S Temporary Global Senior Subordinated Note and the Regulation S Permanent Global Senior Subordinated Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Senior Subordinated Note and the Regulation S Permanent Global Senior Subordinated Notes that are held by Participants through Euroclear or Cedel Bank. Section 2.02. Execution and Authentication. Two Officers of the Authority shall sign the Senior Subordinated Notes for the Authority by manual or facsimile signature. If an Officer whose signature is on a Senior Subordinated Note no longer holds that office at the time a Senior Subordinated Note is authenticated, the Senior Subordinated Note shall nevertheless be valid. 22 Senior Subordinated Notes A Senior Subordinated Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Senior Subordinated Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Authority signed by two Officers of the Authority (an "Authentication Order"), authenticate Senior Subordinated Notes for original issue up to the aggregate principal amount not to exceed $300,000,000 (other than as provided in Section 2.07 hereof) in one or more series, which order shall specify whether such notes are Initial Senior Subordinated Notes or Senior Subordinated Exchange Notes. The Senior Subordinated Notes shall be issued only in fully registered form, without coupons and only in denominations of $1,000 and any integral multiple thereof. All Senior Subordinated Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Senior Subordinated Notes will have the right to vote or consent as a separate class on any matter. The Trustee may appoint an authenticating agent acceptable to the Authority to authenticate Senior Subordinated Notes. An authenticating agent may authenticate Senior Subordinated 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 Holders or an Affiliate of the Authority. Section 2.03. Registrar and Paying Agent. The Authority shall maintain an office or agency where Senior Subordinated Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Senior Subordinated Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Senior Subordinated 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 or any of its Restricted Subsidiaries may act as Paying Agent or Registrar. The Authority initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Senior Subordinated Notes. The Authority initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Senior Subordinated 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 Additional Interest, if any, or interest on the Senior Subordinated 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 a Restricted Subsidiary or an Affiliate) shall have no further liability for the money. If the Authority or a Restricted Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the 23 Senior Subordinated Notes benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Authority, the Trustee shall serve as Paying Agent for the Senior Subordinated 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 ss. 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 Senior Subordinated Notes and the Authority shall otherwise comply with TIA ss. 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Senior Subordinated Notes. A Global Senior Subordinated Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Senior Subordinated Notes will be exchanged by the Authority for Definitive Senior Subordinated Notes if (i) the Authority delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Authority within 120 days after the date of such notice from the Depositary or (ii) the Authority in its sole discretion determines that the Global Senior Subordinated Notes (in whole but not in part) should be exchanged for Definitive Senior Subordinated Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Senior Subordinated Note be exchanged by the Authority for Definitive Senior Subordinated Notes prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Senior Subordinated Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Senior Subordinated Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Senior Subordinated Note authenticated and delivered in exchange for, or in lieu of, a Global Senior Subordinated Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Senior Subordinated Note. A Global Senior Subordinated Note may not be exchanged for another Senior Subordinated Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Senior Subordinated Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Senior Subordinated Notes. The transfer and exchange of beneficial interests in the Global Senior Subordinated Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Senior Subordinated Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Senior Subordinated Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Senior Subordinated Note. Beneficial interests in any Restricted Global Senior Subordinated Note may be transferred to Persons who take 24 Senior Subordinated Notes delivery thereof in the form of a beneficial interest in the same Restricted Global Senior Subordinated Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Distribution Compliance Period, transfers of beneficial interests in the Temporary Regulation S Global Senior Subordinated Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Senior Subordinated Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Senior Subordinated Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Senior Subordinated Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Senior Subordinated Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Senior Subordinated Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Senior Subordinated Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Senior Subordinated Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Authority in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Senior Subordinated Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Senior Subordinated Notes contained in this Indenture and the Senior Subordinated Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Senior Subordinated Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Senior Subordinated Note. A beneficial interest in any Restricted Global Senior Subordinated Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Senior Subordinated Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Senior Subordinated Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Senior Subordinated Note or the Regulation S Global Senior Subordinated Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; 25 Senior Subordinated Notes (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Senior Subordinated Note for Beneficial Interests in the Unrestricted Global Senior Subordinated Note. A beneficial interest in any Restricted Global Senior Subordinated Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Senior Subordinated Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Subordinated Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Subordinated Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Senior Subordinated Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Senior Subordinated Note has not yet been issued, the Authority shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Senior Subordinated Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Senior Subordinated Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Senior Subordinated Note. 26 Senior Subordinated Notes (c) Transfer or Exchange of Beneficial Interests for Definitive Senior Subordinated Notes. (i) Beneficial Interests in Restricted Global Senior Subordinated Notes to Restricted Definitive Senior Subordinated Notes. If any holder of a beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Subordinated Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Senior Subordinated Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Restricted Definitive Senior Subordinated Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to the Authority or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Senior Subordinated Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Authority shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Subordinated Note in the appropriate principal amount. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest in a Restricted Global Senior Subordinated Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Senior Subordinated Notes to the Persons in whose names such Senior Subordinated Notes are so registered. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest in a Restricted Global Senior Subordinated Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Beneficial Interests in Regulation S Temporary Global Senior Subordinated Note to Definitive Senior Subordinated Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a 27 Senior Subordinated Notes beneficial interest in the Regulation S Temporary Global Senior Subordinated Note may not be exchanged for a Definitive Senior Subordinated Note or transferred to a Person who takes delivery thereof in the form of a Definitive Senior Subordinated Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) Beneficial Interests in Restricted Global Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. A holder of a beneficial interest in a Restricted Global Senior Subordinated Note may exchange such beneficial interest for an Unrestricted Definitive Senior Subordinated Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Subordinated Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Subordinated Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iv) Beneficial Interests in Unrestricted Global Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. If any holder of a beneficial interest in an Unrestricted Global Senior Subordinated Note proposes to exchange such beneficial interest for a Definitive Senior Subordinated Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Senior Subordinated Note, then, upon satisfaction of the conditions set forth in 28 Senior Subordinated Notes Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Senior Subordinated Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Authority shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Senior Subordinated Note in the appropriate principal amount. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Senior Subordinated Notes to the Persons in whose names such Senior Subordinated Notes are so registered. Any Definitive Senior Subordinated Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Senior Subordinated Notes for Beneficial Interests. (i) Restricted Definitive Senior Subordinated Notes to Beneficial Interests in Restricted Global Senior Subordinated Notes. If any Holder of a Restricted Definitive Senior Subordinated Note proposes to exchange such Senior Subordinated Note for a beneficial interest in a Restricted Global Senior Subordinated Note or to transfer such Restricted Definitive Senior Subordinated Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Senior Subordinated Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Senior Subordinated Note proposes to exchange such Senior Subordinated Note for a beneficial interest in a Restricted Global Senior Subordinated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Senior Subordinated Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Senior Subordinated Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Senior Subordinated Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Senior Subordinated Note is being transferred to the Authority or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (F) if such Restricted Definitive Senior Subordinated Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Restricted Definitive Senior Subordinated Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Senior Subordinated Note, in the case of clause (B) above, the 144A Global Senior 29 Senior Subordinated Notes Subordinated Note, in the case of clause (C) above, the Regulation S Global Senior Subordinated Note. (ii) Restricted Definitive Senior Subordinated Notes to Beneficial Interests in Unrestricted Global Senior Subordinated Notes. A Holder of a Restricted Definitive Senior Subordinated Note may exchange such Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note or transfer such Restricted Definitive Senior Subordinated Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Subordinated Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Senior Subordinated Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Senior Subordinated Notes proposes to exchange such Senior Subordinated Notes for a beneficial interest in the Unrestricted Global Senior Subordinated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Senior Subordinated Notes proposes to transfer such Senior Subordinated Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Senior Subordinated Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Senior Subordinated Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Senior Subordinated Note. (iii) Unrestricted Definitive Senior Subordinated Notes to Beneficial Interests in Unrestricted Global Senior Subordinated Notes. A Holder of an Unrestricted Definitive Senior Subordinated Note may exchange such Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note or transfer such Definitive Senior Subordinated Notes to a Person who 30 Senior Subordinated Notes takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Senior Subordinated Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Senior Subordinated Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Senior Subordinated Notes. If any such exchange or transfer from a Definitive Senior Subordinated Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Senior Subordinated Note has not yet been issued, the Authority shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Senior Subordinated Notes in an aggregate principal amount equal to the principal amount of Definitive Senior Subordinated Notes so transferred. (e) Transfer and Exchange of Definitive Senior Subordinated Notes for Definitive Senior Subordinated Notes. Upon request by a Holder of Definitive Senior Subordinated Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Senior Subordinated Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Senior Subordinated Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Senior Subordinated Notes to Restricted Definitive Senior Subordinated Notes. Any Restricted Definitive Senior Subordinated Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Senior Subordinated Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. Any Restricted Definitive Senior Subordinated Note may be exchanged by the Holder thereof for an Unrestricted Definitive Senior Subordinated Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Senior Subordinated Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the 31 Senior Subordinated Notes Senior Subordinated Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Authority; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Senior Subordinated Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Senior Subordinated Notes proposes to exchange such Senior Subordinated Notes for an Unrestricted Definitive Senior Subordinated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Senior Subordinated Notes proposes to transfer such Senior Subordinated Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Authority to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Unrestricted Definitive Senior Subordinated Notes to Unrestricted Definitive Senior Subordinated Notes. A Holder of Unrestricted Definitive Senior Subordinated Notes may transfer such Senior Subordinated Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Senior Subordinated Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Senior Subordinated Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of an Exchange Offer in accordance with the Senior Subordinated Registration Rights Agreement, the Authority shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Senior Subordinated Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Senior Subordinated Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Senior Subordinated Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Authority, and accepted for exchange in the Exchange Offer and (ii) Definitive Senior Subordinated Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Senior Subordinated Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Senior Subordinated Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Senior Subordinated Notes to be reduced accordingly, and the Authority shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Senior Subordinated Notes so accepted Definitive Senior Subordinated Notes in the appropriate principal amount. 32 Senior Subordinated Notes (g) Legends. The following legends shall appear on the face of all Global Senior Subordinated Notes and Definitive Senior Subordinated Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Senior Subordinated Note and each Definitive Senior Subordinated Note (and all Senior Subordinated Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form. "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Senior Subordinated Note or Definitive Senior Subordinated Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Senior Subordinated Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Senior Subordinated Note Legend. Each Global Senior Subordinated Note shall bear a legend in substantially the following form: 33 Senior Subordinated Notes "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE AUTHORITY." (iii) Regulation S Temporary Global Senior Subordinated Note Legend. The Regulation S Temporary Global Senior Subordinated Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Senior Subordinated Notes. At such time as all beneficial interests in a particular Global Senior Subordinated Note have been exchanged for Definitive Senior Subordinated Notes or a particular Global Senior Subordinated Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Senior Subordinated Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Senior Subordinated Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Subordinated Note or for Definitive Senior Subordinated Notes, the principal amount of Senior Subordinated Notes represented by such Global Senior Subordinated Note shall be reduced accordingly and an endorsement shall be made on such Global Senior Subordinated Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Senior Subordinated Note, such other Global Senior Subordinated Note shall be increased accordingly and an endorsement shall be made on such Global Senior Subordinated Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (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 Global Senior Subordinated Notes and Definitive Senior Subordinated Notes upon the Authority's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Senior Subordinated Note or to a Holder of a Definitive Senior Subordinated Note for any registration of transfer or exchange, but the Authority may require payment 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 2.10, 3.06, 3.10, 4.10, 4.15 and 9.05 hereof). 34 Senior Subordinated Notes (iii) The Registrar shall not be required to register the transfer of or exchange any Senior Subordinated Note selected for redemption in whole or in part, except the unredeemed portion of any Senior Subordinated Note being redeemed in part. (iv) All Global Senior Subordinated Notes and Definitive Senior Subordinated Notes issued upon any registration of transfer or exchange of Global Senior Subordinated Notes or Definitive Senior Subordinated Notes shall be the valid obligations of the Authority, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Senior Subordinated Notes or Definitive Senior Subordinated 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 any Senior Subordinated Notes during a period beginning at the opening of business 15 days before the day of any selection of Senior Subordinated Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Senior Subordinated Note so selected for redemption in whole or in part, except the unredeemed portion of any Senior Subordinated Note being redeemed in part or (C) to register the transfer of or to exchange a Senior Subordinated 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 Senior Subordinated Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name any Senior Subordinated Note is registered as the absolute owner of such Senior Subordinated Note for the purpose of receiving payment of principal of and interest on such Senior Subordinated Notes and for all other purposes, and none of the Trustee, any Agent or the Authority shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Senior Subordinated Notes and Definitive Senior Subordinated Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Senior Subordinated Notes. If any mutilated Senior Subordinated Note is surrendered to the Trustee or the Authority and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Senior Subordinated Note, the Authority shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Senior Subordinated Note in accordance with this Indenture. 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 Senior Subordinated Note is replaced. The Authority may charge for its expenses in replacing a Senior Subordinated Note. Every replacement Senior Subordinated 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 Senior Subordinated Notes duly issued hereunder. 35 Senior Subordinated Notes Section 2.08. Outstanding Senior Subordinated Notes. The Senior Subordinated Notes outstanding at any time are all the Senior Subordinated Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Senior Subordinated Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Senior Subordinated Note does not cease to be outstanding because the Authority or an Affiliate of the Authority holds the Senior Subordinated Note. If a Senior Subordinated 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 Senior Subordinated Note is held by a bona fide purchaser. If the principal amount of any Senior Subordinated Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Authority, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Senior Subordinated Notes payable on that date, then on and after that date such Senior Subordinated Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Senior Subordinated Notes. In determining whether the Holders of the required principal amount of Senior Subordinated Notes have concurred in any direction, waiver or consent, Senior Subordinated Notes owned by the Authority, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Authority, 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 Senior Subordinated Notes that the Trustee actually knows are so owned shall be so disregarded. Section 2.10. Temporary Senior Subordinated Notes. Until certificates representing Senior Subordinated Notes are ready for delivery, the Authority may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Senior Subordinated Notes. Temporary Senior Subordinated Notes shall be substantially in the form of certificated Senior Subordinated Notes but may have variations that the Authority considers appropriate for temporary Senior Subordinated Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Authority shall prepare and the Trustee shall authenticate definitive Senior Subordinated Notes in exchange for temporary Senior Subordinated Notes. Holders of temporary Senior Subordinated Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Authority at any time may deliver Senior Subordinated Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Senior Subordinated Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Senior Subordinated Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Senior Subordinated Notes (subject to the record 36 Senior Subordinated Notes retention requirement of the Exchange Act). Certification of the destruction of all canceled Senior Subordinated Notes shall be delivered to the Authority. The Authority may not issue new Senior Subordinated Notes to replace Senior Subordinated Notes that it has paid or that have been delivered to the Trustee for cancellation. Section 2.12. Defaulted Interest. If the Authority defaults in a payment of interest on the Senior Subordinated Notes, it shall pay the defaulted interest 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 Senior Subordinated Notes and in Section 4.01 hereof. The Authority shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Senior Subordinated 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 to be paid. Section 2.13. CUSIP Numbers. The Authority in issuing the Senior Subordinated Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Senior Subordinated Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Senior Subordinated Notes, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Authority will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Authority elects to redeem Senior Subordinated Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Senior Subordinated Notes to be redeemed, (iv) the redemption price and (v) if applicable, any redemption requirements of the principal national securities exchange on which the Senior Subordinated Notes are listed. Section 3.02. Selection of Senior Subordinated Notes to Be Redeemed. If less than all of the Senior Subordinated Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Senior Subordinated Notes to be redeemed or purchased among the Holders of the Senior Subordinated Notes in compliance with any requirements of the principal national securities exchange, if any, on which the Senior Subordinated Notes are listed as set forth in the Officers' Certificate delivered pursuant to Section 3.01 or, if the Senior Subordinated Notes are not so listed or if the requirements are not set forth in such Officers' Certificate, on a pro rata basis, 37 Senior Subordinated Notes by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Senior Subordinated Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Senior Subordinated Notes not previously called for redemption. The Trustee shall promptly notify the Authority in writing of the Senior Subordinated Notes selected for redemption and, in the case of any Senior Subordinated Note selected for partial redemption, the principal amount thereof to be redeemed. Senior Subordinated Notes and portions of Senior Subordinated Notes selected shall be in amounts of $1,000 or whole multiples of $1,000, except that if all of the Senior Subordinated Notes of a Holder are to be redeemed, the entire outstanding amount of Senior Subordinated Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Senior Subordinated Notes called for redemption also apply to portions of Senior Subordinated Notes called for redemption. Section 3.03. Notice of Redemption. Subject to the provisions of Section 3.10 hereof, 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 Senior Subordinated Notes are to be redeemed at its registered address. The notice shall identify the Senior Subordinated Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Senior Subordinated Note is being redeemed in part, the portion of the principal amount of such Senior Subordinated Note to be redeemed and that, after the redemption date upon surrender of such Senior Subordinated Note, a new Senior Subordinated Note or Senior Subordinated Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Senior Subordinated Note; (d) the name and address of the Paying Agent; (e) that Senior Subordinated 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 Senior Subordinated Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Senior Subordinated Notes and/or Section of this Indenture pursuant to which the Senior Subordinated 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 Senior Subordinated 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 (unless a shorter period shall be satisfactory to the Trustee), 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. 38 Senior Subordinated Notes Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Senior Subordinated 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 Redemption Price. One Business Day prior to the redemption date, the Authority shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Senior Subordinated Notes to be redeemed on that 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 redemption price of, and accrued interest on, all Senior Subordinated Notes to be redeemed. If the Authority complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Senior Subordinated Notes or the portions of Senior Subordinated Notes called for redemption. If a Senior Subordinated Note is 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 Senior Subordinated Note was registered at the close of business on such record date. If any Senior Subordinated Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Authority to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the 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 Senior Subordinated Notes and in Section 4.01 hereof. Section 3.06. Senior Subordinated Notes Redeemed in Part. Upon surrender of a Senior Subordinated Note that is 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 Senior Subordinated Note equal in principal amount to the unredeemed portion of the Senior Subordinated Note surrendered. Section 3.07. Optional Redemption. (a) Except as set forth in Section 3.08, the Authority shall not have the option to redeem the Senior Subordinated Notes pursuant to this Section 3.07 prior to January 1, 2004. On or after such date, the Authority shall have the option to redeem the Senior Subordinated Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on January 1 of the years indicated below:
Year Percentage ---- ---------- 2004....................................................... 104.375% 2005....................................................... 102.917% 2006....................................................... 101.458% 2007 and thereafter........................................ 100.000%
Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. 39 Senior Subordinated Notes 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 Senior Subordinated 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) 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 Senior Subordinated 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 Senior Subordinated Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Subordinated Notes or (3) the current market price of the Senior Subordinated Notes, together with, in each case, accrued and unpaid interest and Additional 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 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 Senior Subordinated Notes who is required to apply for 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 payments with respect to the Senior Subordinated Notes. Section 3.10. Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Authority shall be required to commence an offer to all Holders to purchase Senior Subordinated Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale 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 the principal amount of Senior Subordinated Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Senior Subordinated Notes tendered in response to the Asset Sale Offer. Payment for any Senior Subordinated 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 shall be paid to the Person in whose name a Senior 40 Senior Subordinated Notes Subordinated Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Senior Subordinated Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale 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 Senior Subordinated Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.10 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Senior Subordinated Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Authority defaults in making such payment, any Senior Subordinated Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date; (e) that Holders electing to have a Senior Subordinated Note purchased pursuant to an Asset Sale Offer may elect to have Senior Subordinated Notes purchased in integral multiples of $1,000 only; (f) that Holders electing to have a Senior Subordinated Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Senior Subordinated Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Subordinated Note completed, or transfer by book-entry transfer, 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; (g) that Holders shall be entitled to withdraw 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 Senior Subordinated Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Senior Subordinated Note purchased; (h) that, if the aggregate principal amount of Senior Subordinated Notes surrendered by Holders exceeds the Offer Amount, the Authority shall select the Senior Subordinated Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Authority so that only Senior Subordinated Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Senior Subordinated Notes were purchased only in part shall be issued new Senior Subordinated Notes equal in principal amount to the unpurchased portion of the Senior Subordinated Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Authority shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Senior Subordinated Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Senior Subordinated Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Senior Subordinated Notes or portions thereof were accepted for payment by the Authority in 41 Senior Subordinated Notes accordance with the terms of this Section 3.10. The Authority, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five Business Days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Senior Subordinated Notes tendered by such Holder and accepted by the Authority for purchase, and the Authority shall promptly issue a new Senior Subordinated Note, and the Trustee, upon written request from the Authority shall authenticate and mail or deliver such new Senior Subordinated Note to such Holder, in a principal amount equal to any unpurchased portion of the Senior Subordinated Note surrendered. Any Senior Subordinated 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 Asset Sale 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. ARTICLE 4 COVENANTS Section 4.01. Payment of Senior Subordinated Notes. (a) The Authority shall pay or cause to be paid the principal of, premium, if any, and interest on the Senior Subordinated Notes on the dates and in the manner provided in the Senior Subordinated Notes. Principal, premium, if any, and interest and Additional Interest, if any, shall be considered paid on the date due if the Paying Agent, if other than the Authority or a Subsidiary thereof, 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 and Additional Interest, if any, then due. The Authority shall pay all Additional Interest, if any, in the same manner, on the same dates and in the amounts set forth in the first paragraph of the Senior Subordinated Notes. (b) 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 Senior Subordinated 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. (a) 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 Senior Subordinated 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 Senior Subordinated 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. (b) The Authority may also from time to time designate one or more other offices or agencies where the Senior Subordinated 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 42 Senior Subordinated Notes give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. (c) 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. (a) Whether or not required by the SEC, so long as any Senior Subordinated Notes are outstanding, the Authority will furnish to the Holders of Senior Subordinated Notes and the Trustee within 15 days after the end of the time periods specified in the SEC's rules and regulations for filings of current, quarterly and annual reports: (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Authority were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Authority and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Authority and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Authority, to the extent that would be required by the rules, regulations or interpretive positions of the SEC) and, with respect to the annual information only, a report thereon by the Authority's independent public accountants; and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Authority were required to file such reports. (b) In the event that the Authority consummates an Exchange Offer, whether or not required by the rules and regulations of the SEC, the Authority will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. (c) The Authority has agreed that, for so long as any Senior Subordinated Notes remain outstanding, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (d) The Authority shall file with the Trustee and provide to Holders of Senior Subordinated 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. (e) The Authority shall at all times comply with TIA ss. 314(a). 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 and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view 43 Senior Subordinated Notes to determining whether the Authority has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Authority has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Authority is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Senior Subordinated Notes is prohibited or if such event has occurred, a description of the event and what action the Authority is taking or proposes to take with respect thereto. (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 has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, 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 Senior Subordinated Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Authority is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Authority shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Senior Subordinated 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. (a) The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries, directly or indirectly, to: (i) make any payment on or with respect to any of the Authority's or any of its Restricted Subsidiaries' Equity Interests; (ii) purchase, redeem, defease or otherwise acquire or retire for 44 Senior Subordinated Notes value any Equity Interest in the Authority held by the Tribe or any Affiliate of the Tribe; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness (other than the defeasance and the ultimate redemption of the Junior Subordinated Notes in accordance with their terms and the terms of the Defeasance Trust), except a payment of interest or principal at Stated Maturity thereof; (iv) 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 (other than Government Service Payments); or (v) make any Restricted Investment; (all such payments and other actions set forth in clauses (i) through (v) are collectively referred to as "Restricted Payments") unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) the Authority would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a); and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Authority and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii), (iv) and (v) of Section 4.07(b)), is less than the sum, without duplication, of (1) 50% of the Consolidated Net Income of the Authority for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Authority's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net cash proceeds or fair market value (as determined in good faith by the Management Board and evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee) of assets or property (other than cash) received by the Authority from capital contributions from the Tribe that bear no mandatory obligation to repay the Tribe and other than from a Restricted Subsidiary of the Authority, plus (3) to the extent that any Restricted Investment that was made after the date of this Indenture is sold, liquidated or otherwise disposed of for cash or an amount equal to the fair market value thereof (as determined in good faith by the Management Board and evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee), the lesser of (I) the cash return of capital or fair market value amount, as the case may be, with respect to such Restricted Investment (less the cost of disposition, if any) and (II) the initial amount of such Restricted Investment, plus (4) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the lesser of (I) the fair market value of the Authority's Investment in such Subsidiary as of the date of such redesignation or (II) such fair market value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. (b) So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit: (i) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (ii) the payment of any dividend by a Restricted Subsidiary of the Authority to the holders of its common Equity Interests on a pro rata basis; (iii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Authority held by any 45 Senior Subordinated Notes member of the Authority's (or any of its Restricted Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of this Indenture; provided that (a) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any 12-month period and (b) the aggregate amount of all such repurchased, redeemed, acquired or retired Equity Interests shall not in the aggregate exceed $3.0 million; (iv) the redemption or purchase of Subordinated Indebtedness of the Authority in the event that the holder of such Subordinated Indebtedness has failed to qualify or be found suitable or otherwise be eligible by any Gaming Regulatory Authority to remain a holder of such Subordinated Indebtedness; (v) the redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness with the net cash proceeds from a substantially concurrent capital contribution from the Tribe (provided that such capital contribution is not counted for purposes of Section 4.07(a)(C)(2)); and (vi) any other Restricted Payments in an amount not to exceed $20.0 million at any one time outstanding. (c) The Authority may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default; provided that in no event shall (i) any entity (including any Subsidiary of the Authority or the Authority or any operating division thereof) engaged in a Principal Business be transferred to or held by an Unrestricted Subsidiary or (ii) any Key Project Assets or Gaming Licenses be transferred to an Unrestricted Subsidiary. In the event of such designation, all outstanding Investments owned by the Authority and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under Section 4.07(a) unless the Investment constitutes a Permitted Investment. All such outstanding Investments will be deemed to constitute Restricted Payments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Authority may redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary if such redesignation would not otherwise cause a Default. (d) The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Authority or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this Section 4.07 shall be determined by the Management Board whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Authority shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed. Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. (a) Except as set forth in Section 4.08(b), the Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Capital Stock to the Authority or any of the Authority's Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Authority or any of the Authority's Restricted Subsidiaries; (ii) make loans or advances to the Authority or any of the Authority's Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Authority or any of the Authority's Restricted Subsidiaries. (b) The provisions of Section 4.08(a) will not apply to encumbrances or restrictions existing under or by reason of: 46 Senior Subordinated Notes (i) Existing Indebtedness as in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, extensions, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness, as in effect on the date of this Indenture; (ii) this Indenture and the Senior Subordinated Notes; (iii) the Senior Notes Indenture and the Senior Notes; (iv) the Credit Facilities; (v) applicable law; (vi) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Authority or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred; (vii) customary non-assignment provisions in leases or other contracts entered into in the ordinary course of business and consistent with past practices; (viii) purchase money obligations (including, without limitation, Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in Section 4.08(a)(iii); (ix) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending its sale or other disposition; (x) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (xi) Liens securing Indebtedness otherwise permitted to be incurred pursuant to Section 4.12 that limit the right of the Authority or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien; (xii) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; and (xiii) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. 47 Senior Subordinated Notes Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Authority will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Indebtedness) and the Authority will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Authority may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and the Authority's Subsidiaries may incur Indebtedness or issue preferred stock if 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 on which such additional Indebtedness is incurred would have been at least 2.0 to 1 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. Notwithstanding the foregoing, the Authority will not issue any Disqualified Stock or any type of Capital Stock that would violate IGRA. (b) So long as no Default or Event of Default shall have occurred and be continuing, or would be caused thereby, Section 4.09(a) will not prohibit the incurrence of any of the following items of Indebtedness: (i) the incurrence by the Authority or its Restricted Subsidiaries of Indebtedness and letters of credit pursuant to Credit Facilities; provided that the aggregate principal amount of all such Indebtedness and letters of credit outstanding under all Credit Facilities, after giving effect to such incurrence (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Authority thereunder), does not exceed $500.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Authority or any of its Restricted Subsidiaries since the date of this Indenture to repay Indebtedness under Credit Facilities permitted under Section 4.10; (ii) the incurrence by the Authority and its Restricted Subsidiaries of the Existing Indebtedness; (iii) the incurrence by the Authority of Indebtedness represented by the Senior Subordinated Notes and the Senior Subordinated Exchange Notes; (iv) the incurrence by the Authority of Indebtedness represented by the Senior Notes and the Senior Exchange Notes; (v) the incurrence by the Authority or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price of furniture, fixtures, equipment or similar assets used or useful in the business of the Authority or such Restricted Subsidiary not to exceed 100% of the lesser of cost or fair market value of the assets financed and, in an aggregate principal amount under this clause (v) not to exceed $25.0 million at any time outstanding; (vi) the incurrence by the Authority or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, renew, extend, defease or replace Indebtedness that was permitted by 48 Senior Subordinated Notes this Indenture to be incurred under Section 4.09(a) or clauses (i), (ii) (other than the Junior Subordinated Notes), (iii), (iv) or (v) of Section 4.09(b); (vii) the incurrence by the Authority or any of its Restricted Subsidiaries of 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; (viii) the guarantee by the Authority or any of its Restricted Subsidiaries of any Indebtedness of the Authority or any of its Restricted Subsidiaries that was permitted to be incurred by another provision of this Section 4.09; (ix) the incurrence by a Wholly Owned Restricted Subsidiary of Indebtedness owed to another Wholly Owned Restricted Subsidiary or to the Authority; provided that if at any time any such Wholly Owned Restricted Subsidiary ceases to be a Wholly Owned Restricted Subsidiary, any such Indebtedness shall be deemed to be an incurrence of Indebtedness for the purposes of this Section 4.09; (x) the incurrence by the Authority or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (x), not to exceed $25.0 million; or (xi) the incurrence by the Authority's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Authority that was not permitted by this clause (xi). For purposes of determining compliance with this Section 4.09 in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (i) through (xi) above or is entitled to be incurred pursuant to Section 4.09(a), the Authority shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence in any manner that complies with this Section 4.09. Section 4.10. Asset Sales. (a) The Authority will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Authority (or its Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Management Board and evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of; and (ii) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Authority or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following shall be deemed to be cash: (A) any liabilities that would appear on the Authority's or such Restricted Subsidiary's balance sheet prepared in accordance with GAAP (other than contingent liabilities and liabilities that are by their terms subordinated to the Senior Subordinated Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Authority or such Restricted Subsidiary from further liability; and (B) any securities, notes or other obligations received by the Authority or any such Restricted Subsidiary from such transferee that 49 Senior Subordinated Notes are converted by the Authority or such Restricted Subsidiary into cash (to the extent of the cash received) within 30 days of the receipt thereof, provided, however, that the Authority will not be permitted to make any Asset Sale of Key Project Assets. (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Authority may apply such Net Proceeds, at its option, to: (i) repay permanently term Indebtedness under Credit Facilities of the Authority or any Restricted Subsidiary; (ii) repay revolving credit Indebtedness under Credit Facilities and correspondingly permanently reduce commitments with respect thereto; (iii) acquire a majority of the assets of, or a majority of the Voting Stock of, an entity engaged in the Principal Business or a Related Business; (iv) make capital expenditures or acquire other long-term assets that are used or useful in the Principal Business or a Related Business; (v) make an investment in the Principal Business or a Related Business or in tangible long-term assets used or useful in the Principal Business or a Related Business; or (vi) reduce permanently Indebtedness (including the Senior Notes) that is not Subordinated Indebtedness. Pending the final application of any such Net Proceeds, the Authority may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. (c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b) will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority will make an Asset Sale Offer to all Holders of Senior Subordinated Notes and all holders of other Indebtedness containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Senior Subordinated Notes and such other Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase and will be payable in cash, in accordance with the procedures set forth in this Indenture and such other Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Authority may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Senior Subordinated Notes and such other Indebtedness tendered into such Asset Sale Offer surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Subordinated Notes and such other Indebtedness (to the extent that such other Indebtedness permits such selection) to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Section 4.11. Transactions with Affiliates. (a) The Authority will not, and the Authority will not permit any of its Restricted Subsidiaries to, make any payment to, or 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 or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless: (i) such Affiliate Transaction is on terms that are no less favorable to the Authority or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Authority or such Restricted Subsidiary with an unrelated Person; and (ii) the Authority delivers to the Trustee: (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Management Board set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Management Board; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in 50 Senior Subordinated Notes excess of $10.0 million, an opinion as to the fairness to the Authority or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a): (i) any employment agreement or arrangement entered into by the Authority or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Authority or such Restricted Subsidiary; (ii) transactions between or among the Authority and/or its Restricted Subsidiaries; (iii) payment of reasonable Management Board fees to members of the Management Board; (iv) transactions with Persons in whom the Authority owns any Equity Interests, so long as the remaining equity holders of such Person are not Affiliates of the Authority or any of its Subsidiaries; (v) Government Service Payments; (vi) transactions pursuant to the Development Services Agreement, the Relinquishment Agreement and the Side Letters; (vii) Restricted Payments or Permitted Investments that are made in compliance with the provisions of Section 4.07; and (viii) contractual arrangements existing on the date of this Indenture and renewals, extensions and any modifications thereof that are not materially adverse to Holders. Section 4.12. Liens. The Authority will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of its property or assets or any proceeds therefrom, which secure either (i) Subordinated Indebtedness, unless the Senior Subordinated Notes are secured by a Lien on such property assets or proceeds, which Lien is senior in priority to the Liens securing such Subordinated Indebtedness or (ii) pari passu Indebtedness, unless the Senior Subordinated Notes are equally and ratably secured with the Liens securing such pari passu Indebtedness. Section 4.13. Line of Business. The Authority shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than the Principal Business or a Related Business. Section 4.14. Existence of the Authority and Maintenance of the Lease. (a) The Authority shall, and shall cause each of its Restricted Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect their respective existence, in accordance with their respective organizational documents and their respective rights (contractual, charter and statutory), licenses and franchises; provided, however, that neither the Authority nor any Restricted Subsidiary shall be required to preserve, with respect to itself, any license, right or franchise and, with respect to its Restricted Subsidiaries, any such existence, license, right or franchise, if its Management Board or Board of Directors, or other governing body or officers authorized to make such determination, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Authority or any Restricted Subsidiary, and that the loss thereof is not adverse in any material respect to the Holders. (b) The Authority shall do, or cause to be done, all things necessary to perform any material covenants set forth in the Lease in order to keep the Lease in full force and effect. 51 Senior Subordinated Notes Section 4.15. Offer to Repurchase Upon Change of Control. (a) If a Change of Control occurs, each Holder of the Senior Subordinated Notes will have the right to require the Authority to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder's Senior Subordinated Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Authority will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Senior Subordinated Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, thereon, to the date of purchase. (b) Within 20 Business Days following any Change of Control, the Authority will mail a notice to each Holder (and, unless the Trustee makes the mailing on behalf of the Authority, to the Trustee) describing the transaction or transactions that constitute the Change of Control and offering to repurchase Senior Subordinated Notes on the Change of Control Payment Date specified in such notice, pursuant to the procedures required by this Indenture and described in such notice. If the Authority wishes the Trustee to do the mailing, it will give the Trustee adequate prior notice so that the Trustee may do so. 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 and regulations are applicable in connection with the repurchase of the Senior Subordinated Notes as a result of a Change of Control. (c) On the Change of Control Payment Date, the Authority will, to the extent lawful: (i) accept for payment all Senior Subordinated Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Senior Subordinated Notes or portions thereof so tendered; and (iii) deliver or cause to be delivered to the Trustee the Senior Subordinated Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Senior Subordinated Notes or portions thereof being purchased by the Authority. (d) The Paying Agent will promptly mail to each Holder of Senior Subordinated Notes so tendered the Change of Control Payment for such Senior Subordinated Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Senior Subordinated Note equal in principal amount to any unpurchased portion of the Senior Subordinated Notes surrendered, if any; provided that each such new Senior Subordinated Note will be in a principal amount of $1,000 or an integral multiple thereof. The Authority will notify the Trustee and will instruct the Trustee to notify the Holders of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (e) Notwithstanding anything to the contrary in this Section 4.15, the Authority shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and Section 3.10 hereof and all other provisions of this Indenture applicable to a Change of Control Offer made by the Authority and purchases all Senior Subordinated Notes validly tendered and not withdrawn under such Change of Control Offer. Section 4.16. No Senior Subordinated Debt. Notwithstanding the provisions of Section 4.09 hereof, (i) the Authority shall not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness and senior in any respect in right of payment to the Senior Subordinated Notes, and (ii) no Subsidiary Guarantor shall incur any Indebtedness that is subordinated or junior in right of payment to any Senior Subsidiary Guarantees of Senior Indebtedness and senior in any respect in right of payment to the Senior Subordinated Subsidiary Guarantees. 52 Senior Subordinated Notes Section 4.17. Limitation on Sale and Leaseback Transactions. The Authority will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction involving the Resort; provided that the Authority or any of its Restricted Subsidiaries may enter into a sale and leaseback transaction if: (i) the Authority or such Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12; (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Management Board and set forth in an Officers' Certificate delivered to the Trustee, of the property that is subject of such sale and leaseback transaction; and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and the Authority applies the proceeds of such transaction in compliance with Section 4.10. Section 4.18. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted Subsidiaries. The Authority (i) will not, and will not permit any Wholly Owned Restricted Subsidiary of the Authority to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Wholly Owned Restricted Subsidiary of the Authority to any Person (other than the Authority or another Wholly Owned Restricted Subsidiary of the Authority), unless (a) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with Section 4.10, and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Authority to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Authority or a Wholly Owned Restricted Subsidiary of the Authority. Section 4.19. Payments for Consent. Neither the Authority nor any of its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Senior Subordinated Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Senior Subordinated Notes unless such consideration is offered to be paid or is paid to all Holders of the Senior Subordinated Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.20. Senior Subordinated Subsidiary Guarantees. If the Authority shall acquire or create a Restricted Subsidiary after the date of this Indenture, then such newly acquired or created Restricted Subsidiary shall execute a Senior Subordinated Subsidiary Guarantee in the form of a Supplemental Indenture and deliver an Opinion of Counsel, in accordance with the terms of this Indenture, except for (i) all Subsidiaries organized outside of the United States and its territories and (ii) all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with this Indenture for so long as they continue to constitute Unrestricted Subsidiaries. Any Senior Subordinated Guarantees will be subordinated to Senior Indebtedness in the same manner and to the same extent as the Senior Subordinated Notes. The form of such Senior Subordinated Subsidiary Guarantee is attached as Exhibit D hereto. 53 Senior Subordinated Notes Section 4.21. Ownership Interests in the Authority. Neither the Tribe nor the Authority shall permit any Person other than the Tribe to acquire any Ownership Interest whatsoever in the Authority. Section 4.22. Subordination of Junior Payments Under the Relinquishment Agreement. The Authority will not designate the Senior Relinquishment Payments (as defined in the Relinquishment Agreement) as Designated Senior Indebtedness and the Authority will not amend Section 6.2 of the Relinquishment Agreement in a manner adverse to the Holders of the Senior Subordinated Notes. Section 4.23. Construction. The Authority will use its commercially reasonable best efforts to cause construction of the Expansion Project to be prosecuted with diligence and continuity in good and workmanlike manner materially in accordance with the plans relating to the Expansion Project as more fully described in the Offering Memorandum of the Authority dated February 24, 1999. Section 4.24. Restrictions on Leasing and Dedication of Property. (a) Except as provided in Section 4.24(b), the Authority will not lease, sublease, or grant a license, concession or other agreement to occupy, manage or use any material portion of the Authority's property and assets owned or leased by the Authority (each, a "Lease Transaction"). (b) Section 4.24(a) will not prohibit any of the following Lease Transactions: (i) The Authority may enter into a Lease Transaction with respect to any space with any Person (including, without limitation, a lease in connection with the Expansion Project for the purpose of developing, constructing, operating and managing retail establishments within the Resort), provided that: (A) such Lease Transaction will not materially interfere with, impair or detract from the operations of the Resort; (B) such Lease Transaction contains rent and such other terms such that the Lease Transaction, taken as a whole is commercially reasonable in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues; and (C) such Lease Transaction complies with all applicable law, including obtaining any consent of the BIA, if required; (ii) the Lease and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the Holders; (iii) the Authority may enter into a management or operating agreement with respect to any of the Authority's property and assets with any Person; provided that (A) the manager or operator has experience in managing or operating similar operations; and (B) such management or operating agreement is on commercially reasonable and fair terms to the Authority; and (iv) the Relinquishment Agreement, the Development Services Agreement and the Side Letters with the Manager and any amendments, extensions, modifications or renewals thereof which are not materially adverse to the Holders. 54 Senior Subordinated Notes (c) 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, and no person other than the Authority may conduct gaming or casino operations on any property which is the subject of a Lease Transaction. Section 4.25. 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, set insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, including, without limitation, property and casualty. Customary insurance coverage shall be deemed to include the following: (a) 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; (b) comprehensive general liability insurance with minimum limits of $2.0 million; (c) umbrella or bumbershoot liability insurance providing excess liability coverages over and above the foregoing underlying insurance policies up to a minimum limit of $100.0 million; and (d) property insurance protecting the property against loss or damage by fire, lightning, wind-storm, 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)). Section 4.26. Gaming Licenses. The Authority will 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 or any part of the Resort as a result of any noncompliance with the 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 Senior Subordinated Notes 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. 55 Senior Subordinated Notes Section 4.27. Required Defeasance and Redemption of the Junior Subordinated Notes. The Authority will establish, as of the date of the Indentures, the Defeasance Trust and deposit into the Defeasance Trust, cash or government securities estimated to be sufficient to pay all principal, premium and interest on the Junior Subordinated Notes less $500,000 on January 1, 2000, the first redemption date. The Authority will redeem the Junior Subordinated Notes from the proceeds of the Defeasance Trust as of January 1, 2000 at a price of 100% of the principal amount, plus accrued and unpaid interest thereon, less $500,000. Section 4.28. Designation of Designated Senior Indebtedness Under the Relinquished Agreement. The Authority will not designate any indebtedness as "Designated Senior Indebtedness" under the Relinquishment Agreement that is not also designated as Designated Senior Indebtedness under this Indenture. ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. The Authority shall not, directly or indirectly, consolidate or merge with or into (whether or not the Authority is the surviving entity), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, another Person. ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default. An Event of Default occurs if: (a) the Authority defaults for 30 days in the payment when due of interest on, or Additional Interest with respect to, the Senior Subordinated Notes; (b) the Authority defaults in payment when due of the principal of or premium, if any, on the Senior Subordinated Notes; (c) the Authority or any of its Restricted Subsidiaries fails to comply with any of the provisions of Section 4.10 or 5.01 hereof; (d) the Authority or any of its Restricted Subsidiaries fails to observe or perform (i) any covenant described in Section 4.07 or 4.09 for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class or (ii) any other covenant, representation, warranty or other agreement in this Indenture or the Senior Subordinated Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Authority or any of its Restricted Subsidiaries (or the payment of which is 56 Senior Subordinated Notes guaranteed by the Authority or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, if that default (i) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (ii) results in the acceleration of such Indebtedness prior to its express maturity; and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (f) failure by the Authority or any of its Restricted Subsidiaries to pay final judgments in amounts not covered by insurance or not adequately reserved for in accordance with GAAP aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed (by reason of pending appeal or otherwise) for a period of 60 days; (g) the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of the Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a custodian of the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Authority or any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; 57 Senior Subordinated Notes (i) 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; (j) 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); (k) the Lease ceases to be in full force and effect; (l) except as permitted by this Indenture, any Senior Subordinated Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subordinated Subsidiary Guarantee; or (m) failure by the Tribe to comply with the provisions of Article 11 for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Authority, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Notes may declare all the Senior Subordinated Notes to be due and payable immediately. Upon any such declaration, the Senior Subordinated Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Authority, any of its Restricted Subsidiaries that are Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Senior Subordinated 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 Senior Subordinated 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. If an Event of Default occurs on or after January 1, 2004 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 Subordinated Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Senior Subordinated 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 Senior Subordinated Notes to the contrary notwithstanding. If an Event of Default occurs prior to January 1, 2004 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 Subordinated Notes prior to such date, then, upon acceleration of the Senior Subordinated Notes, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on January 1 of the years set forth below, as set forth below (expressed as a percentage of the principal amount of the Senior Subordinated Notes on the date of payment that would otherwise be due but for the provisions of this sentence): 58 Senior Subordinated Notes
Year Percentage ---- ---------- 1999....................................................... 8.75% 2000....................................................... 7.875% 2001....................................................... 7.0% 2002....................................................... 6.15% 2003....................................................... 5.275%
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 Senior Subordinated Notes or to enforce the performance of any provision of the Senior Subordinated Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Senior Subordinated Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Senior Subordinated 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 Senior Subordinated Notes by notice to the Trustee may on behalf of the Holders of all of the Senior Subordinated 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 and Additional Interest , if any, or interest on, the Senior Subordinated 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 Senior Subordinated 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 Senior Subordinated 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. 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 Senior Subordinated Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Senior Subordinated Note may pursue a remedy with respect to this Indenture or the Senior Subordinated Notes only if: (a) the Holder of a Senior Subordinated Note gives to the Trustee written notice of a continuing Event of Default; 59 Senior Subordinated Notes (b) the Holders of at least 25% in principal amount of the then outstanding Senior Subordinated Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Senior Subordinated Note or Holders of Senior Subordinated 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 Senior Subordinated Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Senior Subordinated Note may not use this Indenture to prejudice the rights of another Holder of a Senior Subordinated Note or to obtain a preference or priority over another Holder of a Senior Subordinated Note. Section 6.07. Rights of Holders of Senior Subordinated Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Senior Subordinated Note to receive payment of principal, premium and Additional Interest, if any, and interest on the Senior Subordinated Note, on or after the respective due dates expressed in the Senior Subordinated Note (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 and Additional Interest, if any, and interest remaining unpaid on the Senior Subordinated 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 advances of the Trustee, its agents and counsel) and the Holders of the Senior Subordinated Notes allowed in any judicial proceedings relative to the Authority (or any other obligor upon the Senior Subordinated 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 60 Senior Subordinated Notes 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 Senior Subordinated 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 Senior Subordinated Notes for amounts due and unpaid on the Senior Subordinated Notes for principal, premium and Additional Interest, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Senior Subordinated Notes for principal, premium and Additional Interest, if any and interest, respectively; and Third: 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 Senior Subordinated 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 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 Senior Subordinated Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Senior Subordinated Notes. 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 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 such person's own affairs. (b) Except during the continuance of an Event of Default: 61 Senior Subordinated Notes (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture 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 to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (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 does not limit the effect of paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable 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 Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (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 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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) Delivery of reports, information and documents to the Trustee under Section 4.03 is for informational purposes only and the Trustee's receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Authority's compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). 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 62 Senior Subordinated Notes 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 unless such Holders shall 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 7.01 hereof, the Trustee shall have no duty to inquire as to the performance of the Authority's covenants in Article 4 or Article 11 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 Sections 6.01 (a) or (b) or Section 4.01 hereof or (ii) any Default or Event of Default of which a Responsible Officer of the Trustee shall have received written notification or obtained actual knowledge. (h) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee may, in its discretion, make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Authority personally or by agent or attorney during regular business hours. (i) In the absence of a written direction to do so received by the Trustee pursuant to Section 6.05 from Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes and indemnification from such Holders for any costs incurred by the Trustee in acting pursuant to such direction, the Trustee shall be under no duty to inquire into or to determine whether the Authority has taken any "willful action" under Section 6.02. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Senior Subordinated Notes and may otherwise deal with the Authority or any Affiliate of 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 or the Senior Subordinated Notes, it shall not be accountable for the 63 Senior Subordinated Notes Authority's use of the proceeds from the Senior Subordinated Notes or any money paid to the Authority or upon the Authority's direction under any provision of this Indenture, 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 Senior Subordinated Notes or any other document in connection with the sale of the Senior Subordinated Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05. Notice 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 Holders of Senior Subordinated Notes a notice 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 on any Senior Subordinated Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Senior Subordinated Notes. Section 7.06. Reports by Trustee to Holders of the Senior Subordinated Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Senior Subordinated Notes remain outstanding, the Trustee shall mail to the Holders of the Senior Subordinated Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Senior Subordinated Notes shall be mailed to the Authority and filed with the SEC and each stock exchange on which the Senior Subordinated Notes are listed in accordance with TIA ss. 313(d). The Authority shall promptly notify the Trustee when the Senior Subordinated 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 Senior Subordinated 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 Senior Subordinated 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; 64 Senior Subordinated Notes (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 Senior Subordinated 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. 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. The Authority shall indemnify the Trustee and its directors, officers, employees and agents 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, including the costs and expenses of enforcing this Indenture 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 7.07, the Trustee shall have a Lien prior to the Senior Subordinated Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Senior Subordinated 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(g) or (h) 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. 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 as provided in this Section. 65 Senior Subordinated Notes 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 a majority in principal amount of the then outstanding Senior Subordinated 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 (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. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may 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 at least a majority in principal amount of the then outstanding Senior Subordinated Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes, fails to comply with Section 7.10, such Holder 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. 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 (including the trust created by this Indenture) to, another corporation, the successor corporation without any further act shall be the successor Trustee. 66 Senior Subordinated Notes 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 supervision or examination by federal or state authorities and that has, or together with all of its Subsidiaries and parent entities has, a combined capital and surplus of at least $100 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 TIAss.310(a)(1), (2) and (5). The Trustee is subject to TIAss.310(b). Section 7.11. Preferential Collection of Claims Against Authority. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. 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 Management Board evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Senior Subordinated Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02. Legal Defeasance and Discharge. 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 its obligations with respect to all outstanding Senior Subordinated 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 entire Indebtedness represented by the outstanding Senior Subordinated Notes, 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 Senior Subordinated 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 Senior Subordinated Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Senior Subordinated Notes when such payments are due, (b) the Authority's obligations with respect to such Senior Subordinated 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 8. Subject to compliance with this Article 8, the Authority may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. 67 Senior Subordinated Notes 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 its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14(b), 4.15, 4.16, 4.17, 4.18, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25 and 4.27 hereof and Section 5.01 hereof with respect to the outstanding Senior Subordinated Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Senior Subordinated 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 Senior Subordinated Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Senior Subordinated 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, 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 Senior Subordinated Notes shall be unaffected thereby. In addition, upon the Authority's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(f) and Sections 6.01(i) through 6.01(m) hereof shall not constitute Events of Default. 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 Senior Subordinated 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, to pay the principal of, premium and Additional Interest, if any, and interest on the outstanding Senior Subordinated Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (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 (A) the Authority has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, 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, the Holders of the outstanding Senior Subordinated Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to 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 the Holders of the outstanding Senior Subordinated Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal 68 Senior Subordinated Notes 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 on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Senior Subordinated Notes pursuant to this Article 8 concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of 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 or any of its Restricted Subsidiaries is a party or by which the Authority or any of its Restricted Subsidiaries is bound; (f) the Authority must have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that after the 91st day 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; (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 of preferring the Holders over any other creditors of the Authority or with the intent 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, 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 Senior Subordinated Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Senior Subordinated 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 Senior Subordinated Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, 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 Senior Subordinated Notes. Anything in this Article 8 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 69 Senior Subordinated Notes 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 Senior Subordinated Note and remaining unclaimed for two years after such principal, and 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 Senior Subordinated Note shall thereafter 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 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 Senior Subordinated 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 makes any payment of principal of, premium, if any, or interest on any Senior Subordinated Note following the reinstatement of its obligations, the Authority shall be subrogated to the rights of the Holders of such Senior Subordinated Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Senior Subordinated Notes. Notwithstanding Section 9.02 of this Indenture, provided that any required governmental approval to ensure the enforceability of the Senior Subordinated Notes and this Indenture, including that of the BIA is obtained, the Authority, the Subsidiary Guarantors, if any, and the Trustee may amend or supplement this Indenture, the Senior Subordinated Subsidiary Guarantees, if any, or the Senior Subordinated Notes without the consent of any Holder of a Senior Subordinated Note to: (a) cure any ambiguity, defect or inconsistency; (b) provide for uncertificated Senior Subordinated Notes in addition to or in place of certificated Senior Subordinated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; 70 Senior Subordinated Notes (c) provide for the assumption of the Authority's or a Subsidiary Guarantor's obligations to the Holders of the Senior Subordinated Notes by a successor to the Authority or such Subsidiary Guarantor; (d) make any change that would provide any additional rights or benefits to the Holders of the Senior Subordinated Notes or that does not adversely affect the legal rights hereunder of any Holder of the Senior Subordinated Notes; (e) comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (f) allow any Subsidiary to execute a supplemental indenture and/or a Senior Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Notes. Upon the request of the Authority accompanied by a resolution of its Management Board authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Authority and the Subsidiary Guarantors, if any, in the execution of any amended or supplemental Indenture 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 that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02. With Consent of Holders of Senior Subordinated Notes. (a) Except as provided below in this Section 9.02, the Authority and the Trustee may amend or supplement this Indenture (including Sections 3.10 and 4.10 hereof), the Senior Subordinated Subsidiary Guarantees, if any, and the Senior Subordinated Notes may be amended or supplemented: (i) with the consent of the Holders of at least a majority in principal amount of the Senior Subordinated Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Subordinated Notes), 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 on the Senior Subordinated Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Senior Subordinated Notes); (ii) without the consent of at least 66 2/3% of the aggregate principal amount of Senior Subordinated Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Senior Subordinated Notes), no waiver or amendment to this Indenture may make a change in the provisions of Section 4.15 hereof that adversely affects the rights of any Holder of Senior Subordinated Notes and (iii) without the consent of at least 75% of the aggregate principal amount of Senior Subordinated Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Senior Subordinated Notes), no waiver or amendment to this Indenture may make a change in the provisions of Article 10 hereof that adversely affects the rights of any Holder of Senior Subordinated Notes. 71 Senior Subordinated Notes (b) Section 2.08 hereof shall determine which Senior Subordinated Notes are considered to be "outstanding" for purposes of this Section 9.02. (c) Upon the request of the Authority accompanied by a resolution of its Management Board authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Senior Subordinated 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 unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. (d) It shall not be necessary for the consent of the Holders of Senior Subordinated 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. (e) After an amendment, supplement or waiver under this Section becomes effective, the Authority shall mail to the Holders of Senior Subordinated 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 or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class may waive compliance in a particular instance by the Authority with any provision of this Indenture or the Senior Subordinated Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Senior Subordinated Notes held by a non-consenting Holder): (i) reduce the principal amount of Senior Subordinated Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the principal of or change the fixed maturity of any Senior Subordinated Note or alter or waive any of the provisions with respect to the redemption of the Senior Subordinated Notes except as provided above with respect to Sections 3.10, 4.10 and 4.15 hereof; (iii) reduce the rate of or change the time for payment of interest, including default interest, on any Senior Subordinated Note; (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Senior Subordinated Notes (except a rescission of acceleration of the Senior Subordinated Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Senior Subordinated Notes and a waiver of the payment default that resulted from such acceleration); (v) make any Senior Subordinated Note payable in money other than that stated in the Senior Subordinated Notes; (vi) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Senior Subordinated Notes to receive payments of principal of or interest on the Senior Subordinated Notes; (vii) waive a redemption payment with respect to any Note (other than a payment required by 3.10, 4.10 and 4.15 hereof); 72 Senior Subordinated Notes (viii) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (ix) release any Subsidiary Guarantor from any of its obligations under its Senior Subordinated Subsidiary Guarantee or this Indenture, except in accordance with the terms of its Senior Subordinated Subsidiary Guarantee. Section 9.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Senior Subordinated Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. 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 Senior Subordinated Note is a continuing consent by the Holder of a Senior Subordinated Note and every subsequent Holder of a Senior Subordinated Note or portion of a Senior Subordinated Note that evidences the same debt as the consenting Holder's Senior Subordinated Note, even if notation of the consent is not made on any Senior Subordinated Note. However, any such Holder of a Senior Subordinated Note or subsequent Holder of a Senior Subordinated Note may revoke the consent as to its Senior Subordinated 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 Senior Subordinated Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Senior Subordinated Note thereafter authenticated. The Authority in exchange for all Senior Subordinated Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Senior Subordinated Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Senior Subordinated 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 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 until the Management Board approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 SUBORDINATION Section 10.01. Agreement to Subordinate. The Authority agrees, and each Holder by accepting a Senior Subordinated Note agrees, that the Indebtedness evidenced by the Senior Subordinated Notes is subordinated in right of payment, to the 73 Senior Subordinated Notes extent and in the manner provided in this Article 10, to the prior payment in full of all Senior Indebtedness (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Indebtedness. The provisions of this Article 10 are made for the benefit of the holders of any Senior Indebtedness, each of which is made an obligee hereunder and any one or more of which may enforce such provisions. The provisions of this Article 10 shall be reinstated if at any time any payment made on account of any Senior Indebtedness is rescinded or must otherwise be returned by the holder receiving payment thereof or any representative of such holder upon the insolvency, bankruptcy or reorganization of the Authority or otherwise. Section 10.02. Certain Definitions. "Permitted Junior Securities" means Equity Interests in the Authority or any Senior Subordinated Guarantor or debt securities that are subordinated to all Senior Indebtedness (and any debt securities issued in exchange for Senior Indebtedness) to substantially the same extent as, or to a greater extent than, the Senior Subordinated Notes are subordinated to Senior Indebtedness pursuant to this Indenture. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Indebtedness. Section 10.03. Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors in a liquidation or dissolution of the Authority or the Tribe, in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Authority, the Tribe or their respective property, in an assignment for the benefit of creditors or in any marshaling of the Authority's or the Tribe's assets and liabilities: (i) holders of Senior Indebtedness shall be entitled to receive payment in full of all Obligations due in respect of such Senior Indebtedness (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Indebtedness) before Holders of the Senior Subordinated Notes shall be entitled to receive any payment with respect to the Senior Subordinated Notes (except that Holders of Senior Subordinated Notes may receive and retain (A) Permitted Junior Securities and (B) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof); and (ii) until all Obligations with respect to Senior Indebtedness (as provided in clause (i) above) are paid in full, any distribution to which Holders would be entitled but for this Article 10 shall be made to holders of Senior Indebtedness (except that Holders of Senior Subordinated Notes may receive and retain (A) Permitted Junior Securities and (B) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof), as their interests may appear. Section 10.04. Default on Designated Senior Indebtedness. (a) The Authority may not make any payment or distribution to the Trustee or any Holder in respect of Obligations with respect to the Senior Subordinated Notes and may not acquire from the Trustee or any Holder any Senior Subordinated Notes for cash or property (other than (A) Permitted Junior Securities and (B) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof) until all principal and other Obligations with respect to the Senior Indebtedness have been paid in full if: 74 Senior Subordinated Notes (i) a default in the payment of any principal or other Obligations with respect to Designated Senior Indebtedness occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Designated Senior Indebtedness; or (ii) a default, other than a payment default, on Designated Senior Indebtedness occurs and is continuing that then permits holders of the Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Person who may give it pursuant to Section 10.12 hereof. If the Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (A) at least 360 days shall have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (B) all scheduled payments of principal, premium, if any, and interest on the Senior Subordinated Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 180 days. (b) The Authority may and shall resume payments on and distributions in respect of the Senior Subordinated Notes and may acquire them upon the earlier of: (i) the date upon which all Senior Indebtedness is paid in full and in cash or the default is cured or waived in writing, or (ii) in the case of a default referred to in clause (ii) of Section 10.04(a) hereof, 179 days pass after notice is received if the maturity of such Designated Senior Indebtedness has not been accelerated, if this Article 10 otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. Section 10.05. Acceleration of Senior Subordinated Notes. If payment of the Senior Subordinated Notes is accelerated because of an Event of Default, the Authority shall promptly notify holders of Senior Indebtedness of the acceleration. Section 10.06. When Distribution Must Be Paid Over. In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Senior Subordinated Notes at a time when a Responsible Officer of the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Indebtedness as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Indebtedness remaining unpaid to the extent necessary to pay such Obligations in full and in cash in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders 75 Senior Subordinated Notes of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Authority or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. Section 10.07. Notice by Authority. The Authority shall promptly notify the Trustee and the Paying Agent of any facts known to the Authority that would cause a payment of any Obligations with respect to the Senior Subordinated Notes to violate this Article 10, but failure to give such notice shall not affect the subordination of the Senior Subordinated Notes to Senior Indebtedness as provided in this Article 10. Section 10.08. Subrogation. After all Senior Indebtedness is paid in full and until the Senior Subordinated Notes are paid in full, Holders of Senior Subordinated Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Senior Subordinated Notes) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Holders of Senior Subordinated Notes have been applied to the payment of Senior Indebtedness. A distribution made under this Article 10 to holders of Senior Indebtedness that otherwise would have been made to Holders of Senior Subordinated Notes is not, as between the Authority and Holders, a payment by the Authority on the Senior Subordinated Notes. Section 10.09. Relative Rights. This Article 10 defines the relative rights of Holders of Senior Subordinated Notes and holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the Authority and Holders of Senior Subordinated Notes, the obligation of the Authority, which is absolute and unconditional, to pay principal of and interest on the Senior Subordinated Notes in accordance with their terms; (ii) affect the relative rights of Holders of Senior Subordinated Notes and creditors of the Authority other than their rights in relation to holders of Senior Indebtedness; or (iii) prevent the Trustee or any Holder of Senior Subordinated Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Holders of Senior Subordinated Notes. If the Authority fails because of this Article 10 to pay principal of or interest on a Senior Subordinated Note on the due date, the failure is still a Default or Event of Default. Section 10.10. Subordination May Not Be Impaired. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Senior Subordinated Notes shall be impaired by any act or failure to act by the Authority or any Holder or by the failure of the Authority or any Holder to comply with this Indenture. No right of any present or future holder of any Senior Indebtedness to enforce the subordination provided in this Article 10 shall at any time or in any way be prejudiced or impaired by any act or failure to act by such holder, or any non-compliance by the Tribe, the Authority or any Subsidiary Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or 76 Senior Subordinated Notes otherwise be charged with. The holders of Senior Indebtedness may, without notice to or consent of any Holders, (i) extend, renew, modify or amend the terms of the Senior Indebtedness (including changing the terms of payment) or any security therefor and release, sell or exchange such security or release any person in any manner liable for such Senior Indebtedness, (ii) exercise or refrain from exercising any rights against the Tribe, the Authority, any Subsidiary Guarantor or any other person (including the holders), and (iii) apply any sums by whomsoever paid, or howsoever realized to any Senior Indebtedness in such manner as the holder of the Senior Indebtedness may determine. Section 10.11. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Authority referred to in this Article 10, the Trustee and the Holders of Senior Subordinated Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Senior Subordinated Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Authority, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. Section 10.12. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Senior Subordinated Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Senior Subordinated Notes to violate this Article 10. Only the Authority or a Representative may give the notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 10.13. Authorization to Effect Subordination. Each Holder of Senior Subordinated Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Senior Subordinated Notes. No holder of any Senior Indebtedness and no Representative of such holder shall have (i) any duty to file any such proof of claim or proof of debt or (ii) any liability to any Holder if any such proof of claim or proof of debt is for any reason defective. 77 Senior Subordinated Notes Section 10.14. Amendments. The provisions of this Article 10 shall not be amended or modified without the written consent of the holders of all Senior Indebtedness. ARTICLE 11 COVENANTS OF THE TRIBE Section 11.01. Covenants of the Tribe. The Tribe shall not, and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, except as required by federal or state law, to do any of the following: (a) increase or impose any tax or other payment obligation on the Authority or on any patrons of, or any activity at, the Resort other than: (i) payments which are due under any agreement in effect on the Closing Date or payments which are not materially adverse to the economic interests of Holders; (ii) payments which the Authority has agreed to reimburse each Holder for the economic effect thereof, if any; (iii) payments which correspondingly reduce the Restricted Payments otherwise payable to the Tribe; (iv) pursuant to the Tribal Tax Code; or (v) Government Service Payments; (b) amend the terms of the Lease in any material manner that would be materially adverse to the economic interests of Holders; (c) amend the Tribal Gaming Ordinance in effect on the Closing Date (unless any such amendment is a legitimate effort to ensure that the Authority and the Resort conduct gaming operations in a manner that is consistent with applicable laws, rules and regulations or that protects the environment, the public health and safety, or the integrity of the Authority or the Resort), restrict or eliminate the exclusive right of the Authority to conduct gaming operations on any property owned or controlled by the Tribe in a manner that would be materially adverse to the economic interests of Holders; or (d) take any other action, enter into any agreement, amend its constitution or enact any ordinance, law, rule or regulation that would have a material adverse effect on the economic interests of Holders. Moreover, except with the consent of a majority in interest of Holders 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 impose, tax or otherwise make a charge on the Senior Subordinated Notes, this Indenture or any payments or deposits to be made thereunder. 78 Senior Subordinated Notes Section 11.02. Additional Covenants of the Tribe. (a) Any action taken by the Tribe to comply with federal or state law that would otherwise violate Section 11.01 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 the federal or state law, the Tribe shall give the Trustee at least 30 days prior written notice of any such action. (b) 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. (c) 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. (d) 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. (e) 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 Holders provided for in this Indenture or the Senior Subordinated Notes. (f) 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 Lease (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 affect on the rights of the Trustee or the Holders under this Indenture or the Senior Subordinated Notes. (g) 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 Senior Subordinated Notes shall be entitled to receive payment in full in respect to all principal, premium, interest and other amounts owing in respect of the Notes before any payment or any distribution to the Tribe. (h) 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. (i) The Tribe shall comply with all material terms of the Construction Reserve Disbursement Agreement and shall not amend and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, directly or indirectly, to amend, except as required by federal or state law, such Construction Reserve Disbursement Agreement in a manner that would have a material adverse effect on the economic interests of Holders. 79 Senior Subordinated Notes Any action taken in violation of this Article 11 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 ss.318(c), the imposed duties shall control. Section 12.02. Notices. Any notice or communication by the Authority, any Subsidiary Guarantor 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 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telecopier No.: (860) 204-6153 Attention: Roland J. Harris With a copy to: Hogan & Hartson LLP 555 Thirteenth Street, NW Washington, DC 20004 Telecopier No.: (202) 637-5910 Attention: David B. H. Martin, Jr., Esq. If to the Tribe: The Mohegan Tribe of Indians of Connecticut 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telecopier No.: (860) 204-6153 Attention: Roland J. Harris With a copy to: Rome McGuigan Sabanosh, P.C. One State Street Hartford, CT 06103-3103 Telecopier No.: (203) 724-3921 Attention: Lewis B. Rome, Esq. 80 Senior Subordinated Notes If to the Trustee: State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, CT 06103 Telecopier No.: (860) 244-1889 Attention: Corporate Trust Administration (Mohegan Tribal Gaming Authority/8 3/4% Senior Subordinated Notes due 2009) With a copy to: Shipman & Goodwin LLP One American Row Hartford, CT 06103-2819 Telecopier No.: (860) 251-5999 Attention: Daniel P. Brown, Jr., Esq. 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 ss. 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 Senior Subordinated Notes with Other Holders of Senior Subordinated Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Senior Subordinated Notes. The Authority, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). 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: 81 Senior Subordinated Notes (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, provided 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, 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 ss. 314(a)(4)) shall comply with the provisions of TIA ss. 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 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 or to compel the Tribe to return any prohibited payment made to the Tribe as described in Section 11.02(d). Subject to the foregoing, the Tribe and the Authority waive their respective 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 Indenture or the Senior Subordinated 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 or the Senior Subordinated 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: 82 Senior Subordinated Notes (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 and the Senior Subordinated 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 Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. ss. 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 and the Senior Subordinated 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. Section 12.08. No Personal Liability of Directors, Officers, Employees and Stockholders. Neither the Tribe nor any director, officer, office holder, employee, agent, representative or member of the Authority or the Tribe or holder of an Ownership Interest of the Authority, any Subsidiary Guarantor or the Tribe, as such, shall have any liability for any obligations of the Authority or such Subsidiary Guarantor under the Senior Subordinated Notes, the Senior Subordinated Subsidiary Guarantees, if any, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Subordinated Notes. Section 12.09. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE SENIOR SUBORDINATED NOTES AND THE SENIOR SUBORDINATED SUBSIDIARY GUARANTEES WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 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 its Subsidiaries 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 in this Indenture and the Senior Subordinated Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor in this Indenture shall bind its successors. 83 Senior Subordinated Notes Section 12.12. Severability. In case any provision in this Indenture or in the Senior Subordinated 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] 84 SIGNATURES Dated as of March ___, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:__________________________________ Name: Title: Attest: __________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY By:__________________________________ Name: Title: Attest: __________________________________ Authorized Signatory Date: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT (solely with respect to its obligations under Article 11 and Sections 4.21 and 12.07) By:__________________________________ Name: Title: Attest: __________________________________ Authorized Signatory Date: 85 Senior Subordinated Notes EXHIBIT A-1 [Face of Note] - -------------------------------------------------------------------------------- CUSIP/CINS 608328 AC4/U60742 AB6 8 3/4% Senior Subordinated Note due 2009 No. ___ $______________ MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to _____________________________________________________________ or registered assigns, the principal sum of ___________________________________________________________ Dollars on January 1, 2009. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 Dated: March 3, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:__________________________________ Name: Title: By:__________________________________ Name: Title: This is one of the Senior Subordinated Notes referred to in the within-mentioned Indenture: STATE STREET BANK AND TRUST COMPANY, as Trustee By:__________________________________ Authorized Signatory - -------------------------------------------------------------------------------- A-1-1 [Back of Note] 8 3/4% Senior Subordinated Note due 2009 THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE AUTHORITY. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. (a) The Mohegan Tribal Gaming Authority (the "Authority"), promises to pay interest on the principal amount of this Senior Subordinated Note at 83/4% per annum from March 3, 1999 until maturity. A-1-2 The Authority will pay interest and Additional Interest, if any, semi-annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Subordinated Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Subordinated Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be July 1, 1999. 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 interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (b) The Holder of this Senior Subordinated Note is entitled to the benefits of the Senior Subordinated Registration Rights Agreement dated as of the date hereof, among the Authority and the Initial Purchasers named therein ( the "Senior Subordinated Registration Rights Agreement"). If (i) the Authority fails to file any of the Registration Statements required by the Registration Rights Agreements 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 of 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 in connection with resales of Transfer Restricted Securities during 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 will pay Additional Interest to each Holder of Senior Subordinated Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Senior Subordinated Notes held by such Holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Senior Subordinated Notes. (A) Except as expressly provided in this paragraph 1(b), Additional Interest shall be treated as interest and any date on which Additional Interest is due and payable shall be treated as an Interest Payment Date for all purposes under this Senior Subordinated Note and the Indenture. (B) In the event that the Authority is required to pay Additional Interest pursuant to this paragraph 1(b), the Authority shall notify the Trustee in writing at least 15 days prior to the first Interest Payment Date upon which such Additional Interest is due; provided that, in the event that the obligation to pay such Additional Interest occurs less than 15 days prior to such Additional Interest Date, such notice shall be provided by the Authority to the Trustee as soon as reasonably practicable prior to such Interest Payment Date. 2. METHOD OF PAYMENT. The Authority will pay interest on the Senior Subordinated Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Senior Subordinated Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Senior Subordinated Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Senior Subordinated Notes will be payable as to principal, premium and A-1-3 Additional Interest, if any, and interest 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 and Additional Interest 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 Additional Interest on, all Global Senior Subordinated Notes and all other Senior Subordinated Notes the Holders of which shall hold at least $1.0 million in principal amount of Senior Subordinated Notes and 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, State Street Bank and Trust Company, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Authority issued the Senior Subordinated Notes under an Indenture dated as of March 3, 1999 ("Indenture") between the Authority and the Trustee. The terms of the Senior Subordinated 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 ss.ss. 77aaa-77bbbb). The Senior Subordinated Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Subordinated Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. 5. OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Authority shall not have the option to redeem the Senior Subordinated Notes prior to January 1, 2004. Thereafter, the Authority shall have the option to redeem the Senior Subordinated 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 and Additional Interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on January 1 of the years indicated below:
Year Percentage ---- ---------- 2004.................................................... 104.375% 2005.................................................... 102.917% 2006.................................................... 101.458% 2007 and thereafter..................................... 100.000%
(b) 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 Senior Subordinated 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 Senior Subordinated Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount A-1-4 thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Subordinated Notes or (3) the current market price of the Senior Subordinated Notes, together with, in either case, accrued and unpaid interest and Additional 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 Senior Subordinated 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. Except as set forth in paragraph 7 below, the Authority shall not be required to make mandatory redemption payments with respect to the Senior Subordinated Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Authority shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Subordinated Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 20 Business Days following any Change of Control, the Authority shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Authority or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority shall commence an offer to all Holders of Senior Subordinated Notes (as "Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum principal amount of Senior Subordinated Notes 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 and Additional Interest thereon, 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 Subordinated Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Authority (or such Subsidiary) may use such deficiency for any purpose not otherwise permitted by the Indenture. If the aggregate principal amount of Senior Subordinated Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Subordinated Notes to be purchased on a pro rata basis. Holders of Senior Subordinated Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Authority prior to any related purchase date and may elect to have such Senior Subordinated Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Subordinated Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Subordinated Notes are to be redeemed at its registered address. Senior Subordinated Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Subordinated Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Subordinated Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of A-1-5 Senior Subordinated Notes may be registered and Senior Subordinated 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 Senior Subordinated Note or portion of a Senior Subordinated Note selected for redemption, except for the unredeemed portion of any Senior Subordinated Note being redeemed in part. Also, the Authority need not exchange or register the transfer of any Senior Subordinated Notes for a period of 15 days before a selection of Senior Subordinated Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Subordinated Notes, voting as a single class, and any existing default or compliance with any provision of the Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes, voting as a single class. Without the consent of any Holder of a Senior Subordinated Note, the Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Subordinated Notes in addition to or in place of certificated Senior Subordinated Notes, to provide for the assumption of the Authority's or Subsidiary Guarantor's obligations to Holders of the Senior Subordinated Notes by a successor to the Authority or such Subsidiary Guarantor, to make any change that would provide any additional rights or benefits to the Holders of the Senior Subordinated Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Senior Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Notes provided that the Authority has obtained any required government approval to ensure the enforceability of the Senior Subordinated Notes and the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Senior Subordinated Notes; (ii) default in payment when due of principal of or premium, if any, on the Senior Subordinated Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Authority or any of its Restricted Subsidiaries to comply with Section 4.10 or 5.01 of the Indenture; (iv) failure by the Authority or any of its Restricted Subsidiaries to observe or perform (A) any covenant described in Section 4.07 or 4.09 of the Indenture for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class or (B) any other covenant, representation, warranty or other agreement in the Indenture or the Senior Subordinated Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class; (v) default under certain other agreements relating to Indebtedness of the Authority or any of its Restricted Subsidiaries which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (viii) 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 A-1-6 consecutive days at the Resort; (ix) 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); (x) the Lease ceases to be in full force and effect; (xi) except as permitted by the Indenture, any Senior Subordinated Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subordinated Subsidiary Guarantee; and (xii) failure by the Tribe to comply with the provisions of Article 11 for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class. 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 Senior Subordinated Notes may declare all the Senior Subordinated 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 Senior Subordinated Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Senior Subordinated Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Senior Subordinated 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) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Senior Subordinated Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Senior Subordinated 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 Senior Subordinated Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required 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 AUTHORITY. 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. A controlling person, director, officer, employee or holder of an Ownership Interest of the Authority, as such, shall not have any liability for any obligations of the Authority under the Senior Subordinated Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Senior Subordinated Notes. 15. AUTHENTICATION. This Senior Subordinated 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 OF RESTRICTED GLOBAL SENIOR SUBORDINATED NOTES AND RESTRICTED DEFINITIVE SENIOR SUBORDINATED NOTES. In addition to the rights provided to Holders of Senior Subordinated Notes under the Indenture, Holders of Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes shall have all the rights set forth in the Senior A-1-7 Subordinated Registration Rights Agreement dated as of March 3, 1999, between the Authority and the parties named on the signature pages thereof (the "Senior Subordinated Registration Rights Agreement"). 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 Senior Subordinated 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 Senior Subordinated Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Senior Subordinated Registration Rights Agreement. Requests may be made to: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Attention: Roland J. Harris A-1-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:___________________________________ ________________________________________________________________________________ (Insert assignee's legal name) (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*: ________________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-1-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_____________________ Date:______________________ Your Signature: ________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: ________________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-1-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR SUBORDINATED NOTE The following exchanges of a part of this Global Senior Subordinated Note for an interest in another Global Senior Subordinated Note or for a Definitive Senior Subordinated Note, or exchanges of a part of another Global Senior Subordinated Note or Definitive Senior Subordinated Note for an interest in this Global Senior Subordinated Note, have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Senior authorized officer of Principal Amount of Principal Amount of Subordinated Note Trustee or Senior Date of Exchange this Global Senior this Global Senior following such decrease Subordinated Note Subordinated Note Subordinated Note (or increase) Custodian - --------------------- ----------------------- ---------------------- ----------------------- ---------------------
A-1-11 EXHIBIT A-2 [Face of Regulation S Temporary Global Senior Subordinated Note] - -------------------------------------------------------------------------------- CUSIP/CINS: U60742 AB6 8 3/4% Senior Subordinated Note due 2009 No. ___ $__________ MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to______________________________________________________________ or registered assigns, the principal sum of ___________________________________________________________ Dollars on January 1, 2009 Interest Payment Dates: January 1, and July 1 Record Dates: December 15, and June 15 Dated: March 3, 1999 MOHEGAN TRIBAL GAMING AUTHORITY By:____________________________ Name: Title: By:____________________________ Name: Title: This is one of the Senior Subordinated Notes referred to in the within-mentioned Indenture: STATE STREET BANK AND TRUST COMPANY, as Trustee By: __________________________________ Authorized Signatory - -------------------------------------------------------------------------------- A-2-1 [Back of Regulation S Temporary Global Senior Subordinated Note] 8 3/4% Senior Subordinated Note due 2009 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR SUBORDINATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SENIOR SUBORDINATED NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE AUTHORITY 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. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE AUTHORITY THAT (A) SUCH SECURITY 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), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS A-2-2 IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. (a) The Mohegan Tribal Gaming Authority (the "Authority"), promises to pay interest on the principal amount of this Senior Subordinated Note at 83/4% per annum from March 3, 1999 until maturity. The Authority will pay interest and Additional Interest, if any, semi-annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Senior Subordinated Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance; provided that if there is no existing Default in the payment of interest, and if this Senior Subordinated Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be July 1, 1999. 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 interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (b) The Holder of this Senior Subordinated Note is entitled to the benefits of the Senior Subordinated Registration Rights Agreement dated as of the date hereof, among the Authority and the Initial Purchasers named therein ( the "Senior Subordinated Registration Rights Agreement"). If (i) the Authority fails to file any of the Registration Statements required by the Registration Rights Agreements 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 of 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 in connection with resales of Transfer Restricted Securities during 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 will pay Additional Interest to each Holder of Senior Subordinated Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to 25 basis points per 90-day period of the principal amount of Senior Subordinated Notes held by such Holder. The amount of the Additional Interest will increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest of 1% per annum of the principal amount of Senior Subordinated Notes. (A) Except as expressly provided in this paragraph 1(b), Additional Interest shall be treated as interest and any date on which Additional Interest is due and payable shall be treated as an Interest Payment Date for all purposes under this Senior Subordinated Note and the Indenture. A-2-3 (B) In the event that the Authority is required to pay Additional Interest pursuant to this paragraph 1(b), the Authority shall notify the Trustee in writing at least 15 days prior to the first Interest Payment Date upon which such Additional Interest is due; provided that, in the event that the obligation to pay such Additional Interest occurs less than 15 days prior to such Additional Interest Date, such notice shall be provided by the Authority to the Trustee as soon as reasonably practicable prior to such Interest Payment Date. 2. METHOD OF PAYMENT. The Authority will pay interest on the Senior Subordinated Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Senior Subordinated Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Senior Subordinated Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Senior Subordinated Notes will be payable as to principal, premium and Additional Interest, if any, and interest 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 and Additional Interest, if any, 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 Additional Interest on, all Global Senior Subordinated Notes and all other Senior Subordinated Notes the Holders of which shall hold at least $1.0 million in principal amount of Senior Subordinated Notes and 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, State Street Bank and Trust Company, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Authority issued the Senior Subordinated Notes under an Indenture dated as of March 3, 1999 ("Indenture") between the Authority and the Trustee. The terms of the Senior Subordinated 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 ss.ss. 77aaa-77bbbb). The Senior Subordinated Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Senior Subordinated Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. 5. OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Authority shall not have the option to redeem the Senior Subordinated Notes prior to January 1, 2004. Thereafter, the Authority shall have the option to redeem the Senior Subordinated 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 and Additional Interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on January 1 of the years indicated below: A-2-4
Year Percentage ---- ---------- 2004............................................. 104.375% 2005............................................. 102.917% 2006............................................. 101.458% 2007 and thereafter.............................. 100.000%
(b) 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 Senior Subordinated 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 Senior Subordinated Notes of such Holder or beneficial owner at a redemption price equal to the lesser of (1) the principal amount thereof or (2) the price at which such Holder or beneficial owner acquired the Senior Subordinated Notes or (3) the current market price of the Senior Subordinated Notes, together with, in either case, accrued and unpaid interest and Additional 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 Senior Subordinated 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. Except as set forth in paragraph 7 below, the Authority shall not be required to make mandatory redemption payments with respect to the Senior Subordinated Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Authority shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior Subordinated Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 20 Business Days following any Change of Control, the Authority shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Authority or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Authority shall commence an offer to all Holders of Senior Subordinated Notes (as "Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum principal amount of Senior Subordinated Notes 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 and Additional Interest thereon, 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 Subordinated Notes tendered pursuant to an Asset Sale A-2-5 Offer is less than the Excess Proceeds, the Authority (or such Subsidiary) may use such deficiency for any purpose not otherwise permitted by the Indenture. If the aggregate principal amount of Senior Subordinated Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Subordinated Notes to be purchased on a pro rata basis. Holders of Senior Subordinated Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Authority prior to any related purchase date and may elect to have such Senior Subordinated Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Subordinated Notes. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Senior Subordinated Notes are to be redeemed at its registered address. Senior Subordinated Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Senior Subordinated Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Senior Subordinated Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Senior Subordinated Notes may be registered and Senior Subordinated 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 Senior Subordinated Note or portion of a Senior Subordinated Note selected for redemption, except for the unredeemed portion of any Senior Subordinated Note being redeemed in part. Also, the Authority need not exchange or register the transfer of any Senior Subordinated Notes for a period of 15 days before a selection of Senior Subordinated Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Note. 10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Senior Subordinated Notes, voting as a single class, and any existing default or compliance with any provision of the Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes, voting as a single class. Without the consent of any Holder of a Senior Subordinated Note, the Indenture, the Senior Subordinated Subsidiary Guarantees or the Senior Subordinated Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Senior Subordinated Notes in addition to or in place of certificated Senior Subordinated Notes, to provide for the assumption of the Authority's or Subsidiary Guarantor's obligations to Holders of the Senior Subordinated Notes by a successor to the Authority or such Subsidiary Guarantor, to make any change that would provide any additional rights or benefits to the Holders of the Senior Subordinated Notes or that does not adversely affect the legal rights under the A-2-6 Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to allow any Subsidiary Guarantor to execute a supplemental indenture to the Indenture and/or a Senior Subordinated Subsidiary Guarantee with respect to the Senior Subordinated Notes provided that the Authority has obtained any required government approval to ensure the enforceability of the Senior Subordinated Notes and the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Senior Subordinated Notes; (ii) default in payment when due of principal of or premium, if any, on the Senior Subordinated Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Authority or any of its Restricted Subsidiaries to comply with Section 4.10 or 5.01 of the Indenture; (iv) failure by the Authority or any of its Restricted Subsidiaries to observe or perform (A) any covenant described in Section 4.07 or 4.09 of the Indenture for 30 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class or (B) any other covenant, representation, warranty or other agreement in the Indenture or the Senior Subordinated Notes for 60 days after notice to the Authority by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class; (v) default under certain other agreements relating to Indebtedness of the Authority or any of its Restricted Subsidiaries which default results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Authority or any of its Restricted Subsidiaries; (viii) 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; (ix) 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); (x) the Lease ceases to be in full force and effect; (xi) except as permitted by the Indenture, any Senior Subordinated Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Subsidiary Guarantor's Senior Subordinated Subsidiary Guarantee; and (xii) failure by the Tribe to comply with the provisions in Article 11 for 30 days after notice to the Authority and the Tribe by the Trustee or the Holders of at least 25% in aggregate principal amount of the Senior Subordinated Notes then outstanding voting as a single class. 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 Senior Subordinated Notes may declare all the Senior Subordinated 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 Senior Subordinated Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Senior Subordinated Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Senior Subordinated 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) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Senior Subordinated Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Senior Subordinated 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 Senior Subordinated Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. A-2-7 13. TRUSTEE DEALINGS WITH AUTHORITY. 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. A controlling person, director, officer, employee or holder of an Ownership Interest of the Authority, as such, shall not have any liability for any obligations of the Authority under the Senior Subordinated Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Senior Subordinated Notes. 15. AUTHENTICATION. This Senior Subordinated 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 OF RESTRICTED GLOBAL SENIOR SUBORDINATED NOTES AND RESTRICTED DEFINITIVE SENIOR SUBORDINATED NOTES. In addition to the rights provided to Holders of Senior Subordinated Notes under the Indenture, Holders of Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes shall have all the rights set forth in the Senior Subordinated Registration Rights Agreement dated as of March 3, 1999, between the Authority and the parties named on the signature pages thereof (the "Senior Subordinated Registration Rights Agreement"). 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 Senior Subordinated 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 Senior Subordinated Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Senior Subordinated Registration Rights Agreement. Requests may be made to: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Attention: Roland J. Harris A-2-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:___________________________________ ________________________________________________________________________________ (Insert assignee's legal name) (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*: ________________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-2-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: |_| Section 4.10 |_| Section 4.15 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_____________________ Date:______________________ Your Signature: ________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: ________________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-2-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SENIOR SUBORDINATED NOTE The following exchanges of a part of this Global Senior Subordinated Note for an interest in another Global Senior Subordinated Note or for a Definitive Senior Subordinated Note, or exchanges of a part of another Global Senior Subordinated Note or Definitive Senior Subordinated Note for an interest in this Global Senior Subordinated Note, have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Senior authorized officer of Principal Amount of Principal Amount of Subordinated Note Trustee or Senior Date of Exchange this Global Senior this Global Senior following such decrease Subordinated Note Subordinated Note Subordinated Note (or increase) Custodian - --------------------- ----------------------- ---------------------- ----------------------- ---------------------
A-2-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, CT 06103 Re: 8 3/4% Senior Subordinated Notes due 2009 Reference is hereby made to the Indenture, dated as of March 3, 1999 (the "Indenture"), between the Mohegan Tribal Gaming Authority, as issuer (the "Authority"), and State Street Bank and Trust Company, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________, (the "Transferor") owns and proposes to transfer the Senior Subordinated Note[s] or interest in such Senior Subordinated Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Senior Subordinated Note[s] or interests (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [_] Check if Transferee will take delivery of a beneficial interest in the 144A Global Senior Subordinated Note or a Definitive Senior Subordinated Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Senior Subordinated Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Senior Subordinated Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Senior Subordinated Note and/or the Definitive Senior Subordinated Note and in the Indenture and the Securities Act. 2. [_] Check if Transferee will take delivery of a beneficial interest in the Temporary Regulation S Global Senior Subordinated Note, the Regulation S Global Senior Subordinated Note or a Definitive Senior Subordinated Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf B-1 knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act; (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Distribution Compliance Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).) Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Senior Subordinated Note, the Temporary Regulation S Global Senior Subordinated Note and/or the Definitive Senior Subordinated Note and in the Indenture and the Securities Act. 3. [_] Check and complete if Transferee will take delivery of a beneficial interest in the Definitive Senior Subordinated Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Senior Subordinated Notes and Restricted Definitive Senior Subordinated Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [_] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [_] such Transfer is being effected to the Authority or a subsidiary thereof; or (c) [_] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or 4. [_] Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Senior Subordinated Note or of an Unrestricted Definitive Senior Subordinated Note. (a) [_] Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Subordinated Notes, on Restricted Definitive Senior Subordinated Notes and in the Indenture. (b) [_] Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private B-2 Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Subordinated Notes, on Restricted Definitive Senior Subordinated Notes and in the Indenture. (c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Senior Subordinated Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Senior Subordinated Notes or Restricted Definitive Senior Subordinated Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Authority. ------------------------------------- [Insert Name of Transferor] By: ---------------------------------- Name: Title: Dated: -------------------- B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [_] a beneficial interest in the: (i) [_] 144A Global Senior Subordinated Note (CUSIP 608328 AC4), or (ii) [_] Regulation S Global Senior Subordinated Note (CUSIP U60742 AB6), or (b) [_] a Restricted Definitive Senior Subordinated Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [_] a beneficial interest in the: (i) [_] 144A Global Senior Subordinated Note (CUSIP 608328 AC4), or (ii) [_] Regulation S Global Senior Subordinated Note (CUSIP U60742 AB6), or (iii) [_] Unrestricted Global Senior Subordinated Note (CUSIP ); or (b) [_] a Restricted Definitive Senior Subordinated Note; or (c) [_] an Unrestricted Definitive Senior Subordinated Note, in accordance with the terms of the Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, CT 06103 Re: 8 3/4% Senior Subordinated Notes due 2009 (CUSIP 608328 AC4/U60742 AB6) Reference is hereby made to the Indenture, dated as of March 3, 1999 (the "Indenture"), between the Mohegan Tribal Gaming Authority, as issuer (the "Authority"), and State Street Bank and Trust Company, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "Owner") owns and proposes to exchange the Senior Subordinated Note[s] or interest in such Senior Subordinated Note[s] specified herein, in the principal amount of $____________ in such Senior Subordinated Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Senior Subordinated Notes or Beneficial Interests in a Restricted Global Senior Subordinated Note for Unrestricted Definitive Senior Subordinated Notes or Beneficial Interests in an Unrestricted Global Senior Subordinated Note (a) [_] Check if Exchange is from beneficial interest in a Restricted Global Senior Subordinated Note to beneficial interest in an Unrestricted Global Senior Subordinated Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Senior Subordinated Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Senior Subordinated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] Check if Exchange is from beneficial interest in a Restricted Global Senior Subordinated Note to Unrestricted Definitive Senior Subordinated Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Subordinated Note for an Unrestricted Definitive Senior Subordinated Note, the Owner hereby certifies (i) the Definitive Senior Subordinated Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain C-1 compliance with the Securities Act and (iv) the Definitive Senior Subordinated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] Check if Exchange is from Restricted Definitive Senior Subordinated Note to beneficial interest in an Unrestricted Global Senior Subordinated Note. In connection with the Owner's Exchange of a Restricted Definitive Senior Subordinated Note for a beneficial interest in an Unrestricted Global Senior Subordinated Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] Check if Exchange is from Restricted Definitive Senior Subordinated Note to Unrestricted Definitive Senior Subordinated Note. In connection with the Owner's Exchange of a Restricted Definitive Senior Subordinated Note for an Unrestricted Definitive Senior Subordinated Note, the Owner hereby certifies (i) the Unrestricted Definitive Senior Subordinated Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Senior Subordinated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. Exchange of Restricted Definitive Senior Subordinated Notes or Beneficial Interests in Restricted Global Senior Subordinated Notes for Restricted Definitive Senior Subordinated Notes or Beneficial Interests in Restricted Global Senior Subordinated Notes (a) [_] Check if Exchange is from beneficial interest in a Restricted Global Senior Subordinated Note to Restricted Definitive Senior Subordinated Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Senior Subordinated Note for a Restricted Definitive Senior Subordinated Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Senior Subordinated Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Senior Subordinated Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Senior Subordinated Note and in the Indenture and the Securities Act. (b) [_] Check if Exchange is from Restricted Definitive Senior Subordinated Note to beneficial interest in a Restricted Global Senior Subordinated Note. In connection with the Exchange of the Owner's Restricted Definitive Senior Subordinated Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Senior Subordinated Note, [_] Regulation S Global Senior Subordinated Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Senior Subordinated Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Senior Subordinated Note and in the Indenture and the Securities Act. C-2 This certificate and the statements contained herein are made for your benefit and the benefit of the Authority. ------------------------------------- [Insert Name of Transferor] By: ---------------------------------- Name: Title: Dated: -------------------- C-3 EXHIBIT D FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON SENIOR SUBORDINATED NOTE Each Subsidiary Guarantor (as defined in the Indenture) has jointly and severally unconditionally guaranteed (a) the due and punctual payment of the principal of, premium, if any, and interest on the Senior Subordinated Notes, whether at maturity or an Interest Payment Date, by acceleration, call for redemption or otherwise, (b) the due and punctual payment of interest on the overdue principal and premium of, and interest, to the extent lawful, on the Senior Subordinated Notes and (c) that in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, the same will be promptly paid in full when due in accordance with the terms of the extension of renewal, whether at stated maturity, by acceleration or otherwise. Notwithstanding the foregoing, in the event that the Senior Subordinated Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Subsidiary Guarantor under its Senior Subordinated Subsidiary Guarantee shall be limited to such amount as will not, after giving effect thereto, and to all other liabilities of the Subsidiary Guarantor, result in such amount constituting a fraudulent transfer or conveyance. The Senior Subordinated Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Senior Subordinated Note upon which the Senior Subordinated Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual or facsimile signature of one of its authorized officers. Dated:________________, ______ [SUBSIDIARY GUARANTOR] By:___________________________________ Name: Title: D-1 EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ________________, among __________________ (the "Subsidiary Guarantor"), a subsidiary of the Mohegan Tribal Gaming Authority (or its permitted successor), (the "Authority"), the Authority, the other Subsidiary Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H: WHEREAS, the Authority has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of March 3, 1999 providing for the issuance of an aggregate principal amount of up to $300,000,000 of 8 3/4% Senior Subordinated Notes due 2009 (the "Senior Subordinated Notes"); WHEREAS, the Indenture provides that under certain circumstances the Subsidiary Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Subsidiary Guarantor shall unconditionally guarantee all of the Authority's Obligations under the Senior Subordinated Notes and the Indenture on the terms and conditions set forth herein (the "Senior Subordinated Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Subordinated Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. INDENTURE PROVISION PURSUANT TO WHICH GUARANTEE IS GIVEN. This Supplemental Indenture is being executed and delivered pursuant to Section 4.20 of the Indenture. 3. AGREEMENT TO GUARANTEE. The Subsidiary Guarantor hereby agrees as follows: (a) The Subsidiary Guarantor, jointly and severally with all other Subsidiary Guarantors, if any, unconditionally guarantee to each Holder of a Senior Subordinated Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Senior Subordinated Notes or the obligations of the Authority hereunder or thereunder, that: (i) the principal of and interest on the Senior Subordinated Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Senior Subordinated Notes, if any, if lawful, and all other obligations of the Authority to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Senior Subordinated Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any E-1 performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Notwithstanding the foregoing, in the event that this Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Subsidiary Guarantor under this Supplemental Indenture and its Senior Subordinated Subsidiary Guarantee shall be limited to such amount as will not, after giving effect thereto, and to all other liabilities of the Subsidiary Guarantor, result in such amount constituting a fraudulent transfer or conveyance. 4. EXECUTION AND DELIVERY OF SENIOR SUBORDINATED SUBSIDIARY GUARANTEES. (a) To evidence its Senior Subordinated Subsidiary Guarantee set forth in this Supplemental Indenture, the Subsidiary Guarantor hereby agrees that a notation of such Senior Subordinated Subsidiary Guarantee shall be endorsed by an officer of such Subsidiary Guarantor on each Senior Note authenticated and delivered by the Trustee after the date hereof. (b) Notwithstanding the foregoing, the Subsidiary Guarantor hereby agrees that its Senior Subsidiary Guarantee set forth herein shall remain in full force and effect notwithstanding any failure to endorse on each Senior Note a notation of such Senior Subordinated Subsidiary Guarantee. (c) If an officer whose signature is on this Supplemental Indenture or on the Senior Subordinated Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Senior Subordinated Note on which a Senior Subordinated Subsidiary Guarantee is endorsed, the Senior Subsidiary Guarantee shall be valid nevertheless. (d) The delivery of the Senior Subordinated Note by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of the Senior Subordinated Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of the Subsidiary Guarantor. (e) The Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, regardless of the validity, regularity or enforceability of the Senior Subordinated Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Senior Subordinated Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Authority, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (f) The Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Authority, any right to require a proceeding first against the Authority, protest, notice and all demands whatsoever and covenants that its Senior Subordinated Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be discharged except by complete performance of the obligations contained in the Senior Subordinated Notes and the Indenture or pursuant to Section 5(b) of this Supplemental Indenture. (g) If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Supplemental Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, the Subsidiary Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter E-2 all rights and remedies of the Subsidiary Guarantor, the Trustee and the Holders shall continue as though no such proceeding had been instituted. (h) The Subsidiary Guarantor hereby waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Authority or any other Subsidiary Guarantor as a result of any payment by such Subsidiary Guarantor under its Senior Subordinated Subsidiary Guarantee. The Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand: (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of the Senior Subordinated Subsidiary Guarantee made pursuant to this Supplemental Indenture, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby; and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 6, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purpose of the Senior Subordinated Subsidiary Guarantee made pursuant to this Supplemental Indenture. (i) The Subsidiary Guarantor shall have the right to seek contribution from any other non-paying Subsidiary Guarantor, if any, so long as the exercise of such right does not impair the rights of the Holders under the Senior Subordinated Subsidiary Guarantee made pursuant to this Supplemental Indenture. (j) The Subsidiary Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or 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, which may affect the covenants or the performance of the Indenture or this Senior Subordinated Subsidiary Guarantee; and the Subsidiary Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 5. SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS (a) Nothing contained in the Indenture, this Supplemental Indenture or in the Senior Subordinated Notes shall prevent any consolidation or merger of the Subsidiary Guarantor with or into the Authority or any other Subsidiary Guarantor or shall prevent any transfer, sale or conveyance of the property of the Subsidiary Guarantor as an entirety or substantially as an entirety, to the Authority or any other Subsidiary Guarantor. (b) Except as set forth in Article 5 of the Indenture, upon the sale or disposition of all of the Capital Stock of the Subsidiary Guarantor by the Authority or a Subsidiary of the Authority, or upon the consolidation or merger of the Subsidiary Guarantor with or into any Person, or if a Subsidiary Guarantor is designated as an Unrestricted Subsidiary, or the sale of all or substantially all of the assets of the Subsidiary Guarantor (in each case, other than with or to an Affiliate of the Authority), or upon a legal defeasance or covenant defeasance of the Senior Subordinated Notes, such Subsidiary Guarantor shall be deemed automatically and unconditionally released and discharged from all obligations under this Senior Subordinated Subsidiary Guarantee without any further action required on the part of the Trustee or any Holder if no Default shall have occurred and be continuing; provided E-3 that in the event of an Asset Sale, the Net Cash Proceeds therefrom are treated in accordance with Section 4.10 of the Indenture and provided further that in the event of a resdesignation of a Subsidiary, that the transaction is in compliance with Section 4.07 of the Indenture. Except with respect to transactions set forth in the preceding sentence, the Authority and the Subsidiary Guarantor covenant and agree that upon any such consolidation, merger or transfer of assets, the performance of all covenants and conditions of this Supplemental Indenture to be performed by such Subsidiary Guarantor shall be expressly assumed by supplemental indenture satisfactory in form to the Trustee, by the corporation formed by such consolidation, or into which the Subsidiary Guarantor shall have merged, or by the corporation which shall have acquired such property. Upon receipt of an Officers' Certificate of the Authority or the Subsidiary Guarantor, as the case may be, to the effect that the Authority or such Subsidiary Guarantor has complied with the first sentence of this Section 5(b), the Trustee shall execute any documents reasonably requested by the Authority or the Subsidiary Guarantor, at the cost of the Authority or such Subsidiary Guarantor, as the case may be, in order to evidence the release of such Subsidiary Guarantor from its obligations under its Senior Subsidiary Guarantee endorsed on the Senior Subordinated Notes and under the Indenture and this Supplemental Indenture. 6. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall govern and be used to construe this Supplemental Indenture. 7. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 8. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not effect the construction hereof. E-4 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: _______________, ____ [SUBSIDIARY GUARANTOR] By: ----------------------------------- Name: Title: MOHEGAN TRIBAL GAMING AUTHORITY By: ----------------------------------- Name: Title: [EXISTING SUBSIDIARY GUARANTORS] By: ----------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Trustee By: ----------------------------------- Authorized Signatory E-5 Attachment to Indenture 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 of Connecticut Address: 1 Mohegan Sun Boulevard Uncasville, CT 06382 Occupation: Indian Tribe Party in Interest: Mohegan Tribal Gaming Authority Address: 1 Mohegan Sun Boulevard Uncasville, CT 06382 Occupation: Tribal Gaming Authority Party in Interest: State Street Bank and Trust Company Goodwin Square 225 Asylum Street Hartford, CT 06103 Occupation: Commercial Bank and Trust Company Fixed limited time to run: The Senior Subordinated Notes become due January 1, 2009. The Chairman of the Mohegan Tribe of Indians of Connecticut (the "Tribe") is authorized to execute the attached document by Resolution No. 99-03 of the Tribal Council of the Tribe, dated February 18, 1999. 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 (the "Management Board") is authorized to execute the attached document by Resolution No. TGA 99-04 of the Management Board, dated February 18, 1999. 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 ___ (time) on March __, 1999 at ______________ (place), for the particular purpose set forth above. The undersigned parties agree that the foregoing agreement is in compliance with 25 U.S.C. ss. 81. WITNESS: Mohegan Tribe of Indians of Connecticut By: ------------------------------------------ Roland J. Harris Title: Mohegan Tribal Gaming Authority By: ------------------------------------------ Roland J. Harris Title: State Street Bank and Trust Company By: ------------------------------------------ Name: Title: Approved Pursuant to 25 U.S.C. ss. 81 United States Department of Interior Bureau of Indian Affairs: Date: March __, 1999 By: ------------------------------------------ Name: Title: Eastern Area Office Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority EX-4.8 6 EXHIBIT 4.8 Exhibit 4.8 SENIOR SUBORDINATED REGISTRATION RIGHTS AGREEMENT Dated as of March 3, 1999 by and among MOHEGAN TRIBAL GAMING AUTHORITY and SALOMON SMITH BARNEY INC. NATIONSBANC MONTGOMERY SECURITIES LLC SG COWEN SECURITIES CORPORATION BEAR, STEARNS & CO. INC. BANCBOSTON ROBERTSON STEPHENS INC. FLEET SECURITIES, INC. This Senior Subordinated Registration Rights Agreement (this "Agreement") is made and entered into as of March 3, 1999, by and among the Mohegan Tribal Gaming Authority (the "Authority") an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"), and Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC, SG Cowen Securities Corporation, Bear, Stearns & Co. Inc., BancBoston Robertson Stephens Inc. and Fleet Securities, Inc. (each an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom has agreed to purchase the Authority's 8 3/4% Initial Senior Subordinated Notes due 2009 (the "Initial Senior Subordinated Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated February 24, 1999, (the "Purchase Agreement"), by and among the Authority, the Tribe and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Senior Subordinated Notes, the Authority has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 6 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Senior Subordinated Notes Indenture, dated March 3, 1999, between the Authority, the Tribe and State Street Bank and Trust Company, as Trustee, relating to the Initial Senior Subordinated Notes and the Senior Subordinated Exchange Notes (the "Senior Subordinated Notes Indenture"). The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings. Act: The Securities Act of 1933, as amended. Affiliate: As defined in Rule 144 of the Act. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Business Day: Any day except a Saturday, Sunday or other day in the City of New York, or in the city of the corporate trust office of the Trustee, on which banks are authorized to not open for business. Certificated Securities: Definitive Senior Subordinated Notes, as defined in the Senior Subordinated Notes Indenture. Closing Date: The date hereof. Commission: The Securities and Exchange Commission. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Senior Subordinated Exchange Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Authority to the Registrar under the Senior Subordinated Notes Indenture of Senior Subordinated Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Initial Senior Subordinated Notes tendered by Holders thereof pursuant to the Exchange Offer. Consummation Deadline: As defined in Section 3(b) hereof. 1 Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Notes: The Authority's 8 3/4% Senior Subordinated Exchange Notes due 2009 to be issued pursuant to the Senior Subordinated Notes Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. Exchange Offer: (A) The exchange and issuance by the Authority of a principal amount of Senior Subordinated Exchange Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Initial Senior Subordinated Notes that are tendered by such Holders in connection with such exchange and issuance and (B) the exchange and issuance by the Authority of a principal amount of Senior Exchange Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Initial Senior Notes that are tendered by such Holders in connection with such exchange and issuance. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Initial Senior Subordinated Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act, and pursuant to Regulation S under the Act. Filing Deadline: As defined in Sections 3(a) and 4(a) hereof. Holders: As defined in Section 2 hereof. Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Recommencement Date: As defined in Section 6(d) hereof. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Authority relating to (a) an offering of Senior Subordinated Exchange Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Regulation S: Regulation S promulgated under the Act. Rule 144: Rule 144 promulgated under the Act. Shelf Registration Statement: As defined in Section 4 hereof. Suspension Notice: As defined in Section 6(d) hereof. TIA: The Trust Indenture Act of 1939, as amended. 2 Transfer Restricted Securities: Each (A) Initial Senior Subordinated Note, until the earliest to occur of (i) the date on which such Initial Senior Subordinated Note is exchanged in the Exchange Offer for a Senior Subordinated Exchange Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (ii) the date on which such Initial Senior Subordinated Note has been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Senior Subordinated Exchange Notes), or (iii) the date on which such Initial Senior Subordinated Note is distributed to the public pursuant to Rule 144 under the Act and each (B) Senior Subordinated Exchange Note held by a Broker Dealer until the date on which such Senior Subordinated Exchange Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). Tribe: 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. SECTION 2. HOLDERS A person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Authority shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date (such 90th day being the "Filing Deadline"), (ii) use its best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 150 days after the Closing Date (such 150th day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Senior Subordinated Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Senior Subordinated Exchange Notes to be offered in exchange for the Initial Senior Subordinated Notes that are Transfer Restricted Securities and (ii) resales of Senior Subordinated Exchange Notes by Broker-Dealers that tendered into the Exchange Offer Initial Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Initial Senior Subordinated Notes acquired directly from the Authority or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Authority shall use its best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Authority shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Senior Subordinated Exchange Notes and the Senior Exchange Notes shall be included in the Exchange Offer Registration Statement. The Authority shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days thereafter (such 30th day being the "Consummation Deadline"). 3 (c) The Authority shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Initial Senior Subordinated Notes acquired directly from the Authority or any Affiliate of the Authority), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Senior Subordinated Exchange Notes received by such Broker-Dealer in the Exchange Offer, the Authority shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of Senior Subordinated Exchange Notes by Broker-Dealers, the Authority agrees to use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Authority shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Exchange Offer is not permitted by applicable law (after the Authority has complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Authority within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Senior Subordinated Exchange 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 by such Holder or (C) such Holder is a Broker-Dealer and holds Initial Senior Subordinated Notes acquired directly from the Authority or any of its Affiliates, then the Authority shall (x) cause to be filed, on or prior to 30 days after the earlier of (i) the date on which the Authority determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Authority receives the notice specified in clause (a)(ii) above, (such earlier date, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "Shelf Registration Statement")), relating to all Transfer Restricted Securities, and (y) shall use its best efforts to cause such Shelf Registration Statement to become effective on or prior to 90 days after the Filing Deadline for the Shelf Registration Statement (such 90th day the "Effectiveness Deadline"). If, after the Authority has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Authority is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e. clause (a)(i) 4 above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Authority shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Authority shall use its best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Authority in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to additional interest pursuant to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to furnish promptly additional information required to be disclosed in order to make the information previously furnished to the Authority by such Holder not materially misleading. SECTION 5. ADDITIONAL INTEREST If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within 2 days by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective within 5 days of filing such post-effective amendment to such Registration Statement (each such event referred to in clauses (i) through (iv), a "Registration Default"), then the Authority hereby agrees to pay to each Holder of Transfer Restricted Securities affected thereby additional interest in an amount equal to 25 basis points per 90-day period of the principal amount of Transfer Restricted Securities held by such Holder for the 90-day period or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the additional interest shall increase by an additional 25 basis points with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of additional interest of 1% per annum of the principal amount of Transfer Restricted Securities; provided that the Authority shall in no event be required to pay additional interest for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the additional interest payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. 5 All accrued additional interest shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Senior Subordinated Notes Indenture and the Senior Subordinated Notes, on each Interest Payment Date, as more fully set forth in the Senior Subordinated Notes Indenture and the Senior Subordinated Notes. Notwithstanding the fact that any securities for which additional interest is due cease to be Transfer Restricted Securities, all obligations of the Authority to pay additional interest with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Authority shall (x) comply with all applicable provisions of Section 6(c) below, (y) use its best efforts to effect such exchange and to permit the resale of Senior Subordinated Exchange Notes by Broker-Dealers that tendered in the Exchange Offer Initial Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Initial Senior Subordinated Notes acquired directly from the Authority or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Authority raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Authority hereby agrees to seek a no-action letter or other favorable decision from the Commission staff allowing the Authority to Consummate a Exchange Offer for such Transfer Restricted Securities. In connection with the foregoing, the Authority hereby agrees to take all actions as may be required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Authority setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Authority, prior to the Consummation of the Exchange Offer, a written representation to the Authority (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Authority, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Senior Subordinated Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Senior Subordinated Exchange Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer, each Holder using the Exchange Offer to participate in a distribution of the Senior Subordinated Exchange Notes shall acknowledge and agree that, if the resales are of Senior Subordinated Exchange Notes obtained by such Holder in exchange for Initial Senior Subordinated Notes acquired directly from the Authority or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of 6 Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Authority shall provide a supplemental letter to the Commission (A) stating that the Authority is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that the Authority has not entered into any arrangement or understanding with any person to distribute the Senior Subordinated Exchange Notes to be received in the Exchange Offer and that, to the best of the Authority's information and belief, each Holder participating in the Exchange Offer is acquiring the Senior Subordinated Exchange Notes in its ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the Senior Subordinated Exchange Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Authority shall (i) comply with all the provisions of Section 6(c) below and use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Authority pursuant to Section 4(b) hereof), and pursuant thereto the Authority will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue, upon the request of any Holder or purchaser of Initial Senior Subordinated Notes covered by any Shelf Registration Statement contemplated by this Agreement, Senior Subordinated Exchange Notes having an aggregate principal amount equal to the aggregate principal amount of Initial Senior Subordinated Notes sold pursuant to the Shelf Registration Statement and surrendered to the Authority for cancellation. The Authority shall register Senior Subordinated Exchange Notes on the Shelf Registration Statement for this purpose and issue the Senior Subordinated Exchange Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Authority shall: (i) use its best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Authority shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use its best efforts to cause such amendment to be declared effective as soon as practicable; (ii) prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such 7 Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be, cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Authority shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to each Holder in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days, and the Authority will use its best efforts to reflect in each such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) when so filed with the Commission, such comments proposed by such Holders. A Holder shall be deemed to have objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; 8 (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder in connection with such exchange or sale, if any, make the Authority's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Holders may reasonably request; (vii) make available, at reasonable times, for inspection by each Holder and any attorney or accountant retained by such Holders, all financial and other records, pertinent corporate documents of the Authority and cause the Authority's officers, board members and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (viii) if requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Authority is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Authority hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) upon the request of any Holder, enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Authority shall (A) upon request of any Holder, furnish (or in the case of paragraphs (2) and (3), use its best efforts to cause to be furnished) to each Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, signed on behalf of the Authority by the Chairman of the Management Board confirming, as of the date thereof, the matters set forth in Section 6(d) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Authority covering such matters as such Holder may reasonably request and are customarily given in similar offerings; and 9 (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Authority's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 6(e) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Authority pursuant to this clause (xi); (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Authority shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use its best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Senior Subordinated Notes Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvi) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a 12-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Senior Subordinated Notes Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Senior Subordinated Notes Indenture as may be required for such Senior Subordinated Notes 10 Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Senior Subordinated Notes Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Authority of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Authority that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Authority with more recently dated Prospectuses or (ii) deliver to the Authority (at the Authority's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. (e) Underwritten Offerings. No Holder may participate in any underwritten Shelf Registration Statement hereunder unless such Holder (i) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements entered into in connection therewith and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Authority's performance of or compliance with this Agreement will be borne by the Authority, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Senior Subordinated Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Authority and the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Senior Subordinated Exchange Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Authority (including the expenses of any special audit and comfort letters required by or incident to such performance). The Authority will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Authority. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the 11 Authority will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Senior Subordinated Notes into the Exchange Offer and/or selling or reselling Initial Senior Subordinated Notes or Senior Subordinated Exchange Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. Notwithstanding the foregoing, the Holders of any Initial Senior Subordinated Notes or Exchange Senior Subordinated Notes being registered on the Shelf Registration Statement shall pay all agency or brokerage fees and commissions and underwriting discounts and commissions attributable to the sale of such Initial Senior Subordinated Notes or Exchange Senior Subordinated Notes and the fees and disbursements of any counsel retained by such Holders other than counsel referred to above. SECTION 8. INDEMNIFICATION (a) The Authority agrees to indemnify and hold harmless each Holder, its directors, officers and each person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Authority to any Holder or any prospective purchaser of Senior Subordinated Exchange Notes or registered Initial Senior Subordinated Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Authority by any of the Holders. (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Authority and its directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Authority to the same extent as the foregoing indemnity from the Authority set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Authority by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "indemnifying person") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the 12 defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Authority, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than 20 Business Days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Authority, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Authority, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Authority, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Authority, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Authority and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the 13 equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. SECTION 9. RULE 144A and RULE 144 The Authority agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Authority (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. SECTION 10. CONSENT TO SUIT The Authority 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 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 Authority intends 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 Authority waives its immunity from unconsented suit to permit the maintenance of the following actions: (i) Courts. The Authority waives its 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 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 Authority has been improperly granted or unreasonably withheld; (iii) enforce any judgment prohibiting the Authority from taking any action, or mandating or obligating the Authority to take any action, including a judgment compelling the Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. ss. 1302 (or any successor statute). (ii) Arbitration. The Authority waives its immunity from unconsented suit to permit arbitrators, appointed and acting under the commercial arbitration rules of the American Arbitration 14 Association, whenever and to the extent any agreement to submit a matter to arbitration is made by the Authority, to: (i) enforce and interpret the terms of this Agreement and to award and enforce the award of any damages owing as a consequence thereof; (ii) determine whether any consent or approval of the Authority has been unreasonably withheld; and (iii) enforce any judgment prohibiting the Authority from taking any action, or mandating or obligating the Authority to take any action, including a judgment compelling the Authority to submit to binding arbitration. SECTION 11. MISCELLANEOUS (a) Remedies. The Authority acknowledges and agrees that any failure by the Authority to comply with its obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Authority's obligations under Sections 3 and 4 hereof. The Authority further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Authority will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Authority's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 11(c)(i), the Authority has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Authority has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Authority or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Authority, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Senior Subordinated Notes Indenture, with a copy to the Registrar under the Senior Subordinated Notes Indenture; and (ii) if to the Authority: Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard 15 Uncasville, CT 06382 Telecopier No.: (860) 204-6153 Attention: Roland J. Harris With a copy to: Hogan & Hartson LLP 555 Thirteenth Street, NW Washington, DC 20004 Telecopier No.: (202) 637-5910 Attention: David B.H. Martin, Jr., Esq. All such notices and communications 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 receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the person giving the same to the Trustee at the address specified in the Senior Subordinated Notes Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Senior Subordinated Notes Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration 16 rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 17 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. MOHEGAN TRIBAL GAMING AUTHORITY ----------------------------------- By: Name: Title: SALOMON SMITH BARNEY INC. By: -------------------------------- Name: Title: NATIONSBANC MONTGOMERY SECURITIES LLC By: -------------------------------- Name: Title: SG COWEN SECURITIES CORPORATION By: -------------------------------- Name: Title: BEAR, STEARNS & CO. INC. By: -------------------------------- Name: Title: BANCBOSTON ROBERTSON STEPHENS INC. By: -------------------------------- Name: Title: 18 FLEET SECURITIES, INC. By: -------------------------------- Name: Title: 19 EX-5.1 7 EXHIBIT 5.1 Exhibit 5.1 _____________, 1999 Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Ladies and Gentlemen: This firm has acted as special counsel to the Mohegan Tribe of Indians of Connecticut (the "Tribe") and the Mohegan Tribal Gaming Authority (the "Authority"), an instrumentality of the Tribe, in connection with its Registration Statement on Form S-4, (the "Registration Statement"), filed with the Securities and Exchange Commission relating to the proposed offering of up to $200,000,000 in aggregate principal amount of 8-1/8% Senior Notes due January 1, 2006 (the "Senior Exchange Notes") in exchange for up to $200,000,000 in aggregate principal amount of the Authority's outstanding 8-1/8% Senior Notes due January 1, 2006 (the "Senior Notes") and to the proposed offering of up to $300,000,000 in aggregate principal amount of 8-3/4% Senior Subordinated Notes due January 1, 2009 (the "Senior Subordinated Exchange Notes" and together with the Senior Exchange Notes, the "Exchange Notes") in exchange for up to $300,000,000 in aggregate principal amount of the Authority's outstanding 8-3/4% Senior Subordinated Notes due January 1, 2009 (the "Senior Subordinated Notes"). This opinion letter is furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. (S)229.601(b)(5), in connection with the Registration Statement. For purposes of this opinion letter, we have examined copies of the following documents: 1. An executed copy of the Registration Statement. 2. An executed copy of the Senior Notes Indenture dated March 3, 1999 (the "Senior Notes Indenture"), by and between the Authority and First Union National Bank, including the form of Exchange Mohegan Tribal Gaming Authority ______________, 1999 Page 2 Note to be issued pursuant thereto, as filed as Exhibit 4.2 to the Registration Statement. 3. An executed copy of the Indenture dated March 3, 1999 (the "Senior Subordinated Notes Indenture"), by and between the Authority and State Street Bank and Trust Company, including the form of Exchange Note to be issued pursuant thereto, as filed as Exhibit 4.7 to the Registration Statement. 4. The Constitution of the Mohegan Tribe, as certified by the Recording Secretary of the Management Board of the Authority on the date hereof as being complete, accurate and in effect. 5. The Mohegan Tribal Ordinance No. 95-2 "And Ordinance Establishing the Mohegan Tribal Gaming Authority" dated July 15, 1995. 6. Resolutions of the Management Board of the Authority adopted on February 18, 1999 as certified by the Recording Secretary of the Management Board of the Authority on the date hereof as being complete, accurate and in effect, relating to the issuance and sale of the Exchange Notes and arrangements in connection therewith. In our examination of the aforesaid documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity, accuracy and completeness of all documents submitted to us, and the conformity with the original documents of all documents submitted to us as certified, telecopied, photostatic or reproduced copies. This opinion letter is given, and all statements herein are made, in the context of the foregoing. This opinion letter is based as to matters of law solely on applicable provisions of the contract law of the State of New York (but not including any statutes, ordinances, administrative decisions, rules or regulations of any political subdivision of the State of New York). We express no opinion herein as to any other laws, statutes, ordinances, rules or regulations. Based upon, subject to and limited by the foregoing, we are of the opinion that the Exchange Notes have been duly authorized on behalf of the Authority and that, (i) following the effectiveness of the Registration Statement and receipt by the Authority of the Senior Notes in exchange for the Senior Exchange Mohegan Tribal Gaming Authority ______________, 1999 Page 3 Notes and receipt by the Authority of the Senior Subordinated Notes in exchange for the Senior Subordinated Exchange Notes as specified in the resolutions of the Management Board referred to above, and (ii) assuming due execution, authentication, issuance and delivery of the Senior Exchange Notes and Senior Subordinated Exchange Notes as provided in the Senior Notes Indenture and Senior Subordinated Notes Indenture (together, the "Indentures"), respectively, both sets of Exchange Notes will constitute valid and binding obligations of the Authority entitled to the benefits of the Indentures and enforceable in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and as may be limited by the exercise of judicial discretion and the application of principles of equity including without limitation, requirements of good faith, fair dealing, conscionability and materiality (regardless of whether the Exchange Notes are considered in a proceeding in equity or at law). The Opinion expressed in the Paragraph above shall be understood to mean ======================================================================== only that (i) if there is a default in performance of an obligation, (ii) if a ============================================================================== failure to pay or other damage can be shown and (iii) if the defaulting party ============================================================================= can be brought into a court which will hear the case and apply the governing ============================================================================ law, then, subject to the availability of defenses, and to the exceptions set ============================================================================= forth in the Paragraph above, the court will provide a money damage (or perhaps =============================================================================== injunctive or specific performance) remedy. =========================================== We assume no obligation to advise you of any changes in the foregoing subsequent to the delivery of this opinion letter. This opinion letter has been prepared solely for your use in connection with the filing of the Registration Statement on the date of this opinion letter and should not be quoted in whole or in part or otherwise referred to, nor filed with or furnished to any governmental agency or other person or entity, without the prior written consent of this firm. We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the prospectus constituting a part of the Registration Statement. In giving this consent, we do not thereby admit that we are an "expert" within the meaning of the Securities Act of 1933, as amended. Mohegan Tribal Gaming Authority ______________, 1999 Page 4 Very truly yours, HOGAN & HARTSON L.L.P. EX-10.6 8 EXHIBIT 10.6 Exhibit 10.6 AMENDMENT TO LAND LEASE This Amendment to Land Lease (this "Amendment") is entered into as of this 18th day of February 1999, between the MOHEGAN TRIBE OF INDIANS OF CONNECTICUT, a federally recognized Indian tribe (as lessor or landlord under the Land Lease referred to below, being hereinafter referred to as the "Tribe"), and the MOHEGAN TRIBAL GAMING AUTHORITY, an instrumentality of the Tribe (as lessee or tenant under such Land Lease, being hereinafter referred to as the "Authority"). WHEREAS, the Tribe and the Authority are parties to that certain Land Lease, dated September 29, 1995, as amended (the "Land Lease"); WHEREAS, the Tribe and the Authority desire to obtain financing for the purpose, among others, of expanding the Improvements, as defined in the Land Lease; WHEREAS, such financing is to be secured by, among other things, a leasehold mortgage deed encumbering all property which is the subject of the Land Lease together with all improvements now or hereafter located thereon, all as more fully set forth in that certain Leasehold Mortgage (which term is defined in Section 1 below) which has been approved by the Bureau of Indian Affairs; WHEREAS, the Tribe and the Authority desire to amend the Land Lease for the purpose of providing that the Leasehold Mortgage is a Permitted Mortgage, and that the Mortgagee referred to in the Leasehold Mortgage is a Permitted Mortgagee, within the meaning of the Land Lease; NOW, THEREFORE, in consideration of the foregoing and the agreements of the parties hereinafter set forth, the parties hereto hereby agree as follows: 1. The Land Lease is hereby amended by deleting Section 6(i) thereof and by inserting in lieu thereof the following: "(i) that certain Open-End Construction - Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement (the "Leasehold Mortgage") of even date herewith between the Authority, as Mortgagor, and Bank of America National Trust and Savings Association, as Administrative Agent under that certain Loan Agreement dated as of March 3, 1999 among Mortgagor, the Mohegan Tribe of Indians of Connecticut, the Lenders, Documentation Agent and Syndication Agent referred to therein, as Mortgagee, securing the Obligations, as defined in the Leasehold Mortgage, or" 2. The Authority and the Tribe acknowledge and agree that the Land Lease, as amended pursuant to this Amendment, is in full force and effect. 3. This Amendment, 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 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). IN WITNESS WHEREOF, this Amendment has been executed as of the date first above written. WITNESSES: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT By:/s/ Roland J. Harris __________________________________ ----------------------------- Roland J. Harris Chairman, Tribal Council __________________________________ MOHEGAN TRIBAL GAMING AUTHORITY By:/s/ Roland J. Harris __________________________________ -------------------- Roland J. Harris Chairman, Management Board __________________________________ 2 STATE OF ) ) ss. COUNTY OF ) On March ____, 1999, __________, 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, afederally recognized Indian tribe, as his/her free act and deed and the free act and deed of the Tribe. _______________________________ Notary Public My Commission expires:_________ STATE OF ) ) ss. COUNTY OF ) On March ___, 1999, __________, 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 TRIBAL GAMING AUTHORITY, as his/her free act and deed and the free act and deed of the Authority. _______________________________ Notary Public My Commission expires:_________ 3 Attachment to Amendment 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 of Connecticut Address: P.O. Box 488 67 Sandy Desert Road Uncasville, CT 06382 Occupation: Indian Tribe Party in Interest: Mohegan Tribal Gaming Authority Address: 1 Mohegan Sun Boulevard Uncasville, CT 06382 Occupation: Tribal Gaming Authority Fixed limited time to run: 25 years, with option to renew for 25 years (pursuant to Section 3 of the Land Lease referred to in the attached document) The Chairman of the Tribal Council of the Mohegan Tribe of Indians of Connecticut ("Tribe") is authorized to execute the attached document by Resolution No. 99-05 of the Tribal Council of the Tribe, dated February 18, 1999. The Chairman exercises his authority in this instance because the Tribal Council 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. 99-07 of the Management Board, dated February 18, 1999. 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 Mohegan Tribal Gaming Authority and the Tribe. The document was executed on or about 9:00 a.m. on March 3, 1999, at Uncasville, Connecticut, for the particular purpose set forth above. 4 The undersigned parties agree that the foregoing agreement is in compliance with 25 U.S.C. (S)(S) 81 and 415 and 25 C.F.R. (S) 162. WITNESS: Mohegan Tribe of Indians of Connecticut _____________________________ By: /s/ Roland J. Harris -------------------------------------- Roland J. Harris Title: Chairman, Tribal Counsel Mohegan Tribal Gaming Authority _____________________________ By: /s/ Roland J. Harris -------------------------------------- Roland J. Harris Title: Chairman, Management Board Approved Pursuant to U.S.C. (S)(S) 81 and 415 and 25 C.F.R. (S) 162 United States Department of Interior Bureau of Indian Affairs: Date: March 3, 1999 By: /s/ Franklin Keel ------------------------------------- Franklin Keel Eastern Area Director Eastern Area Office Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority 5 STATE OF ) ) ss. COUNTY OF ) On ______________, 1999, personally appeared before me, __________ a Notary Public in and for said County and State, ____________, 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 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. _________________________________ Notary Public My Commission expires:___________ 6 EX-10.10 9 EXHIBIT 10.10 Exhibit 10.10 EXECUTION ================================================================================ LOAN AGREEMENT Dated as of March 3, 1999 among THE MOHEGAN TRIBAL GAMING AUTHORITY (as the "Borrower"), THE MOHEGAN TRIBE OF INDIANS OF CONNECTICUT, (the "Tribe" as an additional obligor with respect to certain representations, warranties and covenants) the Lenders, Syndication Agent and Documentation Agent herein named and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as Administrative Agent NATIONSBANC MONTGOMERY SECURITIES, LLC, as Lead Arranger and Sole Book Manager ================================================================================ TABLE OF CONTENTS
Page ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS........................................................ 1 1.1 Defined Terms........................................................................... 1 1.2 Use of Defined Terms.................................................................... 28 1.3 Accounting Terms........................................................................ 28 1.4 Rounding................................................................................ 28 1.5 Exhibits and Schedules.................................................................. 29 1.6 Miscellaneous Terms..................................................................... 29 ARTICLE 2. LOANS AND LETTERS OF CREDIT............................................................. 30 2.1 Loans-General........................................................................... 30 2.2 Base Rate Loans......................................................................... 31 2.3 LIBOR Loans............................................................................. 31 2.4 Letters of Credit....................................................................... 32 2.5 Automatic Reduction of Commitment....................................................... 35 2.6 Voluntary Reduction of Commitment....................................................... 36 2.7 Optional Increases to the Commitment.................................................... 36 2.8 Administrative Agent's Right to Assume Funds Available for Advances..................... 37 2.9 Collateral.............................................................................. 38 ARTICLE 3. PAYMENTS AND FEES....................................................................... 39 3.1 Principal and Interest.................................................................. 39 3.2 Arrangement Fees........................................................................ 40 3.3 Annual Agency Fees...................................................................... 40 3.4 Facility Fees........................................................................... 40 3.5 Commitment Fees......................................................................... 40 3.6 Letter of Credit Fees................................................................... 41 3.7 Increased Commitment Costs.............................................................. 41 3.8 LIBOR Fees and Costs.................................................................... 41 3.9 Default Rate............................................................................ 44 3.10 Computation of Interest and Fees........................................................ 44 3.11 Non-Business Days....................................................................... 44 3.12 Manner and Treatment of Payments........................................................ 45 3.13 Funding Sources......................................................................... 45 3.14 Failure to Charge Not Subsequent Waiver................................................. 45 3.15 Administrative Agent's Right to Assume Payments Will be Made by Borrower ....................................................................... 45
-i- 3.16 Authority to Charge Account............................................................. 46 3.17 Fee Determination Detail................................................................ 46 3.18 Survivability........................................................................... 46 3.19 Withholding Gross-Up.................................................................... 46 ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE TRIBE............................................. 48 4.1 Existence and Qualification; Power; Compliance With Laws................................ 48 4.2 Authority; Compliance With Other Agreements and Instruments and Government Regulations.. 48 4.3 No Governmental Approvals Required...................................................... 49 4.4 The Nature of Borrower.................................................................. 49 4.5 No Management Contract.................................................................. 50 4.6 Title to and Location of Property....................................................... 50 4.7 Real Property........................................................................... 50 4.8 Governmental Regulation................................................................. 50 4.9 Binding Obligations..................................................................... 50 4.10 No Default.............................................................................. 50 4.11 Disclosure.............................................................................. 51 4.12 Gaming Laws............................................................................. 51 4.13 Security Interests...................................................................... 51 4.14 Arbitration............................................................................. 51 4.15 Recourse Obligations.................................................................... 51 ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.......................................... 52 5.1 Existence and Qualification; Power; Compliance With Laws................................ 52 5.2 Authority; Compliance With Other Agreements and Instruments and Government Regulations.. 52 5.3 No Governmental Approvals Required...................................................... 53 5.4 The Nature of Borrower.................................................................. 53 5.5 No Management Contract.................................................................. 54 5.6 Financial Statements.................................................................... 54 5.7 Financial Statements of Borrower........................................................ 54 5.8 No Other Liabilities; No Material Adverse Effect........................................ 54 5.9 Title to and Location of Property....................................................... 54 5.10 Real Property........................................................................... 54 5.11 Intangible Assets....................................................................... 55 5.12 Governmental Regulation................................................................. 55 5.13 Litigation.............................................................................. 55 5.14 Binding Obligations..................................................................... 55 5.15 No Default.............................................................................. 56 5.16 ERISA................................................................................... 56
-ii- 5.17 Regulations T, U and X; Investment Company Act.......................................... 56 5.18 Disclosure.............................................................................. 56 5.19 Tax Liability........................................................................... 56 5.20 Projections............................................................................. 56 5.21 Employee Matters........................................................................ 57 5.22 Gaming Laws............................................................................. 57 5.23 Security Interests...................................................................... 57 5.24 Hazardous Materials..................................................................... 57 5.25 Arbitration............................................................................. 57 5.26 Deposit Accounts........................................................................ 57 ARTICLE 6. AFFIRMATIVE COVENANTS OF BORROWER (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)... 58 6.1 Payment of Taxes and Other Potential Liens.............................................. 58 6.2 Maintenance of Properties............................................................... 58 6.3 Maintenance of Insurance................................................................ 58 6.4 Compliance With Laws.................................................................... 59 6.5 Preservation of Licenses and Permits.................................................... 59 6.6 Inspection Rights....................................................................... 59 6.7 Keeping of Records and Books of Account................................................. 60 6.8 Compliance With Agreements.............................................................. 60 6.9 Use of Proceeds......................................................................... 60 6.10 Hazardous Materials Laws................................................................ 60 6.11 Deposit and Brokerage Accounts.......................................................... 61 6.12 Proposed Expansion...................................................................... 61 6.13 Year 2000 Compliance.................................................................... 61 ARTICLE 7. NEGATIVE COVENANTS OF BORROWER (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)...... 62 7.1 Payment of Subordinated Obligations..................................................... 62 7.2 Disposition of Property................................................................. 62 7.3 Investments and Acquisitions............................................................ 62 7.4 Hostile Tender Offers................................................................... 63 7.5 Distributions........................................................................... 63 7.6 ERISA................................................................................... 64 7.7 Business of Borrower.................................................................... 64 7.8 Liens; Negative Pledges; Sales and Leasebacks........................................... 64 7.9 Indebtedness and Contingent Obligations................................................. 65 7.10 Transactions with Affiliates............................................................ 65 7.11 Authority Expenditures.................................................................. 66 7.12 Total Leverage Ratio.................................................................... 66
-iii- 7.13 Senior Leverage Ratio................................................................... 66 7.14 Fixed Charge Coverage Ratio............................................................. 67 7.15 Capital Expenditures.................................................................... 67 7.16 Deposit Accounts........................................................................ 68 ARTICLE 8. INFORMATION AND REPORTING REQUIREMENTS.................................................. 69 8.1 Financial and Business Information...................................................... 69 8.2 Compliance Certificates................................................................. 71 ARTICLE 9. COVENANTS OF THE TRIBE.................................................................. 72 9.1 Continual Operation of Mohegan Sun...................................................... 72 9.2 Remittance of Available Cash Flow....................................................... 72 9.3 Sovereign Immunity; Jurisdiction and Venue.............................................. 72 9.4 The Landlord Consent.................................................................... 72 9.5 Preservation of Existence; Operation.................................................... 72 9.6 Ownership of Mohegan Sun; Management.................................................... 73 9.7 Prohibited Transactions................................................................. 73 9.8 Amendments to Certain Documents......................................................... 73 9.9 Impairment of Contracts; Imposition of Governmental Charges............................. 74 9.10 Segregation of Authority Assets......................................................... 74 9.11 Trust Property.......................................................................... 74 9.12 Liens on Authority Property............................................................. 74 9.13 Bankruptcy Matters; Etc................................................................. 75 9.14 Impairment of Contracts................................................................. 75 ARTICLE 10. CONDITIONS.............................................................................. 76 10.1 Closing................................................................................. 76 10.2 Initial Advances........................................................................ 78 10.3 Any Increasing Advance.................................................................. 79 ARTICLE 11. EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT.................................... 81 11.1 Events of Default....................................................................... 81 11.2 Remedies Upon Event of Default.......................................................... 84 ARTICLE 12. THE ADMINISTRATIVE AGENT................................................................ 87 12.1 Appointment and Authorization........................................................... 87 12.2 Business Activities with the Tribe and Borrower......................................... 87 12.3 Proportionate Interest of the Lenders in any Collateral................................. 87
-iv- 12.4 Lenders' Credit Decisions............................................................... 88 12.5 Action by Administrative Agent.......................................................... 88 12.6 Liability of Administrative Agent....................................................... 89 12.7 Indemnification......................................................................... 90 12.8 Successor Administrative Agent.......................................................... 90 12.9 Performance of Conditions............................................................... 91 12.10 Collateral Matters...................................................................... 91 12.11 No Obligations of Borrower or the Tribe................................................. 92 ARTICLE 13. MISCELLANEOUS........................................................................... 93 13.1 Cumulative Remedies; No Waiver.......................................................... 93 13.2 Amendments; Consents.................................................................... 93 13.3 Costs, Expenses and Taxes............................................................... 94 13.4 Nature of the Lenders' Obligations...................................................... 94 13.5 Survival of Representations and Warranties.............................................. 95 13.6 Notices................................................................................. 95 13.7 Execution of Loan Documents............................................................. 95 13.8 Binding Effect; Assignment.............................................................. 95 13.9 Lien on Deposits and Property in Possession of any Lender............................... 98 13.10 Sharing of Setoffs...................................................................... 98 13.11 Indemnity by Borrower................................................................... 99 13.12 Nonliability of the Lenders............................................................. 100 13.13 No Third Parties Benefited.............................................................. 101 13.14 Confidentiality......................................................................... 101 13.15 Hazardous Materials Indemnity........................................................... 101 13.16 Further Assurances...................................................................... 102 13.17 Integration............................................................................. 102 13.18 Governing Law........................................................................... 102 13.19 Severability of Provisions.............................................................. 103 13.20 Independent Covenants................................................................... 103 13.21 Headings................................................................................ 103 13.22 Time of the Essence..................................................................... 103 13.23 Tax Withholding Exemption Certificates.................................................. 103 13.24 Arbitration Reference................................................................... 103 13.25 PURPORTED ORAL AMENDMENTS............................................................... 104 13.26 WAIVER OF RIGHT TO TRIAL BY JURY........................................................ 104 13.27 WAIVER OF SOVEREIGN IMMUNITY; CONSENT TO JURISDICTION .................................. 105 13.28 Lender Covenant......................................................................... 106 13.29 PREJUDGMENT REMEDY WAIVER............................................................... 107 13.30 Designated Senior Secured Indebtedness.................................................. 107 13.31 Compliance with 25 U.S.C.(S).81......................................................... 107
-v- EXHIBITS - -------- A - Assignment Agreement B - Compliance Certificate C - Deposit Account Letter D - Note E - Opinion - Tribal Counsel F - Opinions - Hogan & Hartson and Rome McGuigan Sabanosh G - Request for Letter of Credit H - Request for Loan SCHEDULES - --------- 1.1 Pro Rata Shares of the Commitment 4.7 Mohegan Sun Real Property 5.13 Litigation 5.20 Projections 5.24 Hazardous Materials 5.26 Deposit and Brokerage Accounts 6.4 Real Property Insurance 7.8 Existing Liens and Rights of Others 7.9 Existing Indebtedness and Contingent Obligations -vi- LOAN AGREEMENT -------------- Dated as of March 3, 1999 This LOAN AGREEMENT ("Agreement") is entered into by and among The Mohegan Tribe of Indians of Connecticut, a federally recognized Indian Tribe and Native American sovereign nation (the "Tribe"), The Mohegan Tribal Gaming Authority, a governmental instrumentality of the Tribe (the "Borrower"), Bank of America National Trust and Savings Association ("Bank of America"), and each other lender whose name is set forth on the signature pages hereof or which may hereafter execute and deliver an Assignment Agreement with respect to this Agreement pursuant to Section 13.8 (collectively, the "Lenders" and individually, a "Lender"), Salomon Smith Barney, Inc., as Syndication Agent, Societe Generale, as Documentation Agent and Bank of America, as Administrative Agent. NationsBanc Montgomery Securities, LLC, is Lead Arranger and Sole Book Manager for the credit facilities described herein, but is not a party to this Agreement In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE 2. DEFINITIONS AND ACCOUNTING TERMS -------------------------------- 2.1 Defined Terms. As used in this Agreement, the following terms ------------- shall have the meanings set forth below: "Acquisition" means any transaction, or any series of related ----------- transactions, by which Borrower directly or indirectly (i) acquires any going business or all or substantially all of the assets of any firm, partnership, joint venture, corporation or division thereof, or any other business entity, whether through purchase of assets, merger or otherwise, or (ii) acquires (in one transaction or as the most recent transaction in a series of transactions) control of at least a majority in ordinary voting power of the securities of a corporation which have ordinary voting power for the election of directors, or (iii) acquires (in one transaction or as the most recent transaction in a series of transactions) control of a 50% or more ownership interest in any partnership, joint venture or other business entity. "Adjusted EBITDA" means, for any period, (a) which does not --------------- include any full Fiscal Quarters beginning following the Completion Date, EBITDA for that period, and (b) which includes (i) only one full Fiscal Quarter beginning following the Completion Date, EBITDA for that Fiscal Quarter times four, (ii) two full Fiscal Quarters following the Completion Date, EBITDA for those two Fiscal Quarters times two, (iii) three full Fiscal Quarters following the Completion Date, EBITDA for those -1- three Fiscal Quarters times one and one third, and (iv) which includes four Fiscal Quarters following the Completion Date, EBITDA for the four most recent Fiscal Quarters. "Advance" means any Advance made or to be made by any Lender to ------- Borrower as provided in Article 2. "Administrative Agent" means Bank of America, when acting in its -------------------- capacity as the Administrative Agent under any of the Loan Documents, and any successor Administrative Agent appointed pursuant to Section 12.8. "Administrative Agent's Office" means the Administrative Agent's ----------------------------- address as set forth on the signature pages of this Agreement, or such other address as the Administrative Agent hereafter may designate by written notice to Borrower and the Lenders. "Affiliate" means, as to any Person, any other Person which --------- directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (and the correlative terms, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). Each enrolled member of the Tribe and their immediate family members shall be deemed to be Affiliates of Borrower. "Agreement" means this Loan Agreement, either as originally --------- executed or as it may from time to time be supplemented, modified, amended, restated or extended. "Applicable Percentage" means, during each Pricing Period, (a) in --------------------- the case of interest calculable with respect to each Base Rate Loan, the percentage set forth below in the column headed "Base Rate", (b) in the case of interest calculable with respect to each LIBOR Loan, the percentage set forth in the column headed "LIBOR", and (c) in the case of Commitment Fees, the percentage set forth in the column headed "Commitment Fees," provided that during the Pricing Period immediately following the last day -------- of each Low Usage Quarter, the Commitment Fees set forth in the matrix below shall be increased by 0.125% per annum:
Total Leverage Base Commitment Ratio Rate LIBOR Fees ----- ---- ----- ---- Less than 0.000% 1.125% 0.300% 2.00:1.00 Greater than or 0.125% 1.375% 0.350% equal to 2.00:1.00
-2- but less than 2.50:1.00 Greater than or 0.375% 1.625% 0.400% equal to 2.50:1.00 but less than 3.00:1.00 Greater than or 0.625% 1.875% 0.500% equal to 3.00:1.00 but less than 3.50:1.00 Greater than or 0.875% 2.125% 0.500% equal to 3.50:1.00 but less than 4.00:1.00 Greater than or 1.125% 2.375% 0.500% equal to 4.00:1.00 but less than 4.50:1.00 Greater than or 1.375% 2.625% 0.500% equal to 4.50:1.00
The Applicable Percentage shall change as of the first day of the calendar month following the receipt of a Compliance Certificate indicating a change in the Total Leverage Ratio. Notwithstanding the provisions of this definition, in the event that Borrower fails to deliver any Compliance Certificate on a timely basis, the Applicable Percentage shall increase to the highest level set forth above until such time as Borrower delivers a Compliance Certificate. "Approved Swap Agreements" means one or more Swap Agreements with ------------------------ respect to the Indebtedness evidenced by this Agreement between Borrower and one or more of the Lenders, on terms mutually acceptable to Borrower and that Lender or Lenders. Each Approved Swap Agreement shall be a Loan Document and shall be secured by the Liens created by the Collateral Documents to the extent set forth in Section 2.9. "Assignment Agreement" means an Assignment Agreement substantially in -------------------- the form of Exhibit A. "Authority Property" means any and all now owned or hereafter acquired ------------------ real, mixed and personal Property of the Borrower (whether or not otherwise designated as property of the Borrower) which is reflected on the balance sheet described in Section 5.6(a) or any subsequent balance sheet hereafter delivered by Borrower to the Administrative Agent or the Lenders in connection herewith. "Authority Property" in any event includes without limitation (i) the Mohegan -------- Sun, all gaming revenues of Borrower, the revenues of Borrower, and (ii) all tangible Property located within the area described on Schedule 4.7. "Available Cash Flow" means, for any calendar month (a) EBITDA for ------------------- that month, minus (b) the amount of Maintenance Capital Expenditures made during ----- that month, minus (c) any principal repayments with respect to Indebtedness and ----- -3- Capital Leases constituting Recourse Obligations required to be made during that period in cash, and minus (d) the amount of cash Interest Charges during that ----- month. "Base Rate" means, as of any date of determination, the greater of (a) --------- ------- the Reference Rate or (b) the Federal Funds Rate plus .50%. ---- "Base Rate Advance" means an Advance made hereunder as a part of a ----------------- Base Rate Loan made in accordance with Article 2. "Base Rate Loan" means a Loan made hereunder and designated as a Base -------------- Rate Loan in accordance with Article 2. "Borrower" means The Mohegan Tribal Gaming Authority. -------- "Bureau of Indian Affairs" means the United States Department of the ------------------------ Interior, Bureau of Indian Affairs, and each successor agency. "Business Day" means any Monday, Tuesday, Wednesday, Thursday or ------------ Friday, other than a day on which banks are authorized or required to be closed ---------- in California, Connecticut or New York. "Capital Expenditure" means any expenditure that is considered a ------------------- capital expenditure under Generally Accepted Accounting Principles, consistently applied, including any amount that is required to be treated as an asset subject --------- to a Capital Lease. "Capital Lease" means, as to any Person, a lease of any Property by ------------- that Person as lessee that is, or should be in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or if such Statement is not then in effect, such other statement of Generally Accepted Accounting Principles as may be applicable, recorded as a "capital lease" on the balance sheet of that Person prepared in accordance with Generally Accepted Accounting Principles. "Cash" means, when used in connection with any Person, all monetary ---- and non-monetary items owned by that Person that are treated as cash in accordance with Generally Accepted Accounting Principles. "Cash Equivalents" means, when used in connection with any Person, ---------------- that Person's Investments in: (a) Government Securities due within one year after the date of the making of the Investment; -4- (b) readily marketable direct obligations of any State of the United States of America or any political subdivision of any such State given on the date of such investment a credit rating of at least Aa by Moody's Investors Service, Inc. or AA by Standard & Poor's Ratings Group, in each case due within one year after the date of the making of the Investment; (c) certificates of deposit issued by, bank deposits in, eurodollar deposits through, bankers' acceptances of, and reverse repurchase agreements covering Government Securities executed by, any Lender or any other bank, savings and loan or savings bank doing business in and incorporated under the Laws of the United States of America or any State thereof and having on the date of such Investment combined capital, surplus and undivided profits of at least $250,000,000, in each case due within one year after the date of the making of the Investment; (d) certificates of deposit issued by, bank deposits in, eurodollar deposits through, bankers' acceptances of, and reverse repurchase agreements covering Government Securities executed by, any branch or office located in the United States of America of a bank incorporated under the Laws of any jurisdiction outside the United States of America having on the date of such Investment combined capital, surplus and undivided profits of at least $500,000,000, in each case due within one year after the date of the making of the Investment; and (e) readily marketable commercial paper of corporations doing business in and incorporated under the Laws of the United States of America or any State thereof given on the date of such Investment the highest credit rating by Moody's Investors Service, Inc. and Standard & Poor's Corporation, in each case due within 270 days after the date of the making of the Investment. "Change in Control" means the occurrence of any one or more of the ----------------- following: (a) Borrower ceases to be a wholly-owned unit, instrumentality or subdivision of the government of the Tribe; (b) Borrower ceases to have the exclusive legal right to operate the gaming operations of the Tribe; or -5- (c) Borrower sells, assigns, transfers, leases or otherwise disposes of all or substantially all of its assets to, any Person (except for any sale, assignment, transfer, lease or other disposition to a Subsidiary of Borrower permitted hereby and by the Senior Note Indenture). "Closing Date" means the time and Business Day on which the ------------ consummation of all of the transactions contemplated in Section 10.1 occurs. "Code" means the Internal Revenue Code of 1986, as amended or replaced ---- and as in effect from time to time. "Collateral" means, collectively, all of the collateral subject to the ---------- Liens, or intended to be subject to the Liens, created by the Collateral Documents. "Collateral Documents" means, collectively, the Security Agreement, -------------------- each Deposit Account Agreement, any Leasehold Mortgage and any other pledge agreement, hypothecation agreement, security agreement, assignment, deed of trust, mortgage or similar instrument executed by Borrower in favor of the Administrative Agent or any Creditor to secure the Obligations. "Commission" means the National Indian Gaming Commission. ---------- "Commitment" means $425,000,000, or such lesser amount to which the ---------- lending commitment of the Lenders may be reduced in accordance with Sections 2.5 and 2.6. The respective Pro Rata Shares of each Lender with respect to the Commitment as of the Closing Date are set forth in Schedule 1.1. "Commitment Fees" means the fees referred to in Section 3.5. --------------- "Compact" means the tribal-state Compact entered into between the ------- Tribe and the State of Connecticut pursuant to IGRA, dated April 25, 1994, as amended. "Completion Date" means the first date upon which hotel guests utilize --------------- the lodging services contemplated to be provided by the hotel tower described as part of the Proposed Expansion. "Compliance Certificate" means a certificate substantially in the form ---------------------- of Exhibit B, properly completed and signed by a Senior Officer of the Borrower. "Constitution" means the Constitution of the Tribe adopted by the ------------ Tribe and ratified by the Tribe's members by Tribal Referendum dated April 12, 1996, as it may be amended from time to time. -6- "Consumer Price Index" means the Consumer Price Index for All Urban -------------------- Consumers (CPI-U) for the U.S. City Average for All Items, 1982-1984=100, as compiled and released by the Bureau of Labor Statistics. "Contingent Obligation" means, as to any Person, any (a) direct or --------------------- indirect guarantee of Indebtedness of, or other obligation performable by, any other Person, including any endorsement (other than for collection or deposit in --------- the ordinary course of business), co-making or sale with recourse of the obligations of any other Person or (b) contractual assurance (not arising solely by operation of Law) given to an obligee with respect to the performance of an obligation by, or the financial condition of, any other Person, whether direct, indirect or contingent, including any purchase or repurchase agreement covering --------- such obligation or any collateral security therefor, any agreement to provide funds (by means of loans, capital contributions or otherwise) to such other Person, any agreement to support the solvency or level of any balance sheet item to such other Person, or any other arrangement of whatever nature having the effect of assuring or holding harmless any obligee against loss with respect to any obligation of such other Person including without limitation any "keep- well", "take-or-pay" or "through put" agreement or arrangement. As of each date of determination, the amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation (unless the Contingent Obligation is limited by its terms to a lesser amount, in which case to the extent of such amount) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith. "Construction Consultant" means a construction consultant designated ----------------------- by the Administrative Agent and approved by Borrower, with such consent not to be unreasonably withheld or delayed. "Construction Progress Report" means a report prepared by the ---------------------------- Construction Consultant in a form which is reasonably acceptable to the Administrative Agent describing the progress of construction of the Proposed Expansion. "Construction Reserve Disbursement Agreement" means the Construction ------------------------------------------- Reserve Disbursement Agreement dated March 3, 1999 between the Tribe and Fleet National Bank, as Escrow Agent, for the benefit of Borrower. "Contractual Obligation" means, as to any Person, any provision of any ---------------------- outstanding Securities issued by that Person or of any material agreement, instrument or undertaking to which that Person is a party or by which it or any of its Property is bound. -7- "Creditors" means, collectively, the Administrative Agent, the Issuing --------- Lender, the Lenders, and the Lead Arranger, and their respective successors in interest. "Debtor Relief Laws" means the Bankruptcy Code of the United States of ------------------ America, as amended from time to time, and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws from time to time in effect affecting the rights of creditors generally. "Default" means any event that, with the giving of any applicable ------- notice or passage of time, or both, would be an Event of Default. "Default Rate" means the interest rate set forth in Section 3.9. ------------ "Defeasance Deposit" means the irrevocable trust deposit made by ------------------ Borrower on the Closing Date with First Union National Bank pursuant to the Escrow Deposit Agreement dated March 3, 1999 between Borrower and First Union National Bank in the principal amount of $140,300,000 for the purpose of providing for the covenant defeasance of the TCA Subordinated Notes, initially consisting of United States Treasury Bills maturing December 12, 1999. Notwithstanding any provision of the Loan Documents to the contrary the Administrative Agent and the Lenders shall not claim any Lien in the Defeasance Deposit. "Deposit Account Agreement" means a letter agreement among Borrower, ------------------------- the Administrative Agent and the depositary for each Operating Account, substantially in the form of Exhibit C. "Designated Deposit Account" means a deposit account to be maintained -------------------------- by Borrower with the Administrative Agent, as from time to time designated by Borrower by written notification to the Administrative Agent. "Designated Market" means, for any LIBOR Loan, the London Eurodollar ----------------- Market, provided that if the Administrative Agent determines that the London -------- Eurodollar Market is unavailable or reasonably inconvenient, "Designated Market" means such other offshore market for deposits in dollars as the Administrative Agent may reasonably designate. "Development Services Agreement" means the Development Services ------------------------------ Agreement dated February 7, 1998 between Borrower and Trading Cove Associates. "Disposition" means the sale, transfer or other disposition of ----------- Authority Property in any single transaction or series of related transactions of any individual -8- asset, or group of related assets, that has or have at the date of the Disposition a book value or fair market value (which shall be deemed to be equal to the sales price for such asset or assets upon a sale to a Person that is not an Affiliate of the Tribe) of $10,000,000 or more, other than (i) the sale or ----- ---- other disposition of inventory in the ordinary course of business, (ii) the sale or other disposition of equipment or other personal property that is replaced by equipment or personal property, as the case may be, performing substantially the same function not later than ninety (90) days after such sale or disposition and (iii) the sale or other disposition of obsolete equipment. "Distribution" means (a) any transfer of Cash or other Property from ------------ Borrower or any account of Borrower to the Tribe or any of its members or Affiliates or to their respective accounts, (b) any retirement, redemption, prepayment of principal, purchase or other acquisition for value by Borrower of any Securities or other obligations of the Tribe or any of its Affiliates (or of any other Person to the extent that such Securities or other obligations are guaranteed by the Tribe or any of its Affiliates), (c) the declaration or payment by Borrower of any dividend or distribution to the Tribe or any of its members or any of its Affiliates in Cash or in Property (but not the making of arm's length payments for goods and services provided by the Tribe or any of its Affiliates to the Borrower in the manner contemplated by Section 7.10), (d) any Investment (whether by means of loans, advances or otherwise) by Borrower in Securities or other obligations of the Tribe or any of its Affiliates, or (e) any other payment, assignment or transfer, whether in Cash or other Property, from Borrower to the Tribe or any of its members or Affiliates, including the payment of any tax, fee, charge or assessment imposed by the Tribe on Borrower, its revenues or Properties, provided that, both (A) the making of payments by -------- ---- Borrower to the Tribe or any of its Affiliates in consideration of goods and services provided to Borrower by the Tribe or its Affiliates in the ordinary course of business and in accordance with past practices, and (B) assessment by the Tribe against Borrower of the regulatory costs and expenses of the Tribe associated with Borrower in accordance with past practices, shall not be considered a Distribution. "Documentation Agent" means Societe Generale. The capacity of the ------------------- Documentation Agent is solely titular in nature, and except to the extent expressly set forth herein, the Documentation Agent shall not have any rights or obligations under the Loan Documents by reason of such capacity. "dollars" or "$" means United States dollars. ------- - "EBITDA" means, for any period, (a) Net Income of Borrower for that ------ period, plus (b) Interest Charges of Borrower for that period, plus (c) (without ---- ---- duplication) the aggregate amount, if any, of federal and state taxes on or measured by income of Borrower for that period (whether or not payable during that period, and excluding any amount payable to the State of Connecticut under the Compact), plus ---- -9- (d) depreciation and amortization of Borrower for that period, and minus (e) ----- payments under the Relinquishment Agreement, in each case paid during that period in cash, in each case as determined in accordance with Generally Accepted Accounting Principles. "Eligible Assignee" means (a) with respect to any Lender, another ----------------- Lender (b) with respect to any Lender, any Affiliate of that Lender, (c) any commercial bank having a combined capital and surplus of $100,000,000 or more, (d) any (i) savings bank, savings and loan association or similar financial institution or (ii) insurance company engaged in the business of writing insurance which, in either case (A) has a net worth of $200,000,000 or more, (B) is engaged in the business of lending money and extending credit under credit facilities substantially similar to those extended under this Agreement and (C) is operationally and procedurally able to meet the obligations of a Lender hereunder to the same degree as a commercial bank and (e) any other financial institution (including a mutual fund or other fund) having total assets of --------- $250,000,000 or more which meets the requirements set forth in subclauses (B) and (C) of clause (d) above; provided that each Eligible Assignee must either -------- (a) be organized under the Laws of the United States of America, any State thereof or the District of Columbia or (b) be organized under the Laws of the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of such a country, and (i) act hereunder through a branch, agency or funding office located in the United States of America and (ii) be exempt from withholding of tax on interest and deliver the documents related thereto pursuant to Section 13.23. "ERISA" means the Employee Retirement Income Security Act of 1974, and ----- any regulations issued pursuant thereto, as amended or replaced and as in effect from time to time. "ERISA Affiliate" means, with respect to any Person, any Person (or --------------- any trade or business, whether or not incorporated) that is under common control with that Person within the meaning of Section 414 of the Internal Revenue Code, Title 26, U.S.C. "Eurodollar Obligations" means eurocurrency liabilities, as defined in ---------------------- Regulation D. "Event of Default" shall have the meaning provided in Section 11.1. ---------------- "Existing Senior Secured Notes" means Borrower's existing $175,000,000 ----------------------------- principal amount 13.50% Senior Secured Notes issued pursuant to the Indenture dated as of September 29, 1995 among Borrower and First Fidelity Bank, as Trustee, as amended. -10- "Federal Funds Rate" means, as of any date of determination, a ------------------ fluctuating interest rate per annum equal to the federal funds effective rate for the previous Business Day as quoted by the Federal Reserve Bank of New York or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent. "Fiscal Quarter" means the fiscal quarter of Borrower consisting of a -------------- three month fiscal period ending on each March 31, June 30, September 30 and December 31. "Fiscal Year" means the fiscal year of Borrower consisting of a twelve ----------- month fiscal period ending on each September 30. "Fixed Charge Coverage Ratio" means, as of each date of determination, --------------------------- the ratio of (a) Adjusted EBITDA plus management fees paid in cash, in each case ---- for the four Fiscal Quarter period then ending, to (b) the sum of (i) Interest --- Charges with respect to Recourse Obligations to the extent payable in cash during that period, plus (ii) any principal repayments with respect to ---- Indebtedness and Capital Leases constituting Recourse Obligations required to be made during that period in cash, plus (iii) Maintenance Capital Expenditures for ---- that period, plus (iv) Distributions made during that period to the Tribe in ---- accordance with Section 7.5 plus (v) payments under the Relinquishment Agreement ---- and management fees, in each case made in cash during that period (without any annualization thereof). "Gaming Authority Ordinance" means Ordinance No. 95-2 of the Tribe, as -------------------------- enacted on July 15, 1995. "Gaming Board" means, collectively, (a) The Mohegan Tribal Gaming ------------ Commission, (b) the Connecticut Division of Special Revenue, (c) the Commission, and (d) any other Governmental Agency that holds licensing or permit authority over gambling, gaming or casino activities conducted by the Borrower or the Tribe within its jurisdiction. "Gaming Laws" means IGRA, the Gaming Ordinance, the Gaming Authority ----------- Ordinance and all other Laws pursuant to which any Gaming Board possesses licensing or permit authority over gambling, gaming, or casino activities conducted by the Borrower or the Tribe within its jurisdiction. "Gaming Ordinance" means Ordinance 94-1 of the Tribe, as enacted on, ---------------- July 28, 1994. -11- "Generally Accepted Accounting Principles" means, as of any date of ---------------------------------------- determination, accounting principles set forth as generally accepted in the effective Statements of the Auditing Standards Board of the American Institute of Certified Public Accountants as of the date of this Agreement, or if such statements are not then in effect, accounting principles that are then approved by a significant segment of the accounting profession in the United States of America. The term "consistently applied," as used in connection therewith, -------------------- means that the accounting principles applied are consistent in all material respects to those applied at prior dates or for prior periods. "Government Securities" means readily marketable direct full faith and --------------------- credit obligations of the United States of America or obligations unconditionally guaranteed by the full faith and credit of the United States of America. "Governmental Agency" means (a) any international, foreign, federal, ------------------- tribal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court, administrative tribunal or public utility, or (d) any arbitration tribunal or other non-governmental authority to whose jurisdiction a Person has consented. "Hazardous Materials" means substances defined as hazardous substances ------------------- pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC (S)9601, et seq., or as hazardous, toxic or pollutant ------- pursuant to the Hazardous Materials Transportation Act, 49 USC (S)1801, et seq., ------- the Resource Conservation and Recovery Act, 42 USC (S)6901, et seq., or in any ------- other applicable Hazardous Materials Law, in each case as such laws are amended from time to time. "Hazardous Materials Claims" means the matters described in clauses -------------------------- (a) and (b) of Section 6.10. "Hazardous Materials Laws" means all federal, tribal, Connecticut ------------------------ state or local laws, ordinances, rules or regulations governing the disposal of Hazardous Materials, to the extent applicable. "IGRA" means the federal Indian Gaming Regulatory Act of 1988, as ---- amended, codified at 25 U.S.C. (S)2701, et seq. -- --- "Indebtedness" means, as to any Person, without duplication, (a) all ------------ indebtedness of such Person for borrowed money, (b) that portion of the obligations of such Person under Capital Leases which should properly be recorded as a liability on a balance sheet of that Person prepared in accordance with Generally Accepted -12- Accounting Principles, (c) any obligation of such Person that is evidenced by a promissory note or other instrument representing an extension of credit to such Person, whether or not for borrowed money, (d) any obligation of such Person for the deferred purchase price of Property or services (other than trade or other ----- ---- accounts payable in the ordinary course of business in accordance with customary terms), (e) any obligation of such Person that is secured by a Lien on assets of such Person, whether or not that Person has assumed such obligation or whether or not such obligation is non-recourse to the credit of such Person, but only to the extent of the lesser of (i) the outstanding principal amount of the obligation (or, with respect to any letter of credit, the amount available for drawing thereunder), and (ii) the fair market value of the assets so subject to the Lien, (f) obligations of such Person arising under acceptance facilities or under facilities for the discount of accounts receivable of such Person, (g) obligations of such Person for unreimbursed draws under letters of credit issued for the account of such Person and (h) any obligations of such Person under a Swap Agreement, provided that (y) the obligations of Borrower under the -------- Relinquishment Agreement shall not be treated as Indebtedness except to the extent that the same are not paid when due, and (z) the obligations of Borrower with respect to the TCA Subordinated Notes shall not be treated as Indebtedness during any period with respect to which the Defeasance Deposit exists. "Intangible Assets" means assets that are considered intangible assets ----------------- under Generally Accepted Accounting Principles, including customer lists, --------- goodwill, computer software and capitalized research and development costs. "Interest Charges" means, with respect to any fiscal period, the sum ---------------- --- of (a) all interest, fees, charges and related expenses payable with respect to - -- that fiscal period to a lender in connection with borrowed money or the deferred purchase price of assets that is treated as interest in accordance with Generally Accepted Accounting Principles (other than any such interest, charges and related expenses accruing with respect to the TCA Subordinated Notes following the Closing Date to the extent provided for by the Defeasance Deposit), plus (b) the portion of rent payable with respect to that fiscal ---- period under Capital Leases that should be treated as interest in accordance with Generally Accepted Accounting Principles. "Interest Differential" means, with respect to any prepayment of a --------------------- LIBOR Loan on a day other than the last day of the applicable Interest Period and with respect to the failure to borrow a LIBOR Loan on the date or in the amount specified in a Request for Loan, (a) the per annum interest rate payable pursuant to Section 3.1(c) with respect to that LIBOR Loan as of the date of the prepayment or failure to borrow, minus (b) the LIBOR on or as near as ----- practicable to the date of the prepayment or failure to borrow for a LIBOR Loan commencing on such date and ending on the last day of the applicable Interest Period; provided that if the LIBOR so prescribed is equal to or within 1/8% less -------- than the LIBOR for the LIBOR Loan that -13- was prepaid or not borrowed, then 1/8 of 1% shall be subtracted from the LIBOR so prescribed. The determination of the Interest Differential by the Administrative Agent shall be conclusive in the absence of manifest error. "Interest Period" means, as to each LIBOR Loan, the period commencing --------------- on the date specified by Borrower pursuant to Section 2.1(b) and ending 1, 2, 3 or 6 months thereafter, as specified by Borrower in the applicable Request for Loan; provided that: -------- (a) The first day of any Interest Period shall be a LIBOR Business Day; (b) Any Interest Period that would otherwise end on a day that is not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day unless such LIBOR Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day; and (c) No Interest Period shall extend beyond the Maturity Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, Title --------------------- 26, U.S.C., as amended or replaced and as in effect from time to time. "Investment" means, when used in connection with any Person, any ---------- investment by or of that Person, whether by means of purchase or other acquisition of capital stock or other Securities of any other Person or by means of loan, advance, capital contribution, guaranty or other debt or equity participation or interest, or otherwise, in any other Person, including any --------- partnership and joint venture interests of such Person in any other Person. The amount of any Investment shall be the amount actually invested, without adjustment for increases or decreases in the value of such Investment. "Issuing Lender" means Bank of America. -------------- "Landlord Consent" means the consent, waiver and estoppel executed by ---------------- the Tribe on the Closing Date in favor of the Administrative Agent, either as originally executed or as it may from time to time be supplemented, modified, amended, restated or extended. "Laws" means, collectively, all international, foreign, federal, ---- tribal, state and local constitutions, statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents. -14- "Lead Arranger" means NationsBanc Montgomery Securities, LLC and its ------------- successors and assigns. "Lease" means the Lease dated September 29, 1995 between the Tribe and ----- Borrower, as amended by an amendment also dated September 29, 1995, with respect to the real property underlying the Mohegan Sun and the improvements thereon. "Leasehold Mortgage" means, collectively, the Leasehold Mortgage ------------------ executed by Borrower in favor of the Administrative Agent covering the leasehold interest of Borrower under the Lease to the reservation real property described on Schedule 4.7, the related improvements and fixtures used in connection with Mohegan Sun, either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted. "Lender" means each of the lenders party to this Agreement on the ------ Closing Date and each other lender which hereafter becomes a party hereto in accordance with Section 13.8, provided that, for the purpose of the term -------- "Approved Swap Agreement" the term "Lender" shall also include any Affiliate of a Lender which enters into a Swap Agreement which expressly relates to the Indebtedness evidenced by this Agreement and the Loan Documents. "Letters of Credit" means any of the letters of credit issued by the ----------------- Issuing Lender under the Commitment pursuant to Section 2.4, either as originally issued or as the same may be supplemented, modified, amended, renewed, extended or supplemented. "LIBOR" means, with respect to any LIBOR Loan, the interest rate ----- (rounded upward to the next 1/100 of 1%) determined to be equal to the LIBOR Base Rate divided by the remainder of (a) 1 minus (b) the Reserve Percentage. ------- -- ----- "LIBOR Advance" means an Advance made hereunder as a part of a LIBOR ------------- Loan made in accordance with Article 2. "LIBOR Base Rate" means, with respect to any LIBOR Loan, the interest --------------- rate per annum (determined solely by the Administrative Agent) at which deposits in dollars are offered by Bank of America to prime banks in the Designated Market at or about 11:00 a.m. local time in the Designated Market, two LIBOR Business Days before the first day of the applicable Interest Period in an aggregate amount approximately equal to the amount of such LIBOR Loan and for a period of time comparable to the number of days in the applicable Interest Period. The determination of the LIBOR Base Rate by the Administrative Agent shall be conclusive in the absence of manifest error. -15- "LIBOR Business Day" means any Business Day on which dealings in ------------------ dollar deposits are conducted by and among banks in the Designated Market. "LIBOR Lending Office" means, as to each Lender, its office or branch -------------------- so designated by written notice to Borrower and the Administrative Agent as its LIBOR Lending Office. If no LIBOR Lending Office is designated by a Lender, its LIBOR Lending Office shall be its office at its address for purposes of notices hereunder. "LIBOR Loan" means a Loan made hereunder and designated as a LIBOR ---------- Loan in accordance with Article 2. "Lien" means any mortgage, deed of trust, pledge, hypothecation, ---- assignment for security, security interest, encumbrance, lien or charge of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, affecting any Property, including any agreement to grant any of the foregoing, --------- any conditional sale or other title retention agreement, any lease in the nature of a security interest, and/or the filing of or agreement to give any financing statement under the Uniform Commercial Code or comparable Law of any jurisdiction with respect to any Property. "Loan" means the group of Advances made at any one time by the Lenders ---- in accordance with the Commitment pursuant to Article 2. "Loan Documents" means, collectively, this Agreement, any Notes, each -------------- Letter of Credit, the Collateral Documents, the Landlord Consent, any Request for Loan, any Request for Letter of Credit and any other agreements of any type or nature heretofore or hereafter executed and delivered by the Borrower, the Tribe or any of its Affiliates to the Administrative Agent or to any Lender in any way relating to or in furtherance of this Agreement, including any Approved --------- Swap Agreement, in each case either as originally executed or as the same may from time to time be supplemented, modified, amended, restated, extended or supplanted. "Low Usage Quarter" means each Fiscal Quarter ending prior to the ----------------- Completion Date during which (a) the average daily amount of the Unused Commitment is equal to or greater than (b) two thirds of the average Commitment during that Fiscal Quarter. "Maintenance Capital Expenditure" means a Capital Expenditure for the ------------------------------- maintenance, repair, restoration or refurbishment of those portions of Mohegan Sun which are open for business on the Closing Date (or, as of the date of the Capital Expenditure have been open for business for a period in excess of one year), but excluding any Capital Expenditure which adds to or further improves --------- Mohegan Sun. -16- "Management Board" means the Management Board of Borrower, as ---------------- established pursuant to the Gaming Authority Ordinance. "Material Adverse Effect" means any set of circumstances or events ----------------------- which (a) may reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of any Loan Document, (b) may reasonably be expected to be material and adverse to the condition (financial or otherwise) or business operations or Properties or to the prospects of Borrower, (c) materially impairs or may reasonably be expected to materially impair the ability of Borrower to perform its Obligations or (d) materially impairs or could reasonably be expected to materially impair the ability of the Lenders or the Administrative Agent to enforce the principal benefits intended to be created and conveyed by the Loan Documents, including without limitation the Liens created by the Collateral Documents. "Material Documents" means, collectively, the Lease, the Construction ------------------ Reserve Disbursement Agreement, the Senior Unsecured Notes, the Senior Unsecured Note Indenture, the Relinquishment Agreement, the New Subordinated Notes and the New Subordinated Notes Indenture, the Constitution, the Compact, the Gaming Ordinance, the Gaming Authority Ordinance, the Development Services Agreement, the Town Agreement and the UCC Ordinance. "Maturity Date" means March 3, 2004. ------------- "Mohegan Sun" means the high stakes bingo and casino property and ----------- related transportation, retail, dining and entertainment facilities and proposed hotel described in the Gaming Ordinance and commonly known as "Mohegan Sun Resort Casino" owned by the Borrower and located in Uncasville, Connecticut (including any future expansions thereof), which facilities are located upon the real property described on Schedule 4.7. "Multiemployer Plan" means any employee benefit plan of the type ------------------ described in Section 4001(a)(3) of ERISA. "Negative Pledge" means any covenant binding on the Tribe or Borrower --------------- that prohibits the creation of Liens on any Authority Property, except a ------ covenant contained in an instrument creating a Permitted Encumbrance or Permitted Right of Others on Authority Property that prohibits the creation of other Liens on that Authority Property and no other Authority Property. "Net Income" means, with respect to any fiscal period, the net income ---------- from continuing operations before extraordinary or non-recurring items of Borrower for that period, determined in accordance with Generally Accepted Accounting Principles, consistently applied. -17- "New Subordinated Notes" means (a) Borrower's 8 3/4% Senior ---------------------- Subordinated Notes due 2009 issued on or about March 3, 1999 in the aggregate principal amount of $300,000,000 pursuant to the New Subordinated Note Indenture, and (b) any Senior Subordinated Exchange Notes issued pursuant to the New Subordinated Note Indenture. "New Subordinated Note Indenture" means the Indenture dated as of ------------------------------- March 3, 1999 between Borrower and State Street Bank and Trust Company, as Trustee, relating to the New Subordinated Notes. "Non-Authority Property" means Property of the Tribe which is not ---------------------- Authority Property. "Note" means any promissory note made by Borrower to a Lender ---- evidencing Advances under that Lender's Pro Rata Share of the Commitment, substantially in the form of Exhibit D, either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted. "Obligations" means all present and future obligations of every kind ----------- or nature of the Tribe, Borrower or any Party at any time and from time to time owed to the Creditors or any one or more of them under any one or more of the Loan Documents, whether due or to become due, matured or unmatured, liquidated or unliquidated, or contingent or noncontingent, including obligations of -------- performance as well as obligations of payment, and including interest that --------- accrues after the commencement of any proceeding under any Debtor Relief Law by or against the Tribe, Borrower or any such Party. "Operating Accounts" means the deposit accounts of Borrower described ------------------ on Schedule 5.26, and each other deposit, savings, brokerage or similar account hereafter established by Borrower. "Party" means any Person other than the Creditors which now or ----- hereafter is a party to any of the Loan Documents. "PBGC" means the Pension Benefit Guaranty Corporation or any successor ---- thereof established under ERISA. "Pension Plan" means any "employee pension benefit plan" that is ------------ subject to Title IV of ERISA and which is maintained for employees of Borrower or any of its ERISA Affiliates, other than a Multiemployer Plan. ----- ---- -18- "Permitted Dispositions" means Dispositions made during the term of ---------------------- this Agreement of Authority Property which has, as of each date of determination, an aggregate book value not in excess of 5% of the aggregate value of the assets of Borrower determined, as of each such date, with reference to the then most recent audited financial statements of Borrower, provided that -------- no Disposition of Authority Property which is an operationally integral part of Mohegan Sun shall be a treated as a Permitted Disposition without the prior written consent of the Requisite Lenders. "Permitted Encumbrances" means: ---------------------- (a) inchoate Liens incident to construction or maintenance of real property, or Liens incident to construction or maintenance of real property, now or hereafter filed of record for which adequate accounting reserves have been set aside and which are being contested in good faith by appropriate proceedings and have not proceeded to judgment, provided that, by reason of nonpayment of the obligations -------- secured by such Liens, no such real property is subject to a material risk of loss or forfeiture; (b) Liens for taxes and assessments on Property which are not yet past due, or Liens for taxes and assessments on Property for which adequate reserves have been set aside and are being contested in good faith by appropriate proceedings and have not proceeded to judgment, provided -------- that, by reason of nonpayment of the obligations secured by such Liens, no such Property is subject to a material risk of loss or forfeiture; (c) minor defects and irregularities in title to any real property which in the aggregate do not materially impair the fair market value or use of the real property for the purposes for which it is or may reasonably be expected to be held; (d) easements, exceptions, reservations, or other agreements granted or entered into after the date hereof for the purpose of pipelines, conduits, cables, wire communication lines, power lines and substations, streets, trails, walkways, drainage, irrigation, water, and sewerage purposes, dikes, canals, ditches, the removal of oil, gas, coal, or other minerals, and other like purposes affecting real property which in the aggregate do not materially burden or impair the fair market value or use of such real property for the purposes for which it is or may reasonably be expected to be held; (e) rights reserved to or vested in any Governmental Agency by Law to control or regulate, or obligations or duties under Law to any Governmental Agency with respect to, the use of any real property; -19- (f) rights reserved to or vested in any Governmental Agency by Law to control or regulate, or obligations or duties under Law to any Governmental Agency with respect to, any right, power, franchise, grant, license, or permit; (g) present or future zoning laws and ordinances or other laws and ordinances restricting the occupancy, use, or enjoyment of real property; (h) statutory Liens, other than those described in clauses (a) or (b) above, arising in the ordinary course of business with respect to obligations which are not delinquent or are being contested in good faith by appropriate proceedings, provided that, if delinquent, -------- adequate reserves have been set aside with respect thereto and, by reason of nonpayment, no Property is subject to a material risk of loss or forfeiture; (i) Liens consisting of pledges or deposits made in connection with obligations under workers' compensation laws, unemployment insurance or similar legislation, including Liens of judgments thereunder which are not currently dischargeable; (j) Liens consisting of pledges or deposits of Property to secure performance in connection with operating leases made in the ordinary course of business to which Borrower is a party as lessee, provided -------- the aggregate value of all such pledges and deposits in connection with any such lease does not at any time exceed 10% of the annual fixed rentals payable under such lease; (k) Liens consisting of deposits of Property to secure statutory obligations of Borrower in the ordinary course of its business; (l) Liens consisting of deposits of Property to secure (or in lieu of) surety, appeal or customs bonds in proceedings to which Borrower is a party in the ordinary course of its business; and (m) Liens created by or resulting from any litigation or legal proceeding involving Borrower in the ordinary course of its business which is currently being contested in good faith by appropriate proceedings, provided that adequate reserves have been set aside with respect -------- thereto, and such Liens are discharged or stayed within 60 days of creation and no Property is subject to a material risk of loss or forfeiture. -20- "Permitted Right of Others" means a Right of Others consisting of (a) ------------------------- an interest (other than a legal or equitable co-ownership interest, an option or right to acquire a legal or equitable co-ownership interest and any interest of a ground lessor under a ground lease) that does not materially impair the value or use of property for the purposes for which it is or may reasonably be expected to be held, (b) an option or right to acquire a Lien that would be a Permitted Encumbrance, and (c) the reversionary interest of a landlord under a lease of Property. "Person" means any entity, whether an individual, trustee, ------ corporation, general partnership, limited partnership, limited liability company, limited liability partnership, joint stock company, trust, estate, unincorporated organization, business association, tribe, firm, joint venture, Governmental Agency, or otherwise. "Plans and Budget" means the plans, specifications, construction ---------------- budget, construction plan and timetable prepared by or for Borrower, as the same may be amended or supplemented from time to time, all of which plans and specifications describe and show the construction of the Proposed Expansion and the labor and materials necessary for the construction thereof. "Pricing Period" means the period of three months which commences on -------------- the first day of each March, June, September and December, and ends on the last day of the succeeding May, August, November and February. "Priority Distributions" means Distributions made by Borrower to the ---------------------- Tribe in the aggregate amount of which do not exceed $14,000,000 in any calendar year, plus for 2000 and each subsequent year, an annual adjustment in a ---- percentage equal to the Consumer Price Index adjustment published for that year. "Projections" means the financial projections dated as of the Closing ----------- Date heretofore furnished by the Borrower to the Lenders, true and correct copies of which are attached hereto as Schedule 5.20. "Property" means any interest in any kind of property or asset, -------- whether real, personal or mixed, or tangible or intangible. "Proposed Expansion" means the proposed expansion of the Mohegan Sun ------------------ generally consisting of a hotel with approximately 1500 hotel rooms, approximately 9 new restaurants and lounges, approximately 100,000 square feet of additional gaming space, approximately 100,000 square feet of convention space, and an entertainment event center with seating for approximately 10,000, and approximately 300,000 square feet of additional retail space, in a manner consistent with the Plan and Budget. -21- "Pro Rata Share" means the percentage of the Commitment held by each -------------- Lender on that date or, if the Commitment has been terminated, the percentage of the Obligations held by that Lender, including in each case any holdings through an SPC. As of the Closing Date, each Lender holds the percentage of the Commitment set forth opposite the name of that Lender on Schedule 1.1. Such Schedule shall be deemed to be automatically amended to reflect any assignments of the Commitment made in accordance with Section 13.8. "Quarterly Payment Date" means each March 31, June 30, September 30, ---------------------- and December 31, commencing with the first such date to occur subsequent to the Closing Date. "Real Property" means, collectively, the real property and ------------- improvements underlying Mohegan Sun described on Schedule 4.7. "Recourse Obligations" means, as of each date of determination, and -------------------- without duplication, (a) all Indebtedness and Contingent Obligations as to which Borrower has any direct or indirect liability or obligation (whether as the primary obligor or as a surety, and whether or not Borrower is the nominal obligor with respect thereto), including without limitation indebtedness for borrowed money, obligations with respect to Capital Leases, amounts available for drawing under letters of credit and other similar instruments, and the aggregate amount drawn under letters of credit and other similar instruments not then reimbursed, (b) all Indebtedness, Contingent Obligations and other obligations secured by any Lien upon any Authority Property, and (c) all Indebtedness, Contingent Obligations and other obligations held by any Person who may take recourse to any Authority Property, the revenues of Borrower, or any other Property of Borrower for the satisfaction of such Indebtedness and other obligations. Without limitation on this definition, the Obligations, the Senior Unsecured Notes and the New Subordinated Notes each constitute Recourse Obligations. "Reduction Amount" means the amount which is equal to 10% of the ---------------- principal amount of the Commitment (as in effect as of the first Reduction Date to occur), provided that if the Commitment is thereafter increased in accordance -------- with Section 2.7, then the Reduction Amount for each subsequent Reduction Date shall be ratably increased. "Reduction Date" means each Quarterly Payment Date beginning with the -------------- earlier of (a) March 31, 2002 or (b) the last day of the first full Fiscal Quarter following the Completion Date. -22- "Reference Rate" means the rate of interest publicly announced from -------------- time to time by Bank of America in San Francisco, California, as its "Reference Rate." The Reference Rate is a rate set by Bank of America based upon various factors, including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. Bank of America may price loans at, above or below the Reference Rate. Any change in the Reference Rate shall take effect on the day specified in the public announcement of such change. "Regulations D, T, U and X" means Regulations D, T, U and X, ------------------------- respectively, as at any time amended, of the Board of Governors of the Federal Reserve System, or any other regulations in substance substituted therefor. "Related Businesses" means (a) Class II and Class III Casino gaming ------------------ (as defined in IGRA), and (b) any resort business, any activity or business incidental, directly related or similar thereto, or any business or activity that is a reasonable extension, development or expansion thereof, including any hotel, entertainment, recreation or other activity or business, in each case designed to promote, market, support, develop, construct or enhance the casino gaming and resort business operated by Borrower at Mohegan Sun. "Relinquishment Agreement" means the Relinquishment Agreement dated as ------------------------ of February 7, 1998, among Borrower, the Tribe and TCA, as amended as of the Closing Date. "Request for Letter of Credit" means a written request for letter of ---------------------------- credit substantially in the form of Exhibit G, together with the standard form of application for standby letters of credit, as applicable, used by the Issuing Lender, signed by a Senior Officer of the Borrower and properly completed to provide all information required to be included therein. "Request for Loan" means a written request for a Loan substantially in ---------------- the form of Exhibit H, signed by a Senior Officer of the Borrower and properly completed to provide all information required to be included therein. "Requirement of Law" means, as to any Person, the constitution, the ------------------ articles or certificate of incorporation and bylaws, the partnership agreement and any related certificate of partnership, or other organizational or governing documents of such Person, and any Law, or judgment, order, award, decree, writ or determination of a Governmental Agency, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject. -23- "Requisite Lenders" means, as of any date of determination (a) Lenders ----------------- whose aggregate Pro Rata Share is at least 51% of the then outstanding Loans and Letters of Credit, or (b) if no Loans or Letters of Credit are outstanding, Lenders whose aggregate Pro Rata Share is at least 51% of the Commitment, or (c) if the Commitment has been terminated and no Loans or Letters of Credit or other Obligations (other than under Approved Swap Agreements) are then outstanding, Lenders then owed Specified Swap Amounts which are at least 51% of the aggregate Specified Swap Amount owed to all Lenders. "Reserve Percentage" means, with respect to any LIBOR Loan, the ------------------ percentage applicable as of the date of determination of the LIBOR Base Rate representing the aggregate reserve requirements of the Administrative Agent (disregarding any offsetting amounts that may be available to the Administrative Agent to decrease such requirements to the extent that such offsetting amounts arose out of transactions other than those contemplated by this Agreement) under Regulation D and any other applicable Laws with respect to Eurodollar Obligations in an aggregate amount equal to the amount of such LIBOR Loan and for a time period comparable to the number of months in the applicable Interest Period. The determination by the Administrative Agent of any applicable Reserve Percentage shall be presumed correct in the absence of manifest error. "Responsible Official" means, when used with reference to any Person, -------------------- any Senior Officer and, in the case of Borrower, includes any member of the Management Board. Any document or certificate hereunder that is signed or executed by a Responsible Official of another Person shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such other Person. "Right of Others" means, as to any Property in which a Person has an --------------- interest, (a) any legal or equitable right, title or other interest (other than ----- ---- a Lien) held by any other Person in or with respect to that Property, and (b) any option or right held by any other Person to acquire any right, title or other interest in or with respect to that Property, including any option or --------- right to acquire a Lien. "Securities" means any capital stock, share, voting trust certificate, ---------- bonds, debentures, notes or other evidences of indebtedness, limited partnership interests, or any warrant, option or other right to purchase or acquire any of the foregoing. "Security Agreement" means the Security Agreement of even date ------------------ herewith executed by Borrower in favor of the Administrative Agent for the ratable benefit of the Lenders, either as originally executed or as it may from time to time be supplemented, modified, amended, restated or extended. -24- "Senior Leverage Ratio" means, as of each date of determination, the --------------------- ratio of (a) Total Debt as of that date minus Subordinated Obligations as of ----- that date, to (b) Adjusted EBITDA for the four Fiscal Quarter period ending on that date. "Senior Officer" means (a) as to the Tribe, the Chairman and Vice- -------------- Chairman of the Tribal Council of the Tribe, the Chief of Staff of the Tribe, the Chief Financial Officer of the Tribe and the General Counsel of the Tribe, and (b) as to Borrower, the Chief Executive Officer and the Senior Vice President of Finance of Borrower. Each Senior Officer (whether denominated as an officer of the Tribe or of Borrower) shall be conclusively presumed to be authorized to act on behalf of the Borrower with respect to the transactions contemplated by the Loan Documents. "Senior Unsecured Notes" means (a) Borrowers 8 1/8% Senior Notes due ---------------------- 2006 issued pursuant to the Senior Note Indenture in the aggregate principal amount of $200,000,000, and (b) any Senior Exchange Notes issued pursuant to the Senior Unsecured Note Indenture. "Senior Unsecured Note Indenture" means the Indenture dated as of ------------------------------- March 3, 1999 between Borrower and First Union National Bank, as Trustee, relating to the Senior Unsecured Notes. "SPC" has the meaning set forth in Section 13.8. --- "Special Circumstance" means (a) the adoption of any Law by any -------------------- Governmental Agency, central branch or comparable authority with respect to activities in the Designated Market, or (b) any change in the interpretation or administration of any existing Law by any Governmental Agency, central bank or comparable authority charged with the interpretation or administration thereof, or (c) compliance by any Lender or its LIBOR Lending Office with any request or directive (whether or not having the force of Law) of any such Governmental Agency, central bank or comparable authority, or (d) the existence or occurrence of circumstances affecting the Designated Market generally that are beyond the reasonable control of the Lenders. "Specified Swap Amount" means, at any time, in respect of Swap --------------------- Agreements to which any Lender is party, the Swap Termination Value relating thereto; provided that for purposes of this definition, any Swap Termination -------- Value that is negative as to (i.e., owing by) any Lender shall be deemed equal to zero. "Subordinated Obligations" means, collectively the New Subordinated ------------------------ Notes and each other Indebtedness of Borrower that is subordinated to the Obligations, all of the provisions of which (including amount, maturity, amortization, interest rate, -25- covenants, defaults, remedies and subordination), have been approved in writing as to form and substance by the Administrative Agent and designated in writing as "Subordinated Obligations" by the Administrative Agent with the written consent of the Requisite Lenders. The Senior Unsecured Notes are not Subordinated Obligations. "Subsidiary" means, as of any date of determination and with respect ---------- to any Person, any other corporation, partnership or other business entity (whether or not, in either case, characterized as such or as a "joint venture"), whether now existing or hereafter organized or acquired: (a) in the case of a corporation, of which a majority of the securities having ordinary voting power for the election of directors or other governing body (other than securities having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person and/or one or more Subsidiaries of such Person, or (b) in the case of a partnership or other business entity, of which a majority of the partnership or other ownership interests are at the time beneficially owned by such Person and/or one or more of its Subsidiaries. "Swap Agreements" means one or more written agreements between --------------- Borrower and one or more financial institutions providing for "swap," "cap," "collar" or other interest rate protection with respect to any Indebtedness. "Swap Termination Value" means, in respect of any one or more Swap ---------------------- Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the Administrative Agent based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Agreements which may include any Lender. "Syndication Agent" means Salomon Smith Barney, Inc. The capacity of ----------------- the Syndication Agent is solely titular in nature, and except to the extent expressly set forth herein, the Syndication Agent shall not have any rights or obligations under the Loan Documents by reason of such capacity. "TCA" means Trading Cove Associates, a Connecticut general --- partnership, its successors and assigns. "TCA Subordinated Notes" means subordinated notes issued in the ---------------------- aggregate principal amount of $90,000,000 pursuant to the Note Purchase Agreement dated as of September 29, 1995, between Borrower and Sun International Hotels Limited. -26- "Termination Event" means (a) a "reportable event" as defined in ----------------- Section 4043 of ERISA (other than a reportable event that is not subject to the ----- ---- provision for 30 day notice to the PBGC), (b) the withdrawal of Borrower or any of its ERISA Affiliates from a Pension Plan during any plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Pension Plan or the treatment of an amendment to a Pension Plan as a termination thereof pursuant to Section 4041 of ERISA, (d) the institution of proceedings to terminate a Pension Plan by the PBGC or (e) any other event or condition which might reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan. "Title Company" means Chicago Title Insurance Company or such other ------------- title insurance company as may be reasonably satisfactory to Administrative Agent. "to the best knowledge of" means, when modifying a representation, ------------------------ warranty or other statement of any Person, that the fact or situation described therein is known by the Person (or, in the case of a Person other than a natural Person, known by a Responsible Official of that Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a reasonable Person in similar circumstances would have done) should have been known by the Person (or, in the case of a Person other than a natural Person, should have been known by a Responsible Official of that Person). In the case of the Borrower and the Tribe, knowledge of any Responsible Official of the Borrower shall be attributed to the Tribe, and knowledge of any Responsible Official of the Tribe shall be imputed to the Tribe. "Total Debt" means, as of each date of determination, all Recourse ---------- Obligations other than Borrower's liability for payments under the ---------- Relinquishment Agreement. "Total Leverage Ratio" means, as of each date of determination, the -------------------- ratio of (a) Total Debt as of that date, to (b) Adjusted EBITDA for the four Fiscal Quarter period ending on that date. "Town Agreement" means the Agreement dated as of June 16, 1994 between -------------- the Tribe and the Town of Montville, Connecticut, as amended as of the Closing Date. "Tribal Council" means the Tribal Council of the Tribe elected in -------------- accordance with the Constitution. -27- "Tribe" means The Mohegan Tribe of Indians of Connecticut, a federally ----- recognized Indian Tribe. "type", when used with respect to any Loan or Advance, means the ---- designation of whether such Loan or Advance is a Base Rate Loan or Advance or a LIBOR Loan or Advance. "UCC Ordinance" means the Tribe's Ordinance Number 98-7. ------------- "Unused Commitment" means, as of each date of determination, the ----------------- difference between (a) the aggregate Commitment on that date and (b) the sum of (i) the outstanding principal amount of the Loans, (ii) the amount --- available for drawing under outstanding Letters of Credit, and (iii) the aggregate amount of all unreimbursed draws with respect to Letters of Credit. "Working Capital" means, as of each date of determination, the current --------------- assets of Borrower other than Cash and Cash Equivalents minus the current ----- ---- ----- liabilities of Borrower, in each case determined in accordance with Generally Accepted Accounting Principles, consistently applied. 2.2 Use of Defined Terms. Any defined term used in the plural shall refer -------------------- to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. 2.3 Accounting Terms. All accounting terms not specifically defined in ---------------- this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with, Generally Accepted Accounting Principles applied on a consistent basis, except ------ as otherwise specifically prescribed herein. In the event that Generally Accepted Accounting Principles change during the term of this Agreement such that the financial covenants contained in Sections 7.12 through 7.15, inclusive, would then be calculated in a different manner or with different components, (a) Borrower, the Tribe and the Lenders agree to amend this Agreement in such respects as are necessary to conform those covenants as criteria for evaluating Borrower's financial condition to substantially the same criteria as were effective prior to such change in Generally Accepted Accounting Principles and (b) Borrower shall be deemed to be in compliance with the financial covenants contained in such Sections during the 60 day period following any such change in Generally Accepted Accounting Principles if and to the extent that Borrower would have been in compliance therewith under Generally Accepted Accounting Principles as in effect immediately prior to such change. 2.4 Rounding. Any financial ratios required to be maintained by Borrower -------- pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which -28- such ratio is expressed in this Agreement and rounding the result up or down to the nearest number (with a round-up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement. 2.5 Exhibits and Schedules. All Exhibits and Schedules to this Agreement, ---------------------- either as originally existing or as the same may from time to time be supplemented, modified or amended, are incorporated herein by this reference. A matter disclosed on any Schedule shall be deemed disclosed on all Schedules. 2.6 Miscellaneous Terms. The term "or" is disjunctive; the term "and" is ------------------- conjunctive. The term "shall" is mandatory; the term "may" is permissive. Masculine terms also apply to females; feminine terms also apply to males. The term "including" is by way of example and not limitation. -29- ARTICLE 3. LOANS AND LETTERS OF CREDIT --------------------------- 3.1 Loans-General. ------------- (a) Subject to the terms and conditions set forth in this Agreement, at any time and from time to time from the Closing Date through the Maturity Date, each Lender shall, pro rata according to its Pro Rata Share of the then applicable Commitment, make revolving Advances to Borrower under the Commitment in such amounts as Borrower may request that do not exceed in the aggregate at any one time outstanding the amount of that Lender's Pro Rata Share of the then applicable Commitment; provided that, giving effect to the Loan of which such -------- Advance is a part, the sum of (i) the aggregate principal amount of the --- outstanding Loans plus (ii) the aggregate amount available for drawing under the ---- outstanding Letters of Credit plus (iii) the aggregate amount of all ---- unreimbursed draws with respect to all Letters of Credit, shall not exceed the then applicable Commitment. Subject to the limitations set forth herein, Borrower may borrow, repay and reborrow under this Agreement without premium or penalty. (b) Each Loan shall be made pursuant to a Request for Loan which shall specify the requested (i) date of such Loan, which shall be a Business Day in the case of a Base Rate Loan and a LIBOR Business Day in the case of a LIBOR Loan, (ii) amount of such Loan, (iii) type of such Loan, and (iv) in the case of LIBOR Loans, the Interest Period for such Loan. Unless the Administrative Agent has notified, in its sole and absolute discretion, Borrower to the contrary, a Loan may be requested by telephone by a Senior Officer of Borrower. Borrower shall immediately confirm each requested Loan by submitting a Request for Loan conforming with the requirements of the preceding sentence to the Administrative Agent by telecopier, with the original thereof to follow by mail. In the case of the initial Loans to be made on the Closing Date, the Request for Loan to be delivered by the Borrower shall be delivered to the Administrative Agent no later than 12:00 noon, California time, one day before the Closing Date and such Loans shall be Base Rate Loans only. (c) Promptly following receipt of a Request for Loan, the Administrative Agent shall notify each Lender by telephone, telecopier or telex of the date of the Loan and that Lender's Pro Rata Share of the Loan. Not later than 12:00 noon, California time, in the case where a Base Rate Loan is requested, and 10:00 a.m. California time, in the case where a LIBOR Loan is requested, on the date specified for any Loan, each Lender shall make its Pro Rata Share of the Loan in immediately available funds available to the Administrative Agent at the Administrative Agent's Office. Upon fulfillment of the applicable conditions set forth in Article 10, all Advances shall be credited in immediately available funds to the Designated Deposit Account. -30- (d) Unless the Requisite Lenders otherwise consent, each Loan under the Commitment shall be in an integral multiple of $1,000,000 which is equal to or greater than $5,000,000. (e) Unless the Administrative Agent otherwise consents, no Request for Loan may be revoked by Borrower after its submission to the Lenders by the Administrative Agent. In the event that the Administrative Agent consents to the revocation of any Request for Loan submitted by the Borrower, Borrower agrees that it shall reimburse the Administrative Agent and each Lender for any loss, cost, damage or expense associated with any redeployment of funds caused by such revocation. (f) If, as of the end of the Interest Period with respect to any LIBOR Loan, Borrower has not submitted a Request for Loan or orally requested a Base Rate Loan in accordance with Section 2.1(b), or if any Request for Loan submitted by Borrower for a LIBOR Loan fails to satisfy the notice periods specified in Section 2.3, then, in the absence of notice from Borrower to the contrary, Borrower shall be deemed to have requested a Base Rate Loan in an amount equal to the maturing LIBOR Loan, and the Lenders shall make the Advances necessary to make such Loan notwithstanding Sections 2.1(b) and 2.2. (g) The Loans and Advances made by the Lenders pursuant to this Agreement shall be evidenced hereby, without the requirement for the issuance of any Note or promissory note to any Lender, provided however -------- ------- that upon request from any Lender to Borrower submitted through the Administrative Agent from time to time, Borrower shall issue a Note to such Lender in the amount of that Lender's Pro Rata Share, which Note will thereafter serve as evidence of that Lender's Advances. 3.2 Base Rate Loans. Each request by Borrower for a Base Rate Loan shall --------------- be made pursuant to a Request for Loan or an oral request for loan submitted in accordance with Section 2.1(b), in each case received at the Administrative Agent's Office not later than 10:00 a.m. California time, on the Business Day immediately preceding the Business Day upon which the requested Loan is to be made. 3.3 LIBOR Loans. ----------- (a) Each request by Borrower for a LIBOR Loan shall be made pursuant to a Request for Loan or an oral request submitted in accordance with Section 2.1(b), in each case received at the Administrative Agent's Office not later than 9:00 a.m., California time, at least three LIBOR Business Days before the first day of the applicable Interest Period. -31- (b) Two LIBOR Business Days prior to the first day of the applicable Interest Period, the Administrative Agent shall determine the applicable LIBOR (which determination shall be conclusive in the absence of manifest error) and promptly shall give notice of the same to Borrower and the Lenders by telephone, telecopier or telex. (c) Unless all of the Lenders otherwise consent in writing, no LIBOR Loan may be requested during the continuance of a Default or Event of Default. (d) Nothing contained herein shall require any Lender to actually obtain the funds needed to make any LIBOR Advance in the Designated Market. (e) Unless the Administrative Agent otherwise consents, no more than five LIBOR Loans shall be outstanding at any one time. (f) No LIBOR Loan shall be made which would cause the aggregate amount of all LIBOR Loans having Interest Periods ending after any Reduction Date plus the aggregate face amount of all Letters of Credit having expiry dates ---- (including any mandatory extensions thereof) after that Reduction Date to be in excess of the amount of the Commitment, as scheduled to be reduced pursuant to Section 2.5 on that Reduction Date. 3.4 Letters of Credit. ----------------- (a) Subject to the terms and conditions hereof, at any time and from time to time from the Closing Date through the Maturity Date, the Issuing Lender shall issue such Letters of Credit under the Commitment as Borrower may request by a Request for Letter of Credit which do not result in the aggregate effective face amount of all outstanding Letters of Credit being in excess of $25,000,000; provided that after giving effect to all such Letters of Credit, the sum of (i) - -------- --- the aggregate principal amount of the outstanding Loans plus (ii) the aggregate ---- amount available for drawing under the outstanding Letters of Credit plus (iii) ---- the aggregate amount of all unreimbursed draws with respect to all Letters of Credit, shall not exceed the then applicable Commitment. No Letter of Credit shall be issued which would cause the aggregate amount of all LIBOR Loans having Interest Periods ending after any Reduction Date plus the aggregate face amount ---- of all Letters of Credit having expiry dates (including any mandatory extensions thereof) after that Reduction Date to be in excess of the amount of the Commitment, as scheduled to be reduced pursuant to Section 2.5 on that Reduction Date. Each Letter of Credit shall be in a form reasonably acceptable to the Issuing Lender. Unless all the Lenders otherwise consent in a writing delivered to the Administrative Agent, the terms of the Letters of Credit shall not exceed 12 months from the date of issuance thereof (or, in the case of any -32- renewal, 12 months from the date of such renewal) and no Letter of Credit or renewal thereof shall have a term which exceeds the Maturity Date. Borrower will not request any Letter of Credit which is not reasonably necessary in the ordinary course of business of Borrower. (b) Each Request for Letter of Credit shall be submitted to the Issuing Lender, with a copy to the Administrative Agent, at least three Business Days prior to the date upon which the related Letter of Credit is proposed to be issued. The Administrative Agent shall promptly notify the Issuing Lender whether such Request for Letter of Credit, and the issuance of a Letter of Credit pursuant thereto, conforms to the requirements of this Agreement. Upon issuance of a Letter of Credit, the Issuing Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify the Lenders, of the amount and terms thereof. (c) Upon the issuance of a Letter of Credit, each Lender shall be deemed to have purchased a pro rata participation from the Issuing Lender, in an amount equal to that Lender's Pro Rata Share, of such Letter of Credit. Without limiting the scope and nature of each Lender's participation in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed by Borrower for any payment required to be made by the Issuing Lender under any Letter of Credit, each Lender shall, pro rata according to its Pro Rata Share, reimburse the Issuing Lender promptly upon demand for the amount of such payment through the Administrative Agent. The obligation of each Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of Borrower to reimburse the Issuing Lender for the amount of any payment made by the Issuing Lender under any Letter of Credit together with interest as hereinafter provided. (d) Borrower agrees to pay to the Issuing Lender through the Administrative Agent an amount equal to any payment made by the Issuing Lender with respect to each Letter of Credit upon the date of each drawing thereunder, together with interest on such amount from the date of any payment made by the Issuing Lender at the Default Rate (provided that, subject to the terms and -------- ---- conditions hereof, Borrower may request a Base Rate Loan in accordance with this Agreement to finance such amounts at the rate ordinarily applicable to Base Rate Loans). The principal amount of any such payment shall be used to reimburse the Issuing Lender for the payment made by it under the Letter of Credit. Each Lender that has reimbursed the Issuing Lender pursuant to Section 2.4(c) for its Pro-Rata Share of any payment made by the Issuing Lender under a Letter of Credit shall thereupon acquire a pro-rata participation, to the extent of such reimbursement, in the claim of the Issuing Lender against Borrower under this Section 2.4(d) and shall share, in accordance with that pro-rata participation, in any payment (including any payment of interest with respect -33- thereto) made by Borrower with respect to such claim, and the Administrative Agent shall remit to each such Lender its Pro Rata Share thereof in immediately available funds. (e) If Borrower fails to make the payment required by Section 2.4(d) upon demand, in lieu of the reimbursement to the Issuing Lender under Section 2.4(c) the Issuing Lender may (but is not required to) without notice to or the consent of Borrower, instruct the Administrative Agent to cause Advances to be made by the Lenders under the Commitment in accordance with their Pro Rata Shares in an aggregate amount equal to the amount paid by the Issuing Lender with respect to that Letter of Credit and, for this purpose, the conditions precedent set forth in Article 10 shall not apply. The proceeds of such Advances shall be paid to the Issuing Lender to reimburse it for the payment made by it under the Letter of Credit. Such Advances shall be payable upon demand and shall bear interest at the Default Rate. (f) The issuance of any supplement, modification, amendment, renewal, or extension to or of any Letter of Credit shall be treated in all respects the same as the issuance of a new Letter of Credit. (g) The obligation of Borrower to pay to the Issuing Lender the amount of any payment made by the Issuing Lender under any Letter of Credit shall be absolute, unconditional, and irrevocable, subject only to performance by the Issuing Lender of its obligations to Borrower under Connecticut Uniform Commercial Code Section 42a-5-109. Without limiting the foregoing, Borrower's obligations shall not be affected by any of the following circumstances: (i) any lack of validity or enforceability of the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto; (ii) any amendment or waiver of or any consent to departure from the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto; (iii) the existence of any claim, setoff, defense, or other rights which Borrower may have at any time against the Issuing Lender, the Administrative Agent or any Lender, any beneficiary of the Letter of Credit or any other Person, whether in connection with the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto, or any unrelated transactions; (iv) any demand, statement, or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or -34- insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (v) payment by the Issuing Lender in good faith under the Letter of Credit against presentation of a draft or any accompanying document which does not strictly comply with the terms of the Letter of Credit; (vi) the existence, character, quality, quantity, condition, packing, value or delivery of any property purported to be represented by documents presented in connection with any Letter of Credit or for any difference between any such property and the character, quality, quantity, condition, or value of such property as described in such documents; (vii) the time, place, manner, order or contents of shipments or deliveries of property as described in documents presented in connection with any Letter of Credit or the existence, nature and extent of any insurance relative thereto; (viii) the solvency or financial responsibility of any party issuing any documents in connection with a Letter of Credit; (ix) any failure or delay in notice of shipments or arrival of any property; (x) any error in the transmission of any message relating to a Letter of Credit not caused by the Issuing Lender, or any delay or interruption in any such message; (xi) any error, neglect or default of any correspondent of the Issuing Lender in connection with a Letter of Credit; (xii) any consequence arising from acts of God, war, insurrection, civil unrest, disturbances, labor disputes, emergency conditions or other causes beyond the control of the Issuing Lender; (xiii) so long as the Issuing Lender in good faith determines that the contract or document appears to comply with the terms of the Letter of Credit, the form, accuracy, genuineness or legal effect of any contract or document referred to in any document submitted to the Issuing Lender in connection with a Letter of Credit; and -35- (xiv) where the Issuing Lender has acted in good faith and observed general banking usage, customs or practices, any other circumstances whatsoever. (h) The Issuing Lender shall be entitled to the protection accorded to the Administrative Agent pursuant to Section 12.6, mutatis mutandis. ------- -------- 3.5 Automatic Reduction of Commitment. The Commitment shall --------------------------------- automatically reduce by the Reduction Amount on each Reduction Date. 3.6 Voluntary Reduction of Commitment. Borrower shall have the --------------------------------- right, at any time and from time to time, without penalty or charge, upon at least five Business Days prior written notice to the Administrative Agent, voluntarily to permanently and irrevocably reduce, in aggregate principal amounts which are not less than $5,000,000 and in an integral multiple of $1,000,000, or to terminate, the then undisbursed portion of the Commitment, provided that (i) any such reduction or termination shall be accompanied by all - -------- accrued and unpaid commitment fees with respect to any portion of the Commitment being reduced or terminated, and (ii) no such reduction or termination shall affect the further scheduled reductions of Commitment in accordance with Section 2.5. 3.7 Optional Increases to the Commitment. ------------------------------------ (a) Provided that no Default or Event of Default then exists, -------- Borrower may, at any time prior to the date which is the second anniversary of the Closing Date, request in writing that the then effective Commitment be increased to an amount which is not greater than ----- $500,000,000 minus the amount of any reductions to the Commitment which have then occurred pursuant to Sections 2.5 or 2.6, in accordance with the provisions of this Section. Any request under this Section shall be submitted by Borrower to the Lenders through the Administrative Agent not less than thirty days prior to the proposed increase, specify the proposed effective date and amount of such increase and be accompanied by a Certificate signed by a Senior Officer of Borrower (and consented to by the Tribe acting through a Senior Officer), stating that no Default or Event of Default exists as of the date of the request or will result from the requested increase. Borrower may also specify any fees offered to those Lenders which agree to an increase in the amount of their Pro Rata Share of the Commitment (which fees may be variable based upon the amount which any such Lender is willing to assume as an increase to the amount of its Pro Rata Share of the increased Commitment). The consent of the Lenders, as such, shall not be required for an increase in the amount of the Commitment pursuant to this Section. (b) Each Lender may approve or reject a request for an increase in the amount of the Commitment in its sole and absolute discretion and, absent an affirmative written response within thirty days after receipt of such request, shall be -36- deemed to have rejected the request. The rejection of such a request by any number of Lenders shall not affect Borrower's right to increase the Commitment pursuant to this Section. (c) In responding to a request under this Section, each Lender which is willing to increase the amount of its Pro Rata Share of the increased Commitment shall specify the amount of the proposed increase which it is willing to assume. Each consenting Lender shall be entitled to participate ratably (based on its Pro Rata Share of the Commitment before such increase) in any resulting increase in the Commitment, subject to the right of the Administrative Agent to adjust allocations of the increased Commitment so as to result in the amounts of the Pro Rata Shares of the Lenders being in integral multiples of $100,000. (d) If the aggregate principal amount offered to be assumed by the consenting Lenders is less than the amount requested, Borrower may (i) reject the proposed increase in its entirety, (ii) accept the offered amounts or (iii) designate new lenders who qualify as Eligible Assignees and which are reasonably acceptable to the Administrative Agent as additional Lenders hereunder in accordance with clause (e) of this Section (each, a "New Lender"), which New Lenders may assume the amount of the increase in the Commitment that has not been assumed by the consenting Lenders. (e) Each New Lender designated by Borrower and reasonably acceptable to the Administrative Agent shall become an additional party hereto as a New Lender concurrently with the effectiveness of the proposed increase in the Commitment upon its execution of an instrument of joinder to this Agreement which is in form and substance reasonably acceptable to the Administrative Agent and which, in any event, contains the representations, warranties, indemnities and other protections afforded to the Administrative Agent and the other Lenders which would be granted or made by an Eligible Assignee by means of the execution of an Assignment Agreement. (f) Subject to the foregoing, any increase to the Commitment requested under this Section shall be effective as of the date proposed by Borrower and shall be in the principal amount equal to (i) the amount which consenting Lenders are willing to assume as increases to the amount of their Pro Rata Share plus (ii) the amount offered by any New Lenders. Upon the effectiveness of any - ---- such increase, Borrower shall issue (x) replacement Notes to each affected Lender and new Notes to each New Lender, and the percentage Pro Rata Shares of each Lender will be adjusted to give effect to the increase in the Commitment and set forth in a new Schedule 1.1 issued by the Administrative Agent, (y) execute and deliver to the Administrative Agent such amendments to the Loan Documents as the Administrative Agent may reasonably request relating to such increase, including without limitation an amendment to the Leasehold Mortgage executed by Borrower and the Tribe reflecting the increase of the amounts secured thereby, and (z) Borrower shall provide to the Administrative Agent -37- an endorsement to its ALTA lenders policy of title insurance, in form and substance reasonably acceptable to the Administrative Agent, insuring the continued priority and perfection of the Leasehold Mortgage. 3.8 Administrative Agent's Right to Assume Funds Available for Advances. ------------------------------------------------------------------- Unless the Administrative Agent shall have been notified by any Lender prior to the funding by the Administrative Agent of any Loan that such Lender does not intend to make available to the Administrative Agent such Lender's Pro Rata Share of the total amount of such Loan, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of the Loan and the Administrative Agent may, in reliance upon such assumption, make available to Borrower a corresponding amount. If the Administrative Agent has made funds available to Borrower based on such assumption and such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender, which demand shall be made in a reasonably prompt manner. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent promptly shall notify Borrower and Borrower shall pay such corresponding amount to the Administrative Agent. The Administrative Agent also shall be entitled to recover from such Lender interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to the Federal Funds Rate. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Pro Rata Share or to prejudice any rights which the Administrative Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder. 3.9 Collateral. The Loans, together with all other Obligations, shall be ---------- secured by the Liens created by the Collateral Documents. Each Approved Swap Agreement shall be secured by the Lien of the Collateral Documents (a) on a pari ---- passu basis to the extent of the associated Swap Termination Value, and (b) to - ----- the extent of any excess, on a basis which is in all respects subordinated to all other Obligations. -38- ARTICLE 4. PAYMENTS AND FEES ----------------- 4.1 Principal and Interest. ---------------------- (a) Interest shall be payable on the outstanding daily unpaid principal amount of each Loan from the date thereof until payment in full is made and shall accrue and be payable at the rates set forth herein before and after default, before and after maturity, before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. At the option of the Requisite Lenders, interest on overdue interest shall itself bear interest at the Default Rate, and shall be compounded with the principal Obligations quarterly, to the fullest extent permitted by applicable Laws. (b) Interest accrued with respect to Base Rate Loans shall be payable quarterly in arrears on each Quarterly Payment Date. Except as otherwise provided in Section 3.9, the unpaid principal amount of each Base Rate Loan shall bear interest at a fluctuating rate per annum equal to the Base Rate plus ---- the Applicable Percentage for Base Rate Loans. Each change in the interest rate hereunder shall take effect simultaneously with the corresponding change in the Base Rate or the Applicable Percentage. (c) Interest on each LIBOR Loan which is for a term of three months or less shall be due and payable on the last day of the related Interest Period. Interest accrued on each other LIBOR Loan shall be due and payable on the date which is three months after the date such LIBOR Loan was made, every three months thereafter and, in any event, on the last day of the related Interest Period. Except as otherwise provided in Section 3.9, the unpaid principal amount of any LIBOR Loan shall bear interest at a rate per annum equal to the LIBOR for that LIBOR Loan plus the Applicable Percentage for LIBOR Loans. While ---- the LIBOR for each LIBOR Loan shall remain fixed for the entire related Interest Period, the Applicable Percentage for each LIBOR Loan shall change simultaneously with the corresponding change in Applicable Percentages generally. (d) If not sooner paid, the principal Indebtedness evidenced by the Loan Documents shall be payable as follows: (i) the principal amount of each LIBOR Loan shall be payable on the last day of the Interest Period for such Loan; (ii) the amount, if any, by which the aggregate principal amount of the Loans plus the aggregate amount available for drawing under ---- outstanding Letters of Credit plus the aggregate amount of all ---- -39- unreimbursed draws with respect to Letters of Credit at any time exceeds the Commitment shall be payable immediately; and (iii) the principal Indebtedness evidenced by the Loan Documents shall in any event be payable on the Maturity Date. (e) Subject to Section 3.8, the Loans may, at any time and from time to time, voluntarily be paid or prepaid in whole or in part without premium or penalty, provided that with respect to any voluntary prepayment of the Loans -------- under this Section 3.1(e), (i) any partial prepayment shall be in an integral multiple of $1,000,000 which is not less than $5,000,000, and (ii) the Administrative Agent shall have received written notice of any prepayment prior to 9:00 a.m. California time one Business Day (or, in the case of any prepayment of any LIBOR Loan, three LIBOR Business Days) before the date of prepayment, which notice shall identify the date and amount of the prepayment. 4.2 Arrangement Fees. On the Closing Date, Borrower shall pay to the ---------------- Administrative Agent for the account of the Lead Arranger a fee in the amount set forth in a letter agreement dated March 3, 1999 between the Lead Arranger, the Administrative Agent and Borrower. This fee is fully earned as of the Closing Date, is solely for the account of Lead Arranger and is non-refundable. 4.3 Annual Agency Fees. On the Closing Date and on each anniversary ------------------ thereof, Borrower shall pay to the Administrative Agent agency fees in the amounts set forth in a letter agreement dated March 3, 1999 between the Lead Arranger, Administrative Agent and Borrower. These agency fees are fully earned as of the date when due, are solely for the account of Administrative Agent and are non-refundable. 4.4 Facility Fees. On the Closing Date, Borrower shall pay to the ------------- Administrative Agent, for the account of each Lender, a non-refundable facility fee in amount equal to (a) the amount of that Lender's Pro Rata Share, times (b) ----- a percentage based on the principal amount of the Commitment which such Lender extended a written offer to Borrower to assume (without regard to the Pro Rata Share actually allocated to such Lender), as set forth in a letter agreement dated March 3, 1999 among the Lead Arranger, the Administrative Agent and Borrower. 4.5 Commitment Fees. From the Closing Date, the Borrower shall pay to the --------------- Administrative Agent, for the account of the Lenders according to their Pro Rata Shares, commitment fees equal to the product of (a) the Applicable Percentage for Commitment Fees times (b) the average daily Unused Commitment for that ----- calendar quarter. The commitment fees shall be payable quarterly in arrears on each Quarterly Payment Date and upon any termination of the Commitment. -40- 4.6 Letter of Credit Fees. Concurrently with the issuance of each --------------------- Letter of Credit, Borrower shall pay letter of credit fees (a) to the Issuing Lender, for the sole account of the Issuing Lender, in an amount set forth in a letter agreement dated March 3, 1999 between the Issuing Lender, Lead Arranger and Borrower, and (b) to the Administrative Agent, for the ratable account of the Lenders in accordance with their Pro Rata Shares of the Commitment, in an amount equal to the Applicable Percentage for LIBOR Loans times the maximum ----- amount available for drawing under such Letter of Credit, in each case for the tenor of such Letter of Credit. The Administrative Agent shall promptly make available to the Lenders in immediately available funds, pro-rata according to their Pro Rata Share, the standby letter of credit fees which are for the account of the Lenders. Borrower shall also pay transfer, issuance, check fees and such other fees as the Issuing Lender normally charges (not to include origination fees) in connection with standby letters of credit and activity pursuant thereto, which fees shall be solely for the account of the Issuing Lender. 4.7 Increased Commitment Costs. If any Lender shall have determined -------------------------- that the introduction after the date hereof of any applicable law, rule, regulation or guideline regarding capital adequacy, or any change therein or any change in the interpretation or administration thereof by any central bank or other Governmental Agency charged with the interpretation or administration thereof, or compliance by that Lender (or its LIBOR Lending Office) or any corporation controlling that Lender, with any request, guidelines or directive regarding capital adequacy (whether or not having the force of law) of any such central bank or other authority, affects or would affect the amount of capital required or expected to be maintained by that Lender or any corporation controlling that Lender and (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such capital is increased as a consequence of its obligations under this Agreement, then, upon demand of such Lender, Borrower shall immediately pay to that Lender, from time to time as specified by that Lender, additional amounts sufficient to compensate that Lender for such increase. 4.8 LIBOR Fees and Costs. -------------------- (a) If, after the date hereof, the existence or occurrence of any Special Circumstance: (i) shall subject any Lender or its LIBOR Lending Office to any tax, duty or other charge or cost with respect to any LIBOR Advance, any Note or its obligation to make LIBOR Advances, or shall change the basis of taxation of payments to any Lender of the principal of or interest on any LIBOR Advance or any other amounts due under this Agreement in respect of any LIBOR Advance, any Note or its obligation to make LIBOR Advances (except for changes in any tax on ------ the overall net income, gross income or gross receipts of such Lender or its LIBOR Lending Office); -41- (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the --------- Board of Governors of the Federal Reserve System), special deposit or similar requirements against assets of, deposits with or for the account of, or credit extended by, any Lender or its LIBOR Lending Office; or (iii) shall impose on any Lender or its LIBOR Lending Office or the Designated Market any other condition affecting any LIBOR Advance, any Note, its obligation to make LIBOR Advances or this Agreement, or shall otherwise affect any of the same; and the result of any of the foregoing, as determined by such Lender, increases the cost to such Lender or its LIBOR Lending Office of making or maintaining any LIBOR Advance or in respect of any LIBOR Advance, any Note or its obligation to make LIBOR Advances or reduces the amount of any sum received or receivable by such Lender or its LIBOR Lending Office with respect to any LIBOR Advance, any Note or its obligation to make LIBOR Advances (assuming such Lender's LIBOR Lending Office had funded 100% of its LIBOR Advance in the Designated Market), then, upon demand by such Lender (with a copy to the Administrative Agent), Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction (determined as though such Lender's LIBOR Lending Office had funded 100% of its LIBOR Advance in the Designated Market). A statement of any Lender claiming compensation under this subsection, providing supporting calculation, and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. Each Lender agrees to endeavor promptly to notify Borrower of any event of which it has actual knowledge occurring after the Closing Date, which will entitle such Lender to compensation pursuant to this Section, and agrees to designate a different LIBOR Lending Office promptly if such designation will avoid the need for or reduce the amount of such compensation and will not, in the judgment of such Lender, otherwise be disadvantageous to such Lender. If any Lender claims compensation under this Section, Borrower may at any time, upon at least four LIBOR Business Days' prior notice to the Administrative Agent and such Lender and upon payment in full of the amounts provided for in this Section through the date of such payment plus any prepayment fee required by ---- Section 3.8(d), pay in full the affected LIBOR Advances of such Lender or request that such LIBOR Advances be converted to Base Rate Advances. (b) If, after the date hereof, the existence or occurrence of any Special Circumstance shall, in the opinion of any Lender, make it unlawful, impossible or impracticable for such Lender or its LIBOR Lending Office to make, maintain or fund its portion of any LIBOR Loan, or materially restrict the ability of such Lender to purchase or sell, or to take deposits of, dollars in the Designated Market, or to -42- determine or charge interest rates based upon the LIBOR, and such Lender shall so notify the Administrative Agent, then such Lender's obligation to make LIBOR Advances shall be suspended for the duration of such illegality, impossibility or impracticability and the Administrative Agent forthwith shall give notice thereof to the other Lenders and Borrower. Upon receipt of such notice, the outstanding principal amount of such Lender's LIBOR Advances, together with accrued interest thereon, automatically shall be converted to Base Rate Advances on either (1) the last day of the Interest Period(s) applicable to such LIBOR Advances if such Lender may lawfully continue to maintain and fund such LIBOR Advances to such day(s) or (2) immediately if such Lender may not lawfully continue to fund and maintain such LIBOR Advances to such day(s), provided that in such event the -------- conversion shall not be subject to payment of a prepayment fee under Section 3.8(d). In the event that any Lender is unable, for the reasons set forth above, to make, maintain or fund its portion of any LIBOR Loan, such Lender shall fund such amount as a Base Rate Advance for the same period of time, and such amount shall be treated in all respects as a Base Rate Advance. (c) If, with respect to any proposed LIBOR Loan: (i) the Administrative Agent reasonably determines that, by reason of circumstances affecting the Designated Market generally that are beyond the reasonable control of the Lenders, deposits in dollars (in the applicable amounts) are not being offered to each of the Lenders in the Designated Market for the applicable Interest Period; or (ii) the Requisite Lenders advise the Administrative Agent that the LIBOR as determined by the Administrative Agent (A) does not represent the effective pricing to such Lenders for deposits in dollars in the Designated Market in the relevant amount for the applicable Interest Period, or (B) will not adequately and fairly reflect the cost to such Lenders of making the applicable LIBOR Advances; then the Administrative Agent forthwith shall give notice thereof to Borrower and the Lenders, whereupon until the Administrative Agent notifies Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of the Lenders to make any future LIBOR Advances shall be suspended. If at the time of such notice there is then pending a Request for Loan that specifies a LIBOR Loan, such Request for Loan shall be deemed to specify a Base Rate Loan. (d) Upon payment or prepayment of any LIBOR Advance (other than as the result of a conversion required under Section 3.8(b)), on a day other than the last day in the applicable Interest Period (whether voluntarily, involuntarily, by reason of acceleration, or otherwise), or upon the failure of Borrower to borrow on the -43- date or in the amount specified for a LIBOR Loan in any Request for Loan, Borrower shall pay to the appropriate Lender a prepayment fee or failure to borrow fee, as the case may be, calculated as follows (and determined as though 100% of the LIBOR Advance had been funded in the Designated Market): (i) principal amount of the LIBOR Advance, times the ----- number of days between the date of prepayment or failure to borrow and the last day in the applicable Interest Period, divided by 360, times ---------- ----- the applicable Interest Differential; plus ---- (ii) all actual out-of-pocket expenses (other than those taken into account in the calculation of the Interest Differential) incurred by the Lender (excluding allocations of any expense internal --------- to that Lender) and reasonably attributable to such payment, prepayment or failure to borrow; provided that no prepayment fee or failure to borrow fee shall be payable -------- (and no credit or rebate shall be required) if the product of the foregoing formula is not a positive number. Each Lender's determination of the amount of any prepayment fee or failure to borrow fee payable under this Section 3.8(d) shall be based upon the Administrative Agent's determination of the applicable Interest Differential but shall otherwise be conclusive in the absence of manifest error. 4.9 Default Rate. Upon the occurrence and during the continuation of ------------ any Default, the outstanding principal amount of the Loans shall, at the option of the Requisite Lenders, thereafter bear interest at a rate per annum which is 2% per annum in excess of the otherwise applicable rate, to the fullest extent permitted by applicable Laws. Upon the occurrence and during the continuation of any Default or Event of Default, accrued and unpaid interest on past due amounts (including, without limitation, interest on past due interest) shall be payable --------- upon demand and shall be compounded quarterly, on the last day of each calendar quarter, to the fullest extent permitted by applicable Laws. 4.10 Computation of Interest and Fees. Computation of interest on Base -------------------------------- Rate Loans shall be calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. Computation of interest on LIBOR Loans and on fees payable under this Agreement shall be calculated on the basis of a year of 360 days and the actual number of days elapsed. Borrower acknowledges that such latter calculation method will result in a higher yield to the Lenders than a method based on a year of 365 or 366 days. Any Loan that is repaid on the same day on which it is made shall bear interest for one day. 4.11 Non-Business Days. If any payment to be made by Borrower or any ----------------- other Party under any Loan Document shall come due on a day other than a Business Day, payment shall instead be considered due on the next succeeding Business Day and the extension of time shall be reflected in computing interest. -44- 4.12 Manner and Treatment of Payments. -------------------------------- (a) Each payment hereunder (except payments pursuant to Sections ------ 3.7, 3.8, 13.11 and 13.15) or on the Notes or under any other Loan Document shall be made, without setoff, counterclaim or deduction of any kind, to the Administrative Agent, at the Administrative Agent's Office, for the account of each of the Lenders or the Administrative Agent, as the case may be, in immediately available funds not later than 11:00 a.m., California local time, on the day of payment (which must be a Business Day). All later payments shall be deemed received on the next succeeding Business Day. The amount of all payments received by the Administrative Agent for the account of each Lender shall be paid by the Administrative Agent to the applicable Lender in immediately available funds and, if such payment was received by the Administrative Agent by 11:00 a.m., California local time, on a Business Day and not so made available to the account of a Lender on that Business Day, the Administrative Agent shall reimburse that Lender for the cost to such Lender of funding the amount of such payment at the Federal Funds Rate. All payments shall be made in lawful money of the United States of America. (b) Each payment or prepayment on account of any Loan shall be made and applied pro rata according to the outstanding Advances made by each Lender comprising such Loan. (c) Each Lender shall use its best efforts to keep a record of Advances made by it and payments received by it with respect to its Note and such record shall be presumptive evidence of the amounts owing. Notwithstanding the foregoing sentence, no Lender shall be liable to any Party for any failure to keep such a record, and no such failure shall affect the amount of the Obligations hereunder. 4.13 Funding Sources. Nothing in this Agreement shall be deemed to --------------- obligate any Lender to obtain the funds for any Loan or Advance in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan or Advance in any particular place or manner. 4.14 Failure to Charge Not Subsequent Waiver. Any decision by the --------------------------------------- Administrative Agent or any Lender not to require payment of any interest (including interest at the Default Rate), fee, cost or other amount payable - ---------- under any Loan Document, or to calculate any amount payable by a particular method, on any occasion shall in no way limit or be deemed a waiver of the Administrative Agent's or such Lender's right to require full payment of any interest (including interest at the Default Rate), fee, cost or other amount --------- payable under any Loan Document, or to calculate an amount payable by another method, on any other or subsequent occasion. -45- 4.15 Administrative Agent's Right to Assume Payments Will be Made by --------------------------------------------------------------- Borrower. Unless the Administrative Agent shall have been notified by Borrower - -------- prior to the date on which any payment to be made by Borrower hereunder is due that Borrower does not intend to remit such payment, the Administrative Agent may, in its discretion, assume that Borrower has remitted such payment when so due and the Administrative Agent may, in its discretion and in reliance upon such assumption, make available to each Lender on such payment date an amount equal to such Lender's share of such assumed payment. If Borrower has not in fact remitted such payment to the Administrative Agent, each Lender shall forthwith on demand repay to the Administrative Agent the amount of such assumed payment made available to such Lender, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent at the Federal Funds Rate. 4.16 Authority to Charge Account. Borrower hereby authorizes the --------------------------- Administrative Agent to charge the Designated Deposit Account or any other demand deposit account maintained by Borrower with the Administrative Agent, in such amounts as may from time to time be necessary to cause timely payment of principal, interest, fees and other charges payable by Borrower under the Loan Documents, but only to the extent that any such payment is not otherwise made when due. Nothing herein shall obligate the Administrative Agent to charge any such account in this manner or to charge any account at a time when there are not sufficient good funds in such account. 4.17 Fee Determination Detail. The Administrative Agent, and any ------------------------ Lender, shall provide reasonable detail to Borrower regarding the manner in which the amount of any payment to the Lenders, or that Lender, under Article 3 has been determined. 4.18 Survivability. All of Borrower's obligations under Sections 3.7 ------------- and 3.8 shall survive for one year following the date on which all Loans hereunder are fully paid; provided, however, that such obligations shall not, -------- from and after the date on which all Loans hereunder are fully paid, be deemed secured Obligations for any purpose under the Loan Documents. 4.19 Withholding Gross-Up. Each payment of any amount payable by -------------------- Borrower or any other Party under this Agreement or any other Loan Document shall be made free and clear of, and without reduction by reason of, any taxes, assessments or other charges imposed by any Governmental Agency, central bank or comparable authority, excluding (i) taxes imposed on or measured in whole or in --------- part by overall net income, gross income or gross receipts, (ii) franchise taxes imposed on any Lender by (A) any jurisdiction (or political subdivision thereof) in which it is organized or maintains its principal office or LIBOR Lending Office or (B) any jurisdiction (or political subdivision thereof) in which it is "doing business", (iii) any withholding -46- taxes or other taxes based on gross income imposed by the United States of America that are not attributable to any change in any Law or the interpretation or administration of any Law by any Governmental Agency and (iv) any withholding tax or other taxes based on gross income imposed by the United States of America for any period with respect to which it has failed to provide Borrower with the appropriate form or forms required by Section 13.23, to the extent such forms are then available under applicable Laws (all such non-excluded taxes, assessments or other charges being hereinafter referred to as "Taxes"). To the extent that Borrower or any other Party is obligated by applicable Laws to make any deduction or withholding on account of Taxes from any amount payable to any Lender under this Agreement, they shall (i) make such deduction or withholding and pay the same to the relevant Governmental Agency and (ii) pay such additional amount to that Lender as is necessary to result in that Lender's receiving a net after-Tax amount equal to the amount to which that Lender would have been entitled under this Agreement absent such deduction or withholding. If and when receipt of such payment results in an excess payment or credit to that Lender on account of such Taxes, that Lender shall promptly refund such excess to Borrower or the relevant Party. -47- ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE TRIBE ------------------------------------------- In order to induce the Creditors to enter into this Agreement and the other Loan Documents to be executed as of the Closing Date, the Tribe represents and warrants to the Creditors that, as of the Closing Date (but not as of any date subsequent thereto). 5.1 Existence and Qualification; Power; Compliance With Laws. The -------------------------------------------------------- Tribe is federally recognized as a Indian Tribe pursuant to a determination of the Assistant Secretary - Indian Affairs, dated March 7, 1994, published in the Federal Register on March 15, 1994, as amended by a correction dated July 1, 1994, published in the Federal Register on July 20, 1994, and as an Indian Tribal government pursuant to Sections 7701(a)(40)(A) and 7871(a) of the Internal Revenue Code, Title 26 U.S.C. Borrower is a governmental instrumentality of the Tribe. As of the Closing Date, each of the Tribe and Borrower is a non-taxable entity for purposes of federal income taxation under the Internal Revenue Code, Title 26 U.S.C., and the gaming and other revenues of Borrower are exempt from federal income taxation. To the extent required by Law, Borrower and the Tribe are qualified to do business and are in good standing under the laws of each jurisdiction in which they are required to be qualified by reason of the location or the conduct of their business. The Tribe and the Borrower each have all requisite power and authority to execute and deliver each Loan Document to which they are a Party and to perform their respective Obligations. The Tribe and Borrower are in material compliance with the terms of the Compact, the Gaming Authority Ordinance, the Gaming Ordinance and with all Laws and other legal requirements applicable to their existence and business (including without limitation, IGRA and all Gaming Laws), have obtained all authorizations, consents, approvals, orders, licenses and permits from, and have accomplished all filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Agency that are necessary for the transaction of their business, except where the failure so to ------ file, register, qualify or obtain exemptions does not constitute a Material Adverse Effect. 5.2 Authority; Compliance With Other Agreements and Instruments and --------------------------------------------------------------- Government Regulations. The execution, delivery and performance by the Tribe - ---------------------- and by Borrower of the Loan Documents have been duly authorized by all necessary Tribal Council , Management Board and other action, and do not: (a) require any consent or approval not heretofore obtained of any enrolled tribal member, Tribal Council member, Management Board Member, security holder or creditor; (b) violate or conflict with any provision of the Constitution, charter, bylaws or other governing documents of the Tribe or of Borrower; -48- (c) result in or require the creation or imposition of any Lien or Right of Others (other than pursuant to the Collateral Documents) upon or with respect to any Authority Property now owned or leased or hereafter acquired; (d) violate any Law or Requirement of Law, including any Gaming Law, applicable to the Tribe or Borrower; (e) constitute a "transfer of an interest" or an "obligation incurred" that is avoidable by a trustee under Section 548 of the Bankruptcy Code of 1978, as amended, or constitute a "fraudulent conveyance," "fraudulent obligation" or "fraudulent transfer" within the meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in any applicable jurisdiction; (f) result in a material breach of or default under, or would, with the giving of notice or the lapse of time or both, constitute a material breach of or default under, or cause or permit the acceleration of any obligation owed under, any mortgage, indenture or loan or credit agreement or any other Contractual Obligation to which the Tribe or Borrower is a party or by which the Tribe, Borrower or any of their Property is bound or affected; or (g) require any consent or approval of any Governmental Agency, or any notice to, registration or qualification with any Governmental Agency, not heretofore obtained or obtained concurrently with the Closing Date; and the Tribe and Borrower are not in violation of, or default under, any Requirement of Law or Contractual Obligation, or any indenture, loan or credit agreement described in Section 4.2(f), in any respect that constitutes a Material Adverse Effect. 5.3 No Governmental Approvals Required. Except for the consent of the ---------------------------------- ------ Bureau of Indian Affairs pursuant to 25 U.S.C (S)81 (which consent is being obtained concurrently with the execution and delivery of this Agreement), no authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Agency is required to authorize or permit under applicable Laws the execution, delivery and performance by the Tribe and the Borrower of the Loan Documents to which they are parties. 5.4 The Nature of Borrower. The Tribe has no Subsidiaries and no ---------------------- Affiliates which are included in or controlled by or through Borrower. All activities of the Tribe constituting or relating to the ownership and operation of gaming facilities (including all Class II and Class III gaming activities within the meaning of IGRA) and all activities of the Tribe constituting or relating to the ownership of hotel, restaurant, entertainment and resort facilities are conducted on behalf of the Tribe by Borrower pursuant to the authority granted to Borrower in the Gaming Authority Ordinance. -49- 5.5 No Management Contract. Neither this Agreement nor the other Loan ---------------------- Documents, taken individually or as a whole, constitute "management contracts" or "management agreements" within the meaning of Section 12 of IGRA, or deprive Borrower of the sole proprietary interest and responsibility of the conduct of gaming activity at Mohegan Sun. 5.6 Title to and Location of Property. As of the Closing Date, --------------------------------- Borrower has good and valid title to all the Property reflected in the financial statements described in Section 5.6 other than immaterial items of Property ----- ---- subsequently sold or disposed of in the ordinary course of business, free and clear of all Liens and Rights of Others, other than as set forth in Schedule 7.8, provided that the leasehold estate which is the subject of the Leasehold Mortgage covers real property the title to which is held by the United States in trust on behalf of the Tribe. 5.7 Real Property. Schedule 4.7 sets forth a summary description of ------------- all real property owned by the Tribe which is Authority Property, including the Real Property, and of all real property leasehold estates held by Borrower from the Tribe, which summary is accurate and complete in all material respects. Except as set forth in Schedule 4.7, the leases creating such real property leasehold estates are in full force and effect and create a valid leasehold estate on the terms of such lease, and neither Borrower nor the Tribe is in default or breach of any thereof . The copies of such real property leases heretofore furnished to the Administrative Agent are true copies and there are no amendments thereto copies of which have not been furnished to the Administrative Agent. Under 25 U.S.C. (S)177 such real property may not be encumbered by the Tribe or Borrower without the consent of the United States of America, however each required consent has been obtained concurrently with the execution and delivery of this Agreement. The Authority Property includes all real, mixed and personal property which is operationally integral to the on- reservation gaming activities of the Tribe. 5.8 Governmental Regulation. Except for consents of the Bureau of ----------------------- Indian Affairs being obtained concurrently with the execution of this Agreement, Borrower is not subject to regulation under any Law limiting or regulating its ability to incur Indebtedness for money borrowed, to grant Liens to secure its obligations with respect to such Indebtedness or to otherwise perform the Obligations. 5.9 Binding Obligations. The Loan Documents contemplated by Section ------------------- 10.1 and Section 10.2 have been executed and delivered by the Tribe and Borrower, as applicable, and constitute the legal, valid and binding obligations of the Tribe and Borrower enforceable in accordance with their terms. The provisions of Section 13.24 are specifically enforceable against the Tribe and Borrower. 5.10 No Default. No event has occurred and is continuing that is a ---------- Default or an Event of Default. -50- 5.11 Disclosure. No written statement made by or on behalf of the ---------- Tribe or Borrower to the Administrative Agent or any Lender in connection with this Agreement, or in connection with any Loan or Letter of Credit, contains any untrue statement of a material fact or omits a material fact necessary in order to make the statement made not misleading in light of all the circumstances existing at the date the statement was made. There is no fact known to the Tribe or Borrower (other than matters of a general economic nature or matters generally applicable to businesses of the types engaged in by Borrower) which would constitute a Material Adverse Effect that has not been disclosed in writing to the Administrative Agent and the Lenders. 5.12 Gaming Laws. Borrower and the Tribe are in material compliance ----------- with all applicable Gaming Laws. 5.13 Security Interests. The Liens created by the Security Agreement ------------------ are perfected and of first priority to the fullest extent that the same may be perfected by the filing of financing statements under the Connecticut Uniform Commercial Code (as adopted by the Borrower pursuant to the UCC Ordinance). The Leasehold Mortgage creates a valid and perfected Lien in the Collateral described therein securing the Obligations. The Deposit Account Agreements create a valid and perfected Lien in the Collateral described therein (including without limitation the Operating Accounts) securing the Obligations. Each of the Liens described in this Section are of first priority, subject only to Permitted Encumbrances, Permitted Rights of Others and matters described in Schedule 7.8. 5.14 Arbitration. Pursuant to the Constitution, to the extent that any ----------- dispute among the parties to the Loan Documents is initiated in or referred to the Tribal Court, (i) such court lacks discretion to refuse to compel arbitration among the parties to the dispute, and (ii) such court is obligated to honor and enforce any award by the arbitrator, without review of any nature by such court. 5.15 Recourse Obligations. Under current Law, no obligation of the -------------------- Tribe of any type or nature may constitute a Recourse Obligation unless and to the extent that Borrower has become an express obligor with respect thereto, and the Tribe has no authority, independent of Borrower, to incur any obligation on behalf of Borrower, to bind any Authority Property, or to grant Liens upon any Authority Property. -51- ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER ---------------------------------------------- In order to induce the Creditors to enter into this Agreement and the other Loan Documents, to make Loans and to issue and participate in Letters of Credit hereunder, Borrower represents and warrants to the Creditors that: 6.1 Existence and Qualification; Power; Compliance With Laws. The -------------------------------------------------------- Tribe is federally recognized as a Indian Tribe pursuant to a determination of the Assistant Secretary - Indian Affairs, dated March 7, 1994, published in the Federal Register on March 15, 1994, as amended by a correction dated July 1, 1994, published in the Federal Register on July 20, 1994, and as an Indian Tribal government pursuant to Sections 7701(a)(40)(A) and 7871(a) of the Internal Revenue Code, Title 26 U.S.C. Borrower is a governmental instrumentality of the Tribe. As of the Closing Date, each of the Tribe and Borrower is a non-taxable entity for purposes of federal income taxation under the Internal Revenue Code, Title 26 U.S.C., and the gaming and other revenues of Borrower are exempt from federal income taxation. To the extent required by Law, Borrower and the Tribe are qualified to do business and is in good standing under the laws of each jurisdiction in which they are required to be qualified by reason of the location or the conduct of their business. The Tribe and the Borrower each have all requisite power and authority to conduct their respective business, to own and lease their respective Properties, to execute and deliver each Loan Document to which they are a Party and to perform their respective Obligations. As of the Closing Date, the chief executive offices of Borrower are located in Uncasville, Connecticut at the address for notices set forth on the signature pages hereto. The Tribe and Borrower are in material compliance with the terms of the Compact, the Gaming Ordinance, the Gaming Authority Ordinance and with all Laws and other legal requirements applicable to their existence and business (including without limitation, IGRA and all Gaming Laws), have obtained all authorizations, consents, approvals, orders, licenses and permits from, and have accomplished all filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Agency that are necessary for the transaction of their business, except where the failure so ------ to file, register, qualify or obtain exemptions does not constitute a Material Adverse Effect. 6.2 Authority; Compliance With Other Agreements and Instruments and --------------------------------------------------------------- Government Regulations. The execution, delivery and performance by the Tribe - ---------------------- and by Borrower of the Loan Documents have been duly authorized by all necessary Tribal Council, Management Board and other action, and do not: (a) require any consent or approval not heretofore obtained of any enrolled tribal member or Tribal Council member, Management Board member, security holder or creditor; -52- (b) violate or conflict with any provision of the Constitution, charter, bylaws or other governing documents of the Tribe or of Borrower; (c) result in or require the creation or imposition of any Lien or Right of Others (other than pursuant to the Collateral Documents) upon or with respect to any Authority Property now owned or leased or hereafter acquired; (d) violate any Law or Requirement of Law, including any Gaming Law, applicable to the Tribe or Borrower; (e) constitute a "transfer of an interest" or an "obligation incurred" that is avoidable by a trustee under Section 548 of the Bankruptcy Code of 1978, as amended, or constitute a "fraudulent conveyance," "fraudulent obligation" or "fraudulent transfer" within the meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in any applicable jurisdiction; (f) result in a material breach of or default under, or would, with the giving of notice or the lapse of time or both, constitute a material breach of or default under, or cause or permit the acceleration of any obligation owed under, any mortgage, indenture or loan or credit agreement or any other Contractual Obligation to which the Tribe or Borrower is a party or by which the Tribe, Borrower or any of their Property is bound or affected; or (g) require any consent or approval of any Governmental Agency, or any notice to, registration or qualification with any Governmental Agency, not heretofore obtained or obtained concurrently with the Closing Date; and the Tribe and Borrower are not in violation of, or default under, any Requirement of Law or Contractual Obligation, or any indenture, loan or credit agreement described in Section 5.2(f), in any respect that constitutes a Material Adverse Effect. 6.3 No Governmental Approvals Required. Except for the consent of the ---------------------------------- ------ Bureau of Indian Affairs pursuant to 25 U.S.C (S)81 (which consent is being obtained concurrently with the execution and delivery of this Agreement), no authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Agency is required to authorize or permit under applicable Laws the execution, delivery and performance by the Tribe and the Borrower of the Loan Documents to which they are parties. 6.4 The Nature of Borrower. The Tribe has no Subsidiaries and no ---------------------- Affiliates which are included in or controlled by or through Borrower. All activities of the Tribe constituting or relating to the ownership and operation of gaming facilities (including all Class II and Class III gaming activities within the meaning of IGRA) and all activities of the Tribe -53- constituting or relating to the ownership of hotel, restaurant, entertainment and resort facilities are conducted on behalf of the Tribe by Borrower pursuant to the authority granted to Borrower in the Gaming Authority Ordinance. 6.5 No Management Contract. Neither this Agreement nor the other Loan ---------------------- Documents, taken individually or as a whole, constitute "management contracts" or "management agreements" within the meaning of Section 12 of IGRA, or deprive Borrower of the sole proprietary interest and responsibility of the conduct of gaming activity at Mohegan Sun. 6.6 Financial Statements. Borrower has furnished to the Lenders (a) -------------------- the audited financial statements of Borrower as at September 30, 1998 and for the fiscal year then ended, and (b) the unaudited financial statements of Borrower as at December 31, 1998 and for the three month fiscal period then ended. The financial statements described above fairly present the financial condition and the results of operations of Borrower as at such dates and for such periods in accordance with Generally Accepted Accounting Principles consistently applied, except in the case of the financial statements described ------ in clause (b) above, for any requirement for footnote disclosures. 6.7 Financial Statements of Borrower. The financial statements of -------------------------------- Borrower referred to in Section 5.6 includes as liabilities of the Borrower, all Recourse Obligations existing as of the date hereof, whether or not Borrower is described as the borrower or obligor with respect thereto. Each financial statement of Borrower which is hereafter delivered in accordance with Section 8.1 includes as liabilities of the Borrower, all then existing Recourse Obligations, whether or not Borrower is described as the borrower or obligor with respect thereto. No Non-Authority Property is described as an asset of Borrower on any balance sheet or other financial statement of Borrower provided to the Administrative Agent or the Lenders. 6.8 No Other Liabilities; No Material Adverse Effect. As of the ------------------------------------------------ Closing Date, Borrower does not have any material liability or material contingent liability not reflected or disclosed in the financial statements described in Section 5.6(b) or the notes to the financial statements described in Section 5.6(a). No event or circumstance that constitutes a Material Adverse Effect has occurred since September 30, 1998. As of the date of each Advance made and each Letter of Credit issued subsequent to the Closing Date, no event or circumstance has occurred since the Closing Date that constitutes a Material Adverse Effect. 6.9 Title to and Location of Property. As of the Closing Date, --------------------------------- Borrower has good and valid title to all the Property reflected in the financial statements described in Section 5.6 other than immaterial items of Property ----- ---- subsequently sold or disposed of in the ordinary course of business, free and clear of all Liens and Rights of Others, other than as set forth in Schedule 7.8, provided that the leasehold estate which is the subject of the Leasehold Mortgage covers real property the title to which is held by the United States in trust on behalf of the Tribe. -54- 6.10 Real Property. Schedule 4.7 sets forth a summary description of ------------- all real property owned by the Tribe which is Authority Property, including the Real Property, and of all real property leasehold estates held by Borrower from the Tribe, which summary is accurate and complete in all material respects. Except as set forth in Schedule 4.7, the leases creating such real property leasehold estates are in full force and effect and create a valid leasehold estate on the terms of such lease, and neither Borrower nor the Tribe is in default or breach of any thereof . The copies of such real property leases heretofore furnished to the Administrative Agent are true copies and there are no amendments thereto copies of which have not been furnished to the Administrative Agent. Under 25 U.S.C. (S)177 such real property may not be encumbered by the Tribe or Borrower without the consent of the United States of America, however each required consent has been obtained concurrently with the execution and delivery of this Agreement. The Authority Property includes all real, mixed and personal property which is operationally integral to the on- reservation gaming activities of the Tribe. 6.11 Intangible Assets. Borrower owns, or possesses the right to use ----------------- to the extent necessary in the business of Borrower, all trademarks, trade names, copyrights, patents, patent rights, computer software, licenses and other Intangible Assets that are used in the conduct of the business of Borrower as now operated and which are material to the condition (financial or otherwise), business or operations of Borrower, and no such Intangible Asset conflicts with the valid trademark, trade name, copyright, patent, patent right or Intangible Asset of any other Person to the extent that such conflict constitutes a Material Adverse Effect. 6.12 Governmental Regulation. Except for consents of the Bureau of ----------------------- Indian Affairs being obtained concurrently with the execution of this Agreement, Borrower is not subject to regulation under any Law limiting or regulating its ability to incur Indebtedness for money borrowed, to grant Liens to secure its obligations with respect to such Indebtedness or to otherwise perform the Obligations. 6.13 Litigation. Except for (a) any matter fully covered (subject to ---------- ------ applicable deductibles and retentions) by insurance and with respect to which the insurance carrier has not denied coverage, nor issued any denial of claim, nor any other statement that the claim is in excess of coverage, (b) any matter, or series of related matters, not fully covered by insurance (subject to applicable deductibles and retentions) involving a claim against Borrower which is, in the reasonable opinion of Borrower's independent legal counsel, in an amount less than $1,000,000, and (c) matters set forth in Schedule 5.13, there are no actions, suits, proceedings or investigations pending as to which Borrower has been served or have received notice or, to the best knowledge of Borrower, threatened against or affecting Borrower or any of its Property before any Governmental Agency. There is no reasonable basis to believe that any of the matters described on Schedule 5.13 may result in or constitute a Material Adverse Effect. -55- 6.14 Binding Obligations. The Loan Documents to which the Tribe or ------------------- Borrower is a party have been executed and delivered by the Tribe and Borrower and constitute the legal, valid and binding obligations of the Tribe and Borrower enforceable in accordance with their terms, and each Loan Document hereafter executed will, when executed and delivered by the Parties thereto, constitute the legal, valid and binding obligation of the Borrower and the Tribe as applicable, enforceable against the Borrower and the Tribe as applicable in accordance with its terms. 6.15 No Default. No event has occurred and is continuing that is a ---------- Default or an Event of Default. 6.16 ERISA. As of the Closing Date neither Borrower nor any ERISA ----- Affiliate maintains, contributes to or is required to contribute to any "employee pension benefit plan" that is subject to Title IV of ERISA. 6.17 Regulations T, U and X; Investment Company Act. No part of the ---------------------------------------------- proceeds of any Loan or other extension of credit hereunder will be used to purchase or carry, or to extend credit to others for the purpose of purchasing or carrying, any "margin stock" (as such term is defined in Regulations T, U and X) in violation of Regulations T, U and X. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any such "margin stock." Borrower is not required to be registered as an "investment company" under the Investment Company Act of 1940. 6.18 Disclosure. No written statement made by or on behalf of the ---------- Tribe or Borrower to the Administrative Agent or any Lender in connection with this Agreement, or in connection with any Loan or Letter of Credit, contains any untrue statement of a material fact or omits a material fact necessary in order to make the statement made not misleading in light of all the circumstances existing at the date the statement was made. There is no fact known to the Tribe or Borrower (other than matters of a general economic nature or matters generally applicable to businesses of the types engaged in by Borrower) which would constitute a Material Adverse Effect that has not been disclosed in writing to the Administrative Agent and the Lenders. 6.19 Tax Liability. Borrower has filed all tax returns which are ------------- required to be filed, and has paid, or made provision for the payment of, all taxes with respect to the periods, Property or transactions covered by said returns, or pursuant to any assessment received by Borrower, except such taxes, ------ if any, as are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established and maintained. 6.20 Projections. As of the Closing Date, to the best knowledge of ----------- Borrower, the assumptions set forth in the Projections are reasonable and consistent with each other and -56- with all facts known to the Tribe or Borrower and no material assumption is omitted as a basis for the Projections, and the Projections are reasonably based on such assumptions. Nothing in this Section shall be construed as a representation, warranty or covenant that the Projections in fact will be achieved. 6.21 Employee Matters. There is no strike or work stoppage in ---------------- existence or, to Borrower's knowledge, threatened involving Borrower that would constitute a Material Adverse Effect. 6.22 Gaming Laws. Borrower is in material compliance with all ----------- applicable Gaming Laws. 6.23 Security Interests. The Liens created by the Security Agreement ------------------ are perfected and of first priority to the fullest extent that the same may be perfected by the filing of financing statements under the Connecticut Uniform Commercial Code (as adopted by the Borrower pursuant to the UCC Ordinance). The Leasehold Mortgage creates a valid and perfected Lien in the Collateral described therein securing the Obligations. The Deposit Account Agreements create a valid and perfected Lien in the Collateral described therein (including without limitation the Operating Accounts) securing the Obligations. Each of the Liens described in this Section are of first priority, subject only to Permitted Encumbrances, Permitted Rights of Others and matters described in Schedule 7.8. 6.24 Hazardous Materials. Except as specifically described in ------------------- Schedule 5.24, neither Borrower nor to the best knowledge of each Senior Officer of the Borrower any predecessor in title or any third person at any time occupying or present on the Real Property at any time, has disposed of, discharged, released or threatened the release of any material amount of Hazardous Materials on, from or under such real property in any manner that violates any Hazardous Materials Law. Except as specifically described in Schedule 5.24, no condition exists that violates any Hazardous Material Law affecting the Real Property except for such violations that would not individually or in the aggregate have a Material Adverse Effect. Except as specifically described in Schedule 5.24, the Real Property and each portion thereof is not and has not been utilized by Borrower as a site for the manufacture of any Hazardous Materials and is in compliance in all material respects with all Hazardous Materials Laws. To the extent that any Hazardous Materials have been, or are, used, generated or stored by Borrower on any Real Property, or transported to or from such Real Property by Borrower, such use, generation, storage and transportation have been and are, in compliance in all material respects with all Hazardous Materials Laws. 6.25 Arbitration. To the extent that any dispute among the parties to ----------- the Loan Documents is initiated in or referred to the Tribal Court, (i) such court lacks discretion to refuse to compel arbitration among the parties to the dispute, and (ii) such court is obligated to honor and enforce any award by the arbitrator, without review of any nature by such court. -57- 6.26 Deposit Accounts. Borrower does not maintain any deposit, ---------------- checking, brokerage or other similar account with any bank, savings association, financial institution or similar financial intermediary in which Cash or Cash Equivalents having an aggregate value in excess of $100,000 for all such accounts are deposited which is not listed on Schedule 5.26 or the existence of which has not been disclosed to the Administrative Agent and the Lenders in writing. -58- ARTICLE 7. AFFIRMATIVE COVENANTS OF BORROWER --------------------------------- (OTHER THAN INFORMATION AND -------------------------- REPORTING REQUIREMENTS) ---------------------- So long as any Advance remains unpaid, or any other Obligation remains unpaid or unperformed (other than the obligations referenced in Section 3.18), or any portion of the Commitment remains in force, Borrower shall, unless the Administrative Agent (with the approval of the Requisite Lenders) otherwise consents: 7.1 Payment of Taxes and Other Potential Liens. Pay and discharge ------------------------------------------ promptly all taxes, assessments and governmental charges or levies imposed upon Borrower or its Property or any part thereof, upon its income or profits or any part thereof or (to the extent that the same arise after the Closing Date) any tax assessment, governmental changes or levies imposed upon any right or interest of the Administrative Agent or any Lender under any Loan Document, except that Borrower shall not be required to pay or cause to be paid (a) any - ------ income or gross receipts tax or any other tax on or measured by income generally applicable to banks, (b) any tax, assessment, charge or levy that is not yet delinquent, or is being contested in good faith by appropriate proceedings, so long as Borrower has established and maintained adequate reserves for the payment of the same and by reason of such nonpayment and contest no material item or portion of Authority Property is in jeopardy of being seized, levied upon or forfeited, and (c) taxes, assessments, charges and levies of amounts not in excess of $100,000 which Borrower in good faith inadvertently fails to pay. 7.2 Maintenance of Properties. Maintain, preserve and protect all of ------------------------- the depreciable Properties of Borrower in good order and condition, subject to wear and tear in the ordinary course of business, and not permit any waste of such Properties, except that the failure to maintain, preserve and protect a ------ particular item of depreciable Property that is not of significant value, either intrinsically or to the operations of Borrower shall not constitute a violation of this covenant, and maintain its ownership of all intellectual property and licenses thereof necessary for the operation of Mohegan Sun. 7.3 Maintenance of Insurance. Cause Borrower to maintain liability, ------------------------ casualty and other insurance with respect to itself and all Authority Property (subject to customary deductibles and retention) with responsible insurance companies in such amounts and against such risks as is carried by responsible companies engaged in similar businesses and owning similar assets in the general areas in which Borrower operates and, in any event, (a) workers' compensation insurance, to the extent required to comply with all applicable state, territorial and United States laws and regulations, (b) comprehensive general liability insurance with minimum limits of $2,000,000, (c) umbrella liability insurance providing excess liability coverages over and above the foregoing underlying insurance policies up to a minimum limit of $100,000,000, (d) property insurance protecting the Mohegan Sun for possible damage by fire, lightening, wind-storm other damage, vandalism, riot, earthquake, -59- 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 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), and (e) such insurance with respect to the Real Property as is maintained as of the Closing Date as described in Schedule 6.4. 7.4 Compliance With Laws. Comply with all Requirements of Laws -------------------- noncompliance with which would constitute a Material Adverse Effect, except that ------ Borrower need not comply with a Requirement of Law then being contested by it in good faith by appropriate proceedings. 7.5 Preservation of Licenses and Permits. Preserve and maintain all ------------------------------------ authorizations, rights, franchises, privileges, consents, approvals, orders, licenses, permits, or registrations from any Governmental Agency that are necessary for the transaction of the business of Mohegan Sun, and qualify and remain qualified to transact business in each jurisdiction in which such qualification is necessary in view of its business or the ownership or leasing of its Properties except where the failure to preserve and maintain any such ------ authorizations, rights, franchises, privileges, consents, approvals, orders, licenses, permits or registrations or to so qualify or remain qualified would not constitute a Material Adverse Effect. 7.6 Inspection Rights. Upon reasonable notice, at any time during ----------------- regular business hours and as often as requested (but not so as to unreasonably interfere with the business of Borrower), permit the Administrative Agent or any Lender, or any authorized employee, agent or representative thereof, to examine, audit and make copies and abstracts from the records and books of account of, and to visit and inspect Mohegan Sun, and to discuss the affairs, finances and accounts of Borrower with any of its officers, key employees, and accountants, and, upon request, furnish promptly to the Administrative Agent or any Lender true copies of all financial information made available to the senior management of Borrower. Without limitation on the foregoing, Borrower shall: (a) provide the Construction Consultant any and all requested access to the Proposed Expansion site; (b) provide any and all information which is reasonably required for the preparation of a monthly Construction Progress Report; (c) cooperate in the preparation of each Construction Progress Report and, if requested by the Administrative Agent, cause the Proposed Expansion's -60- architect and general contractor to certify that the improvements constructed as of the date of any Construction Progress Report conform to the Plans in all material respects; (d) maintain a full set of working drawings at the construction office for the Proposed Expansion for review by the Construction Consultant; and (e) within 15 days following any request by the Administrative Agent, deliver (i) then current construction plans for the Proposed Expansion certified as true and correct by the architect and the project engineer for the Proposed Expansion, (ii) a then current list of the names, addresses and telephone numbers of each contractor, subcontractor and material supplier with respect to the Proposed Expansion and the dollar value and amounts paid with respect to the related contracts, and (iii) then current versions of the construction schedule for all uncompleted work on the Proposed Expansion and all executed contracts and subcontracts for such work. 7.7 Keeping of Records and Books of Account. Keep adequate records --------------------------------------- and books of account reflecting all financial transactions in conformity with Generally Accepted Accounting Principles and in material conformity with all applicable requirements of any Governmental Agency having regulatory jurisdiction over Borrower. 7.8 Compliance With Agreements. Promptly and fully comply with all -------------------------- Contractual Obligations under all material agreements, indentures, leases and instruments to which it is a party, whether such material agreements, indentures, leases or instruments are with a Lender or another Person, provided -------- that the good faith failure of Borrower to comply with Contractual Obligations involving an amount of money which is less than $1,000,000 or Property having a value of less than $1,000,000 shall not constitute a breach of this covenant for so long as Borrower is attempting, through the exercise of diligent efforts, to comply therewith. 7.9 Use of Proceeds. Use the proceeds of the Loans and Letters of --------------- Credit (a) on the Closing Date, to repay the Existing Senior Secured Notes in their entirety (in the aggregate amount, with accrued interest and premium of approximately $175,000,000), (b) to finance the Proposed Expansion and other Capital Expenditures associated with Authority Property, and (c) for other working capital, casino and general purposes of Borrower, provided that all -------- proceeds of the Loans and all Letters of Credit shall be used exclusively by the Borrower to finance facilities and operations constituting "Gaming" within the meaning of Article XIII, Section 1 of the Constitution. 7.10 Hazardous Materials Laws. Keep and maintain the Real Property and ------------------------ each portion thereof in compliance in all material respects with all Hazardous Materials Laws and promptly advise Administrative Agent in writing of (a) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened in writing pursuant to any applicable Hazardous Materials Laws, (b) any and all claims made or threatened in writing, and received by Borrower, by any third party against Borrower or the -61- Real Property relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials and (c) discovery by any Senior Officer of the Borrower and the Tribe of any occurrence or condition on any real property adjoining or in the vicinity of the Real Property that could reasonably be expected to cause the Real Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the Real Property under any Hazardous Materials Laws, provided that the good -------- faith failure of Borrower to comply with Hazardous Materials Laws shall not constitute a breach of this covenant if (a) Borrower is diligently attempting to comply therewith, and (b) no Authority Property having a value in excess of $1,000,000 is affected by such non-compliance or is in jeopardy of seizure or closure as a result of such non-compliance. 7.11 Deposit and Brokerage Accounts. Promptly and in any event within ------------------------------ ten days enter into a Deposit Account Agreement with respect to each Operating Account hereafter established. 7.12 Proposed Expansion. Prior to commencement of construction of the ------------------ Proposed Expansion, deliver to the Lenders the proposed Plans and Budget, the form, substance and scope of which shall be reasonably acceptable to, and approved in writing by, the Requisite Lenders. Upon receipt of the complete Plans and Budget, the Administrative Agent shall submit the same to the Lenders. The Lenders shall consider the Plans and Budget promptly (and in any event within 30 days following their receipt of the Plans and Budget), and shall approve or disapprove of the proposed Plans and Budget within that period. 7.13 Year 2000 Compliance. Borrower represents that it has made -------------------- appropriate inquiry regarding the ability of its computer systems and those of its principal customers and vendors to operate correctly in a date-sensitive manner following January 1, 2000. Borrower has implemented a Year 2000 program to provide an independent analysis of Borrower's Year 2000 preparedness and the adequacy of Borrower's Year 2000 plans. It is anticipated that all remediation and verification necessary for Borrower to become Year 2000 compliant will not exceed $1,000,000 and will not have a Material Adverse Effect. -62- ARTICLE 8. NEGATIVE COVENANTS OF BORROWER ------------------------------ (OTHER THAN INFORMATION AND -------------------------- REPORTING REQUIREMENTS) ---------------------- So long as any Advance remains unpaid, or any other Obligation remains unpaid or unperformed (other than the obligations referenced in Section 3.18), or any portion of the Commitment remains in force, Borrower shall not, unless the Administrative Agent (with the approval of the Requisite Lenders) otherwise consents: 8.1 Payment of Subordinated Obligations. Prepay any principal ----------------------------------- (including sinking fund payments), interest or any other amount with respect to --------- any Subordinated Obligations, or purchase or redeem (or offer to purchase or redeem) any Subordinated Obligations, or deposit any monies, securities or other Property with any trustee or other Person to provide assurance that the principal or any portion thereof of any Subordinated Obligations will be paid when due or otherwise provide for the defeasance of any Subordinated Obligations except (a) scheduled payments of interest made when no Default or Event of - ------ Default exists or would result therefrom, (b) refinancings of New Subordinated Notes through their exchange for the Exchange Notes contemplated by the New Subordinated Notes Indenture, and (c) repayments of the TCA Subordinated Notes using the proceeds of the Defeasance Deposit. 8.2 Disposition of Property. Make any Disposition of Authority ----------------------- Property, whether now owned or hereafter acquired, except for (a) Permitted ------ Dispositions made when no Default or Event of Default exists or would result therefrom, or (b) Dispositions of Property specifically contemplated by Sections 7.5 or 7.10. 8.3 Investments and Acquisitions. Make any Acquisition using ---------------------------- Authority Property, or enter into any agreement to make any Acquisition using Authority Property, or make or suffer to exist any Investment made using Authority Property, except: ------ (a) Investments in Cash Equivalents; (b) Investments in Subsidiaries to the extent in compliance with Section 9.6; (c) Investments consisting of Property received in connection with any Permitted Disposition; (d) Investments consisting of payroll advances to employees of Borrower and its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount not to exceed $250,000 at any one time outstanding; -63- (e) Investments in accounts and notes receivable if created or acquired in the ordinary course of business and which are payable or dischargeable in accordance with customary trade terms; (f) Investments in Persons owning Related Businesses in an aggregate amount not to exceed, when aggregated with the Capital Expenditures made under Section 7.15(c), $25,000,000; and (g) Investments in Approved Swap Agreements. 8.4 Hostile Tender Offers. Use the proceeds of the Commitment or any --------------------- funds of Borrower to directly or indirectly finance any offer to purchase or acquire, or to consummate a purchase or acquisition of, 5% or more of the capital stock of any corporation or other business entity if the board of directors or management of such corporation or business entity has notified Borrower that it opposes such offer or purchase. 8.5 Distributions. Make any Distribution, whether from capital, ------------- income or otherwise, and whether in Cash or other Property, except: ------ (a) Priority Distributions; (b) Distributions consisting of payments to the Tribe for governmental services (including charges for utilities, police and fire department services, health and emergency medical services, the pro rata portion of Tribal Council costs and salaries attributable to the operations of Borrower, and similar pro rata costs of other tribal departments, in each case, to the extent that the costs of such departments are attributable to the operations of Borrower), supplied by the Tribe in accordance with past practices to the Borrower by the Tribe or any of its representatives, political subunits, councils, agencies or instrumentalities. (c) prior to the Completion Date, other Distributions to the Tribe in an amount not to exceed $3,000,000 made during any calendar month out of Available Cash Flow for the immediately preceding calendar month when no Default or Event of Default exists or would result therefrom; (d) Distributions to the Tribe constituting payment of amounts permitted by Section 9.9(b); (e) following the Completion Date, other Distributions to the Tribe made when no Default or Event of Default exists (and which do not result in any Event of Default), made out of Available Cash Flow; and -64- (f) Distributions consisting of any payment or transfer specifically permitted by Section 7.10. 8.6 ERISA. ----- (a) At any time, permit any Pension Plan which is maintained by Borrower or to which Borrower is obligated to contribute on behalf of its employees, in such case if to do so would constitute a Material Adverse Effect, to: (i) engage in any non-exempt "prohibited transaction," as such term is defined in Section 4975 of the Internal Revenue Code, Title 26, U.S.C.; (ii) incur any material "accumulated funding deficiency," as that term is defined in Section 302 of ERISA; or (iii) suffer a Termination Event to occur which may reasonably be expected to result in liability of Borrower or any ERISA Affiliate thereof to the Pension Plan or to the PBGC or the imposition of a Lien on the Property of Borrower or any ERISA Affiliate thereof pursuant to Section 4068 of ERISA. (b) At any time, permit any Pension Plan which is maintained by Borrower or to which Borrower is obligated to contribute on behalf of its employees to fail to comply with ERISA or other applicable Laws in any respect that would result in a Material Adverse Effect. 8.7 Business of Borrower. Engage in any material business which is -------------------- not fundamentally related to the operation of Mohegan Sun, use any material Authority Property for a purpose which is unrelated to the business of Borrower, or make any fundamental change to the nature of the business operations of Borrower. 8.8 Liens; Negative Pledges; Sales and Leasebacks. Create, incur, --------------------------------------------- assume or suffer to exist any Lien or Right of Others of any nature upon or with respect to Authority Property; or suffer to exist any Negative Pledge with respect to any Authority Property; or engage in any sale and leaseback transaction with respect to any Authority Property; except: ------ (a) Permitted Encumbrances and Permitted Rights of Others; (b) Liens and Negative Pledges in favor of the Administrative Agent or the Lenders under the Loan Documents; -65- (c) Existing Liens disclosed in Schedule 7.8; provided that -------- (i) the obligations secured thereby are not increased, and (ii) the Liens and related Negative Pledges in favor of First Fidelity Bank and Fleet National Bank disclosed on Schedule 7.8 as file numbers 0001709240 and 0001723520 shall be terminated in accordance with Section 10.2 prior to the making of the Initial Advances and the issuance of the initial Letters of Credit hereunder; (d) Existing Rights of Others and Negative Pledges disclosed in Schedule 7.8; and (e) Purchase money Liens and associated Negative Pledges incurred with respect to Property acquired using the proceeds of Indebtedness and Capital Leases permitted under Section 7.9(h). 8.9 Indebtedness and Contingent Obligations. Create, incur, assume or --------------------------------------- suffer to exist any Indebtedness or Contingent Obligation, except: ------ (a) Indebtedness and Contingent Obligations in favor of the Lenders or the Administrative Agent under the Loan Documents; (b) Indebtedness and Contingent Obligations consisting of Approved Swap Agreements; (c) Indebtedness evidenced by the Senior Unsecured Notes in an aggregate principal amount not to exceed $200,000,000; (d) defeased Indebtedness under the TCA Subordinated Notes; (e) other existing Indebtedness and Contingent Obligations disclosed on Schedule 7.9 and the renewal or refinancing, but not the increase, thereof; (f) the New Subordinated Notes in an aggregate outstanding principal amount not to exceed $300,000,000; (g) other Subordinated Obligations the incurrence of which is approved by the Requisite Lenders; (h) purchase money Indebtedness and Capital Lease Obligations in an aggregate principal amount not to exceed $25,000,000; and (i) unsecured Recourse Obligations in an aggregate principal amount not to exceed $25,000,000. -66- 8.10 Transactions with Affiliates. Enter into any transaction of any ---------------------------- kind with any Affiliate of Borrower other than (a) employment of enrolled tribal ---------- members, and the immediate family members of tribal members, on terms consistent with the past practices of Borrower (including the payment of employment bonuses in accordance with past practices), (b) transactions involving Property having an aggregate value of not more than $2,000,000 for all such transactions, (c) transactions which are on commercially reasonable terms entered into with Native American suppliers and vendors in accordance with the affirmative action provisions of the Tribe's Employment Rights Ordinance and the Development Services Agreement (in the case of any such transactions or series of related transactions involving more than $2,000,000, on terms disclosed to the Lenders), (d) other transactions on terms at least as favorable to Borrower as would be the case in an arm's-length transaction between unrelated parties of equal bargaining power, the terms of which are disclosed to the Lenders in writing, and (e) transactions pursuant to the Development Services Agreement and Relinquishment Agreement. 8.11 Authority Expenditures. Use any Authority Property for a purpose ---------------------- which is not related to the business of Borrower or specifically contemplated hereby, expend any Authority funds for any purpose which does not directly or indirectly benefit Borrower, or make any Capital Expenditure using funds of Borrower or other Authority Property except to add to, further improve, maintain, repair, restore or refurbish Mohegan Sun and Related Businesses. 8.12 Total Leverage Ratio. Permit the Total Leverage Ratio, as of the -------------------- last day of any Fiscal Quarter described in the matrix below, to exceed the ratio set forth opposite that Fiscal Quarter: Fiscal Quarters Ending Maximum Ratio ---------------------- ------------- Closing Date through December 31, 2000 3.50:1.00 March 31, 2001 4.00:1.00 June 30, 2001 through December 31, 2001 5.00:1.00 March 31, 2002 4.00:1.00 June 30, 2002 and thereafter 3.50:1.00. 8.13 Senior Leverage Ratio. Permit the Senior Leverage Ratio, as of --------------------- the last day of any Fiscal Quarter described in the matrix below, to exceed the ratio set forth opposite that Fiscal Quarter: -67- Fiscal Quarters Ending Maximum Ratio ---------------------- ------------- Closing Date through December 31, 2000 2.00:1.00 March 31, 2001 2.50:1.00 June 30, 2001 3.00:1.00 September 30, 2001 3.25:1.00 December 31, 2001 3.00:1.00 March 31, 2002 2.50:1.00 June 30, 2002 and thereafter 2.00:1.00. 8.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage --------------------------- Ratio, as of that last day of any Fiscal Quarter described in the matrix below, to be less than the ratio set forth opposite that Fiscal Quarter: Fiscal Quarters Ending Minimum Ratio ---------------------- ------------- March 31, 1999 1.10:1.00 June 30, 1999 through June 30, 2001 1.20:1.00 September 30, 2001 1.15:1.00 December 31, 2001 and thereafter 1.50:1.00. 8.15 Capital Expenditures. Make, or become legally obligated to make, -------------------- any Capital Expenditure other than: ----- ---- (a) Capital Expenditures made in accordance with the Plans and Budget (and only following their approval in accordance with Section 6.12) for the construction of the Proposed Expansion in an aggregate amount not to exceed $800,000,000; -68- (b) Maintenance Capital Expenditures in an aggregate amount not to exceed $25,000,000 in any Fiscal Year; (c) Capital Expenditures for Related Businesses which, when aggregated with the Investments made pursuant to Section 7.3(g), do not exceed $25,000,000; and (d) Following the Completion Date, other Capital Expenditures in an aggregate amount which does not exceed $40,000,000, in any Fiscal Year. 8.16 Deposit Accounts. Fail, within ten days following the ---------------- opening of each such account, to execute and deliver to the Administrative Agent Deposit Account Agreements granting Liens in each deposit, checking, brokerage or other similar account of the Borrower which is opened following the Closing Date with any bank, savings association, financial institution or similar financial intermediary in which Cash or Cash Equivalents will be deposited. -69- ARTICLE 9. INFORMATION AND REPORTING REQUIREMENTS -------------------------------------- 9.1 Financial and Business Information. So long as any Advance ---------------------------------- remains unpaid, or any other Obligation remains unpaid or unperformed (other than the obligations referenced in Section 3.18), or any portion of the Commitment remains in force, Borrower shall, unless the Administrative Agent (with the approval of the Requisite Lenders) otherwise consents, deliver to the Administrative Agent and the Lenders, at Borrower's sole expense: (a) As soon as practicable, and in any event within 45 days after the end of each Fiscal Quarter, (i) the balance sheets of Borrower as at the end of such Fiscal Quarter, (ii) statements of income and retained earnings and of cash flow of Borrower as at the end of such Fiscal Quarter and for the portion of the Fiscal Year ended with such Fiscal Quarter, and (iii) the statements of cash flow of Borrower for such Fiscal Quarter and for the portion of the Fiscal Year ended with such Fiscal Quarter, all in reasonable detail. Such financial statements shall be certified by a Senior Officer of Borrower as fairly presenting the financial condition, results of operations and changes in financial position or cash flows of Borrower in accordance with Generally Accepted Accounting Principles (other than any requirement for footnote disclosures) consistently applied, as at such date and for such periods, subject only to normal year-end accruals and audit adjustments and shall be accompanied by a management narrative description of results of operations; (b) As soon as practicable, and in any event within 90 days after the end of each Fiscal Year, (i) the balance sheets of Borrower as at the end of such Fiscal Year, (ii) statements of income and retained earnings and of cash flows of Borrower for such Fiscal Year, and (iii) statements of cash flow of Borrower for such Fiscal Year, all in reasonable detail. Such financial statements shall be prepared in accordance with Generally Accepted Accounting Principles, consistently applied, and such balance sheet and statements shall be accompanied by a report and opinion of independent public accountants of recognized standing selected by Borrower and reasonably satisfactory to the Requisite Lenders, which report shall be based on an audit conducted in accordance with generally accepted auditing standards as at such date, and which opinion shall be an unqualified opinion without additional explanatory or non-standard wording which the Requisite Lenders determine is unacceptable and with no limitation as to the scope of their audit; (c) Concurrently with the delivery of the financial statements referred to in Sections 8.1(a) and 8.1(b), a written discussion and analysis of the financial condition and results of operations of Borrower in reasonable detail, including in the case of any such report --------- delivered in connection with the financial statements referred to in Section 8.1(b), an explanation of any material variance from operational results or balance sheet items contained in projections previously delivered to the Lenders; -70- (d) As soon as practicable, and in any event within 20 days after the end of each calendar month, a monthly revenue report showing revenues for the prior calendar month associated with each gaming category, occupancy percentage, and average hotel room rental rates experienced by the Mohegan Sun during such monthly period; (e) As soon as practicable, and in any event within 90 days after the commencement of each Fiscal Year, projected financial statements by Fiscal Year for each of the three Fiscal Years immediately subsequent to that Fiscal Year, including, in each case, projected balance sheets, --------- statements of income and retained earnings and statements of cash flow of Borrower, all in reasonable detail and in any event to include (i) projected Distributions to be made to the Tribe by Borrower and (ii) projected Capital Expenditures; (f) Promptly following receipt by Borrower, copies of any detailed audit reports or recommendations submitted to Borrower or the Tribe by independent accountants in connection with the accounts or books of Borrower or any audit of Borrower; (g) Promptly following a filing, copies of any specific report or other document filed by Borrower (or by the Tribe in respect of its gaming operations or any Authority Property) with any Governmental Agency, including without limitation all reports which Borrower is required to file with the National Indian Gaming Commission under 25 C.F.R. Part 514; (h) Promptly after the same are available, a copy of the Form 5500 series report of each Pension Plan maintained by Borrower as filed with the Internal Revenue Service for each Fiscal Year; (i) Promptly upon a Senior Officer of the Borrower or the Tribe becoming aware, and in any event within thirty Business Days after becoming aware, of the occurrence of any (i) "reportable event" (as such term is defined in Section 4043 of ERISA) or (ii) "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code, Title 26, U.S.C.) in connection with any Pension Plan or any trust created thereunder, written notice specifying the nature thereof and specifying what action Borrower is taking or proposes to take with respect thereto, and, when known, any action taken by the Internal Revenue Service with respect thereto; (j) As soon as practicable, and in any event not less than 10 days (or, if acceptable to the Administrative Agent, a shorter period) prior to the proposed effective date thereof, written notice of any proposed amendment, modification or -71- waiver of the terms and provisions of any of the Material Documents or the Plans and Budget. (k) As soon as practicable, and in any event within five Business Days after a Senior Officer of the Borrower or the Tribe becomes aware of the existence of any condition or event which constitutes a Default or Event of Default, written notice specifying the nature and period of existence thereof and specifying what action Borrower and the Tribe are taking or propose to take with respect thereto; (l) Promptly upon a Senior Officer of the Borrower or the Tribe becoming aware that (i) any Person has commenced a legal proceeding with respect to a claim against Borrower or the Tribe that is, in the reasonable opinion of their independent legal counsel, $5,000,000 or more in excess of the amount thereof that is fully covered by insurance (subject to applicable deductibles and retentions), (ii) any creditor or lessor under a written credit agreement with respect to Indebtedness in excess of $5,000,000 or lease involving unpaid rent in excess of $5,000,000 has asserted a default thereunder on the part of Borrower or the Tribe, (iii) any Person commenced a legal proceeding with respect to a claim against Borrower or the Tribe under a contract that is not a credit agreement or lease in excess of $5,000,000, (iv) any labor union has notified Borrower or the Tribe of its intent to strike Borrower or the Tribe on a date certain, which strike could reasonably be expected to have a Material Adverse Effect, or (v) any other event or circumstance occurs or exists that would constitute a Material Adverse Effect, in each case a written notice describing the pertinent facts relating thereto and what action Borrower and the Tribe are taking or propose to take with respect thereto; (m) Not later than the fifteenth day of each calendar month, such information as may be required for the completion of the monthly Construction Progress Report; and (n) Such other data and information regarding the Borrower and the business of Mohegan Sun as from time to time may be reasonably requested by the Administrative Agent or the Requisite Lenders. 9.2 Compliance Certificates. So long as any Advance remains unpaid, ----------------------- or any other Obligation remains unpaid or unperformed (other than the obligations referenced in Section 3.18), or any portion of the Commitment remains outstanding, Borrower shall, unless the Requisite Lenders otherwise consent, deliver to the Administrative Agent, at Borrower's sole expense, concurrently with the financial statements required pursuant to Sections 8.1(a), and 8.1(b), a Compliance Certificate signed by the chief financial officer or chief executive officer of Borrower, together with a narrative description of the results of the operations of Borrower. -72- ARTICLE 10. COVENANTS OF THE TRIBE ---------------------- So long as any Advance remains unpaid, or any other Obligation remains unpaid or unperformed (other than the obligations referenced in Section 3.18), or any portion of the Commitment remains in force, the Tribe shall, and shall cause the Borrower to, unless the Administrative Agent (with the approval of the Requisite Lenders) otherwise consents: 10.1 Continual Operation of Mohegan Sun. Cause Borrower to ---------------------------------- continuously operate the Mohegan Sun and each principal amenity now or hereafter associated therewith in the manner operated as of the Closing Date (or as contemplated on the Closing Date to be operated) and in any event in compliance with the Gaming Ordinance, the Gaming Authority Ordinance all applicable Laws and the Compact, and refrain from conducting any gaming activities (including without limitation all Class II and Class III gaming activities (as defined in IGRA)) through any Person, agency or instrumentality other than Borrower or at any location other than Mohegan Sun. 10.2 Remittance of Available Cash Flow. Cause Borrower, to the --------------------------------- extent that Available Cash Flow exists, promptly and in any event within two Business Days following demand by the Administrative Agent (with such demand to be made only following the date upon which any such payment is due hereunder and has not been made by Borrower), to remit to the Administrative Agent from Available Cash Flow all payments of principal, interest, fees and other amounts payable to the Creditors under the Loan Documents. 10.3 Sovereign Immunity; Jurisdiction and Venue. Refrain from ------------------------------------------ asserting that the provisions of this Article and Sections 13.18, 13.24, 13.26 and 13.27 are not valid, binding and legally enforceable against the Tribe and Borrower, and reaffirm in writing upon request the valid, binding and enforceable nature of the provisions of this Article and Sections 13.18, 13.24, 13.26 and 13.27. 10.4 The Landlord Consent. Continuously abide by the terms of -------------------- the Landlord Consent. 10.5 Preservation of Existence; Operation. ------------------------------------ (a) Do all things necessary to maintain the existence of the Tribe as a federally recognized Indian Tribe under 25 C.F.R. Part 83 and as an Indian Tribal government pursuant to Sections 7701(a)(40)(A) and 7871(a) of the Internal Revenue Code, Title 26 U.S.C.; and (b) Continuously maintain the existence of Borrower as a governmental instrumentality of Borrower. -73- 10.6 Ownership of Mohegan Sun; Management. Not form or acquire ------------------------------------ any corporation or other business entity for the purpose of directly or indirectly owning Mohegan Sun or any interest therein, or engage any manager for Mohegan Sun, provided that Borrower shall be entitled to form one or more -------- wholly-owned Subsidiaries for the purpose of owning or operating the assets of the Borrower provided that concurrently with their formation such Subsidiaries execute a guarantee of the Obligations and Collateral Documents which are in form and substance acceptable to the Administrative Agent and any and all other documents reasonably required by the Administrative Agent in connection with the Loan Documents. 10.7 Prohibited Transactions. Not accept any Distribution or ----------------------- other payment from Borrower the making of which is prohibited hereunder (the Tribe hereby agreeing that any such payment or Distribution so made will be held by the Tribe in trust for the benefit of, and shall be paid forthwith over and delivered, upon the request of the Administrative Agent or the Borrower, to Borrower), or enter into any transaction with Borrower which is prohibited by Section 7.10. 10.8 Amendments to Certain Documents. ------------------------------- (a) Not amend, modify or waive any term or provision of any Material Document, or waive any rights thereunder in any respect which is adverse to the interests of the Administrative Agent or the Lenders, provided that: -------- (i) The terms of the Senior Unsecured Notes and the Senior Unsecured Note Indenture may be amended, modified or waived in any manner permitted thereunder; (ii) The terms of the New Subordinated Notes and the New Subordinated Notes Indenture may be amended, modified or waived in any manner permitted thereunder which is not materially adverse to the interests of the Lenders and which does not shorten their maturity or the time for the making of any payment thereunder, increase the rate of interest or affect in any manner the subordination provisions thereof; and (iii) The UCC Ordinance provides and shall provide that any amendment to the Uniform Commercial Code as enacted from time to time by Connecticut shall be automatically incorporated in the Tribe's Uniform Commercial Code. (b) In any event, not consent to any amendment, modification, or waiver of any term or provision of any Material Document in any manner without thirty days prior written notice to the Lenders. -74- 10.9 Impairment of Contracts; Imposition of Governmental Charges. The ----------------------------------------------------------- Tribe shall not: (a) Adopt, enact, promulgate or otherwise place into effect any tribal Law which impairs or interferes, or could impair or interfere, in any manner, with any right or remedy of the Creditors, the Obligations of the Tribe or Borrower under this Agreement or the other Loan Documents (it being understood and agreed that any such tribal Law which is adopted, enacted, promulgated or otherwise placed into effect without the consent of all of the Lenders shall, with respect to the Loan Documents, the rights and remedies of the Creditors thereunder, and the Obligations, be void and of no effect); or (b) Demand, impose or receive any tax, charge, assessment, fee or other imposition (except as specifically contemplated by Sections 7.2, 7.5 or 7.10) or impose any regulatory or licensing requirement, except as ------ provided in the Gaming Ordinance, against Borrower, its customers or guests, its operations or Property (including without limitation Mohegan Sun), the Creditors, the employees, officers, directors, patrons or vendors of Borrower, other than (i) charges upon Borrower to pay the actual and ----- ---- reasonable regulatory expenditures of the Mohegan Tribal Gaming Commission under the Gaming Ordinance, (ii) sales, use, room occupancy and related excise taxes, including admissions and cabaret taxes and any other taxes (other than income taxes) imposed by the Tribe on the Borrower, its patrons, or operations, provided that the rate and scope of such taxes shall not be more onerous than those which may be imposed by the State of Connecticut, (iii) fees imposed on Borrower by the Commission under IGRA, and (iv) the actual costs to the Tribe of services provided to Borrower under the Town Agreement. 10.10 Segregation of Authority Assets. The Tribe shall not: ------------------------------- (a) Fail to segregate all Authority Property, including all funds and bank accounts, from the Property of the Tribe; or (b) Commingle any Property of Borrower (including any funds or bank accounts) with any Non-Authority Property or with any Property of its Affiliates. 10.11 Trust Property. The Tribe shall not convey into trust with the -------------- federal government of the United States of America, to be held for the benefit of the Tribe or any of its Affiliates, any Property of the Tribe other than ----- ---- interests in real property. 10.12 Liens on Authority Property. The Tribe shall not create, incur, --------------------------- assume or suffer to exist any Lien or other encumbrance upon Authority Property which is not permitted by Section 7.8. -75- 10.13 Bankruptcy Matters; Etc. ----------------------- (a) The Tribe will not enact any bankruptcy 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 Creditors provided for in the Loan Documents; (b) The Tribe will not, or permit Borrower or any of the Tribe's representatives, political subunits, agencies, instrumentalities or councils to, exercise any power of eminent domain over the Mohegan Sun. Except as required by state or federal Law, the Tribe will not enact any statute, law, ordinance or rule that would have a material adverse affect upon the rights of the Creditors under the Loan Documents; and (c) The Tribe agrees that upon any payment or distribution of assets upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency or similar proceedings of or with respect to Borrower, the Creditors shall be entitled to receive payment in full of all Obligations before any payment or distribution is made to the Tribe. 10.14 Impairment of Contracts. The Tribe agrees that any action taken ----------------------- in violation of Sections 9.8, 9.9 or 9.13 shall be deemed in contravention of Article XIV (entitled "Non-Impairment of Contracts") of the Constitution. -76- ARTICLE 11. CONDITIONS ---------- 11.1 Closing. The Closing Date is subject to the following conditions ------- precedent, each of which shall be satisfied unless the Lenders, in their sole and absolute discretion, shall agree otherwise: (a) The Administrative Agent shall have received all of the following, each of which shall be originals unless otherwise specified, each properly executed by each party thereto, each dated as of the Closing Date and each in form and substance satisfactory to the Administrative Agent and its legal counsel (unless otherwise specified or, in the case of the date of any of the following, unless the Administrative Agent otherwise agrees or directs): (i) executed counterparts of this Agreement, sufficient in number for distribution to the Administrative Agent, the Lenders, the Tribe and Borrower; (ii) Notes executed by Borrower in favor of each Lender, each in a principal amount equal to that Lender's Pro Rata Share; (iii) Such documentation as the Administrative Agent may reasonably require to establish the due organization, valid existence and good standing of the Tribe as a federally recognized Indian Tribe, the formation, valid existence and good standing of the Tribe and Borrower, their authority to execute, deliver and perform any Loan Documents, and the identity, authority and capacity of each Senior Officer authorized to act on their behalf, including, without --------- limitation, certified copies of the Constitution, the Tribe's and Borrower's charter and bylaws, and amendments thereto, resolutions, incumbency certificates, Certificates of Senior Officers, and the like; (iv) the Security Agreement executed by Borrower, together with sufficient copies of financing statements on Form UCC-1 (including such fixture filings as may be appropriate) for filing in every jurisdiction in which Borrower owns Property; (v) Deposit Account Agreements in favor of the Administrative Agent executed by Borrower and the holder of each deposit, brokerage or other similar account maintained by Borrower with respect to each Operating Account executed by each party thereto; -77- (vi) The Leasehold Mortgage executed by Borrower and the Bureau of Indian Affairs and the Landlord Consent executed by the Tribe; (vii) the favorable written legal opinion of internal counsel to Borrower, substantially in the form of Exhibit E, opining to the absence of conflicts with the Constitution, tribal Law, and the matters described in Section 4.2, together with copies of all factual certificates and legal opinions upon which such counsel have relied; (viii) the favorable written legal opinions of Hogan & Hartson L.L.P., special counsel to Borrower, and Rome, McGuigan, Sabanosh special Connecticut counsel to Borrower, substantially in the forms of Exhibits F-1 and F-2 together with copies of all factual certificates and legal opinions upon which such counsel have relied; (ix) an advice letter of Dorsey & Whitney LLP, special Indian law counsel to the Administrative Agent; (x) a Certificate signed by a Senior Officer of the Borrower and the Tribe certifying that the conditions specified in Sections 10.1(b), 10.1(d) and 10.1(e) have been satisfied and setting forth the Total Leverage Ratio as of the Closing Date; (xi) evidence that insurance, of the types and in the amounts specified in the Loan Documents, is maintained in force by Borrower, together with an executed form 438 BFU with respect thereto; (xii) a Certificate signed by a Senior Officer of the Borrower and the Tribe attaching true, correct and complete copies of each of the Material Documents (including, in each case, any amendments or modifications of the terms thereof entered into as of the Closing Date). (xiii) The Tribe and First Union National Bank, as Escrow Agent, shall have entered into the Construction Reserve Disbursement Agreement, and the Administrative Agent shall have received evidence satisfactory to it that the deposits referred to therein shall have been made with First Union National Bank. (xiv) evidence acceptable to the Administrative Agent that the Defeasance Deposit has been established. (xv) such other assurances, certificates, documents, consents or opinions as the Administrative Agent reasonably may require. -78- (b) the Existing Senior Secured Notes shall have been or shall concurrently be terminated and all such Indebtedness shall have been or shall concurrently be repaid and retired, all Liens securing such Indebtedness shall have been or shall concurrently be released and the Lenders shall have received or shall concurrently receive all termination statements, re-assignments, reconveyances and other assurances in connection therewith as Administrative Agent shall require in its sole discretion. (c) The fees payable as of the Closing Date pursuant to Sections 3.2, 3.3 and 3.4 shall be paid concurrently. (d) The representations and warranties of the Tribe and Borrower contained in Articles 4 and 5, respectively, shall be true and correct. (e) Borrower and any other Parties shall be in compliance with all the terms and provisions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing. (f) The Bureau of Indian Affairs shall have given its written approval of the transactions contemplated by this Agreement and the other Loan Documents pursuant to 25 U.S.C (S)81 in a writing acceptable to the Administrative Agent, and shall have delivered a letter acceptable to the Administrative Agent stating that it is the finding of the Bureau of Indian Affairs that the approval of the Loan Documents by the Bureau of Indian Affairs is not a major federal action significantly affecting the human environment. 11.2 Initial Advances. The obligation of each Lender to make the initial ---------------- Advance to be made by it, and the obligation of the Issuing Lender to issue the initial Letter of Credit, is subject to the following conditions precedent, each of which shall be satisfied prior to the making of the initial Advances (unless the Lenders, in their sole and absolute discretion, shall agree otherwise): (a) the Title Company shall have committed in writing to issue to the Administrative Agent and the Lenders its ALTA policy of title insurance with respect to the Leasehold Mortgage (contemplating an LP-10 pricing package and based upon a completed Title Status Report issued by the Bureau of Indian Affairs), with coverage in an amount not less than $425,000,000 and endorsements to and exceptions from coverage acceptable to the Administrative Agent, together with reinsurance (allowing for direct access) from reinsurers and in amounts acceptable to the Administrative Agent. -79- (b) the Leasehold Mortgage shall have been recorded with the Bureau of Indian Affairs, with the Town of Montville, Connecticut, and with the appropriate officials of the Tribe, and the Administrative Agent shall have received evidence satisfactory to the Administrative Agent that all actions necessary or, in the opinion of the Administrative Agent or the Lenders, desirable to perfect and protect the Liens of the Collateral Documents have been taken. (c) the Administrative Agent shall have received a Request for Loan or a Request for Letter of Credit, as appropriate. (d) Borrower's letter of credit facility with Fleet National Bank shall have been or shall concurrently be terminated and all such Indebtedness shall have been or shall concurrently be repaid and retired, all Liens securing such Indebtedness shall have been or shall concurrently be released and the Lenders shall have received or shall concurrently receive all termination statements, re-assignments, reconveyances and other assurances in connection therewith as Administrative Agent shall require in its sole discretion. 11.3 Any Increasing Advance. In addition to any applicable conditions ---------------------- precedent set forth elsewhere in this Article 10, and after giving effect to the requested Advances, the obligation of each Lender to make any Advance which would increase the principal amount outstanding under the Loan Documents, and the obligation of the Issuing Lender to issue each Letter of Credit, is subject to the following conditions precedent (unless the Requisite Lenders, in their sole and absolute discretion, agree otherwise): (a) except as disclosed by Borrower and approved in writing by the Requisite Lenders, the representations and warranties contained in Article 5 (other than Sections 5.7 (first sentence) and 5.13) shall be true and ----- correct on and as of the date of the Advance as though made on that date; (b) other than matters described in Schedule 5.13 or not required as of the Closing Date to be therein described, there shall not be then pending or threatened any action, suit, proceeding or investigation against or affecting Borrower or any of its Property before any Governmental Agency that constitutes a Material Adverse Effect; (c) no Default or Event of Default shall then exist; (d) the Administrative Agent shall have timely received a Request for Loan in compliance with Article 2 (or telephonic or other request for loan referred to in the second sentence of Section 2.1(b), if applicable) in compliance with Article 2, or the Issuing Lender and the Administrative Agent shall have timely received a Request for Letter of Credit in compliance with Article 2, as applicable; and -80- (e) the Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent, such other assurances, certificates, documents or consents related to the foregoing as the Administrative Agent reasonably may require. -81- ARTICLE 12. EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT ---------------------------------------------------- 12.1 Events of Default. The existence or occurrence of any one or more of ----------------- the following events, whatever the reason therefor and under any circumstances whatsoever, shall constitute an Event of Default: (a) Borrower fails to pay any principal on any of the Loans, or any portion thereof, when due, or fails or to make full reimbursement with respect to any Letter of Credit when due; or (b) Borrower fails to pay any interest or any of the fees payable under Article 3, or any portion thereof, within two Business Days after demand therefor; or (c) Borrower fails to pay any other fees or amounts payable to the Lenders under any Loan Document, or any portion thereof, within three Business Days after demand therefor; or (d) Any failure to comply with Section 8.1(l) that is materially adverse to the interests of the Administrative Agent or the Lenders; or (e) The Tribe fails to perform or observe any of the covenants contained in Article 9 or the Borrower fails to perform or observe any of the covenants contained in Articles 7 or 8 (other than the covenant set forth in Section 8.1(d)); or (f) Borrower, the Tribe or any other Party fails to perform or observe any other covenant or agreement contained in any Loan Document on its part to be performed or observed within thirty Business Days after the giving of notice by the Administrative Agent at the request of the Requisite Lenders of such Default; or (g) Any representation or warranty made in any Loan Document, or in any certificate delivered pursuant to any Loan Document, proves to have been incorrect when made or reaffirmed in any respect that is materially adverse to the interests of the Administrative Agent or the Lenders; or (h) At any time (i) Borrower fails to pay the principal, or any principal installment, of any present or future indebtedness for borrowed money of $10,000,000 or more, or any guaranty of present or future indebtedness for borrowed money of $10,000,000 or more, on its part to be paid, when due (or within any stated grace period), whether at the stated maturity, upon acceleration, by reason of required prepayment or otherwise or (ii) Borrower fails to perform or observe any other term, covenant or agreement on its part to be performed or observed, or suffers any event to -82- occur, in connection with any present or future indebtedness for borrowed money of $10,000,000 or more, or of any guaranty of present or future indebtedness for borrowed money of $10,000,000 or more, if as a result of such failure or sufferance any holder or holders thereof (or an agent or trustee on its or their behalf) has the right to declare such indebtedness due before the date on which it otherwise would become due; or (i) At any time (i) the Tribe fails to pay the principal, or any principal installment, of any present or future indebtedness for borrowed money of $10,000,000 or more, or any guaranty of present or future indebtedness for borrowed money of $10,000,000 or more, on its part to be paid, when due (or within any stated grace period), whether at the stated maturity, upon acceleration, by reason of required prepayment or otherwise or (ii) the Tribe fails to perform or observe any other term, covenant or agreement on its part to be performed or observed, or suffers any event to occur, in connection with any present or future indebtedness for borrowed money of $10,000,000 or more, or of any guaranty of present or future indebtedness for borrowed money of $10,000,000 or more, if as a result of such failure or sufferance any holder or holders thereof (or an agent or trustee on its or their behalf) has the right to declare such indebtedness due before the date on which it otherwise would become due; or (j) Any Loan Document, at any time after its execution and delivery and for any reason other than the agreement of the Lenders or satisfaction in full of all the Obligations, ceases to be in full force and effect or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect which, in any such event in the reasonable opinion of the Requisite Lenders, is materially adverse to the interests of the Lenders; or Borrower or the Tribe denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind the same or any provision thereof; or (k) Any event occurs which gives the holder or holders of any Subordinated Obligation (or an agent or trustee on its or their behalf) the right to declare such Subordinated Obligations due before the date on which it otherwise would become due, or the right to require the issuer thereof to redeem or purchase, or offer to redeem or purchase, all or any portion of any Subordinated Obligations; or the trustee for, or any holder of, Subordinated Obligations breaches any subordination provision applicable to such Subordinated Obligations; or (l) A final judgment is entered by a court or other tribunal which purports to be of competent jurisdiction that any Subordinated Obligation is not subordinated in accordance with its terms to the Obligations; or -83- (m) A judgment against the Tribe or Borrower is entered for the payment of money in excess of $10,000,000 and, absent procurement of a stay of execution, such judgment remains unbonded or unsatisfied for thirty calendar days after the date of entry of judgment (unless the Tribe or Borrower has deposited the amount of the monetary award associated with such judgment into a court escrow pending determination of an appeal), or in any event later than five days prior to the date of any proposed sale thereunder; or (n) The Tribe or Borrower institutes or consents to any proceeding under a Debtor Relief Law relating to it or to all or any part of their respective Property, or is unable or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any part of its Property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of the Tribe or Borrower and the appointment continues undischarged or unstayed for sixty calendar days; or any proceeding under a Debtor Relief Law relating to the Tribe or Borrower or to all or any part of their Property is instituted without their consent and continues undismissed or unstayed for sixty calendar days; or any judgment, writ, warrant of attachment or execution or similar process is issued or levied against all or any material part of the Authority Property and is not released, vacated or fully bonded within sixty calendar days after its issue or levy; or (o) The Tribe at any time ceases to be a federally recognized Indian Tribe; or (p) The occurrence of a Termination Event with respect to any Pension Plan if the aggregate liability of Borrower and its ERISA Affiliates under ERISA as a result thereof exceeds $5,000,000; or the complete or partial withdrawal by Borrower or any of its ERISA Affiliates from any Multiemployer Plan if the aggregate liability of Borrower and its ERISA affiliates as a result thereof exceeds $5,000,000; or (q) The occurrence of an Event of Default (as such term is or may hereafter be specifically defined in any other Loan Document) under any other Loan Document; or (r) Borrower ceases to be a wholly-owned instrumentality of the Tribe, managed and controlled by the Tribe; or (s) The occurrence of any event or circumstance which results in the failure of Borrower to have any material portion of the Mohegan Sun open to -84- conduct Class II or Class III gaming activities for any reason for more than five consecutive days to the extent that such failure results in a Material Adverse Effect (nothing in this clause requiring the conduct of gaming operations at the Proposed Expansion prior to the opening thereof); or (t) The occurrence of any event or circumstance which results in the prohibition of the Tribe to conduct Class II or Class III gaming activities at Mohegan Sun through the Borrower for a period in excess of five consecutive days (nothing in this clause requiring the conduct of gaming operations at the Proposed Expansion prior to the opening thereof); or (u) Any Change in Control occurs. 12.2 Remedies Upon Event of Default. Without limiting any other rights or ------------------------------ remedies of the Administrative Agent or the Lenders provided for elsewhere in this Agreement, or the Loan Documents, or by applicable Law, or in equity, or otherwise: (a) Upon the occurrence, and during the continuance, of any Event of Default other than an Event of Default described in Section 11.1(n): (i) the commitment to make Advances and issue Letters of Credit and all other obligations of the Administrative Agent, the Issuing Lender and the Lenders and all rights of Borrower and any other Parties under the Loan Documents shall be suspended without notice to or demand upon the Tribe or Borrower, which are expressly waived by the Tribe and Borrower, except that the Requisite Lenders (or, in the case of any Event ------ of Default which arises under a provision of the Loan Documents the amendment of which requires the consent of all the Lenders under Section 13.2, all of the Lenders) may waive the Event of Default or, without waiving, determine, upon terms and conditions satisfactory to such Lenders, to reinstate the Commitment and make further Advances and issue further Letters of Credit, which waiver or determination shall apply equally to, and shall be binding upon, all of the Lenders; (ii) the Issuing Lender may, with the approval of the Administrative Agent on behalf of the Requisite Lenders, demand immediate payment by Borrower of an amount equal to the aggregate amount of all outstanding Letters of Credit; and (iii) the Requisite Lenders may request the Administrative Agent to, and the Administrative Agent thereupon shall, terminate the Commitment and declare all or any part of the unpaid principal of all Loans, all interest accrued and unpaid thereon and all other amounts payable under the -85- Loan Documents to be forthwith due and payable, whereupon the same shall become and be forthwith due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower. (b) Upon the occurrence of any Event of Default described in Section 11.1(n): (i) the commitment to make Advances and issue Letters of Credit and all other obligations of the Administrative Agent, the Issuing Lender and the Lenders and all rights of Borrower and any other Parties under the Loan Documents shall terminate without notice to or demand upon Borrower, which are expressly waived by Borrower and the Tribe; (ii) an amount equal to the aggregate amount available for drawing under outstanding Letters of Credit shall forthwith become due and payable to the Issuing Lender without protest, presentment, notice of dishonor demand or further notice of any kind, all of which are waived by Borrower and the Tribe to be held by the Issuing Lender as cash collateral for the Obligations to the Issuing Lender in non-interest bearing accounts with the Issuing Lender; and; (iii) the unpaid principal of all Loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan Documents shall be forthwith due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower and the Tribe. (c) Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent, without notice or demand upon Borrower or the Tribe, which are expressly waived by Borrower and the Tribe, may proceed in accordance with applicable Laws (but only with the consent of the Requisite Lenders) to protect, exercise and enforce their rights and remedies under the Loan Documents (including the Collateral Documents) against Borrower, the Tribe and any other Party and such other rights and remedies as are provided by Law or equity. (d) The order and manner in which the Lenders' rights and remedies are to be exercised shall be determined by the Requisite Lenders in their sole discretion, and all payments received after the occurrence of any Default or Event of Default by the Administrative Agent and the Lenders, or any of them, shall be applied first to the costs and expenses (including attorneys' fees and disbursements payable pursuant to Section 13.3) of the Administrative Agent, acting as Administrative Agent, and of the Lenders, and thereafter paid pro rata to the Lenders in the same proportions that the aggregate Obligations owed to each Lender under the Loan Documents bear to the aggregate Obligations owed under the Loan Documents to all the Lenders, without priority or preference among the Lenders. Regardless -86- of how each Lender may treat payments for the purpose of its own accounting, for the purpose of computing the Obligations hereunder and under the other Loan Documents, payments shall be applied first, to the costs and expenses of the ----- Administrative Agent, acting as the Administrative Agent, and the Lenders, as set forth above, second, to the payment of accrued and unpaid interest due under ------ any Loan Documents to and including the date of such application (ratably, and without duplication, according to the accrued and unpaid interest due under each of the Loan Documents), and third, to the payment of all other amounts ----- (including principal and fees) then owing to the Administrative Agent or the Lenders under the Loan Documents. No application of payments will cure any Event of Default, or prevent acceleration, or continued acceleration, of amounts payable under the Loan Documents, or prevent the exercise, or continued exercise, of rights or remedies of the Lenders hereunder or thereunder or at law or in equity. -87- ARTICLE 13. THE ADMINISTRATIVE AGENT ------------------------ 13.1 Appointment and Authorization. Each Lender hereby irrevocably ----------------------------- appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof or are reasonably incidental, as determined by the Administrative Agent, thereto. This appointment and authorization is intended solely for the purpose of facilitating the servicing of the Loans and Letters of Credit and does not constitute appointment of the Administrative Agent as trustee for any Lender or as representative of any Lender for any other purpose and, except as specifically set forth in the Loan ------ Documents to the contrary, the Administrative Agent shall take such action and exercise such powers only in an administrative and ministerial capacity. The Administrative Agent is the agent of the Lenders only and does not assume any agency relationship with the Tribe or Borrower, express or implied. 13.2 Business Activities with the Tribe and Borrower. Bank of America ----------------------------------------------- (and each successor Administrative Agent) has the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it was not the Administrative Agent, and the term "Lender" or "Lenders" includes Bank of America in its individual capacity. Each Lender (including Bank of America and each successor Administrative Agent) and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Tribe or Borrower or any of their Affiliates. Bank of America may engage in these activities in the same manner as the other Lenders as if it was not the Administrative Agent and without any duty to account therefor to the Lenders. Bank of America (and each successor Administrative Agent) need not account to any other Lender for any monies received by it for reimbursement of its costs and expenses as Administrative Agent hereunder, or for any monies received by it in its capacity as a Lender hereunder. The Administrative Agent shall not be deemed to hold a fiduciary, trust or other special relationship with any Lender and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. 13.3 Proportionate Interest of the Lenders in any Collateral. The ------------------------------------------------------- Administrative Agent, on behalf of all the Lenders, shall hold in accordance with the Loan Documents all items of any collateral or interests therein received or held by the Administrative Agent. Subject to the Administrative Agent's and the Lenders' rights to reimbursement for their costs and expenses hereunder (including attorneys' fees and disbursements and other professional --------- services), each Lender shall have an interest in any collateral or interests therein in the same proportions that the aggregate Obligations owed such Lender under the Loan Documents (other than an Approved Swap Agreement) bear to the aggregate Obligations owed under the Loan Documents to all the Lenders, without priority or preference among the Lenders. Any obligation owed to a Lender under an Approved Swap Agreement shall rank pari passu with the Obligations under the ---- ----- Loan Documents up to an amount equal to the Swap Termination Value (as determined by the -88- Administrative Agent) of that Approved Swap Agreement, and shall be subordinate to the Obligations under other Loan Documents to the extent of any excess over such amount. 13.4 Lenders' Credit Decisions. Each Lender agrees that it has, ------------------------- independently and without reliance upon the Administrative Agent, any other Lender or the directors, officers, agents, employees or attorneys of the Administrative Agent or of any other Lender, and instead in reliance upon information supplied to it by or on behalf of the Tribe and Borrower and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement. Each Lender also agrees that it shall, independently and without reliance upon the Administrative Agent, any other Lender or the directors, officers, agents, employees or attorneys of the Administrative Agent or of any other Lender, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents. 13.5 Action by Administrative Agent. ------------------------------ (a) The Administrative Agent may assume that no Default or Event of Default has occurred and is continuing, unless the Administrative Agent has received notice from the Tribe or Borrower stating the nature of the Default or Event of Default or has received notice from a Lender stating the nature of the Default or Event of Default and that such Lender considers the Default or Event of Default to have occurred and to be continuing. (b) The Administrative Agent has only those obligations under the Loan Documents as are expressly set forth therein. (c) Except for any obligation expressly set forth in the Loan ------ Documents and as long as the Administrative Agent may assume that no Event of Default has occurred and is continuing, the Administrative Agent may, but shall not be required to, exercise its discretion to act or not act, except that the Administrative Agent shall be required to act or not act ------ upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 13.2) and those instructions shall be binding upon the Administrative Agent and all the Lenders, provided that -------- the Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to applicable Law or would result, in the reasonable judgment of the Administrative Agent, in substantial risk of liability to the Administrative Agent . (d) If the Administrative Agent has received a notice specified in clause (a), the Administrative Agent shall give notice thereof to the Lenders and shall act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 13.2), provided that the Administrative Agent shall not be required to act or not -------- act if to do so would be contrary to any Loan Document or to applicable Law or would result, in the reasonable judgment of the Administrative Agent, in substantial risk of liability to the Administrative Agent, and except that ------ if the Requisite Lenders (or all the Lenders, if required under Section 13.2) fail, for five Business Days after the receipt of notice from the -89- Administrative Agent, to instruct the Administrative Agent, then the Administrative Agent, in its sole discretion, may act or not act as it deems advisable for the protection of the interests of the Lenders, until such time as it receives such a notice from the Requisite Lenders. (e) The Administrative Agent shall have no liability to any Lender for acting as instructed by the Requisite Lenders, or for refraining from acting, if so instructed by the Requisite Lenders (or, in each case, all the Lenders, if required under Section 13.2), notwithstanding any other provision hereof. 13.6 Liability of Administrative Agent. Neither the Administrative --------------------------------- Agent nor any of its directors, officers, agents, employees or attorneys shall be liable for any action taken or not taken by them under or in connection with the Loan Documents, except for their own gross negligence or willful misconduct. ------ Without limitation on the foregoing, the Administrative Agent and its directors, officers, agents, employees and attorneys: (a) May treat each Lender identified on Schedule 1.1 as the owner of its Pro Rata Share until the Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to the Administrative Agent, signed by the payee, and may treat each Lender as the owner of that Lender's interest in the Obligations for all purposes of this Agreement until the Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to the Administrative Agent, signed by that Lender. (b) May consult with legal counsel (including in-house legal --------- counsel), accountants (including in-house accountants) and other --------- professionals or experts selected by it, or with legal counsel, accountants or other professionals or experts for the Tribe, Borrower or the Lenders, and shall not be liable for any action taken or not taken by it in good faith in accordance with any advice of such legal counsel, accountants or other professionals or experts. (c) Shall not be responsible to any Lender for any statement, warranty or representation made in any of the Loan Documents or in any notice, certificate, report, request or other statement (written or oral) given or made in connection with any of the Loan Documents. (d) Except to the extent expressly set forth in the Loan ------ Documents, shall have no duty to ask or inquire as to the performance or observance by the Tribe, Borrower or any other Party of any of the terms, conditions or covenants of any of the Loan Documents or to inspect any collateral or the Property, books or records of the Tribe or Borrower. (e) Will not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, effectiveness, sufficiency or value of any Loan Document, any other instrument or writing furnished pursuant thereto or in connection therewith, or any collateral. -90- (f) Will not incur any liability by acting or not acting in reliance upon any Loan Document, notice, consent, certificate, statement, request or other instrument or writing believed by it to be genuine and signed or sent by the proper party or parties. (g) Will not incur any liability for any arithmetical error in computing any amount paid or payable by the Borrower or any Affiliate thereof or paid or payable to or received or receivable from any Lender under any Loan Document, including, without limitation, principal, interest, commitment --------- fees, Advances and other amounts; provided that, promptly upon discovery of -------- such an error in computation, the Administrative Agent, the Lenders and (to the extent applicable) Borrower or its Affiliates shall make such adjustments as are necessary to correct such error and to restore the parties to the position that they would have occupied had the error not occurred. 13.7 Indemnification. Each Lender shall, ratably in accordance with --------------- its Pro Rata Share, indemnify and hold the Administrative Agent and its directors, officers, agents, employees and attorneys harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable attorneys' fees and disbursements) that may be imposed on, --------- incurred by or asserted against it or them in any way relating to or arising out of the Loan Documents (other than losses incurred by reason of the failure of Borrower to pay the indebtedness represented by the Loan Documents) or any action taken or not taken by it as Administrative Agent thereunder, except such as result from its own gross negligence or willful misconduct. Without limitation on the foregoing, each Lender shall reimburse the Administrative Agent upon demand for that Lender's ratable share of any cost or expense incurred by the Administrative Agent in connection with the negotiation, preparation, execution, delivery, amendment, waiver, restructuring, reorganization (including a bankruptcy reorganization), enforcement or attempted --------- enforcement of the Loan Documents. 13.8 Successor Administrative Agent. The Administrative Agent may, ------------------------------ and at the request of the Requisite Lenders shall, resign as Administrative Agent (i) upon 30 days' notice to the Borrower and the Lenders or (ii) if the Administrative Agent determines that for it to continue as Administrative Agent would result in a conflict of interest affecting the Administrative Agent, or would create an unacceptable risk of significant liability of the Administrative Agent to a third party, or would otherwise be inadvisable under prevailing standards of banking prudence, at any time, and effective immediately upon written notice to Borrower and the Lenders. If the Administrative Agent so resigns, (a) the Requisite Lenders shall appoint a successor Administrative Agent, who must be from among the Lenders (and reasonably acceptable to Borrower unless an Event of Default exists), provided that any resigning Administrative -------- Agent shall be entitled to appoint a successor Administrative Agent from among the Lenders, subject to acceptance of appointment by that successor Administrative Agent, if the Requisite Lenders have not appointed a successor Administrative Agent within 30 days after the date the resigning Administrative Agent gave notice of resignation; (b) upon a successor's acceptance of appointment -91- as Administrative Agent, the successor will thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning Administrative Agent or the removed Administrative Agent; and (c) upon the effectiveness of any resignation, the resigning Administrative Agent thereupon will be discharged from its duties and obligations thereafter arising under the Loan Documents other than obligations arising as a result of any action or inaction of the resigning Administrative Agent prior to the effectiveness of such resignation. Upon any resignation of Bank of America (or any successor Administrative Agent) as Administrative Agent, Bank of America (or such successor) shall be deemed to have concurrently resigned as Issuing Lender with respect to the issuance of any further Letters of Credit hereunder (including without limitation the extension of the expiration of any outstanding Letter of Credit), and the successor Administrative Agent shall (i) be deemed concurrently appointed as Issuing Lender, and (ii) shall promptly issue Letters of Credit to replace or support any outstanding Letters of Credit issued by Bank of America. 13.9 Performance of Conditions. For the purpose of determining ------------------------- fulfillment by the Tribe and Borrower of conditions precedent specified in Section 10.1 and Section 10.2 only, each Lender shall be deemed to have consented to, and approved or accepted, or to be satisfied with each document or other matter sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required under Article 10 to be consented to, or approved by or acceptable or satisfactory to, that Lender, unless an officer of the Administrative Agent who is responsible for the transactions contemplated by the Loan Documents shall have received written notice from that Lender prior to the making of the requested Loan or the issuance of the requested Letter of Credit specifying its objection thereto and either (i) such objection shall not have been withdrawn by written notice to the Administrative Agent or (ii) in the case of any condition to the making of a Loan, that Lender shall not have made available to the Administrative Agent that Lender's Pro Rata Share of such Loan. 13.10 Collateral Matters. ------------------ (a) The Administrative Agent is authorized by each Lender, without the necessity of any notice to or further consent from any Lender, and without the obligation to take any such action, to take any action with respect to any Collateral or any Collateral Document which may from time to time be necessary to perfect and maintain perfected the Liens of the Collateral Documents. (b) The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Commitment and the payment in full of all Loans and all other Obligations payable under this Agreement (other than the obligations referenced in Section 3.18) and under the other Loan Documents; (ii) constituting Property of Borrower or its Affiliates which is sold, transferred or otherwise disposed of in connection with any transaction not prohibited by this Agreement or the Loan Documents; (iii) constituting Property leased to Borrower under an operating lease which has expired or been -92- terminated in a transaction not prohibited by this Agreement or which will concurrently expire and which has not been and is not intended by the Borrower to be, renewed or extended; (iv) consisting of an instrument, if the Indebtedness evidenced thereby has been paid in full; or (v) if approved or consented to by those of the Lenders required by Section 13.2. Upon request by the Administrative Agent, the Lenders will confirm in writing the Administrative Agent's authority to release particular types or items of Collateral pursuant to this Section. 13.11 No Obligations of Borrower or the Tribe. Nothing contained in --------------------------------------- this Article 12 shall be deemed to impose upon Borrower or the Tribe any obligation in respect of the due and punctual performance by the Administrative Agent of its obligations to the Lenders under any provision of this Agreement, and the Tribe and Borrower shall have no liability to the Administrative Agent or any of the Lenders in respect of any failure by the Administrative Agent or any Lender to perform any of its obligations to the Administrative Agent or the Lenders under this Agreement. -93- ARTICLE 14. MISCELLANEOUS ------------- 14.1 Cumulative Remedies; No Waiver. The rights, powers, privileges and ------------------------------ remedies of the Creditors provided herein and in the other Loan Documents are cumulative and not exclusive of any right, power, privilege or remedy provided by Law or equity. No failure or delay on the part of any Creditor in exercising any right, power, privilege or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power, privilege or remedy preclude any other or further exercise of the same or any other right, power, privilege or remedy. The terms and conditions of Article 10 hereof are inserted for the sole benefit of the Creditors and may be waived in whole or in part, with or without terms or conditions, in respect of any Loan or Letter of Credit without prejudicing the Creditors' right to assert them in whole or in part in respect of any other Loan or Letter of Credit. 14.2 Amendments; Consents. No amendment, modification, supplement, -------------------- extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, and no consent to any departure by Borrower or any other Party therefrom, may in any event be effective unless in writing signed by the Administrative Agent with the approval in writing of the Requisite Lenders, and then only in the specific instance and for the specific purpose given; and, without the approval in writing of all the Lenders, no amendment, modification, supplement, termination, waiver or consent may be effective: (a) To (i) amend or modify the principal of, or the amount of principal, principal repayments on, any Obligation, (ii) increase the amount of the Commitment except as contemplated by Section 2.7, or (iii) decrease the rate of interest or any commitment fee payable to any Lender, or any other fee or amount payable to any Lender under the Loan Documents; (b) Except as otherwise expressly provided for herein, to postpone any date fixed for any payment of principal of, prepayment of principal of or any installment of interest on, any Obligation or any installment of any commitment fee or other credit fee payable to any Lender, to extend the Maturity Date or any Reduction Date, or to release any Collateral (except as specifically provided for in any Loan Document); (c) To amend, modify or waive the provisions of the definitions of "Available Cash Flow" or "Requisite Lenders" or amend or modify Article 9, ------------------- ----------------- Sections 11.1(o), 11.1(r), 11.1(t), and 11.1(u) this Section, or Sections 13.18, 13.24, 13.26 or 13.27; (d) To amend or modify any provision of this Agreement in a manner which materially and adversely affects the Administrative Agent or the Issuing Lender without their written consent; -94- (e) To amend or modify any provision of this Agreement that expressly requires the consent or approval of all the Lenders. Any amendment, modification, supplement, termination, waiver or consent pursuant to this Section 13.2 shall apply equally to, and shall be binding upon, all of the Creditors. 14.3 Costs, Expenses and Taxes. Borrower shall pay on demand the ------------------------- reasonable costs and expenses of (a) the Administrative Agent and the Lead Arranger in connection with the negotiation, preparation, syndication, closing, execution and delivery of the Loan Documents, including without limitation, the reasonable attorneys' fees and disbursements of Sheppard, Mullin, Richter & Hampton LLP and Dorsey & Whitney, LLP and the allocated cost of any internal counsel to the Administrative Agent, (b) the Construction Consultant in connection with the monitoring services provided by the Construction Consultant (all as more fully set out in a letter agreement between the Administrative Agent and the Borrower), (c) the Administrative Agent, in connection with each amendment executed when no Default or Event of Default exists, and (d) each of the Creditors in connection with each refinancing, restructuring, reorganization (including a bankruptcy reorganization) and enforcement or attempted enforcement --------- of the Loan Documents, and any matter related thereto, in each case including, --------- filing fees, recording fees, title insurance fees, appraisal fees, search fees and other out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any legal counsel (including the allocated fees and all disbursements and other expenses of any internal legal counsel), independent public accountants and other outside experts retained by the Administrative Agent or any Lender, and including, without limitation, any costs, expenses or fees incurred or suffered by the Creditors in connection with or during the course of any bankruptcy or insolvency proceedings of Borrower. Borrower shall pay any and all documentary and other taxes (other than income or gross receipts taxes generally applicable to banks) and all costs, expenses, fees and charges payable or determined to be payable in connection with the filing or recording of this Agreement, any other Loan Document or any other instrument or writing to be delivered hereunder or thereunder, or in connection with any transaction pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify the Administrative Agent and the Lenders from and against any and all loss, liability or legal or other expense with respect to or resulting from any delay in paying or failure to pay any such tax, cost, expense, fee or charge or that any of them may suffer or incur by reason of the failure of any Party to perform any of its Obligations. Any amount payable to the Administrative Agent or any Lender under this Section shall bear interest at the Default Rate. 14.4 Nature of the Lenders' Obligations. The obligations of the Lenders ---------------------------------- hereunder are several and not joint or joint and several. Nothing contained in this Agreement or any other Loan Document and no action taken by the Administrative Agent or the Lenders or any of them pursuant hereto or thereto may, or may be deemed to, make the Lenders a partnership, an association, a joint venture or other entity, either among themselves or with the Borrower or any Affiliate of the Borrower. Each Lender's obligation to make any Advance pursuant hereto is several and not joint or joint and several. A default by any Lender will not increase the percentage of the Commitment attributable to any other Lender. Any Lender not in default may, if it desires, -95- assume in such proportion as the nondefaulting Lenders agree the obligations of any Lender in default, but is not obligated to do so. 14.5 Survival of Representations and Warranties. All representations ------------------------------------------ and warranties contained herein or in any other Loan Document, or in any certificate or other writing delivered by or on behalf of any one or more of the Parties to any Loan Document, will survive the making of the Loans and the issuance of Letters of Credit hereunder and the execution and delivery of the Loan Documents, and have been or will be relied upon by the Administrative Agent and each Lender, notwithstanding any investigation made by the Administrative Agent or any Lender or on their behalf. 14.6 Notices. Except as otherwise expressly provided in the Loan ------- Documents (a) all notices, requests, demands, directions and other communications provided for hereunder or under any other Loan Document must be in writing and must be mailed, telegraphed, telecopied, delivered or sent by recognized overnight courier service, to the appropriate party at the address set forth on the signature pages of this Agreement or other applicable Loan Document or, as to any party to any Loan Document, at any other address as may be designated by it in a written notice sent to all other parties to such Loan Document in accordance with this Section; and (b) any notice, request, demand, direction or other communication given by telecopier, must be confirmed within 48 hours by letter mailed or delivered to the appropriate party at its respective address. Except as otherwise expressly provided in any Loan Document, if any notice, request, demand, direction or other communication required or permitted by any Loan Document is given by mail it will be effective on the earlier of receipt or the third Business Day after deposit in the United States mail with first class or airmail postage prepaid; if given by telegraph or cable, when delivered to the telegraph company with charges prepaid; if given by telex or telecopier, when sent; or if given by personal delivery, when delivered. Notices given by the Borrower under Articles 2 and 3 shall be deemed given on actual receipt by the Administrative Agent. 14.7 Execution of Loan Documents. Unless the Administrative Agent --------------------------- otherwise specifies with respect to any Loan Document, this Agreement and any other Loan Document may be executed in any number of counterparts and any party hereto or thereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this Agreement or any other Loan Document, as the case may be, when taken together will be deemed to be but one and the same instrument. The execution of this Agreement or any other Loan Document by any party hereto or thereto will not become effective until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto. 14.8 Binding Effect; Assignment. -------------------------- (a) This Agreement and the other Loan Documents shall be binding upon and shall inure to the benefit of the parties hereto and thereto and their respective successors and assigns, except that Borrower and its Affiliates may not assign their rights hereunder or -96- thereunder or any interest herein or therein without the prior written consent of all the Lenders. Any assignment by the Borrower or its Affiliates without the prior written consent of the Lenders shall be void, provided that no Person other than the Lenders shall have any rights under this sentence. Each Lender represents that it is not acquiring any Note with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (subject to any requirement that disposition of such Notes must be within the control of such Lender). Any Lender may at any time pledge its Note, if any, or any other instrument evidencing its rights as a Lender under this Agreement to a Federal Reserve Bank, but no such pledge shall release that Lender from its obligations hereunder or grant to such Federal Reserve Bank the rights of a Lender hereunder absent foreclosure of such pledge. (b) From time to time following the Closing Date, each Lender may assign to one or more Eligible Assignees all or any portion of its Pro Rata Share; provided that (i) such Eligible Assignee, if not then a Lender or an Affiliate of the assigning Lender, shall be approved by each of the Administrative Agent and Borrower (neither of which approvals shall be unreasonably withheld or delayed), (ii) such assignment shall be evidenced by an Assignment Agreement, a copy of which shall be furnished to the Administrative Agent, (iii) except in the case of an assignment to an Affiliate of the assigning Lender or to another Lender of the entire remaining Commitment of the assigning Lender, the assignment shall be of a Pro Rata Share of not less than $10,000,000, and (iv) the effective date of any such assignment shall be as specified in the Assignment Agreement, but not earlier than the date which is five Business Days after the date the Administrative Agent has received the Assignment Agreement unless the Administrative Agent otherwise agrees. Upon the effective date of such Assignment Agreement, the Eligible Assignee named therein shall be a Lender for all purposes of this Agreement, with the Pro Rata Share set forth therein and, to the extent of such Pro Rata Share, the assigning Lender shall be released from its further obligations under this Agreement. Borrower agrees that it shall execute and deliver (against delivery by the assigning Lender to Borrower of any Note in its possession) to such assignee Lender, a Note evidencing that assignee Lender's Pro Rata Share, and to the assigning Lender, a Note evidencing the remaining balance Pro Rata Share retained by the assigning Lender (in each case, if Notes are requested by such Assignee under Section 2.1). (c) By executing and delivering an Assignment Agreement, the Eligible Assignee thereunder acknowledges and agrees that: (i) other than the representation and warranty that it is the legal and beneficial owner of the Pro Rata Share being assigned thereby free and clear of any adverse claim, the assigning Lender has made no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement or any other Loan Document; (ii) the assigning Lender has made no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance by Borrower of the Obligations; (iii) it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.1 and such other -97- documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment Agreement; (iv) it will, independently and without reliance upon the Administrative Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) it appoints and authorizes the Administrative Agent to take such action and to exercise such powers under this Agreement as are delegated to the Administrative Agent by this Agreement; and (vi) it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent shall maintain at the Administrative Agent's Office a copy of each Assignment Agreement delivered to it. After receipt of a completed Assignment Agreement executed by any Lender and an Eligible Assignee, and receipt of an assignment fee of $3,500 from such Eligible Assignee, Administrative Agent shall, promptly following the effective date thereof, provide notice thereof to Borrower and the Lenders. (e) Each Lender may grant participations from time to time in a portion of its Pro Rata Share to one or more banks or other financial institutions (including another Lender); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other financial institutions shall not be a Lender hereunder for any purpose except, if the participation agreement so provides, for the purposes of Sections 3.7, 3.8, 13.11 and 13.15, (iv) Borrower and the other Creditors shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, (v) the participation interest shall be expressed as a percentage of the granting Lender's Pro Rata Share as it then exists and shall not restrict an increase in the Commitment, or in the granting Lender's Pro Rata Share, so long as the amount of the participation interest is not affected thereby, and (vi) the consent of the holder of such participation interest shall not be required for amendments or waivers of provisions of the Loan Documents other ----- than those which (A) extend the Maturity Date, any Reduction Date or any ---- date upon which any payment of money is due to the Lenders, (B) reduce the rate of interest on the Loans, any fee or any other monetary amount payable to the Lenders, (C) reduce the amount of any installment of principal due with respect to the Loans, or (D) release any material portion of the Collateral. (f) Any Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC") of such Granting Lender, identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide all or any part of any Advance that such Granting Lender would otherwise be obligated to make pursuant to Article 2, provided that (i) nothing herein shall constitute a commitment to make any Advance by any SPC, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Lender shall be obligated to make such Advance pursuant to the terms hereof, and (iii) the rights of any such SPC shall be derivative of the rights of the Granting Lender. Each SPC shall be -98- conclusively presumed to have made arrangements with its Granting Lender for the exercise of voting and other rights hereunder in a manner which is acceptable to the SPC, and the Administrative Agent, the other Creditors and each other Party shall be entitled to rely upon and deal solely with the Granting Lender with respect to Advances made by or through its SPC. The making of an Advance by an SPC hereunder shall utilize the Pro Rata Share of the Commitment of the Granting Lender to the same extent, and as if, such Advance were made by the Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the related Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof, provided that the Granting Lender for each SPC hereby -------- ---- agrees to indemnify, save, and hold harmless each other party hereto for any loss, cost, damage and expense arising out of their inability to institute any such proceeding against its SPC. In addition, notwithstanding anything to the contrary contained in this Section, any SPC may (i) with notice to, but without the prior written consent of, the Borrower or the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Advance to its Granting Lender or to any financial institutions providing liquidity and/or credit facilities to or for the account of such SPC to fund the Advances made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans (but nothing contained herein shall be construed in derogation of the obligation of the Granting Lender to make Advances hereunder), provided that neither -------- ---- the consent of the SPC or of any such assignee shall be required for amendments or waivers of provisions of the Loan Documents except for those amendments or waivers for which the consent of participants is required under Section 13.8(e)(vi), and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of a surety, guarantee or credit or liquidity enhancement to such SPC. 14.9 Lien on Deposits and Property in Possession of any Lender. As --------------------------------------------------------- security for the prompt payment and performance of all Obligations, Borrower hereby grants to each Creditor, as the representative of all other Creditors, a security interest in and a right of off-set with respect to, all its right, title, and interest in and to any and all deposit accounts now or hereafter maintained with that Creditor in and to any and all of its Property and the proceeds thereof now or hereafter in the possession of that Creditor. If an Event of Default has occurred and is continuing, any Lender (but only with the consent of the Requisite Lenders) may, to the extent permitted by applicable Laws, exercise its rights under Article 9 of the Uniform Commercial Code and other applicable Laws (including its right of off-set) and apply any funds in any deposit account maintained with it by Borrower and any Property of Borrower in its possession against the Obligations. -99- 14.10 Sharing of Setoffs. Each Lender severally agrees that if it, ------------------ through the exercise of any right of setoff, banker's lien or counterclaim against a Party, or otherwise, receives payment of the Obligations held by it that is ratably more than any other Lender, through any means, receives in payment of the Obligations held by that Lender, then: (a) The Lender exercising the right of setoff, banker's lien or counterclaim or otherwise receiving such payment shall notify the Administrative Agent and thereafter shall purchase, and shall be deemed to have simultaneously purchased, from the other Lender a participation in the Obligations held by the other Lender and shall pay to the other Lender a purchase price in an amount so that the share of the Obligations held by each Lender after the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all of the Lenders share any payment obtained in respect of the Obligations ratably in accordance with each Lender's share of the Obligations immediately prior to, and without taking into account, the payment; provided that, if all or -------- any portion of a disproportionate payment obtained as a result of the exercise of the right of setoff, banker's lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by Borrower or any Person claiming through or succeeding to the rights of Borrower, the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery. Each Lender that purchases a participation in the Obligations pursuant to this Section shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. Each Party expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased may exercise any and all rights of setoff, banker's lien or counterclaim with respect to the participation as fully as if the Lender were the original owner of the Obligation purchased; provided, however, that each -------- Lender agrees that it shall not exercise any right of setoff, banker's lien or counterclaim with respect to the Obligations without first obtaining the consent of the Requisite Lenders. 14.11 Indemnity by Borrower. Borrower agrees to indemnify, save and --------------------- hold harmless each Creditor and their respective Affiliates, directors, officers, agents, attorneys and employees (collectively the "Indemnitees") from ----------- and against: (a) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any third party, if the claim, demand, action or cause of action directly or indirectly relates to a claim, demand, action or cause of action that such Person asserts or may assert against Borrower (or, to the extent related to the Loan Documents or the transactions contemplated thereby, any Affiliate of Borrower or any officer of Borrower); (b) any and all claims, demands, actions or causes of action by a third party if the claim, demand, action or cause of action arises out of or relates to the Commitment, the use or contemplated use of proceeds of any Loan or Letter of Credit, the relationship of Borrower and the Lenders under this Agreement or any transaction contemplated by the Loan Documents; (c) any administrative or investigative proceeding by any Governmental Agency arising out of or related to a claim, demand, action or cause of action described in clauses (a) or (b) above; and (d) any and -100- all liabilities, losses, costs or expenses (including reasonable attorneys' fees --------- and disbursements and other professional services) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action or cause of action; provided that no Indemnitee shall be entitled to -------- indemnification for any loss caused by its own gross negligence or willful misconduct. If any claim, demand, action or cause of action is asserted against any Indemnitee, such Indemnitee shall promptly notify Borrower, but the failure to so promptly notify Borrower shall not affect Borrower's obligations under this Section unless Borrower is materially prejudiced thereby (and then only to the extent prejudiced). Each Indemnitee may contest the validity, applicability and amount of such claim, demand, action or cause of action with counsel selected by such Indemnitee. Each Indemnitee is authorized to employ counsel in enforcing its rights hereunder and in defending any claim, demand, action or cause of action covered by this Section; provided that each Indemnitee shall endeavor in connection with any matter covered by this Section which also involves other Indemnitees, to use reasonable efforts to avoid unnecessary duplication of effort by counsel for all Indemnitees. Any obligation or liability of Borrower to any Indemnitee under this Section shall survive the expiration or termination of this Agreement and the repayment of all Loans and the payment and performance of all other Obligations (other than the Obligations referenced in Section 3.18) owed to the Lenders; provided, however, that such -------- obligations or liabilities shall not, from and after the date on which the Obligations are fully paid and the Commitment terminated, be deemed Obligations for any purpose under the Loan Documents. 14.12 Nonliability of the Lenders. Each of the Tribe and Borrower --------------------------- acknowledges and agrees that: (a) Any inspections of any Property of Borrower made by or through the Creditors are for purposes of administration of the Loan Documents only and neither the Tribe nor Borrower is entitled to rely upon the same; (b) By accepting or approving anything required to be observed, performed, fulfilled or given to the Creditors pursuant to the Loan Documents, none of the Creditors shall be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by any Creditor; (c) The relationship between the Borrower and the Creditors is, and shall at all times remain, solely that of a borrowers and lenders; no Creditor shall under any circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with the Tribe or with Borrower or their Affiliates, or to owe any fiduciary duty to the Tribe, Borrower, or their Affiliates; no Creditor undertakes or assumes any responsibility or duty to the Tribe, Borrower or their Affiliates to select, review, inspect, supervise, pass judgment upon or inform the Tribe, Borrower or their Affiliates of any matter in connection with their Property or the operations of the Tribe, Borrower or its Affiliates; the Tribe, Borrower and its Affiliates shall rely entirely upon their own judgment with respect to -101- such matters; and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by the Creditors in connection with such matters is solely for the protection of the Creditors and neither the Tribe, Borrower nor any other Person is entitled to rely thereon; and (d) The Creditors shall not be responsible or liable to any Person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to Property or other loss, damage, liability or claim caused by the actions, inaction or negligence of the Tribe, Borrower and its Affiliates and Borrower hereby indemnifies and holds the Creditors harmless from any such loss, damage, liability or claim. 14.13 No Third Parties Benefited. This Agreement is made for the -------------------------- purpose of defining and setting forth certain obligations, rights and duties of Borrower, the Tribe and the Creditors in connection with the Loans and Letters of Credit, and is made for the sole benefit of the Tribe, Borrower, the Creditors, and the Creditors' successors and assigns. Except as provided in ------ Sections 3.7, 3.8, 13.8, 13.11, 13.15 and 13.28 no other Person shall have any rights of any nature hereunder or by reason hereof. 14.14 Confidentiality. Each Creditor agrees to hold any confidential --------------- information that it may receive from the Tribe or Borrower pursuant to this Agreement in confidence, except for disclosure (a) to other Lenders, their ------ officers, directors, employees and agents (but, in the case of agents, only subject to an appropriate confidentiality agreement); (b) to legal counsel, accountants and other professional advisors to the Tribe or Borrower or any Lender; (c) to regulatory officials having jurisdiction over that Lender; (d) as required by Law or legal process or in connection with any legal proceeding to which that Creditor, the Tribe or Borrower are adverse parties; (e) to another financial institution in connection with a disposition or proposed disposition to that financial institution of all or part of that Lender's interests hereunder or a participation interest in its Pro Rata Share (or to any SPC of that Lender in accordance with the last sentence of Section 13.8); (f) to prospective purchasers of any Collateral in connection with any disposition thereof (but then only subject to an appropriate confidentiality agreement); or (g) if an Event of Default has occurred and is continuing, to the extent that any Creditor determines such disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under the Loan Documents. For purposes of the foregoing, "confidential information" shall mean all information respecting the Tribe or Borrower delivered to the Lenders marked "Confidential" or in another conspicuous manner which denotes its confidentiality, other than (i) information previously filed with any ---------- Governmental Agency and available to the public, (ii) information previously published in any public medium from a source other than, directly or indirectly, that Lender, and (iii) information previously disclosed by the Tribe or Borrower to any Person not associated with the Tribe or Borrower without a written confidentiality agreement. Nothing in this Section shall be construed to create or give rise to any fiduciary duty on the part of any Creditor to the Tribe or to Borrower. -102- 14.15 Hazardous Materials Indemnity. Borrower hereby agrees to ----------------------------- indemnify, hold harmless and defend (by counsel reasonably satisfactory to the Administrative Agent) each of the Creditors and their respective directors, officers, employees, agents, successors and assigns from and against any and all claims, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial action requirements, enforcement actions of any kind, and all costs and expenses incurred in connection therewith (including but not limited to reasonable attorneys' fees and expenses), arising directly or indirectly, in whole or in part, out of (i) the presence on or under the Real Property of any Hazardous Materials, or any releases or discharges of any Hazardous Materials on, under or from the Real Property and (ii) any activity carried on or undertaken on or off the Real Property by Borrower or any of its predecessors in title (including the Tribe), whether prior to or during the term of this Agreement, and whether by Borrower or any predecessor in title or any employees, agents, contractors or subcontractors of Borrower or any predecessor in title, or any third persons at any time occupying or present on the Real Property, in connection with the handling, treatment, removal, storage, decontamination, clean-up, transport or disposal of any Hazardous Materials at any time located or present on or under the Real Property. The foregoing indemnity shall further apply to any residual contamination on or under the Real Property, or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with applicable Laws, but the foregoing indemnity shall not apply to (i) Hazardous Materials on the Real Property, the presence of which is caused by that Creditor or (ii) activities carried on or undertaken by the Creditors, in each case subsequent to its or their entry into the Real Property pursuant to the Leasehold Mortgage (but only to the extent that the same are not attributable to the Tribe or the Borrower). 14.16 Further Assurances. The Tribe or Borrower shall, at their sole ------------------ expense and without expense to the Creditors do, execute and deliver such further acts and documents as any Lender or the Administrative Agent from time to time reasonably requires for the assuring and confirming unto the Creditors of the rights hereby created or intended now or hereafter so to be, or for carrying out the intention or facilitating the performance of the terms of any Loan Document. 14.17 Integration. This Agreement, together with the other Loan ----------- Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental -------- rights or remedies in favor of the Creditors in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. -103- 14.18 Governing Law. Except to the extent otherwise expressly provided ------------- ------ therein, each Loan Document shall be governed by, and construed and enforced in accordance with, the Laws of Connecticut, without regard to the conflicts of law provisions of the Laws of Connecticut, provided however, that if and only to the -------- ------- extent that any security interest granted to the Administrative Agent for the benefit of the Lenders pursuant to this Agreement or any other Loan Document shall be deemed exempt from the provisions of Article 9 of the Uniform Commercial Code of the State of Connecticut, C.G.S. (S)42a-9-101, et seq., by ------- virtue of C.G.S. (S)42a-9-104(e), then such security interest shall be governed by the corresponding provisions of Article 9 of Tribe's Uniform Commercial Code, as adopted by the UCC Ordinance. Borrower and each other party hereto each hereby consents to the application of Connecticut civil law to the construction, interpretation and enforcement of this Agreement and the other Loan Documents, and to the application of Connecticut civil law to the procedural aspects of any suit, action or proceeding relating thereto, including but not limited to legal process, execution of judgments and other legal remedies, except for any procedural matters governed by or relating to the conduct of arbitration under Section 13.24. 14.19 Severability of Provisions. Any provision in any Loan Document -------------------------- that is held to be inoperative, unenforceable or invalid as to any party or in any jurisdiction shall, as to that party or jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions or the operation, enforceability or validity of that provision as to any other party or in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 14.20 Independent Covenants. Each covenant in Articles 6, 7, 8 and 9 is --------------------- independent of the other covenants in those Articles; the breach of any such covenant shall not be excused by the fact that the circumstances underlying such breach would be permitted by another such covenant. 14.21 Headings. Article and Section headings in this Agreement and the -------- other Loan Documents are included for convenience of reference only and are not part of this Agreement or the other Loan Documents for any other purpose. 14.22 Time of the Essence. Time is of the essence of the Loan ------------------- Documents. 14.23 Tax Withholding Exemption Certificates. On or before the Closing -------------------------------------- Date, each Lender which is organized outside the United States of America shall deliver to Borrower a properly completed and duly executed Internal Revenue Service Form 4224 or Form 1001 and any other certificate or statement required by applicable Laws to establish that payments due to such Lender under the Loan Documents are (a) not subject to withholding under the Code because such payments are effectively connected with the conduct of a trade or business in the United States of America or (b) totally exempt from United States tax under the provisions of an applicable tax treaty. 14.24 Arbitration Reference. --------------------- -104- (a) Mandatory Arbitration. At the option of the Administrative --------------------- Agent (exercised in accordance with consent of the Requisite Lenders), Borrower or (to the extent it is a party to any such controversy or claim), the Tribe, any controversy or claim between or among the parties arising out of or relating to this Agreement or any agreements or instruments relating hereto or delivered in connection herewith and any claim based on or arising from an alleged tort, shall be determined by arbitration. The arbitration shall be conducted in accordance with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this Agreement, and under the Commercial Rules of the American Arbitration Association ("AAA"). The arbitrators shall give effect to statutes of limitation in determining any claim. Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrators. Judgment upon the arbitration award may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. (b) Provisional Remedies, Self-Help and Foreclosure. No provision ----------------------------------------------- of this section shall limit the right of any party to this Agreement to exercise self-help remedies such as setoff, to foreclose against or sell any real or personal property collateral or security or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any arbitration or other proceeding. The exercise of a remedy does not waive the right of either party to resort to arbitration or reference. At the Requisite Lenders' option, foreclosure under a deed of trust or mortgage may be accomplished either by exercise of power of sale under the deed of trust or mortgage or by judicial foreclosure. (c) Limitation. This Section shall not be construed to require ---------- arbitration by the Creditors of any disputes which now exist or hereafter arise amongst themselves which do not involve the Tribe or Borrower and are not related to this Agreement and the Loan Documents. (d) Specific Enforcement Representation. Each party to this ----------------------------------- Agreement severally represents and warrants to the other parties that this Section 13.24 is specifically enforceable against such party by the other parties. 14.25 PURPORTED ORAL AMENDMENTS. THE TRIBE, THE BORROWER AND THE ------------------------- CREDITORS EXPRESSLY ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 13.2. EACH OF THE TRIBE AND BORROWER AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF ANY CREDITOR THAT DOES NOT COMPLY WITH SECTION 13.2 TO -105- EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. 14.26 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT -------------------------------- HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 14.27 WAIVER OF SOVEREIGN IMMUNITY; CONSENT TO JURISDICTION. ----------------------------------------------------- (A) THE TRIBE AND THE BORROWER EACH HEREBY EXPRESSLY AND IRREVOCABLY WAIVE THE SOVEREIGN IMMUNITY OF THE MOHEGAN TRIBAL GAMING AUTHORITY (AND ANY DEFENSE BASED THEREON) FROM ANY SUIT, ACTION OR PROCEEDING OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION, EXERCISE OF CONTEMPT POWERS, OR OTHERWISE) IN ANY FORUM, WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, PROVIDED -------- THAT (1) THE WAIVER CONTAINED IN THIS CLAUSE (A) IS EXPRESSLY LIMITED TO ---- ACTIONS AGAINST THE BORROWER AND (2) ANY RECOVERY UPON ANY JUDGMENT RESULTING THEREFROM SHALL BE LIMITED TO RECOVERY AGAINST THE ASSETS AND REVENUES OF THE BORROWER. (B) THE TRIBE HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ITS OWN SOVEREIGN IMMUNITY (APPLICABLE TO ITSELF AS AN INDIAN TRIBAL NATION) (AND ANY DEFENSE BASED THEREON) FROM ANY SUIT, ACTION OR PROCEEDING OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION, EXERCISE OF CONTEMPT POWERS, OR OTHERWISE) WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF THE TRIBE SET FORTH IN ARTICLE 4, THE COVENANTS OF THE TRIBE SET FORTH IN ARTICLE 9, AND EACH PROVISION OF SECTION 11.1 WHICH RELATES TO AN EVENT OF DEFAULT CAUSED BY THE TRIBE'S BREACH OF ANY SUCH -106- REPRESENTATION, WARRANTY OR COVENANT, IT BEING EXPRESSLY UNDERSTOOD THAT (1) THE WAIVERS AND CONSENTS CONTAINED IN THIS CLAUSE (B) ARE NOT LIMITED TO ACTIONS AGAINST THE BORROWER, (2) ANY ACTION DESCRIBED IN THIS CLAUSE (B) MAY BE BROUGHT AGAINST THE TRIBE, AND (3) ANY RECOVERY UPON ANY JUDGMENT RESULTING FROM ANY SUCH ACTION MAY BE HAD AGAINST THE ASSETS AND REVENUES OF THE TRIBE IN A MANNER CONSISTENT WITH SECTION 13.28. (C) EACH OF THE TRIBE AND BORROWER HEREBY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF CONNECTICUT, THE COURTS OF THE UNITED STATES, AND THE COURTS OF ANY OTHER STATE WHICH MAY HAVE JURISDICTION OVER THE SUBJECT MATTER, OVER ANY SUCH ACTION AND OVER BORROWER AND THE TRIBE. (D) THE WAIVERS AND CONSENTS DESCRIBED IN THIS SECTION SHALL INURE TO THE BENEFIT OF THE CREDITORS AND EACH OTHER PERSON WHO IS ENTITLED TO THE BENEFITS OF THE LOAN DOCUMENTS (INCLUDING WITHOUT LIMITATION THE INDEMNIFIED PERSONS REFERRED TO IN SECTION 13.11). SUBJECT TO SECTION 13.28 THE CREDITORS AND SUCH OTHER PERSONS SHALL HAVE AND BE ENTITLED TO ALL AVAILABLE LEGAL AND EQUITABLE REMEDIES, INCLUDING THE RIGHT TO SPECIFIC PERFORMANCE, MONEY DAMAGES AND INJUNCTIVE OR DECLARATORY RELIEF. THE WAIVERS OF SOVEREIGN IMMUNITY AND CONSENTS TO JURISDICTION CONTAINED IN THIS SECTION ARE IRREVOCABLE. 14.28 Lender Covenant. In any action or proceeding against the Borrower --------------- to enforce the Loan Documents which is not also an action or proceeding against the Tribe, the Creditors agree that they shall have no recourse to the Tribe or to Non-Authority Property. In any action or proceeding to enforce the Loan Documents which includes the Tribe, the Creditors agree that they shall, to the extent then permitted by applicable Law, take commercially practicable steps to enforce any claim for damages awarded to the Creditors by any court, tribunal, arbitrator or other decision maker against the Borrower or the Authority Property prior to taking general recourse to the Tribe or Non-Authority Property. The provisions of this Section shall not be construed (a) to create any recourse on the part of the Creditors against the Tribe, its Properties or revenues except for any breach of the Tribe's own representations, warranties and covenants set forth in Articles 4 and 9, or (b) to require exhaustion by the Creditors of any remedies against Borrower or the Authority Property prior to having recourse, in the proper case, against the Tribe and Non-Authority Property. 14.29 PREJUDGMENT REMEDY WAIVER. Each of the Tribe and Borrower ------------------------- represents, warrants and acknowledges that the transaction of which this Agreement is a part is a commercial transaction and not a consumer transaction. Monies now or in the future to be -107- advanced to or on behalf of Borrower are not and will not be used for personal, family or household purposes. EACH OF THE TRIBE AND BORROWER ACKNOWLEDGES THAT IT HAS THE RIGHT UNDER SECTION 52-278a, ET SEQ., OF THE CONNECTICUT GENERAL STATUTES, SUBJECT TO ------ CERTAIN LIMITATIONS, TO NOTICE OF AND HEARING ON THE RIGHT OF THE CREDITORS TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT, GARNISHMENT OR REPLEVIN, UPON COMMENCING ANY LITIGATION AGAINST EITHER THE TRIBE OR BORROWER. NOTWITHSTANDING SUCH RIGHT, EACH OF THE TRIBE AND BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER TO WHICH IT MIGHT OTHERWISE HAVE THE RIGHT UNDER SAID STATUTE OR UNDER ANY OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN CONNECTION WITH THE OBTAINING BY THE CREDITORS OF ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE TRIBE AND BORROWER FURTHER CONSENTS TO THE ISSUANCE OF ANY PREJUDGMENT REMEDIES WITHOUT A BOND AND AGREES NOT TO REQUEST OR FILE MOTIONS SEEKING TO REQUIRE THE POSTING OF A BOND UNDER PUBLIC ACT 93-431 IN CONNECTION WITH THE CREDITORS' EXERCISE OF ANY PREJUDGMENT REMEDY. EACH OF THE TRIBE AND BORROWER ALSO WAIVES ANY AND ALL OBJECTION WHICH IT MIGHT OTHERWISE ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY THE CREDITORS OF ANY RIGHT OF SETOFF, REPOSSESSION OR SELF HELP AS MAY PRESENTLY EXIST UNDER STATUTE OR COMMON LAW. THIS SECTION SHALL NOT BE CONSTRUED IN DEROGATION OF THE RIGHTS OF THE TRIBE UNDER SECTION 13.28. 14.30 Designated Senior Secured Indebtedness. Borrower hereby -------------------------------------- irrevocably designates the Obligations as "Designated Senior Indebtedness" and "Designated Senior Secured Indebtedness" as such terms are defined in the Relinquishment Agreement and irrevocably designates the Obligations as "Designated Senior Indebtedness" as such term is defined in the New Subordinated Notes Indenture. 14.31 Compliance with 25 U.S.C. (S)81 ---------------------------------- (a) In compliance with Section 81 of Title 25 of the United States Code, the residence and occupation of the parties to this Agreement are as follows: Party in interest: Bank of America National Trust and Savings Association, as Administrative Agent, and the Lenders named herein Residence: Bank of America National Trust and Savings Association, as Administrative Agent -108- 555 South Flower Street Los Angeles, California 90071 Attn: Janice Hammond, Vice President Telephone: (213) 228-9861 Telecopier: (213) 228-2299 Occupation Commercial Lenders Party in interest: The Mohegan Tribal Gaming Authority Residence Uncasville, Connecticut Occupation Tribal Gaming Instrumentality Party in interest: The Mohegan Tribe of Indians of Connecticut Residence Uncasville, Connecticut Occupation A federally recognized Indian Tribe (b) The Chairman of the Management Board of The Mohegan Tribal Gaming Authority is authorized to execute this Agreement and the other Loan Documents by Resolution of the Management Board adopted on February 18, 1999, which finds this Agreement to be in the long range economic objectives of Borrower and the Tribe. The members of the Management Board including the Chairman exercise their authority in this instance because they believe that this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby are in the best interests of Borrower and the Tribe. (c) The Chairman of the Tribal Council of The Mohegan Tribe of Indians of Connecticut is authorized to execute this Agreement and the other Loan Documents by Resolution of the Tribal Council adopted on February 18, 1999, which finds this Agreement to be in the long range economic objectives of Tribe. The members of the Tribal Council including the Chairman exercise their authority in this instance because they believe that this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby are in the best interests of Tribe. (d) This Agreement and the other Loan Documents were executed in counterpart on or about 12:01 p.m. on the 3rd day of March, 1999 at Uncasville, Connecticut, for the particular purposes set forth above. -109- (e) This Agreement relates to the Obligations having an initial maturity date of March 3, 2004. (f) Borrower agrees that this Agreement and the other Loan Documents are in compliance with 25 U.S.C. (S)81. -110- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. "Borrower": THE MOHEGAN TRIBAL GAMING AUTHORITY By: /s/ Roland J. Harris -------------------- Title: Chairman, Managment Board Address for Notices: 1 Mohegan Sun Boulevard Uncasville, Connecticut 06382 Attn: Jeffrey Hartmann, Chief Financial Officer Telephone: (860) 204-7171 Telecopier: (860) 204-7167 "Tribe": THE MOHEGAN TRIBE OF INDIANS OF CONNECTICUT By: /s/Roland J. Harris ------------------- Tribal Council Chairman Address for Notices: P.O. Box 488 67 Sandy Desert Road Uncasville, Connecticut 06382 Attn: Leo Chupaska, Chief Financial Officer Telephone: (860) 204-6106 Telecopier: (860) 204-7167 Approved pursuant to 25 U.S.C. (S) 81: United States Department of the Interior Bureau of Indian Affairs: By: /s/ Franklin Keel ----------------- Area Director of the Eastern Office of the Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority. -111- Approval Dated: March 3, 1999 -112- BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent By: /s/ Janice Hammond ------------------ Janice Hammond, Vice President Address: Bank of America National Trust and Savings Association 555 South Flower Street Los Angeles, California 90017 Attn: Janice Hammond, Vice President Telephone: (213) 228-9861 Telecopier: (213) 228-2299 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Lender and as the Issuing Lender By: /s/ Jon M. Varnell ------------------ Jon M. Varnell, Managing Director Address for Notices: Bank of America National Trust and Savings Association Credit Products-LA 3283 Entertainment and Media Group 555 South Flower Street, 10th Floor Los Angeles, California 90071 Attn: Jon M. Varnell, Managing Director Telephone: (213) 228 6181 Telecopier: (213) 228 2641 with a copy to: Bank of America National Trust and Savings Association Credit Products-LA 3283 Entertainment and Media Group 555 South Flower Street, 10th Floor Los Angeles, California 90071 Attn: William S. Newby, Managing Director Telephone: (213) 228-2438 Telecopier: (213) 228-3145 -113- SALOMON BROTHERS HOLDING COMPANY INC. By: /s/ Mavis B. Taintor -------------------- Title: Managing Director Address for notices: Citibank, N.A. 399 Park Ave., 11th Floor, Zone 20 New York, New York 10043 Attn: Townsend Weekes, Vice President Facsimile: (212) 793-3963 Tel: (212) 559-4846 -114- SOCIETE GENERALE By: /s/ Donald L. Schubert ---------------------- Title: Managing Director Address for notices: Societe Generale 2029 Century Park East, Suite 2900 Los Angeles, California 90067 Attn: Donald L. Schubert, Vice President Facsimile: (310) 551-1537 Telephone: (310) 788-7104 -115- BANKBOSTON, N.A. By: /s/ Daniel M. Kortick --------------------- Title: Director Address for notices: BankBoston Corporation (Boston HQ) Mail Code 01-08-08 100 Federal Street Boston, Massachusetts 02110-1802 Attn: Daniel M. Kortick Facsimile: (617) 434-3401 Tel: (617)434-6757 -116- FLEET NATIONAL BANK By: /s/ William E. Lofgren ---------------------- Title: Senior Vice President Address for notices: Fleet National Bank 250 State Street New London, Connecticut 06320 Attn: William Lofgren, Senior Vice President Facsimile: (860) 437-4269 Tel: (860) 437-4212 -117- COMMERZBANK AG, LOS ANGELES BRANCH By: /s/ Werner Schmidbauer ----------------------- Title: Vice President By: /s/ Karla Wirth --------------- Title: Assistant Treasurer Address for notices: Commerzbank AG, Los Angeles Branch 633 West 5th Street, Suite 6600 Los Angeles, California 90071 Attn: Werner Schmidbauer, Vice President Facsimile: (213) 623-0039 Tel: (213) 683-5413 -118- KEYBANK NATIONAL ASSOCIATION By: /s/ Mary K. Young ----------------- Title: Assistant Vice President Address for notices: KeyBank National Association Mail Stop WA 31-10-4612 700 5th Avenue, 46th Floor Seattle, Washington 98104 Attn: Mary Young Facsimile: (206) 684-6035 Tel: (206) 684-6085 -119- PEOPLE'S BANK By: /s/ Arthur C. Barton -------------------- Title: Vice President Address for notices: People's Bank 4 Broadway Norwich, Connecticut 06360 Attn: Arthur C. Barton Facsimile: 860-886-6588 Tel: 860-892-6226 -120- CITIZENS BANK OF CONNECTICUT By: /s/ Glenna Scaramozza --------------------- Title: Vice President Address for notices: Citizens Bank 63 Eugene O'Neill Drive New London, Connecticut 06320 Attn: Glenna Scaramozza Facsimile: (860) 444-3496 Tel: (860) 444-3476 -121- FIRST SECURITY BANK, N.A. By: /s/ David P. Williams --------------------- Title: Vice President Address for notices: First Security Bank, Utah Second Floor 15 East 100 South Salt Lake City, Utah 84111 Attn: David P. Williams Facsimile: (801) 246-5532 Tel: 801-246-5540 -122- Approved pursuant to 25 U.S.C. (S) 81: United States Department of the Interior Bureau of Indian Affairs: By: /s/ Franklin Keel ----------------- Area Director of the Eastern Office of the Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority. Approval Dated: March 3, 1999 -123- MOHEGAN TRIBAL GAMING AUTHORITY $425,000,000 REDUCING REVOLVING CREDIT FACILITY FINAL ALLOCATIONS
============================================================================================ LENDER COMMITMENT FINAL PERCENT OF AMOUNT ALLOCATION TOTAL ADMINISTRATIVE AGENT - -------------------- Bank of America $ 75,000,000.00 $ 75,000,000.00 17.647058824% National Trust and Savings Association SYNDICATION AGENT - -------------------- Salomon Smith Barney $ 75,000,000.00 $ 75,000,000.00 17.647058824% DOCUMENTATION AGENT - -------------------- Societe Generale $ 75,000,000.00 $ 75,000,000.00 17.647058824% SENIOR MANAGING AGENTS - -------------------- Bank Boston, N.A. $ 50,000,000.00 $ 50,000,000.00 11.764705882% Fleet Bank $ 50,000,000.00 $ 50,000,000.00 11.764705882% CO-AGENTS - -------------------- Commerzbank AG $ 25,000,000.00 $ 25,000,000.00 5.882352941% KeyBank $ 25,000,000.00 $ 25,000,000.00 5.882352941% People's Bank $ 25,000,000.00 $ 25,000,000.00 5.882352941% PARTICIPANTS - -------------------- Citizens Bank of $ 15,000,000.00 $ 15,000,000.00 3.529411765% Connecticut First Security Bank $ 10,000,000.00 $ 10,000,000.00 2.352941176% - ---------------------------------------------------------------------------------------- TOTAL $425,000,000.00 $425,000,000.00 100.00% ========================================================================================
-124- EXHIBIT A --------- ASSIGNMENT AGREEMENT -------------------- THIS ASSIGNMENT AGREEMENT (this "Assignment") is entered into as of _____________, ____ between _______________________________________ ("Assignor") and _____________________________________________________ ("Assignee") with reference to that certain Loan Agreement dated as of March 3, 1999 among The Mohegan Tribe of Indians of Connecticut, a federally recognized Indian Tribe and native American sovereign nation (the "Tribe"), The Mohegan Tribal Gaming Authority, an instrumentality of the Tribe ("Borrower"), the Lenders, Documentation Agent and Syndication Agent referred to therein and Bank of America National Trust and Savings Association ("Bank of America"), as Administrative Agent (as amended from time to time, the "Loan Agreement"). Capitalized terms used but not defined herein are used with the meanings set forth for those terms in the Loan Agreement. RECITALS -------- A. Assignor holds a Pro Rata Share of the Commitment to make Loans (the "Commitment") under the Loan Agreement. B. As of the date hereof, the outstanding principal balance of the Advances made by Assignor (the "Assignor Advances") is set forth on Annex I hereto. C. Assignor desires to assign its rights under the Loan Agreement and the other Loan Documents with respect to a portion of the Commitment and a portion of any Assignor Advances to Assignee and Assignee has agreed to assume the obligations of Assignor under the Loan Documents to the extent of the rights so assigned. NOW, THEREFORE, in consideration of the matters recited above, and the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: SECTION 1. Assignment and Assumption. ------------------------- -1- (a) Assignor hereby assigns to Assignee, without recourse, representation or warranty, an undivided fractional interest in Assignor's rights arising under the Loan Documents relating to the Commitment, and any Assignor Advances to the extent of the Assigned Pro Rata Share reflected on Annex I hereto (the "Assigned Pro Rata Share") including, without limitation, (i) all amounts advanced and to be advanced or participated in by Assignor pursuant to the Commitment; (ii) all of Assignor's rights and powers contained in the Loan Documents; (iii) all claims of Assignor against persons who may in the future become or are now liable for repayment of any Assignor Advances or reimbursement of expenses incurred by Assignor on account of any Assignor Advances; and (iv) all amounts received by Assignor on account of any Assignor Advances, whether from the Borrower or from others who are now or may in the future become obligated with respect to some or all of the amounts owing on any Assignor Advances or from any other source, including, without limitation, recovery from litigation. (b) Assignee hereby assumes from Assignor, and Assignor is hereby expressly and absolutely released from, the Assigned Pro Rata Share of all of Assignor's obligations arising under the Loan Documents relating to the Commitment including, without limitation, all obligations with respect to any Assignor Advances. Assignee agrees that it shall fully perform all of the obligations of Assignor with respect to the interests assigned by this Assignment. (c) Assignor and Assignee hereby agree that Annex I attached hereto sets forth (i) the amount of all Assignor Advances giving effect to the assignment and assumption described herein, (ii) the amount of the Commitment and the Pro Rata Share of Assignee after giving effect to the assignment and assumption described herein, and (iii) accrued but unpaid interest thereon. (d) Assignor and Assignee hereby agree that, upon giving effect to the assignment and assumption described herein, Assignee shall have all of the obligations under the Loan Documents of, and shall be deemed to have made all of the covenants and agreements contained in the Loan Documents made by, a Lender having a Pro Rata Share of the Commitment as reflected on Annex I attached hereto. Assignee hereby acknowledges and agrees that the agreement set forth in this subsection 1(d) is expressly made for the benefit of the Borrower, the Administrative Agent, Assignor and the other Lenders and their respective successors and permitted assigns. From and after the date of this Assignment, (i) Assignee shall be a party to the Loan Agreement and, to the extent provided in this Assignment, shall have the rights and obligations of a Lender under the Loan Agreement and the other Loan Documents and (ii) Assignor shall, to the extent provided in this Assignment, relinquish its rights and be released from its obligations under the Loan Agreement and the other Loan Documents. -2- (e) Assignor and Assignee hereby acknowledge and confirm their understanding and intent (i) that this Assignment shall effect the assignment by Assignor and the assumption by Assignee of the Assigned Pro Rata Share of Assignor's rights and obligations under the Loan Documents and (ii) that any other assignments by Assignor of a portion of its rights and obligations under the Loan Documents shall have no effect on the Commitment and Pro Rata Share of Assignee set forth on Annex I attached hereto. (f) Assignee agrees to pay to Assignor, on ________, an amount equal to $____________, in immediately available funds, representing the purchase price of the Assigned Pro Rata Share. Assignor and Assignee shall make all appropriate adjustments for periods prior to the date of this Assignment or with respect to the making of this Assignment directly between themselves. (g) Nothing contained in this Assignment shall be construed to amend or modify the terms of the Loan Documents other than to effectuate the assignment contemplated herein. SECTION 2. Representations and Warranties. ------------------------------ (a) Assignee represents and warrants that it is an Eligible Assignee. (b) Assignee represents and warrants that it has become a party hereto solely in reliance upon its own independent investigation of the financial and other circumstances surrounding Borrower, any Assignor Advances and all aspects of the transactions evidenced by or referenced in the Loan Documents, or has otherwise satisfied itself thereto, and that it is not relying upon any representation, warranty or statement (except any such representation, warranty or statement expressly set forth in this Assignment) of Assignor in connection with the assignment made hereby. Assignee further acknowledges that Assignee will, independently and without reliance upon Assignor and based upon Assignee's review of such documents and information as Assignee deems appropriate at the time, continue to make its own credit decisions in connection with the assignment made hereby. Assignor shall have no duty or responsibility either initially or on a continuing basis to make any such investigation or any such appraisal on behalf of Assignee or to provide Assignee with any credit or other information with respect thereto, whether coming into its possession before the making of the initial extension of credit under the Loan Agreement or at any time thereafter. (c) Assignee represents and warrants to Assignor that it has experience and expertise in the making of loans such as the Advances assigned hereby and with respect to the other types of credit which may be extended under the Loan Agreement; that it has acquired its Assigned Pro Rata Share for its own account and not with any present -3- intention of selling all or any portion of such interest; and that it has received, reviewed and approved copies of all Loan Documents. (d) Assignor and Assignee represent to one another and to the Administrative Agent that they have duly authorized, executed and delivered this Assignment, that they are legally entitled to enter into the assignment and assumption transactions contemplated herein and that, in the case of Assignor, that it is the legal and beneficial owner of the Assigned Pro Rata Share, free of any Liens or adverse claims. (e) Assignor shall not be responsible to Assignee for the execution, effectiveness, accuracy, completeness, legal effect, genuineness, validity, enforceability, collectibility or sufficiency of any of the Loan Documents (other than its own due execution of the Loan Documents) or for any representations, warranties, recitals or statements made therein or in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents made or furnished or made available by Assignor to Assignee (other than written representations, warranties, recitals or statements made by Assignor therein) or by or on behalf of the Borrower or the Tribe to Assignor or Assignee in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of the Borrower or any other Person liable for the payment of any Advance or payment of amounts owed in connection with other extensions of credit under the Loan Agreement or any other matter. Assignor shall not be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Advances or other extensions of credit under the Loan Agreement or as to the existence or possible existence of any Default or Event of Default. (f) Each party to this Assignment represents and warrants to the other party to this Assignment that it has full power and authority to enter into this Assignment and to perform its obligations under this Assignment in accordance with the provisions of this Assignment, that this Assignment has been duly authorized, executed and delivered by such party and that this Assignment constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. SECTION 3. Notices. ------- Any notice or other communication required or permitted to be given hereunder shall be in writing addressed to the parties at their addresses set forth below and shall be delivered in the manner set forth for notices in the Loan Agreement: -4- (a) Notices to Assignor: _________________________________ _________________________________ _________________________________ (b) Notices to Assignee: _________________________________ _________________________________ _________________________________ SECTION 4. Miscellaneous Provisions. ------------------------ (a) Neither this Assignment nor any term hereof may be changed, waived, discharged or terminated, except by an instrument in writing signed by the party against whom enforcement of such change, waiver, discharge or termination is sought. (b) Title and headings of sections in this Assignment are for convenience of reference only and shall not be used to define or limit the provisions hereof. (c) This Assignment and the transactions contemplated hereunder shall be governed by and construed and enforced in accordance with the laws of the State of Connecticut. (d) This Assignment embodies the entire agreement between Assignor and Assignee with respect to the Loan Documents and supersedes all prior agreements between Assignor and Assignee with respect to the Loan Documents. (e) This Assignment may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but one Assignment. The signature pages of all counterparts of this Assignment may be detached and attached to a single counterpart of this Assignment so that all signature pages are physically attached to the same document. (f) All of the terms, covenants and conditions herein contained shall inure to the benefit of and be binding upon the parties hereto, and their respective successors and assigns. -5- (g) Every provision of this Assignment is intended to be severable. If any term or provision thereof is declared by a court of competent jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever, such illegality, invalidity or unenforceability shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable, and to the extent possible all of the other provisions shall nonetheless remain in full force and effect. SECTION 5. The Administrative Agent. ------------------------ Assignor and Assignee have examined this Assignment and have exercised independent credit judgment in determining to enter into this Assignment. Each of Assignor and Assignee have obtained the advice of their counsel with respect to this document or waive the opportunity to do so. The Administrative Agent bears no responsibility for the form, legality or sufficiency of this Assignment. -6- IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the date first above written. "ASSIGNOR" ________________________________ By: _____________________________ Name: ______________________ Title: ______________________ "ASSIGNEE" ________________________________ By: _____________________________ Name: ______________________ Title: ______________________ -7- ANNEX I I ASSIGNOR'S PRO RATA SHARE OF THE COMMITMENT BEFORE ASSIGNMENT Commitment $_____________________ Pro Rata Share _____________% Outstanding Principal $_____________________ Accrued and unpaid Interest $_____________________ II ASSIGNOR'S REMAINING PRO RATA SHARE OF THE COMMITMENT AFTER ASSIGNMENT Commitment $_____________________ Pro Rata Share _____________% III ASSIGNEE'S PRO RATA SHARE OF THE COMMITMENT AFTER ASSIGNMENT Commitment $_____________________ Pro Rata Share ______________% -8- ACKNOWLEDGMENT AND CONSENT OF THE AGENT Bank of America National Trust and Savings Association, as Administrative Agent, hereby (i) acknowledges and consents to the assignment to and assumption by Assignee of Assignor's rights and obligations with respect to a portion of the Commitment effected pursuant to the foregoing Assignment and (ii) agrees that, for all purposes of the Loan Documents, Assignee shall be deemed to be a Lender having a Pro Rata Share of the Commitment as reflected on Annex I attached to the Assignment. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent By ___________________________ Name: _________________________ Title: ________________________ ACKNOWLEDGMENT AND CONSENT OF THE BORROWER Borrower hereby (i) acknowledges and consents to the assignment to and assumption by Assignee of Assignor's rights and obligations with respect to a portion of the Commitment effected pursuant to the foregoing Assignment and (ii) agrees that, for all purposes of the Loan Documents, Assignee shall be deemed to be a Lender having a Pro Rata Share of the Commitment as reflected on Annex I attached to the Assignment. "Borrower": THE MOHEGAN TRIBAL GAMING AUTHORITY By:__________________________ Title:_______________________ -9- EXHIBIT D --------- NOTE ---- $_______________ March 3, 1999 Uncasville, Connecticut FOR VALUE RECEIVED, the undersigned promises to pay to the order of ______________________________________________________ (the "Lender"), the principal amount of ___________________ ($________) or such lesser aggregate amounts as may be made as Advances under the Commitment pursuant to the Loan Agreement referred to below, payable as hereinafter set forth. The undersigned promises to pay interest on the principal amount hereof remaining unpaid from time to time from the date hereon until the date of payment in full, payable as hereinafter set forth. Reference is made to the Loan Agreement of even date herewith, by and among the undersigned, as Borrower, The Mohegan Tribe of Indians of Connecticut, a federally recognized Indian Tribe and native American sovereign nation (the "Tribe"), the Lenders, Syndication Agent and Documentation Agent named therein, and Bank of America National Trust and Savings Association, as Administrative Agent (as the same may be further amended, renewed, extended or otherwise modified from time to time, the "Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined herein are used herein with the meanings given those terms in the Loan Agreement. This is one of the Notes referred to in the Loan Agreement, and the Lender and any subsequent rightful holder hereof (collectively "Holder") is entitled to all of the rights, remedies, benefits and privileges provided for in the Loan Agreement as originally executed or as it may from time to time be supplemented, modified or amended. The Loan Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events upon the terms and conditions therein specified. The principal indebtedness evidenced by this Note shall be payable as provided in the Loan Agreement and in any event on the Maturity Date. Interest shall be payable on the outstanding daily unpaid principal amount of each Advance hereunder from the date thereof until payment in full and shall accrue and be payable at the rates and on the dates set forth in the Loan Agreement, both before and after default and before and after maturity and judgment, with interest on overdue principal and interest to bear interest at the rate set forth in Section 3.9 of the Loan Agreement, to the fullest extent permitted by applicable Law. -1- The amount of each payment hereunder shall be made to the Administrative Agent at the Administrative Agent's Office for the account of the Lender in immediately available funds not later than 11:00 a.m. (California time) on the day of payment (which must be a Business Day). All payments received after 11:00 a.m. (California time) on any particular Business Day shall be deemed received on the next succeeding Business Day. All payments shall be made in lawful money of the United States of America. The Lender shall use its best efforts to keep a record (which may be in electronic or other intangible form) of Advances made by it and payments of principal received by it with respect to this Note, and such record shall be presumptive evidence of the amounts owing under this Note. The undersigned hereby promises to pay all costs and expenses of any rightful Holder hereof incurred in collecting the undersigned's obligations hereunder or in enforcing or attempting to enforce any of such Holder's rights hereunder, including reasonable attorneys' fees and disbursements (including allocated costs of legal counsel employed by the Administrative Agent or the Holder), whether or not an action is filed in connection therewith. The undersigned hereby waives presentment, demand for payment, dishonor, notice of dishonor, protest, notice of protest and any other notice or formality, to the fullest extent permitted by applicable Laws. THE UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND THE UNDERSIGNED HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT LENDER OR ANY HOLDER OF THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE UNDERSIGNED TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ITS SOVEREIGN IMMUNITY (AND ANY DEFENSE BASED THEREON) FROM ANY SUIT, ACTION OR PROCEEDING OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION, EXERCISE OF CONTEMPT POWERS, OR OTHERWISE) IN ANY FORUM, WITH RESPECT TO THIS NOTE AND THE OTHER LOAN DOCUMENTS -2- AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, PROVIDED THAT (1) THE -------- ---- WAIVER CONTAINED IN THIS PARAGRAPH IS EXPRESSLY LIMITED TO ACTIONS AGAINST THE UNDERSIGNED (AND NOT AGAINST THE MOHEGAN TRIBE OF INDIANS OF CONNECTICUT) AND (2) ANY RECOVERY UPON ANY JUDGMENT RESULTING THEREFROM SHALL BE LIMITED TO RECOVERY AGAINST THE ASSETS AND REVENUES OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF CONNECTICUT, THE COURTS OF THE UNITED STATES, AND THE COURTS OF ANY OTHER STATE WHICH MAY HAVE JURISDICTION OVER THE SUBJECT MATTER, OVER ANY SUCH ACTION AND OVER THE UNDERSIGNED. THE WAIVERS AND CONSENTS DESCRIBED IN THIS NOTE SHALL INURE TO THE BENEFIT OF EACH HOLDER OF THIS NOTE. THE HOLDER SHALL HAVE AND BE ENTITLED TO ALL AVAILABLE LEGAL AND EQUITABLE REMEDIES, INCLUDING THE RIGHT TO SPECIFIC PERFORMANCE, MONEY DAMAGES AND INJUNCTIVE OR DECLARATORY RELIEF. THE WAIVERS OF SOVEREIGN IMMUNITY AND CONSENTS TO JURISDICTION CONTAINED HEREIN ARE IRREVOCABLE. The undersigned represents, warrants and acknowledges that the transaction of which this Note is a part is a commercial transaction and not a consumer transaction. Monies now or in the future to be advanced to or on behalf of the undersigned are not and will not be used for personal, family or household purposes. THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS THE RIGHT UNDER SECTION 52- 278a, ET SEQ., OF THE CONNECTICUT GENERAL STATUTES, SUBJECT TO CERTAIN ------ LIMITATIONS, TO NOTICE OF AND HEARING ON THE RIGHT OF THE LENDER TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT, GARNISHMENT OR REPLEVIN, UPON COMMENCING ANY LITIGATION AGAINST THE UNDERSIGNED. NOTWITHSTANDING SUCH RIGHT, THE UNDERSIGNED HEREBY WAIVES ALL RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER TO WHICH IT MIGHT OTHERWISE HAVE THE RIGHT UNDER SAID STATUTE OR UNDER ANY OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN CONNECTION WITH THE OBTAINING BY THE LENDER OF ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS NOTE. THE UNDERSIGNED FURTHER CONSENTS TO THE ISSUANCE OF ANY PREJUDGMENT REMEDIES WITHOUT A BOND AND AGREES NOT TO REQUEST OR FILE MOTIONS SEEKING TO REQUIRE THE POSTING OF A BOND UNDER PUBLIC ACT 93-431 IN CONNECTION WITH THE LENDER'S EXERCISE OF ANY PREJUDGMENT REMEDY. THE UNDERSIGNED ALSO WAIVES ANY AND ALL OBJECTION WHICH IT MIGHT OTHERWISE ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY THE LENDER OF ANY RIGHT OF SETOFF, REPOSSESSION OR SELF HELP AS MAY PRESENTLY EXIST UNDER STATUTE OR COMMON LAW. -3- This Note was executed on or about ____ p.m. on the_____ day of ___________, 1999 at Uncasville, Connecticut, for the particular purposes set forth above. THIS NOTE SHALL BE DELIVERED TO AND ACCEPTED BY THE LENDER, OR BY ADMINISTRATIVE AGENT ON ITS BEHALF, IN CONNECTICUT AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LOCAL LAWS THEREOF. THE MOHEGAN TRIBAL GAMING AUTHORITY By: _______________________________ Title:_____________________________ -4- SCHEDULE OF ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount Interest Amount of Unpaid Notation of Advance Period Principal Principal Made by Paid Balance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
-5- EXHIBIT G --------- REQUEST FOR LETTER OF CREDIT ---------------------------- 1. This REQUEST FOR LETTER OF CREDIT is executed and delivered by a Senior Officer of The Mohegan Tribal Gaming Authority ("Borrower") to Bank of America National Trust and Savings Association, as the Issuing Lender, pursuant to Sections 2.4 of the Loan Agreement ( the "Loan Agreement") dated as of March 3, 1999, among Borrower, The Mohegan Tribe of Indians of Connecticut, a federally recognized Indian Tribe and native American sovereign nation (the "Tribe"), the Lenders, Documentation Agent and Syndication Agent referred to therein and Bank of America National Trust and Savings Association, as Administrative Agent. Terms defined in the Loan Agreement and not otherwise defined herein are used herein as defined in the Loan Agreement. 2. Subject to paragraph 4 below, Borrower hereby requests that the Issuing - Lender issue a Letter of Credit as follows: (a) Amount of Letter of Credit: $____________. (b) Date of Issuance: ________________, ____. (c) Beneficiary under Letter of Credit: Name: _______________________________ Address: ____________________________ ____________________________ ____________________________ (d) Expiry Date: __________________, ____. (e) Purpose of Letter of Credit: ______________ ____________________________________________. (f) Additional Information/Terms: _______________ _____________________________________________. -2- 3. The requested Letter of Credit is (check one box only): [_] a new Letter of Credit in addition to Letters of Credit already outstanding. [_] a supplement, modification, amendment, renewal, or extension to or of the following outstanding Letter(s) of Credit: [identify] -------- 4. In connection with the issuance of the Letter of Credit requested herein, Borrower represents, warrants and certifies to the Lenders that: (a) Now and as of the date of the issuance of the requested Letter of Credit, except (i) for representations and warranties which expressly speak ------ as of a particular date or which are no longer true and correct as a result of a change permitted by the Loan Agreement or (ii) as disclosed by Borrower and approved in writing by the Requisite Lenders, each representation and warranty made by Borrower in Article 5 of the Loan Agreement (other than Sections 5.7 (first sentence) and 5.13) will be true ---------- and correct, both immediately before such Letter of Credit is issued and after giving effect to such Letter of Credit, as though such representations and warranties were made on and as of the date of such Letter of Credit; (b) other than matters described in Schedule 5.13 of the Loan ---------- Agreement or not required as of the Closing Date to be therein described, there is not any action, suit, proceeding or investigation pending or threatened against or affecting Borrower or any of the Restricted Subsidiaries or any Property of any of them before any Governmental Agency that constitutes a Material Adverse Effect; (c) now and as of the date of the requested Letter of Credit, no Default or Event of Default presently exists or will have occurred and be continuing as a result of the issuance of the Letter of Credit; and (d) following the issuance of the Letter of Credit requested herein, (i) the aggregate effective amount under all outstanding Letters of Credit will not exceed $25,000,000, and (ii) the sum of (A) the aggregate --- principal amount of the outstanding Loans, plus (B) the aggregate amount ---- available for drawing under the outstanding Letters of Credit, plus (C) the ---- aggregate amount of all unreimbursed draws with respect to all Letters of Credit, shall not exceed the then applicable Commitment.. 5. Attached hereto is an Application for Letter of Credit on the form provided to Borrower by the Issuing Lender. -3- 6. This Request for Letter of Credit is executed on _____________, _____, by a Senior Officer of Borrower. The undersigned, in such capacity, hereby certifies each and every matter contained herein to be true and correct. THE MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________ ______________________________ [Name & Title] -4- EXHIBIT H --------- REQUEST FOR LOAN ---------------- 2. This Request for Loan is executed and delivered by a Senior Officer of The Mohegan Tribal Gaming Authority ("Borrower") to Administrative Agent (as hereinafter defined), pursuant to the Loan Agreement (the "Loan Agreement") dated as of March 3, 1999, entered into by and among Borrower, The Mohegan Tribe of Indians of Connecticut, a federally recognized Indian Tribe and native American sovereign nation, (the "Tribe"), the Lenders, Documentation Agent and Syndication Agent referred to therein and Bank of America National Trust and Savings Association, as Administrative Agent ("Administrative Agent"). Terms defined in the Loan Agreement and not otherwise defined herein are used herein as defined in the Loan Agreement. 3. Subject to paragraph 3 below, Borrower hereby requests that Lender - make a Loan pursuant to the Loan Agreement as follows: 3..1 Amount of Loan: $_________________. 3..2 Date of Loan: __________________, _____. 3..3 Proceeds to be deposited as follows: ___________________________________ (d) Type of Loan: [_] Base Rate Loan [_] LIBOR Loan with a ___ month Interest Period. 4. In connection with the Loan requested herein, Borrower hereby represents, warrants, and certifies to the Administrative Agent that as of the date of the Loan requested herein: 4.1 except as disclosed by Borrower and approved in writing by the Administrative Agent and except for representations and warranties which expressly relate solely to a specified date, the representations and warranties contained in Article 5 of the -1- Loan Agreement (other than Sections 5.7 (first sentence) and 5.13) are true ----- ---- and correct on and as of the date of the Loan as though made on that date; 4.2 other than matters described in Schedule 5.13 of the Loan ----- ---- Agreement, or matters not required as of the Closing Date to be therein described, or matters disclosed by Borrower and approved in writing by the Administrative Agent, no action, suit, proceeding or investigation is pending or threatened against or affecting Borrower or any property of Borrower before any Governmental Agency that constitutes a Material Adverse Effect; and 4.3 no Default or Event of Default exists. 5. This Request for Loan is executed on _________, ____, by a Senior Officer of Borrower. The undersigned, in such capacity, hereby certifies each and every matter contained herein to be true and correct. THE MOHEGAN TRIBAL GAMING AUTHORITY By:___________________________ ______________________________ [Name & Title] -2- EX-10.11 10 EXHIBIT 10.11 EXHIBIT 10.11 ESCROW DEPOSIT AGREEMENT THIS AGREEMENT, dated as of the 3rd day of March, 1999 (the "Agreement"), is by and among the Mohegan Tribal Gaming Authority (the "Issuer") and First Union National Bank, as Defeasance Agent (the "Defeasance Agent"). A. WHEREAS, the Issuer issued $90,000,000 in principal amount of its Subordinated Notes (the "Notes") pursuant to a Note Purchase Agreement by and between the Issuer and Sun International Hotels Limited ("Sun International") dated as of September 29, 1995 (the "Note Purchase Agreement"). All capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Note Purchase Agreement. B. WHEREAS, $90,000,000 in principal amount of the Notes remains outstanding, all of which are currently held by Sun International and Waterford Gaming, LLC ("Waterford Gaming", and together with Sun International the "Note Holders") in the amounts set forth opposite their names on the signature pages hereto. C. WHEREAS, the Issuer has elected to provide for a Covenant Defeasance of the Notes pursuant to Section 12.03 of the Note Purchase Agreement and has delivered or will deliver to First Union National Bank as Trustee for the Senior Secured Notes, a certificate calling for the redemption of the Notes on January 1, 2000. D. WHEREAS, Section 12.04(a) of the Note Purchase Agreement provides that Issuer must irrevocably deposit with an agent, which may be the Defeasance Agent, in trust, for the benefit of the Note 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 evidenced by a certificate delivered to the Defeasance Agent, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated maturity date or on the applicable redemption date, as the case may be and the Issuer must specify whether the Notes are being defeased to maturity or to a particular redemption date. E. WHEREAS, the Issuer and the Note Holders have agreed that the obligations of Section 12.04(a) of the Note Purchase Agreement are satisfied by the deposit of sums pursuant to two (2) side letters dated February 22, 1999 attached hereto ("Side Letters"). F. WHEREAS, Defeasance Agent has agreed to accept, hold, and disburse the funds deposited with it and the earnings thereon in accordance with the terms of this Agreement and the Side Letters. G. WHEREAS, in order to establish the escrow of funds for the covenant defeasance of the Notes and to effect the provisions of the Note Purchase Agreement and the Side Letters, the parties hereto have entered into this Agreement. STATEMENT OF AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows: 1. Definitions. The following terms shall have the following ----------- meanings when used herein: "Defeasance Funds" shall mean the funds deposited with Defeasance Agent pursuant to this Agreement, together with any interest and other income thereon, which funds shall include, without limitation, the initial sum of One Hundred Forty Million Three Hundred Thousand Dollars ($140,300,000). "Redemption Date" shall mean January 1, 2000. "Joint Written Direction" shall mean a written direction executed by the Representatives and directing Defeasance Agent to disburse all or a portion of the Defeasance Funds or to take or refrain from taking an action pursuant to this Agreement. "Representatives" shall mean authorized representatives of the Issuer and the Note Holders. 2. Appointment of and Acceptance by Defeasance Agent. The Issuer ------------------------------------------------- hereby appoints Defeasance Agent to serve as defeasance agent hereunder. Defeasance Agent hereby accepts such appointment and, upon receipt by wire transfer of the Defeasance Funds in accordance with Section 3 below, agrees to --------- hold, invest and disburse the Defeasance Funds in accordance with this Agreement. 3. Creation of Defeasance Funds. On March 3, 1999, Issuer will ---------------------------- transfer the sum of One Hundred Forty Million Three Hundred Thousand Dollars ($140,300,000) to Defeasance Agent, by wire transfer of immediately available funds, to the following account: First Union National Bank Charlotte, North Carolina ABA # [053000219] Credit: D/5000000016439 Trust Ops FFC: A/C #9572832469 Mohegan/Sun ESC ATTN: CT-9750 Hartford -2- 4. Disbursements of Defeasance Funds. --------------------------------- a. Joint Written Direction. Defeasance Agent shall disburse ----------------------- Defeasance Funds, at any time and from time to time, in accordance with a Joint Written Direction of the Issuer and the Note Holders. b. Redemption Date. On the Redemption Date, Defeasance Agent --------------- shall apply the Defeasance Funds to the redemption of the Notes in accordance with and at the price set forth in the Side Letters without any further instruction or direction, by payment to the holders of the Notes as set forth on the registration books of the Issuer on the 15th day immediately preceding the Redemption Date. Any payment due on a date other than a banking day shall be made on the next banking day. Any balance of the Defeasance Funds remaining after redemption of the Notes as aforesaid shall be remitted by the Defeasance Agent to the Issuer. 5. Disbursement Into Court. If, at any time, there shall exist any ----------------------- dispute between Issuer or Note Holders with respect to the holding or disposition of any portion of the Defeasance Funds or any other obligations of Defeasance Agent hereunder, or if at any time Defeasance Agent is unable to determine, to Defeasance Agent's sole satisfaction, the proper disposition of any portion of the Defeasance Funds or Defeasance Agent's proper actions with respect to its obligations hereunder, or if the Representatives have not within 30 days of the furnishing by Defeasance Agent of a notice of resignation pursuant to Section 7 hereof, appointed a successor Defeasance Agent to act --------- hereunder, then Defeasance Agent may, in its sole discretion, take either or both of the following actions: a. suspend the performance of any of its obligations (including without limitation any disbursement obligations) under this Agreement until such dispute or uncertainty shall be resolved to the sole satisfaction of Defeasance Agent or until a successor Defeasance Agent shall have been appointed (as the case may be); provided however, that Defeasance Agent -------- ------- shall continue to invest the Defeasance Funds in accordance with Section 6 --------- hereof; and/or b. petition (by means of an interpleader action or any other appropriate method) any court of competent jurisdiction in any venue convenient to Defeasance Agent, for instructions with respect to such dispute or uncertainty, and to the extent required by law, pay into such court, for holding and disposition in accordance with the instructions of such court, all funds held by it in the Defeasance Funds, after deduction and payment to Defeasance Agent of all fees and expenses (including court costs and attorneys' fees) payable to, incurred by, or expected to be incurred by Defeasance Agent in connection with the performance of its duties and the exercise of its rights hereunder. -3- Defeasance Agent shall have no liability to Issuer, Note Holders, their respective shareholders or any other person with respect to any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of funds held in the Defeasance Funds or any delay in or with respect to any other action required or requested of Defeasance Agent. 6. Investment of Funds. Defeasance Agent shall invest the ------------------- Defeasancee Funds in the manner set forth in Schedule 1 attached hereto. Each of the Issuer and the Note Holders agree that said investments will provide sufficient funds to redeem the Notes in full on the Redemption Date. In the event, for any reason that it becomes necessary to reinvest any Defeasance Funds, Defeasance Agent shall do so as the Representatives jointly shall direct; provided, however, that no investment or reinvestment may be made except in Government Securities, in accordance with the terms of the Note Purchase Agreement. If Defeasance Agent has not received a Joint Written Direction at any time that an investment decision must be made, Defeasance Agent shall invest the Defeasance Funds, or such portion thereof as to which no Joint Written Direction has been received, in overnight Government Securities. Each of the foregoing investments shall be made in the name of Defeasance Agent. Notwithstanding anything to the contrary contained herein, Defeasance Agent may, without notice to the Representatives, sell or liquidate any of the foregoing investments at any time if the proceeds thereof are required for any release of funds permitted or required hereunder, and Defeasance Agent shall not be liable or responsible for any loss, cost or penalty, resulting from any such sale or liquidation. With respect to any funds received by Defeasance Agent for deposit into the Defeasance Funds or any Joint Written Direction received by Defeasance Agent with respect to investment of any funds in the Defeasance Funds after ten o'clock, a.m., Hartford, Connecticut, time, Defeasance Agent shall not be required to invest such funds or to effect such investment instruction until the next day upon which banks in Hartford, Connecticut are open for business. 7. Resignation and Removal of Defeasance Agent. Defeasance Agent may ------------------------------------------- resign from the performance of its duties hereunder at any time by giving ten (10) days' prior written notice to the Representatives or may be removed, with or without cause, by the Representatives, acting jointly by furnishing a Joint Written Direction to Defeasance Agent, at any time by the giving of ten (10) days' prior written notice to Defeasance Agent. Such resignation or removal shall take effect upon the appointment of a successor Defeasance Agent as provided herein below. Upon any such notice of resignation or removal, the Representatives jointly shall appoint a successor Defeasance Agent hereunder, which shall be a commercial bank, trust company or other financial institution with a combined capital and surplus in excess of $10,000,000. Upon the acceptance in writing of any appointment as Defeasance Agent hereunder by a successor Defeasance Agent, such successor Defeasance Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Defeasance Agent, and the retiring Defeasance Agent, shall be discharged from its duties and obligations under this Agreement, but shall not be discharged from any liability for actions taken -4- as Defeasance Agent hereunder prior to such succession. After any retiring Defeasance Agent's resignation or removal, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Defeasance Agent under this Agreement. The retiring Defeasance Agent shall transmit all records pertaining to the Defeasance Funds and shall pay all funds held by it in the Defeasance Funds to the successor Defeasance Agent, after making copies of such records as the retiring Defeasance Agent deems advisable and after deduction and payment to the retiring Defeasance Agent of all fees and expenses (including court costs and attorneys' fees) payable to, incurred by, or expected to be incurred by the retiring Defeasance Agent in connection with the performance of its duties and the exercise of its rights hereunder. 8. Liability of Defeasance Agent. ----------------------------- a. Defeasance Agent shall have no liability or obligation with respect to the Defeasance Funds except for Defeasance Agent's willful misconduct or gross negligence. Defeasance Agent's sole responsibility shall be for the safekeeping, investment, and disbursement of the Defeasance Funds in accordance with the terms of this Agreement. Defeasance Agent shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. Defeasance Agent may rely upon any instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which Defeasance Agent shall in good faith believe to be genuine, to have been signed or presented by the person or parties purporting to sign the same and to conform to the provisions of this Agreement. In no event shall Defeasance Agent be liable for incidental, indirect, special, consequential or punitive damages. Defeasance Agent shall not be obligated to take any legal action or commence any proceeding in connection with the Defeasance Funds, any account in which Defeasance Funds are deposited, this Agreement or the Note Purchase Agreement, or to appear in, prosecute or defend any such legal action or proceeding. Defeasance Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability and shall be fully indemnified from any liability whatsoever in acting in accordance with the opinion or instruction of such counsel. Issuer and Note Holders, jointly and severally, shall promptly pay, upon demand, the reasonable fees and expenses of any such counsel. (b) The Defeasance Agent is authorized, in its sole discretion, to comply with orders issued or process entered by any court with respect to the Defeasance Funds, without determination by the Defeasance Agent of such court's jurisdiction in the matter. If any portion of the Defeasance Funds is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, the Defeasance Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if the Defeasance Agent complies with any -5- such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated. 9. Indemnification of Defeasance Agent. From and at all times after ----------------------------------- the date of this Agreement, Issuer, shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless Defeasance Agent and each director, officer, employee, attorney, agent and affiliate of Defeasance Agent (collectively, the "Indemnified Parties") against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorneys' fees, costs and expenses) incurred by or asserted against any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way to any demand, suit, action or proceeding (including any inquiry or investigation) by any person, including without limitation Issuer or Note Holders, whether threatened or initiated, asserting a claim for any legal or equitable against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Agreement or any transactions contemplated herein, whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for any liability finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party. If any such action or claim shall be brought or asserted against any Indemnified Party, such Indemnified Party shall promptly notify Issuer and Note Holders in writing, and Issuer and Note Holders shall assume the defense thereof, including the employment of counsel and the payment of all expenses. Such Indemnified Party shall, in its sole discretion, have the right to employ separate counsel (who may be selected by such Indemnified Party in its sole discretion) in any such action and to participate in the defense thereof, and the fees and expenses of such counsel shall be paid by such Indemnified Party, except that Issuer shall be required to pay such fees and expenses if (a) Issuer agrees to pay such fees and expenses, or (b) Issuer shall fail to assume the defense of such action or proceeding or shall fail, in the sole discretion of such Indemnified Party, to employ counsel satisfactory to the Indemnified Party in any such action or proceeding, (c) Issuer or Note Holders is the plaintiff in any such action or proceeding or (d) the named parties to any such action or proceeding (including any potential parties) include both Indemnified Party and Issuer, and Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to Issuer. Issuer shall be jointly and severally liable to pay fees and expenses of counsel pursuant to the preceding sentence, except that any obligation to pay under clause (a) shall apply only to the party so agreeing. All such fees and expenses payable by Issuer pursuant to the foregoing sentence shall be paid from time to time as incurred, both in advance of and after the final disposition of such action or claim. All of the foregoing losses, damages, costs and expenses of the Indemnified Parties shall be payable by Issuer upon demand by such Indemnified Party. The obligations of Issuer under this Section ------- 9 shall survive any termination of this Agreement, and the resignation or - - removal of Defeasance Agent shall be independent of any obligation of the Defeasance Agent. -6- 10. Fees and Expenses of Defeasance Agent. Issuer shall compensate ------------------------------------- Defeasance Agent for its services hereunder in accordance with Schedule A ---------- attached hereto and, in addition, shall reimburse Defeasance Agent for all of its reasonable out-of-pocket expenses, including attorneys' fees, travel expenses, telephone and facsimile transmission costs, postage (including express mail and overnight delivery charges), copying charges and the like. All of the compensation and reimbursement obligations set forth in this Section 10 shall be ---------- payable by Issuer upon demand by Defeasance Agent. The obligations of Issuer under this Section 10 shall survive any termination of this Agreement and the ---------- resignation or removal of Defeasance Agent. 11. Representations and Warranties. ------------------------------ a. Issuer makes the following representations and warranties to Defeasance Agent: (i) Issuer is duly established and validly existing as an instrumentality of the Mohegan Tribe of Indians of Connecticut, and has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, (ii) This Agreement has been duly and validly authorized, executed and delivered by the Issuer, and constitutes a valid and binding agreement of Issuer, enforceable in accordance with its terms. (iii) The execution, delivery, and performance by Issuer of this Agreement is in accordance with the Note Purchase Agreement and will not violate, conflict with, or cause a default under the governing instruments of Issuer, any applicable law or regulation, any court order or administrative ruling or decree to which Issuer is a party or any of its property is subject, or any agreement, contract, indenture, or other binding arrangement, including without limitation the Note Purchase Agreement, to which Issuer is a party or any of its property is subject. (iv) Roland Harris and each of the other officers of the Management Board of the Issuer has been duly appointed to act as the representative of Issuer hereunder and has full power and authority to execute, deliver, and perform this Agreement, to execute and deliver any Joint Written Direction, to amend, modify or waive any provision of this Agreement and to take any and all other actions under this Agreement, all without further consent or direction from, or notice to, Issuer or any other party. (v) No party other than the parties hereto have, or shall have, any lien, claim or security interest in the Defeasance Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any -7- jurisdiction claiming a security interest in or describing (whether specifically or generally) the Defeasance Funds or any part thereof. (vi) All of the representations and warranties of Issuer contained herein are true and complete as of the date hereof and will be true and complete at the time of any disbursement from the Defeasance Funds. (vii) The Note Holders are the holders of Notes, in the amounts set forth on the signature pages hereto, and the registration books maintained by the Issuer pursuant to Section 10.04 of the Note Purchase Agreement reflect that fact. 12. Consent to Jurisdiction and Venue. In the event that any party --------------------------------- hereto commences a lawsuit or other proceeding relating to or arising from this Agreement, the parties hereto agree that the state courts of the State of Connecticut shall have jurisdiction over any such proceeding. The parties hereto waive any objection to such venue. The parties hereto consent to and agree to submit to the jurisdiction of any of the courts specified herein and agree to accept service or process to vest personal jurisdiction over them in any of these courts. 13. Notice. All notices and other communications hereunder she be in ------ writing and shall be deemed to have been validly served, given or delivered five (5) days after deposit in the United States mails, by certified mail with return receipt requested and postage prepaid, when delivered personally, one (1) day after delivery to any overnight courier, or when transmitted by facsimile transmission facilities, and addressed to the party to be notified as follows: If to Issuer at: Mohegan Tribal Gaming Authority One Mohegan Sun Boulevard Uncasville, Connecticut 06382 ATTENTION: Roland Harris, Chairman Facsimile Number (860) 204-6153 With a copy to: ATTENTION: Jeffrey Hartmann, Chief Financial Officer Facsimile Number: (860) 204-7167 If to Note Holders at: a) Sun International Hotels Limited Executive Offices, Coral Towers PO Box N-4777, Paradise Island Nassau, The Bahamas ATTENTION: Charles Adamo, Esq. Facsimile Number: (242) 363-3703 b) Waterford Gaming, L.L.C. 914 Hartford Turnpike PO Box 715 Waterford, Connecticut 06385 -8- ATTENTION: Len Wolman Facsimile Number. (860) 437-7752 If to Defeasance Agent: First Union National Bank, as Defeasance Agent Corporate Trust Operations 10 State House Square 2nd Floor Hartford, Connecticut 06103 ATTENTION: W. Jeffrey Kramer Facsimile Number: (860) 247-1356 or to such other address as each party may designate for itself by like notice. 14. Amendment or Waiver. This Agreement may be changed, waived, ------------------- discharged or terminated only by a writing signed by the Representatives and Defeasance Agent. No delay or omission by any party in exercising any right with respect hereto shall operate as a waiver. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion. 15. Severability. To the extent any provision of this Agreement is ------------ prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 16. Governing Law. This Agreement shall be construed and ------------- interpreted in accordance with the internal laws of the State of Connecticut without giving effect to the conflict of laws principles thereof. 17. Entire Agreement. This Agreement constitutes the entire ---------------- agreement between the parties relating to the holding, investment and disbursement of the Defeasance Funds and sets forth in their entirety the obligations and duties of Defeasance Agent with respect to the Defeasance Funds. 18. Binding Effect. All of the terms of this Agreement, as amended -------------- from time to time, shall be binding upon, inure to the benefit of and be enforceable by the respective heirs, successors and assigns of Issuer, Note Holders, the Representatives and Defeasance Agent. 19. Execution in Counterparts. This Agreement and any Joint Written ------------------------- Direction may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement or direction. -9- 20. Termination. Upon the first to occur of the disbursement of all ----------- amounts in the Defeasance Funds pursuant to Joint Written Directions or the disbursement of all amounts in the Defeasance Funds into court pursuant to Section 5 hereof, this Agreement shall terminate and Defeasance Agent shall --------- have no further obligation or liability whatsoever with respect to this Agreement or the Defeasance Funds. 21. Dealings. The Defeasance Agent and any stockholder, director, -------- officer or employee of the Defeasance Agent may buy, sell, and deal in any of the securities of the Issuer or Note Holders and become pecuniary interested in any transaction in which the Issuer or Note Holders may be interested, and contract and lend money to the Issuer or Note Holders and otherwise act as fully and freely as though it were not Defeasance Agent under this Agreement. Nothing herein shall preclude the Defeasance Agent from acting in any other capacity for the Issuer or Note Holders or for any other entity. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the date first above written. Defeasance Agent: Issuer: FIRST UNION NATIONAL BANK Mohegan Tribal Gaming Authority, An instrumentality of the Nation By:/s/ W. Jeffrey Kramer By:/s/ Jayne Fawcett ______________________ _____________________________ The undersigned acknowledge that the Authority has entered into the foregoing and confirms the principal amounts of the Notes held by each. Amount: 15% Notes CG Notes Sun International Hotels Limited, ---------- -------- a Bahamian Corporation $ 850,000 $ 7,000,000 By: /s/ Charles Adamo 19,150,000 15,000,000 --------------------------- ----------- 10,000,000 Name: $20,000,000 5,000,000 Title: 8,000,000 ---------- $45,000,000 -10- Amount:15% Notes CG Notes --------- -------- WATERFORD GAMING LLC 850,000 2,500,000 A Delaware limited liability company 19,150,000 2,500,000 ---------- ---------- By:_________________________________ $20,000,000 $5,000,000 Name: Title: -11- SCHEDULE 1 INVESTMENT OF DEFEASANCE FUNDS -12- EX-10.12 11 EXHIBIT 10.12 EXHIBIT 10.12 EXECUTION COPY - -------------------------------------------------------------------------------- THE MOHEGAN TRIBE OF INDIANS OF CONNECTICUT AND FLEET NATIONAL BANK, AS ESCROW AGENT FOR THE BENEFIT OF THE MOHEGAN TRIBAL GAMING AUTHORITY AND THE ADMINISTRATIVE AGENT ON BEHALF OF THE LENDERS AND THE TRUSTEES ON BEHALF OF THE HOLDERS ---------------------------------------------- CONSTRUCTION RESERVE DISBURSEMENT AGREEMENT DATED AS OF MARCH 3 , 1999 ---------------------------------------------- - -------------------------------------------------------------------------------- INDEX ARTICLE I. DEFINITIONS AND OTHER GENERAL PROVISIONS......................................... 1 Section 1.1. Definitions................................................................. 1 Section 1.2. Rules of Construction....................................................... 5 ARTICLE II. ESTABLISHMENT OF ESCROW......................................................... 5 Section 2.1. Appointment of Escrow Agent................................................. 5 Section 2.2. Establishment of Escrow Account............................................. 5 ARTICLE III. DISBURSEMENTS FROM ESCROW...................................................... 6 Section 3.1. Condition to Disbursement................................................... 6 Section 3.2. Method of Disbursement...................................................... 6 Section 3.3. Timing; Amount.............................................................. 6 Section 3.4. Disbursement of Compensation................................................ 6 ARTICLE IV. CONDITIONS PRECEDENT TO DISBURSEMENT............................................ 7 Section 4.1. Conditions to Disbursements Requested by the Authority...................... 7 Section 4.2. Requests for Disbursements by the Tribe..................................... 7 Section 4.3. Final Disbursement of Funds Following Operating Date........................ 7 ARTICLE V. LIMITATION OF LIABILITY.......................................................... 8 Section 5.1. Limitation of Escrow Agent's Liability...................................... 8 Section 5.2. Liability of Administrative Agent and Trustees.............................. 8 ARTICLE VI. INDEMNITY AND INSURANCE......................................................... 9 Section 6.1. Indemnity of Escrow Agent................................................... 9 ARTICLE VII. TERMINATION.................................................................... 9 ARTICLE VIII. SUBSTITUTION OR RESIGNATION................................................... 10 Section 8.1. Substitution of Escrow Agent or Resignation................................. 10 ARTICLE IX. ESCROW ACCOUNT STATEMENT........................................................ 10 ARTICLE X. NOTICE........................................................................... 11 ARTICLE XI. MISCELLANEOUS................................................................... 11 Section 11.1. Waiver..................................................................... 11 Section 11.2. Invalidity................................................................. 11
i Section 11.3. No Authority............................................................... 11 Section 11.4. Assignment................................................................. 11 Section 11.5. Benefit.................................................................... 12 Section 11.6. Time....................................................................... 12 Section 11.7. Choice of Law.............................................................. 12 Section 11.8. Entire Agreement; Amendments............................................... 12 Section 11.9. Notices.................................................................... 12 Section 11.10. Counterparts.............................................................. 13 Section 11.11. Captions.................................................................. 14 Section 11.12. Right to Consult Counsel.................................................. 14 Section 11.13. Disbursement and Escrow Fee............................................... 14 ARTICLE XII. CONSENT TO SUIT................................................................ 14
ii CONSTRUCTION RESERVE DISBURSEMENT AGREEMENT THIS AGREEMENT (this "Agreement" or "Disbursement Agreement") is made as of this 3rd day of March, 1999 by and among the Mohegan Tribe of Indians of Connecticut (the "Tribe"), Fleet National Bank, as escrow agent ("Escrow Agent") and the Mohegan Tribal Gaming Authority (the "Authority") for the benefit of the Administrative Agent on behalf of the Lenders and the Trustees, on behalf of the Holders. A. WHEREAS the Authority has arranged for financing from the Lenders and Holders, among others, (the "Financing") in connection with its plans to expand the Mohegan Sun Casino (as defined below); B. WHEREAS the plans for the Expansion are in the preliminary stages and final construction budgets are yet to be completed; C. WHEREAS the Tribal Council has issued a formal resolution capping the scope of the Expansion at $800 million; D. WHEREAS, the Tribe desires to ensure sufficient funds are available to the Authority and in connection with the Lenders and the Holders providing the Financing, the Tribe has agreed to deposit $40 million in the Reserve Account to pay Vendors for Project Costs incurred in excess of the Construction Budget; NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration the receipt and sufficiency of which are acknowledged, the parties agree as follows: ARTICLE I. DEFINITIONS AND OTHER GENERAL PROVISIONS Section 1.1 Definitions. ----------- The following terms, as used herein, have the following meanings: "Administrative Agent" means Bank of America National Trust and Savings Association, until a successor Administrative Agent is named pursuant to the terms of the Loan Agreement or any successor Administrative Agent under a successor loan agreement. "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "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 (provided that the full faith and credit of the United States is pledged in support thereof) 1 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 lender party to the Loan Agreement or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or better; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above; (v) commercial paper having one of the two highest ratings obtainable from Moody's Investor Service, Inc. or Standard & Poor's Rating Group and in each case maturing within six months after the date of acquisition; and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this definition. "Completed" means, with respect to the Expansion, the first time that: (i) all liens (other than Permitted Liens or liens which relate to Disputed Amounts) relating to the construction of the Expansion have been paid; (ii) the general contractor and the project architect for the Expansion, or an independent construction expert appointed by the Authority, certify that the Expansion is completed 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 (as defined in the Indentures) 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 Expansion; and (iii) the Expansion is in a condition (including installation of furnishings, fixtures and equipment sufficient for the Expanded Resort and provision of adequate expansion operating capital) and 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 Expanded Resort is fit to receive guests in the ordinary course of business. "Construction Budget" means the construction budget established by the Authority as such may be amended from time to time for the construction of the Expansion. "Credit Facilities" means, with respect to the Authority, one or more debt facilities (including, without limitation, the Loan Agreement) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Disputed Amounts" means amounts disputed in good faith between the Authority and any Vendor providing goods, materials or services in connection with the Expansion construction. "Escrow Agent" means Fleet National Bank or such substitute Escrow Agent as may be designated in accordance with Section 8 hereof. 2 "Escrow Agent's Office" means 250 State Street, New London, Connecticut or such other office as to which Escrow Agent provides all parties to this Agreement notice as provided in Section 11.9 hereof. "Escrow Agent Statement" means a statement in form and substance satisfactory to the Authority prepared by the Escrow Agent setting forth in reasonable particularity the balance of funds in the Reserve Account and the manner in which such funds are invested. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. "Expanded Resort" means the Mohegan Sun casino after the Expansion is completed. "Expansion" means the project to expand the existing Mohegan Sun Casino as described in the Authority's Offering Memorandum, dated February 24, 1999. "Final Plans" means, with respect to any particular work or improvement, Plans which (i) have received final approval from all governmental authorities required to approve such Plans prior to completion of the work or improvements; and (ii) contain sufficient specificity to permit the completion of the work or improvement. "Financing Documents" means all documentation relating to the Authority's Credit Facilities (including the Loan Agreement) and the Indentures. "Financing Obligations" means all obligations relating to or arising from the Financing Documents. "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, which are in effect on the date of the Indentures. "Gaming Regulatory Authority" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States or a 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. "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, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Holders" means the Holders of the Authority's 8 1/8% Senior Notes due 2006 and the Authority's 8 3/4% Senior Subordinated Notes due 2009 both as issued, authenticated and 3 delivered under the respective Indentures. The Holders shall include all Holders of any or all of the Initial Notes, Definitive Registered Notes or Exchange Notes (as defined in the Indentures). "Indentures" means the Indentures, dated the date thereof relating to the Authority's 8 1/8% Senior Notes due 2006 and the Authority's 8 3/4% Senior Subordinated Notes due 2009 as amended or supplemented from time to time. "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 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 such payment for the intervening period. "Lenders" means all lenders under the Loan Agreement. "Loan Agreement" means that certain Agreement, dated as of March 3, 1999, by and among the Tribe, the Authority and Bank of America National Trust and Savings Association and certain Lenders as parties thereto, including any related notes, guarantees, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time. "Management Board" means the Management Board of the Authority or any authorized committee of the Management Board of the Authority, as applicable. "NIGC" means the National Indian Gaming Commission. "Notes" means the Authority's 8 1/8% Senior Notes due 2006 and the Authority's 8 3/4% Senior Subordinated Notes due 2009. "Permitted Liens" has the meaning set forth in the Indentures. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "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 Expansion and the labor and materials necessary for the construction thereof. "Project Costs" means all costs of developing, designing, constructing, equipping and furnishing the Expansion, including all costs related to land acquisition, professional services, pre-opening costs and expansion operating capital, provided that all Project Costs shall be allocated in accordance with GAAP, consistently applied, but excluding any debt service costs (such as principal, premium or interest on Credit Facilities or the Notes). 4 "Reserve Account" means the reserve account established pursuant to this Agreement. "Tribal Council" means the nine-member duly elected governing council of the Tribe. "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. (S) 83. "Trustees" means the Persons acting as Trustees under the Indentures until any successor Trustee shall have become such pursuant to the applicable provisions of either such Indenture, and thereafter "Trustees" shall mean each such successor Trustee. "Vendor" means any third party who is not an Affiliate of the Authority and who has provided materials or services used in connection with the completion of the Expanded Resort. Section 1.2. Rules of Construction. --------------------- Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) "or" is not exclusive; (3) "including" means including without limitation; (4) words in the singular include the plural and words in the plural include the singular; and (5) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. ARTICLE II. ESTABLISHMENT OF ESCROW Section 2.1. Appointment of Escrow Agent. --------------------------- The Tribe and the Authority hereby appoint Escrow Agent, and Escrow Agent hereby accepts appointment, as escrow agent under the terms and conditions of this Agreement. By execution and delivery of this Agreement, Escrow Agent hereby acknowledges its receipt of $40.0 million (as such amounts may be reduced from time to time, the "Escrow Principal") from the Tribe. Section 2.2. Establishment of Escrow Account. Concurrently with the ------------------------------- execution and delivery hereof, Escrow Agent shall establish an account (the "Reserve Account") in the name of the Escrow Agent at Escrow Agent's office with the funds to be held in trust and not commingled with any ordinary deposit or commercial bank account. All funds accepted by the Escrow Agent pursuant to this Agreement shall be held in the Reserve Account for the benefit of the Authority, the Administrative Agent and the Trustees subject to the terms and conditions of this Agreement and 5 shall also be under the sole dominion and control of such Escrow Agent as agent for the Authority. Accordingly, all such funds and assets shall not be within the bankruptcy "estate" (as such term is used in 11 U.S.C. (S) 541) of the Escrow Agent. All such funds and all earnings accruing from time to time thereon shall be held in the Reserve Account until disbursed in accordance with the terms hereof. All interest, dividends or other earnings resulting from the investment of the Escrow Principal shall not become part of the Escrow Principal and shall be disbursed to the Tribe pursuant to Section 3.4(b). All funds contained in such Reserve Account shall be invested in cash or Cash Equivalents as are specified, from time to time, by the Authority in writing pending disbursement of such funds pursuant to this Agreement. If no such instructions are received by the Escrow Agent after request, such funds shall be invested in Cash Equivalents. ARTICLE III. DISBURSEMENTS FROM ESCROW Section 3.1. Condition to Disbursement. Except as provided in ------------------------- Sections 3.4, 4.2 and 4.3 hereof, the Escrow Agent shall disburse the Escrow Principal from the Reserve Account only to the extent and in the manner directed by the Authority in a written authorization (each, a "Disbursement Authorization") delivered by the Authority to the Escrow Agent (in the form of Exhibit A attached hereto). In no event may the Authority deliver a Disbursement Authorization authorizing and directing the Escrow Agent to disburse an amount greater than the then remaining Escrow Principal. Section 3.2. Method of Disbursement. Upon receipt of a Disbursement ---------------------- Authorization as set forth in Section 3.1 above, the Escrow Agent shall disburse the Escrow Principal from the Reserve Account to the appropriate Vendor as specified in the Disbursement Authorization. The Escrow Agent shall rely entirely upon the accuracy of the certifications of the Authority set forth in a Disbursement Authorization. The Escrow Agent shall be under no duty to inquire as to the satisfaction of the conditions set forth in Section 4.1 with regard to any Disbursement Authorization. Such disbursement shall be effected within five business days of the Escrow Agent's receipt of a Disbursement Authorization. Section 3.3. Timing; Amount. The Authority shall not request -------------- disbursement from the Reserve Account more frequently than twice a month. Section 3.4. Disbursement of Compensation. ---------------------------- (a) Escrow Agent's Compensation. Escrow Agent shall disburse from --------------------------- the Reserve Account the fees as set forth on Exhibit B attached hereto and made a part hereof to Escrow Agent as compensation for services to be performed by Escrow Agent under this Agreement. The Escrow Agent shall be entitled to disburse and receive such fees without the requirement of obtaining any further consent or action on the part of the Authority or with respect to the payment. (b) Earnings on Escrow Principal. Escrow Agent shall disburse to the ----------------------------- Tribe from the Reserve Account on the last business day of each calendar quarter, all interest, dividends or other earnings resulting from the investment of the Escrow Principal. The Tribe shall receive such disbursements without the requirement of obtaining any further consent or action on the part of the Authority or any other party. 6 ARTICLE IV. CONDITIONS PRECEDENT TO DISBURSEMENT Section 4.1. Conditions to Disbursements Requested by the Authority. ------------------------------------------------------ The Authority's right to request any disbursements from the Reserve Account shall be subject to the following conditions: (a) The Authority has expended at least $500 million towards Completion of the Expansion in accordance with the Construction Budget (including at least $300 million pursuant to the terms of the Loan Agreement unless the Commitment (as defined therein) has then been terminated); (b) The Authority has certified that it does not have funds available to cause the Expansion to be Completed in accordance with the Plans; (c) The Authority has provided the Tribe and the Escrow Agent with invoices from Vendors and has certified that such invoices are for Project Costs incurred in accordance with the Construction Budget; and (d) The Disbursement Request on its face has been completed as to the information required therein and attachments, if any, are attached. Section 4.2. Requests for Disbursements by the Tribe. The Tribe may, --------------------------------------- at any time in its sole discretion by delivering a Disbursement Request in the form of Exhibit C to the Escrow Agent, request that the Escrow Agent make disbursements from the Reserve Account consistent with the terms of Sections 3.4(b) and 4.1(c) and (d). In conjunction with such Disbursement Request, the Tribe shall provide the Escrow Agent with invoices from Vendors and shall certify that such invoices are for Project Costs incurred in accordance with the Construction Budget. Section 4.3. Final Disbursement of Funds Following Operating Date. ---------------------------------------------------- If the Authority provides written certification to the Escrow Agent that (a) the Expanded Resort is Completed, has commenced operations and the Expanded Resort continues to be operating as of the date of the certification and (b) funds remain in the Reserve Account as of the date of the certification then, the Escrow Agent shall disburse all remaining funds in the Reserve Account to the Tribe within five business days. ARTICLE V. LIMITATION OF LIABILITY Section 5.1. Limitation of Escrow Agent's Liability. The Escrow -------------------------------------- Agent's responsibility and liability under this Agreement shall be limited as follows: (a) the Escrow Agent does not represent, warrant or guarantee to the Tribe the performance of the Authority, any contractor, subcontractor or provider of materials or services in connection with construction of the Expansion; (b) the Escrow Agent shall have no responsibility to the Authority, the Tribe, the Administrative Agent, the Trustees or any other party as a consequence of performance by the 7 Escrow Agent of its duties hereunder except for any gross negligence or willful misconduct of the Escrow Agent or failure to account for funds held on deposit; (c) the Authority shall remain solely responsible for all aspects of its business and conduct in connection with the Expansion, including, but not limited to, the quality and suitability of the Plans, the supervision of the construction work, the qualifications, financial condition and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants and property managers, the accuracy of all applications for payment, and the proper application of all disbursements; (d) the Escrow Agent is not obligated to supervise, inspect or inform, the Authority, the Tribe, the Administrative Agent, the Trustees or any other party or any third party of any aspect of the construction of the Expansion or any other party to protect against, or to inform the Authority of, any negligent, faulty, inadequate or defective design or construction of the Expansion. The Escrow Agent 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. Section 5.2. Liability of Administrative Agent and Trustees. ---------------------------------------------- (a) The Administrative Agent and the Trustees shall not be liable to the Authority or the Tribe for any damages caused by the performance or exercise of their rights hereunder. (b) The Administrative Agent and the Trustees shall have no responsibility to the Authority, the Tribe or Escrow Agent hereunder except for any gross negligence or willful misconduct of the Administrative Agent or the Trustees, as the case may be. ARTICLE VI. INDEMNITY AND INSURANCE Section 6.1. Indemnity of Escrow Agent. The Authority and the Tribe ------------------------- shall indemnify and hold harmless and defend the Escrow Agent 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 Escrow Agent'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 Escrow Agent. 8 ARTICLE VII. TERMINATION (a) This Agreement shall terminate automatically and immediately upon disbursement of all funds remaining in the Reserve Account; provided, however, that (i) the agreements and obligations of the Authority and the Tribe under Section 6.1 and Article XII of this Agreement shall survive termination of this Agreement or the resignation of the Escrow Agent. (b) Notwithstanding any foreclosure of any lien of any deed of trust or security agreement relating to any or all of the real or personal property secured by such lien, whether by the exercise of the power of sale contained therein, by an action for judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, the Tribe and the Authority shall remain bound under this Agreement. (c) The Tribe and the Authority shall continue to be liable under this Agreement and the provisions of this Agreement shall remain in full force and effect notwithstanding: (i) Any modification, agreement, or stipulation between the Authority, the Administrative Agent on behalf of the Lenders, and either of the Trustees on behalf of the Holders or their respective successors and assigns, concerning the Financing Documents or the obligations encompassed by them; (ii) Any modification of or amendments or addenda to the Plans; (iii) Any Administrative Agent's or Trustees' waiver of or failure to enforce any of the terms, covenants or conditions contained in the Financing Documents or in any modification thereof; (iv) Any discharge or release of the Authority (or any of its subsidiaries) from any liability with respect to the Financing Obligations; (v) Any discharge, release, exchange or subordination of any real or personal property then held by any Lender as security for the performance of the Financing Obligations; (vi) Any additional security taken for the Financing Obligations, whether real or personal property; (vii) Any foreclosure or other realization on any security for the Financing Obligations; (viii) Any additional loans or financial accommodations to the Authority; and (ix) Any claims whatsoever that the Authority or the Tribe may have against any Vendor. 9 ARTICLE VIII. SUBSTITUTION OR RESIGNATION Section 8.1. Substitution of Escrow Agent or Resignation. ------------------------------------------- (a) The Tribe or the Authority shall each have the right, upon the expiration of 30 days following delivery of written notice of substitution to Escrow Agent, and to the other parties, to cause Escrow Agent to be relieved of its duties hereunder and to select a substitute escrow agent to serve hereunder. The Escrow Agent may resign at any time upon 30 days written notice to all parties hereto. Such resignation shall take effect upon receipt by the Escrow Agent of an instrument of acceptance executed by a successor escrow agent and consented to by the Tribe and the Authority. Upon selection of such substitute escrow agent, the Authority, the Tribe and the substitute escrow agent shall enter into an agreement substantially identical to this Agreement and, thereafter, the Escrow Agent shall be relieved of its duties and obligation to perform hereunder, except that the Escrow Agent shall transfer to the substitute escrow agent upon request therefor all funds and Cash Equivalents maintained by the Escrow Agent hereunder and originals of all books, records, plans and other documents in the Escrow Agent's possession relating to such funds or Cash Equivalents or this Agreement. If no successor escrow agent is appointed and executes and delivers to the Escrow Agent an instrument of acceptance within 30 days of the notice of resignation, the Escrow Agent shall deliver all funds and Cash Equivalents maintained by the Escrow Agent hereunder and originals of all books, records, plans and other documents in the Escrow Agent's possession relating to such funds or Cash Equivalents or this Agreement into a court of competent jurisdiction. ARTICLE IX. ESCROW ACCOUNT STATEMENT Upon the request of the Authority or the Tribe from time to time, the Escrow Agent shall deliver to the Authority and the Tribe a statement prepared by the Escrow Agent in a form reasonably satisfactory to the Tribe and the Authority setting forth with reasonable particularity the balance of funds then in the Reserve Account and the manner in which such funds are invested; provided, however, that the Escrow Agent shall not be required to provide such statements more often than monthly. ARTICLE X. NOTICE The parties hereto irrevocably instruct the Escrow Agent that on the first date upon which the balance in the Reserve Account is reduced to zero, the Escrow Agent shall deliver to the Tribe, the Administrative Agent, the Trustees, and the Authority a notice that the balance in the Reserve Account has been reduced to zero. ARTICLE XI. MISCELLANEOUS Section 11.1. 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 10 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. Section 11.2. 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. Section 11.3. No Authority. The Escrow Agent shall not have any ------------ authority to, and the Escrow Agent shall not make any warranty or representation or incur any obligation on behalf of, or in the name of, the Tribe. Section 11.4. Assignment. This Agreement shall not be assignable by ---------- any of the parties except with the prior written consent of the other parties, provided that the rights of the Administrative Agent on behalf of the Lenders and the Trustees on behalf of the Holders are assignable to their successors. In any event, this Agreement shall inure to and be binding upon the parties and their successors and permitted assigns. Notwithstanding the foregoing, the parties hereto understand that the Lenders, pursuant to the terms of the Loan Agreement, have a security interest in all the assets of the Authority, including the Authority's rights hereunder and each party hereto consents to that security interest. It is expressly understood by the parties hereto that in no circumstances whatsoever shall the Escrow Principal be used to pay charges or expenses relating to Financing Obligations including, without limitation, any debt service. Section 11.5. Benefit. The parties hereto, the Administrative Agent, ------- the Trustees, and their respective successors and assigns, but no others, shall be express third party beneficiaries and entitled to the benefits hereof. Notwithstanding the foregoing, the rights of the Administrative Agent and the Trustees as express third party beneficiaries hereunder are limited to the right to enforce this agreement, pursuant to its terms and the right to consent to any amendment to this Agreement, as provided in Section 11.8 hereof. Section 11.6. Time. Time is of the essence of each provision of this ---- Agreement. Section 11.7. Choice of Law. The existence, validity, construction, ------------- operation and effect of any and all terms and provisions of this Agreement shall be determined in accordance with and governed by the substantive laws of the state of Connecticut, without giving effect to its conflicts of law principles. Section 11.8. Entire Agreement; Amendments. This Agreement contains ---------------------------- the entire agreement among the parties with respect to the subject matter hereof and supersedes any and all prior agreements, understandings and commitments, whether oral or written. This Agreement may be amended only by a writing signed by duly authorized representatives of all parties who are signatories hereto and the express written consent of the Administrative Agent, on behalf of the Lenders and the Trustees on behalf of the Holders. 11 Section 11.9. Notices. All notices and other communications required ------- or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been duly given and received, regardless of when and whether received, either: (a) on the day of hand delivery; or (b) on the day sent, when sent by United States certified mail, postage and certification fee prepaid, return receipt requested, addressed as follows: To the Escrow Agent: Fleet National Bank 250 State Street New London, CT 06320 Attention: William E. Lofgren Senior Vice President To the Trustees on behalf of the Holders: First Union National Bank 10 State House Square Hartford, CT 06103-3698 Attention: W. Jeffrey Kramer Vice President Corporate Trust and: Edwards & Angell 90 State House Square - 9th Floor Hartford, CT 06103 Attention: Justin M. Sullivan, Esq. To the Authority: Roland J. Harris Mohegan Tribal Gaming Authority 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telephone: (203) 848-0545 To the Tribe: Roland J. Harris Mohegan Tribal of Indians of Connecticut 1 Mohegan Sun Boulevard Uncasville, CT 06382 Telephone: (203) 848-0545 To the Administrative Agent on behalf of the Lenders: Jon Varnell Bank of America National Trust and Savings Association 12 555 South Flower Street 11th Floor Los Angeles, CA 90071 Telephone: (213) 228-6181 or at such other address as the specified entity most recently may have designated in writing in accordance with this paragraph and others. Section 11.10. 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. Section 11.11. 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. Section 11.12. Right to Consult Counsel. The Escrow Agent, may, if ------------------------ it deems necessary or appropriate, consult with and be advised by counsel in respect of its duties hereunder. The Escrow Agent shall be entitled to rely upon the advice of its counsel in any action taken in its capacity as the Escrow Agent hereunder and shall be protected from any liability of any kind for actions taken in reasonable reliance upon such opinion of counsel. The Authority agrees to pay all such reasonable counsel fees. Section 11.13. Disbursement and Escrow Fee. The Escrow Agent shall --------------------------- receive its respective compensation as set forth in Section 3.4 hereof during the term of this Agreement, as provided in said Section. ARTICLE XII. 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. 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 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 13 of this Agreement, 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 and the Authority to take any action, including a judgment compelling the Tribe and the Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C (S) 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 and the Authority, to (i) enforce and interpret the terms of this Agreement, 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 and 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 and the Authority to take any action, including a judgment compelling the Tribe and the Authority to submit to binding arbitration. 14 MOHEGAN TRIBE OF INDIANS OF CONNECTICUT By:/s/ Roland J. Harris -------------------- Roland J. Harris Chairman MOHEGAN TRIBAL GAMING AUTHORITY By:/s/ Roland J. Harris -------------------- Roland J. Harris Chairman FLEET NATIONAL BANK, as Escrow Agent By: /s/ William E. Lofgren ---------------------- Title: Senior Vice President 15 EXHIBIT A TO CONSTRUCTION RESERVE DISBURSEMENT AGREEMENT Form of Authority Request for Disbursement ------------------------------------------ ____________, ____ Fleet National Bank 250 State Street New London, Connecticut 06320 Attention: William E. Lofgren Senior Vice President Re: The Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut Construction Reserve Disbursement Agreement Ladies and Gentlemen: This request is delivered to you pursuant to that certain Construction Reserve Disbursement Agreement dated March 3, 1999 between and among Fleet National Bank as Escrow Agent, 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"). Capitalized terms used herein shall have the meanings assigned to such terms in the Construction Reserve Disbursement Agreement (the "Agreement"). We hereby certify to each of you as follows as contemplated by Article IV of the above-referenced Agreement: (1) The Authority has expended at least $500 million towards Completion of the Expansion in accordance with the Construction Budget (including at least $300 million pursuant to the terms of the Loan Agreement or the Commitment (as defined therein) has been terminated); (2) We do not have funds available to cause the Expansion to be Completed in accordance with the Plans. (3) We have provided the Tribe with invoices from Vendors and certify that such invoices are for Project Costs incurred in accordance with the Construction Budget. A-1 The foregoing representations, warranties and certifications are true and correct and you are entitled to rely on the foregoing in connection with the requested disbursement. In accordance with the terms of the Agreement, the Escrow Agent is hereby authorized and directed to disburse funds from the Escrow Principal in the amounts and to the Vendors identified by name and address on Schedule A attached ---------- hereto and made a part hereof. THE MOHEGAN TRIBAL GAMING AUTHORITY By: Name:_______________________ Title: A-2 EXHIBIT B TO CONSTRUCTION RESERVE DISBURSEMENT AGREEMENT For performance of all duties and responsibilities as Escrow Agent described in the Construction Reserve Disbursement Agreement dated March 3, 1999 between the Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority and Fleet National Bank, compensation shall be as follows: Escrow Agent shall distribute to Escrow Agent quarterly, in arrears, from the Reserve Account, an amount equal to 0.03% of the average principal balance maintained in the Reserve Account. B-1 EXHIBIT C TO CONSTRUCTION RESERVE DISBURSEMENT AGREEMENT Form of Tribe Request for Disbursement -------------------------------------- ____________, ____ Fleet National Bank 250 State Street New London, Connecticut 06320 Attention: William E. Lofgren Senior Vice President Re: The Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut Construction Reserve Disbursement Agreement Ladies and Gentlemen: This request is delivered to you pursuant to Sections 4.1 and 4.2 of that certain Construction Reserve Disbursement Agreement dated March 3, 1999 between and among Fleet National Bank as Escrow Agent, 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"). Capitalized terms used herein shall have the meanings assigned to such terms in the Construction Reserve Disbursement Agreement (the "Agreement"). We certify that the attached invoices from Vendors are for Project Costs incurred in accordance with the Construction Budget. The foregoing certification is true and correct and you are entitled to rely on the foregoing in connection with the requested disbursement. In accordance with the terms of the Agreement, the Escrow Agent is hereby authorized and directed to disburse funds from the Escrow Principal in the amounts and to the Vendors identified by name and address on Schedule A attached ---------- hereto and made a part hereof. THE MOHEGAN TRIBE OF INDIANS OF CONNECTICUT By:________________________ Name: Title: C-1 EX-23.2 12 EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- To the Mohegan Tribal Gaming Authority: As independent public accountants, we hereby consent to the use of our reports (and to all references to our Firm) included in or made a part of this registration statement. ARTHUR ANDERSEN LLP Hartford, Connecticut April 20, 1999 EX-25.1 13 EXHIBIT 25.1 Exhibit 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________ FORM T-1 STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ______________________ FIRST UNION NATIONAL BANK (Exact name of Trustee as specified in its charter) United States National Bank 56-0900030 (Jurisdiction of incorporation (IRS employer if not a national bank) identification no.) FIRST UNION NATIONAL BANK First Union National Bank 230 South Tryon Street, 9th Floor Charlotte, NC 28202 (704) 590-7600 Attn: General Counsel (Address of principal executive offices) ______________________ Same as above ------------- (Name, address and telephone number, including area code, of Trustee's agent for service) ______________________
IRS Employer Exact Name of Obligor as State or other Jurisdiction of Primary Standard Industrial Identification Specified in its Charter Incorporation or Organization Classification Code Number Number - --------------------------------------------------------------------------------------------------------------------- Mohegan Tribal Gaming Not Applicable 7999 06-1436334 Authority
1 Mohegan Sun Boulevard Uncasville, Connecticut 06382 (860) 204-8000 (Address, including zip code, and telephone number, including area code, of Obligor's principal executive offices) ______________________ $200,000,000 8/1//8% Senior Notes Due 2006 (Title of the indenture securities) ______________________ 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. ___________________________________________________________________________ Name Address ___________________________________________________________________________ Federal Reserve Bank of Richmond, VA Richmond, VA Comptroller of the Currency Washington, D.C. Securities and Exchange Commission Division of Market Regulation Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. The Trustee is authorized to exercise corporate trust powers. 2. Affiliations with obligor and underwriters. If the obligor or any ------------------------------------------ underwriter for the obligor is an affiliate of the Trustee, describe each such affiliation. None. (See Note 1 on Page 4) Because the obligor is not in default on any securities issued under indentures under which the applicant is Trustee, Items 3 through 15 are not required herein. 16. List of Exhibits. ---------------- All exhibits identified below are filed as a part of this statement of eligibility. 1. A copy of the Articles of Association of First Union National Bank as now in effect, which contain the authority to commence business and a grant of powers to exercise corporate trust powers, is filed as an Exhibit to Form T-1 in connection with Registration Statement Number 333-24773 is filed with the Securities and Exchange Commission on March 20, 1998, and incorporated by reference herein. 2. A copy of the certificate of authority of the Trustee to commence business, if not contained in the Articles of Association is filed as an Exhibit to Form T-1 in connection with Registration Statement Number 333-24773 filed with the Securities and Exchange Commission on March 20, 1998, and is incorporated by reference herein. -2- 3. A copy of the authorization of the Trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in Exhibits (1) or (2) above, is filed as an Exhibit to Form T-1 in connection with Registration Statement Number 333-24773 filed with the Securities and Exchange Commission on March 20, 1998, and is incorporated by reference herein. 4. A copy of the existing By-laws of the Trustee, or instruments corresponding thereto filed as an Exhibit to Form T-1 in connection with Registration Statement Number 333-24773 filed with the Securities and Exchange Commission on March 20, 1998, and is incorporated by reference herein. 5. Inapplicable. 6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement. 7. A copy of the latest report of condition of the Trustee, is filed as an Exhibit to Form T-1 in connection with Registration Statement Number 333-72899 on February 24, 1999, and is incorporated by reference. 8. Inapplicable. 9. Inapplicable. -3- NOTE Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsible answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, First Union National Bank, a national association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Hartford, and State of Connecticut, on the 21 day of April, 1999. FIRST UNION NATIONAL BANK, (Trustee) By: /s/ W. Jeffrey Kramer --------------------- W. Jeffrey Kramer Vice President CONSENT OF TRUSTEE Under Section 321(b) of the Trust Indenture Act of 1939, as amended, and in connection with the proposed issuance by the Obligors of the 8/1//8% Senior Notes Due 2006, First Union National Bank as the Trustee herein named, hereby consents that reports of examinations of said Trustee by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. FIRST UNION NATIONAL BANK By: /s/ W. Jeffrey Kramer --------------------- W. Jeffrey Kramer Vice President Dated: April 21, 1999 -4- EX-25.2 14 EXHIBIT 25.2 Exhibit 25.2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 --------- 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) STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) 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.) 1 Mohegan Sun Boulevard, Uncasville, CT 06382 (Address of principal executive offices) (Zip Code) 8 3/4% Senior Subordinated Notes Due January 1, 2009 (Title of indenture securities) GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. 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. Trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the Obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee or of its parent, State Street Corporation. (See note on page 2.) Item 3. through Item 15. Not applicable. Item 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility. 1. A copy of the articles of association of the trustee as now in effect. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the articles of association. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in paragraph (1) or (2), above. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A copy of the existing by-laws of the trustee, or instruments corresponding thereto. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 5. A copy of each indenture referred to in Item 4. if the obligor is in default. Not applicable. -2- 6. The consents of United States institutional trustees required by Section 321(b) of the Act. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 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. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the April 19, 1999. STATE STREET BANK AND TRUST COMPANY By: /s/ Susan T. Keller --------------------------------- Name: Susan T. Keller Title: Vice President -3- EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by Mohegan Tribal Gaming Authority, of its Senior Subordinated Notes we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ Susan T. Keller ------------------------------------ Name: Susan T. Keller Title: Vice President Dated: April 19, 1999 -4- EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business December 31, 1998, ----------------- published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars ------------ Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin......................... 1,209,293 Interest-bearing balances.................................................. 12,007,895 Securities.......................................................................... 9,705,731 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary............................................ 9,734,476 Loans and lease financing receivables: Loans and leases, net of unearned income..................... 6,973,125 Allowance for loan and lease losses.......................... 84,308 Allocated transfer risk reserve.............................. 0 Loans and leases, net of unearned income and allowances............................. 6,888,817 Assets held in trading accounts..................................................... 1,574,999 Premises and fixed assets........................................................... 523,514 Other real estate owned............................................................. 0 Investments in unconsolidated subsidiaries.......................................... 612 Customers' liability to this bank on acceptances outstanding........................ 47,334 Intangible assets................................................................... 212,743 Other assets........................................................................ 1,279,224 --------- Total assets........................................................................ 43,184,638 ========== LIABILITIES Deposits: In domestic offices............................................................ 10,852,862 Noninterest-bearing...................................... 8,331,830 Interest-bearing......................................... 2,521,032 In foreign offices and Edge subsidiary......................................... 16,761,573 Noninterest-bearing...................................... 83,010 Interest-bearing......................................... 16,678,563 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary............................................ 10,041,324 Demand notes issued to the U.S. Treasury............................................ 108,420 Trading liabilities................................................................. 1,240,938 Other borrowed money................................................................ 322,331 Subordinated notes and debentures................................................... 0 Bank's liability on acceptances executed and outstanding............................ 47,334 Other liabilities................................................................... 1,126,058 Total liabilities................................................................... 40,500,840 ---------- EQUITY CAPITAL Perpetual preferred stock and related surplus....................................... 0 Common stock........................................................................ 29,931 Surplus............................................................................. 468,511 Undivided profits and capital reserves/Net unrealized holding gains (losses)........ 2,164,055 Net unrealized holding gains (losses) on available-for-sale securities......... 21,638 Cumulative foreign currency translation adjustments................................. (337) Total equity capital................................................................ 2,683,798 ---------- Total liabilities and equity capital................................................ 43,184,638 ==========
-5- I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition 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 Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Truman S. Casner -6- EX-99.1 15 EXHIBIT 99.1 Exhibit 99.1 - -------------------------------------------------------------------------------- THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 2, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). - -------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority LETTER OF TRANSMITTAL Offer To Exchange Its 8 1/8% Senior Notes Due January 1, 2006 Which Have Been Registered Under The Securities Act of 1933 For Any And All Of Its Outstanding 8 1/8% Senior Notes Due January 1, 2006 Pursuant To The Prospectus Dated April , 1999 The Exchange Agent for the Exchange Offer is: First Union National Bank By Facsimile: By Mail: (704) 590-7626 First Union National Bank Attention: Customer Service 1525 W.T. Harris Boulevard Confirm by Telephone: (704) 590-7408 Charlotte, North Carolina 28288-1153 Attention: Corporate Trust Department By Hand or Overnight Courier: First Union National Bank 1525 W.T. Harris Boulevard Charlotte, North Carolina 28288-1153 Attention: Corporate Trust Department DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below). This Letter of Transmittal is to be completed by holders of Outstanding Notes (as defined below) either if Outstanding Notes are to be forwarded herewith or if tenders of Outstanding Notes are to be made by book-entry transfer to an account maintained by First Union National Bank (the "Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Holders of Outstanding Notes whose certificates (the "Certificates") for such Outstanding Notes are not immediately available or who cannot deliver their Certificates, this Letter of Transmittal and all other required documents to the Exchange Agent on or prior to the Expiration Date or who cannot complete the procedures for book-entry transfer on a timely basis, may tender their Outstanding Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY List below the Outstanding Notes of which you are a holder. If the space provided below is inadequate, list the certificate numbers and principal amount on a separate signed schedule and attach that schedule to this Letter of Transmittal. See Instruction 3. ALL TENDERING HOLDERS COMPLETE THIS BOX: Description of Outstanding Notes Tendered - -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Fill in, if blank) Outstanding Notes Tendered - -------------------------------------------------------------------------------------------------------- Certificate Number(s)* (Attach additional Principal Amount Principal Amount list (Attach additional Tendered (if less if necessary) list if necessary) than all)** -------------------------------------------------------------------- $ -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Total Amount Tendered: $ $
- ------------------------------------------------------------------------------- * Need not be completed by book-entry holders. Such holders should check the appropriate box below and provide the requested information. ** Need not be completed if tendering for exchange all Outstanding Notes held. Outstanding Notes may be tendered in whole or in part in integral multiples of $1,000 principal amount. All Outstanding Notes held shall be deemed tendered unless a lesser number is specified in this column. See Instruction 4. 2 (Boxes Below To Be Checked By Eligible Institutions Only. See Instruction 1) [_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: _____________________________________________ DTC Account Number: ________________________________________________________ Transaction Code Number: ___________________________________________________ [_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ___________________________________________ Window Ticket Number (if any): _____________________________________________ Date of Notice of Guaranteed Delivery: _____________________________________ Institution Which Guaranteed Delivery: _____________________________________ If Guaranteed Delivery is to be made by book-entry transfer: Name of Tendering Institution: _____________________________________________ DTC Account Number: ________________________________________________________ Transaction Code Number: ___________________________________________________ [_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ Address: ___________________________________________________________________ _____________________________________________________________________ Telephone Number and Contact Person: _______________________________________ 3 Ladies and Gentlemen: The undersigned hereby tenders to Mohegan Tribal Gaming Authority (the "Authority"), the above described principal amount of the Company's 8 1/8% Senior Notes due January 1, 2006 (the "Outstanding Notes") in exchange for a like principal amount of the Authority's 8 1/8% Senior Notes due January 1, 2006 (the "Exchange Notes"), which have been registered under the Securities Act of 1933 (the "Securities Act"), upon the terms and subject to the conditions set forth in the Prospectus dated January 29,1999 (as the same may be amended or supplemented from time to time, the "Prospectus"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Exchange Offer"). Subject to and effective upon the acceptance for exchange of the Outstanding Notes tendered herewith, the undersigned hereby sells, assigns and transfers to or upon the order of the Authority all right, title and interest in and to such Outstanding Notes as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent is also acting as agent of the Authority in connection with the Exchange Offer and as Trustee under the Senior Notes Indenture for the Outstanding Notes and the Exchange Notes) with respect to the tendered Outstanding Notes, with full power of substitution (such power of attorney being an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to: (i) deliver such Outstanding Notes to the Authority together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Authority upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to be issued in exchange for such Outstanding Notes; (ii) present Certificates for such Outstanding Notes for transfer, and to transfer such Outstanding Notes on the account books maintained by DTC; and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding Notes, all in accordance with the terms and conditions of the Exchange Offer. THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE AUTHORITY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE OUTSTANDING NOTES TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER. The name(s) and address(es) of the registered holder(s) of the Outstanding Notes tendered hereby should be printed above, if they are not already set forth above, as they appear on the Certificates representing such Outstanding Notes. The Certificate number(s) and the Outstanding Notes that the undersigned wishes to tender should be indicated in the appropriate boxes above. If any tendered Outstanding Notes are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Outstanding Notes than are tendered or accepted for exchange, Certificates for such nonexchanged or nontendered Outstanding Notes will be returned (or, in the case of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes will be credited to an account maintained at DTC), without expense to the tendering holder promptly following the expiration or termination of the Exchange Offer. 4 The undersigned understands that tenders of Outstanding Notes pursuant to any one of the procedures described in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and in the instructions herein will, upon the Company's acceptance for exchange of such tendered Outstanding Notes, constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Outstanding Notes tendered hereby. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, the undersigned hereby directs that the Exchange Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Outstanding Notes, that such Exchange Notes be credited to the account indicated above maintained at DTC. If applicable, substitute Certificates representing Outstanding Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Outstanding Notes, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery Instructions," please deliver Exchange Notes to the undersigned at the address shown below the undersigned's signature. BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT: (i) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF THE AUTHORITY (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT), OR IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT TO THE EXTENT APPLICABLE; (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS; AND (iii) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IF THE UNDERSIGNED IS NOT A BROKER-DEALER, BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES THAT IT IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF EXCHANGE NOTES. IF THE UNDERSIGNED IS A BROKER-DEALER THAT WILL RECEIVE EXCHANGE NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER, BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES THAT SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER A PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT). THE COMPANY HAS AGREED THAT STARTING ON THE EXPIRATION DATE AND ENDING ON THE CLOSE OF BUSINESS ON THE FIRST ANNIVERSARY OF THE EXPIRATION DATE, IT WILL MAKE THE PROSPECTUS AVAILABLE TO ANY PARTICIPATING BROKER-DEALER IN CONNECTION WITH ANY SUCH RESALE. All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. Except as stated in the Prospectus and in the Instructions contained in this Letter of Transmittal, this tender is irrevocable. 5 PLEASE SIGN HERE PLEASE SIGN HERE _____________________________________ _______________________________________ Authorized Signature Authorized Signature Name:________________________________ Name:__________________________________ Title:_______________________________ Title:_________________________________ Address:_____________________________ Address:_______________________________ _____________________________________ _______________________________________ Telephone Number:____________________ Telephone Number:______________________ Dated:_______________________________ Dated:_________________________________ _____________________________________ _______________________________________ Taxpayer Identification or Social Taxpayer Identification or Social Security Number Security Number (NOTE: Signature(s) must be guaranteed if required by Instructions 2 and 5. This Letter of Transmittal must be signed by the registered holder(s) exactly as the name(s) appear(s) on Certificate(s) for the Outstanding Notes hereby tendered or on a security position listing, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith, including such opinions of counsel, certifications and other information as may be required by the Authority or the Trustee for the Outstanding Notes to comply with the restrictions on transfer applicable to the Outstanding Notes. If signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary capacity or representative capacity, please set forth the signer's full title. See Instructions 2 and 5. Please complete substitute Form W-9 below.) 6 Guarantee of Signature(s) (If required--see Instructions 2 and 5) Signature(s) Guaranteed by an Eligible Institution:_____________________________ Date:______________________ Authorized Signature Name of Eligible Institution Guaranteeing Signature:______________________________________________________ Address:______________________________ Capacity (full title):____________ ______________________________________ Telephone Number:_________________ ______________________________________ SPECIAL ISSUANCE INSTRUCTIONS(See Instructions 2, 5 and 6) SPECIAL DELIVERY INSTRUCTIONS (See Instructions 2, 5 and 6) To be completed ONLY if the Ex- change Notes or any Outstanding To be completed ONLY if Exchange Notes that are not tendered are to Notes or any Outstanding Notes be issued in the name of someone that are not tendered are to be other than the registered hold- sent to someone other than the er(s) of the Outstanding Notes registered holder(s) of the whose name(s) appear(s) above. Outstanding Notes whose name(s) appear(s) above, or to such registered holder(s) at an address other than that shown above. Issue: Mail: [_] Outstanding Notes not ten- dered, to: [_] Outstanding Notes not ten- dered, to: [_] Exchange Notes, to: [_] Exchange Notes, to: Name(s) ___________________________ Address ___________________________ Address ___________________________ Name(s)____________________________ ___________________________________ ___________________________________ Telephone Number:__________________ Telephone Number:__________________ ___________________________________ (Tax Identification or Social ___________________________________ Security Number) (Tax Identification or Social Security Number) 7 INSTRUCTIONS (Forming part of the terms and conditions of the Exchange Offer) 1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed either if (a) Certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Certificates, or timely confirmation of a book-entry transfer of such Outstanding Notes into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. The term "book-entry confirmation" means a timely confirmation of book-entry transfer of Outstanding Notes into the Exchange Agent's account at DTC. Outstanding Notes may be tendered in whole or in part in integral multiples of $1,000 principal amount. Holders who wish to tender their Outstanding Notes and: (i) whose Certificates for such Outstanding Notes are not immediately available; (ii) who cannot deliver their Certificates, this Letter of Transmittal and all other required documents to the Exchange Agent prior to the Expiration Date; or (iii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Outstanding Notes by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form accompanying this Letter of Transmittal, must be received by the Exchange Agent prior to the Expiration Date; and (iii) the Certificates (or a book-entry confirmation) representing all tendered Outstanding Notes, in proper form for transfer, together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile or mail to the Exchange Agent and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. For Outstanding Notes to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery prior to the Expiration Date. As used herein and in the Prospectus, "Eligible Institution" means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association. THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. 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 TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE AUTHORITY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS. 8 The Authority will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a Letter of Transmittal (or facsimile thereof), waives any right to receive any notice of the acceptance of such tender. 2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if: (i) this Letter of Transmittal is signed by the registered holder (which shall include any participant in DTC whose name appears on a security position listing as the owner of the Outstanding Notes) of Outstanding Notes tendered herewith, unless such holder has completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" above; or (ii) such Outstanding Notes are tendered for the account of a firm that is an Eligible Institution. In all other cases, an Eligible Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. 3. Inadequate Space. If the space provided in the box captioned "Description of Outstanding Notes Tendered" is inadequate, the Certificate number(s) and/or the principal amount of Outstanding Notes and any other required information should be listed on a separate signed schedule and attached to this Letter of Transmittal. 4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will be accepted only in integral multiples of $1,000 principal amount. If less than all the Outstanding Notes evidenced by any Certificate submitted are to be tendered, fill in the principal amount of Outstanding Notes which are to be tendered in the box entitled "Principal Amount Tendered (if less than all)." In such case, new Certificate(s) for the remainder of the Outstanding Notes that were evidenced by the old Certificate(s) will be sent to the tendering holder, unless the appropriate boxes on this Letter of Transmittal are completed, promptly after the Expiration Date. All Outstanding Notes represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided herein, tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date. In order for a withdrawal to be effective, a written, telegraphic or facsimile transmission of such notice of withdrawal must be timely received by the Exchange Agent at its address set forth above prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Outstanding Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to be withdrawn, and (if Certificates for such Outstanding Notes have been tendered) the name of the registered holder of the Outstanding Notes as set forth on the Certificate(s), if different from that of the person who tendered such Outstanding Notes. If Certificates for Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, the notice of withdrawal must specify the serial numbers on the particular Certificates for the Outstanding Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Outstanding Notes tendered for the account of an Eligible Institution. If Outstanding Notes have been tendered pursuant to the procedures for book-entry transfer set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Outstanding Notes and must otherwise comply with the procedures of DTC. Withdrawals of tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in the Prospectus under "The Exchange Offer--Procedures for Tendering Outstanding Notes." All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Authority, in its sole discretion, which determination shall be final and binding on all parties. Neither the Authority, any affiliates of the Authority, the Exchange Agent or any other person shall be under any duty to give any notification of any defects or irregularities in any notice 9 of withdrawal or incur any liability for failure to give any such notification. Any Outstanding Notes which have been tendered but which are withdrawn will be returned to the holder thereof promptly after withdrawal. 5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Outstanding Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) or on a security position listing, without alteration, enlargement or any change whatsoever. If any of the Outstanding Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Outstanding Notes are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are names in which Certificates are registered. If this Letter of Transmittal or any Certificates 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 must submit proper evidence satisfactory to the Company, in its sole discretion, of such persons' authority to so act. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Outstanding Notes listed and transmitted hereby, the Certificate(s) must be endorsed or accompanied by appropriate bond power(s), signed exactly as the name(s) of the registered owner appear(s) on the Certificate(s), and also must be accompanied by such opinions of counsel, certifications and other information as the Company or the Trustee for the Outstanding Notes may require in accordance with the restrictions on transfer applicable to the Outstanding Notes. Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution. 6. Special Issuance and Delivery Instructions. If Exchange Notes or Certificates for Outstanding Notes not exchanged are to be issued in the name of a person other than the signer of this Letter of Transmittal, or are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. In the case of issuance in a different name, the taxpayer identification number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at DTC as such holder may designate. If no such instructions are given, Outstanding Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. 7. Irregularities. The Authority will determine, in its sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Outstanding Notes, which determination shall be final and binding on all parties. The Authority reserves the absolute right, in its sole and absolute discretion, to reject any and all tenders determined by it not to be in proper form or the acceptance for exchange of which may, in the view of counsel to the Authority, be unlawful. The Authority also reserves the absolute right, subject to applicable law, to waive any of the conditions of the Exchange Offer set forth in the Prospectus under "The Exchange Offer--Conditions to the Exchange Offer" or any defect or irregularity in any tender of Outstanding Notes of any particular holder whether or not similar defects or irregularities are waived in the case of other holders. The Authority's interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of Outstanding Notes will be deemed to have been validly made until all defects or irregularities with respect to such tender have been cured or waived. Neither the Authority, any affiliates of the Authority, the Exchange Agent, or any other person shall be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. 10 8. Questions, Requests for Assistance and Additional Copies. Questions and requests for assistance may be directed to the Exchange Agent at its address and telephone number set forth above. Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 9. Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax law, a holder whose tendered Outstanding Notes are accepted for exchange is required to provide the Exchange Agent with such holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not provided with the correct TIN, the Internal Revenue Service (the "IRS") may subject the holder or other payee to a $50 penalty. In addition, payments to such holders or other payees with respect to Outstanding Notes exchanged pursuant to the Exchange Offer may be subject to 31% backup withholding. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent. The Exchange Agent will retain such amounts withheld during the 60 day period following the date of the Substitute Form W- 9. If the holder furnishes the Exchange Agent with its TIN within 60 days after the date of the Substitute Form W-9, the amounts retained during the 60 day period will be remitted to the holder and no further amounts shall be retained or withheld from payments made to the holder thereafter. If, however, the holder has not provided the Exchange Agent with its TIN within such 60 day period, amounts withheld will be remitted to the IRS as backup withholding. In addition, 31% of all payments made thereafter will be withheld and remitted to the IRS until a correct TIN is provided. The holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered owner of the Outstanding Notes or of the last transferee appearing on the transfers attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes are registered in more than one name or are not in the name of the actual owner, consult the Instructions to Form W-9 (Request for Identification Number and Certification) for additional guidance on which number to report. Certain holders (including, among others, corporations, financial institutions and certain foreign persons) may not be subject to these backup withholding and reporting requirements. Such holders should nevertheless complete the attached Substitute Form W-9 below, and write "exempt" on the face thereof, to avoid possible erroneous backup withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. Please consult the Instructions to Form W-9 (Request for Identification Number and Certification) for additional guidance on which holders are exempt from backup withholding. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 10. Mutilated, Lost, Destroyed or Stolen Certificates. If any Certificate representing Outstanding Notes has been mutilated, lost, destroyed or stolen, the holder should promptly notify the Exchange Agent. The holder will then be instructed as to the steps that must be taken in order to replace the Certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing mutilated, lost, destroyed or stolen Certificates have been followed. 11 11. Security Transfer Taxes. Holders who tender their Outstanding Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that if Exchange Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Outstanding Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes in connection with the Exchange Offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such transfer tax or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer tax will be billed directly to such tendering holder. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER WITH CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. 12 TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS: (See Instruction 9) PAYER'S NAME: FIRST UNION NATIONAL BANK Part 1--PLEASE PROVIDE YOUR Social security number or SUBSTITUTE TIN ON THE LINE AT RIGHT AND Employer identification CERTIFY BY SIGNING AND number Form W-9 DATING BELOW ----------------------- ---------------------------------------------------------- Department of Part 2--CERTIFICATION--Under penalties of perjury, I the Treasury certify that: Internal (1) The number shown on this form is my correct Revenue Service taxpayer identification number (or I am waiting for a number to be issued to me); Payer's (2) I am not subject to backup withholding either Request for because: (a) I am exempt from backup withholding; Taxpayer's (b) I have not been notified by the Internal Identification Revenue Service ("IRS") that I am subject to backup Number (TIN) withholding as a result of a failure to report all interest or dividends; or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) Any other information provided on this form is true and correct. Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. ---------------------------------------------------------- SIGNATURE ____________________________ Part 3-- Awaiting TIN [_] DATE _________________________________ ---------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. ---------------------------------------------------------- YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments made to me on account of the Exchange Notes shall be retained until I provide a taxpayer identification number to the Exchange Agent and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a taxpayer identification number. SIGNATURE: _________________ DATE: __________________ 13 EX-99.2 16 EXHIBIT 99.2 Exhibit 99.2 NOTICE OF GUARANTEED DELIVERY for Tender of 8 1/8% Senior Notes Due January 1, 2006 (the "Outstanding Notes") of Mohegan Tribal Gaming Authority This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be used to tender Outstanding Notes pursuant to the Exchange Offer described in the Prospectus dated April , 1999 (as the same may be amended or supplemented from time to time, the "Prospectus") of Mohegan Tribal Gaming Authority (the "Authority"), if certificates for the Outstanding Notes are not immediately available, or time will not permit the Outstanding Notes, the Letter of Transmittal and all other required documents to be delivered to First Union National Bank (the "Exchange Agent") prior to 5:00 p.m., New York City time, on [June 2,] 1999 or such later date and time to which the Exchange Offer may be extended (the "Expiration Date"), or the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be delivered by hand or sent by facsimile transmission or mail to the Exchange Agent, and must be received by the Exchange Agent prior to the Expiration Date. See "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus. The Exchange Agent for the Exchange Offer is: First Union National Bank By Mail: By Facsimile: By Hand or Overnight Courier: First Union National Bank (704) 590-7626 First Union National 1525 W.T. Harris Boulevard Attention: Customer Bank Charlotte, North Carolina Service Confirm by 28288-1153 Telephone: (704) 590-7408 1525 W.T. Harris Attention: Corporate Trust Boulevard Department Charlotte, North Carolina 28288-1153 Attention: Corporate Trust Department DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to the Authority, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, the Outstanding Notes indicated below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Procedures for Tendering Outstanding Notes." Name(s) of Registered Holder(s): ______________________________________________ (Please Print or Type) Signature(s): _________________________________________________________________ Address(es): __________________________________________________________________ _______________________________________________________________________________ Area Code(s) and Telephone Number(s): _________________________________________ Account Number: _______________________________________________________________ Date: _________________________________________________________________________ Certificate No(s). Principal Amount of Outstanding (if available) Notes Tendered* _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ * Must be in integral multiples of $1,000 principal amount. GUARANTEE OF DELIVERY (Not to be used for signature guarantee) The undersigned, 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 a correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that the undersigned will deliver to the Exchange Agent the certificates representing the Outstanding Notes being tendered hereby in proper form for transfer (or a confirmation of book-entry transfer of such Outstanding Notes, into the Exchange Agent's account at the book-entry transfer facility of The Depository Trust Company ("DTC")) with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, all within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. Name of Firm: ___________________ _____________________________________ Authorized Signature Address: ________________________ Name: _______________________________ _________________________________ Please Print or Type Zip Code Title: ______________________________ Telephone No.: __________________ Dated: ______________________________ The institution that completes this form must communicate the guarantee to the Exchange Agent and must deliver the certificates representing any Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent's account at DTC) and the Letter of Transmittal to the Exchange Agent within the time period shown herein. Failure to do so could result in a financial loss to such institution. 2 EX-99.3 17 EXHIBIT 99.3 Exhibit 99.3 Mohegan Tribal Gaming Authority Offer to Exchange its 8 1/8% Senior Notes Due January 1, 2006 Which Have Been Registered Under the Securities Act of 1933 For Any and All of its Outstanding 8 1/8% Senior Notes Due January 1, 2006 Pursuant to the Prospectus Dated April , 1999 TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: Mohegan Tribal Gaming Authority (the "Authority") is offering to exchange (the "Exchange Offer"), upon and subject to the terms and conditions set forth in the enclosed Prospectus, dated April , 1999 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of Transmittal"), its 8 1/8% Senior Notes due January 1, 2006 which have been registered under the Securities Act of 1933 (the "Exchange Notes") for any and all of its outstanding 8 1/8% Senior Notes due January 1, 2006 (the "Outstanding Notes"). The Exchange Offer is being made in order to satisfy certain obligations of the Authority contained in the Registration Agreement dated as of March 3, 1999, among the Authority, Salomon Smith Barney, NationsBanc Montgomery Securities, LLC, Bear, Stearns & Co. Inc., SG Cowen, BancBoston Robertson Stephens Inc, and Fleet Securities, Inc. In connection with the Exchange Offer, we are requesting that you contact your clients for whom you hold Outstanding Notes registered in your name or in the name of your nominee, or who hold Outstanding Notes registered in their own names. The Authority will not pay any fees or commissions to any broker, dealer or other person in connection with the solicitation of tenders pursuant to the Exchange Offer. However, you will, upon request, be reimbursed for reasonable out-of-pocket expenses incurred in connection with soliciting acceptances of the Exchange Offer. The Authority will pay or cause to be paid all transfer taxes applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer, except as set forth in the Prospectus and the Letter of Transmittal. For your information and for forwarding to your clients, we are enclosing the following documents: 1. Prospectus dated April , 1999; 2. A Letter of Transmittal for your use and for the information of your clients; 3. A form of Notice of Guaranteed Delivery; and 4. A form of letter which may be sent to your clients for whose account you hold Outstanding Notes registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Exchange Offer. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [JUNE 2,] 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY THE COMPANY (IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED). THE OUTSTANDING NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL, AT ANY TIME PRIOR TO THE EXPIRATION DATE. To participate in the Exchange Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, should be sent to the Exchange Agent and certificates representing the Outstanding Notes should be delivered to the Exchange Agent, all in accordance with the instructions set forth in the Prospectus and the Letter of Transmittal. If holders of Outstanding Notes wish to tender, but it is impracticable for them to forward their certificates for Outstanding Notes prior to the expiration of the Exchange Offer or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus and the Letter of Transmittal. Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to the Exchange Agent for the Outstanding Notes, at its address and telephone number set forth on the front of the Letter of Transmittal. Very truly yours, Mohegan Tribal Gaming Authority NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. 2 EX-99.4 18 EXHIBIT 99.4 Exhibit 99.4 Mohegan Tribal Gaming Authority Offer to Exchange its 8 1/8% Senior Notes Due January 1, 2006 Which Have Been Registered Under the Securities Act of 1933 For Any and All of its Outstanding 8 1/8% Senior Notes Due January 1, 2006 TO OUR CLIENTS: Enclosed for your consideration is a Prospectus, dated April , 1999 (the "Prospectus"), and a form of Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of Mohegan Tribal Gaming Authority (the "Authority") to exchange its 8 1/8% Senior Notes due January 1, 2006, which have been registered under the Securities Act of 1933 (the "Exchange Notes"), for any and all of its outstanding 8 1/8% Senior Notes due January 1, 2006 (the "Outstanding Notes"), upon the terms and subject to the conditions described in the Prospectus and the Letter of Transmittal. The Exchange Offer is being made in order to satisfy certain obligations of the Authority contained in the Registration Agreement dated as of March 3, 1999, among the Authority, Salomon Smith Barney, NationsBanc Montgomery Securities LLC, SG Cowen, Bear, Stearns & Co. Inc., BancBoston Robertson Stephens Inc. and Fleet Securities Inc. This material is being forwarded to you as the beneficial owner of the Outstanding Notes carried by us in your account but not registered in your name. A TENDER OF SUCH OUTSTANDING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf the Outstanding Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Outstanding Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York City time, on [June 2,] 1999, unless extended by the Authority (the "Expiration Date"). Any Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus and the Letter of Transmittal, at any time prior to the Expiration Date. If you wish to have us tender your Outstanding Notes, please so instruct us by completing, executing and returning to us the instruction form included with this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OUTSTANDING NOTES. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein, including the Prospectus and the accompanying form of Letter of Transmittal, relating to the Exchange Offer made by Mohegan Tribal Gaming Authority with respect to its Outstanding Notes. This will instruct you as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the Letter of Transmittal. The aggregate principal amount of the Outstanding Notes held by you for the account of the undersigned is (fill in amount): $ ___________________________________ of the 8 1/8% Senior Notes due January 1, 2006 With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box): [_] To TENDER the following Outstanding Notes held by you for the account of the undersigned (insert aggregate principal amount at maturity of Outstanding Notes to be tendered, in integral multiples of $1,000): $ ___________________________________ of the 8 1/8% Senior Notes due January 1, 2006 [_] NOT to tender any Outstanding Notes held by you for the account of the undersigned. 2 If the undersigned instructs you to tender the Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations, warranties and agreements contained in the Letter of Transmittal that are to be made with respect to the undersigned as beneficial owner. SIGN HERE Name of beneficial owner(s): __________________________________________________ Signature(s): _________________________________________________________________ Name(s) (please print): _______________________________________________________ Address: ______________________________________________________________________ Telephone Number: _____________________________________________________________ Taxpayer Identification or Social Security Number(s): _________________________ Date: _________________________________________________________________________ None of the Outstanding Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all the Outstanding Notes held by us for your account. 3 EX-99.5 19 EXHIBIT 99.5 Exhibit 99.5 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [JUNE 2,] 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). Mohegan Tribal Gaming Authority LETTER OF TRANSMITTAL Offer To Exchange Its 8 3/4% Senior Subordinated Notes Due January 1, 2009 Which Have Been Registered Under The Securities Act of 1933 For Any And All Of Its Outstanding 8 3/4% Senior Subordinated Notes Due January 1, 2009 Pursuant To The Prospectus Dated April , 1999 The Exchange Agent for the Exchange Offer is: State Street Bank and Trust Company By Facsimile: By Mail: (617) 664-5290 State Street Bank and Trust Company Attention: Customer Service Corporate Trust Department Confirm by Telephone to: (617) 664-5249 P.O. Box 778 Boston, MA 02102 Attention: Ralph Jones By Hand before 4:30 p.m.: By Overnight Courier and State Street Bank and Trust Company By Hand after 4:30 p.m.: Corporate Trust Department State Street Bank and Trust Company Two International Place - 4th Floor Corporate Trust Department Boston, MA 02110 Two International Place - 4th Floor Attention: Ralph Jones Boston, MA 02110 Attn: Ralph Jones DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below). This Letter of Transmittal is to be completed by holders of Outstanding Notes (as defined below) if the physical Outstanding Notes are to be forwarded herewith. If tenders of Outstanding Notes are to be made by book-entry transfer to an account maintained by State Street Bank & Trust Company (the "Exchange Agent") at The Depository Trust Company ("DTC"), instructions must be transmitted through the DTC Automated Tender Offer Program (ATOP) pursuant to the procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Holders of Original Notes that are tendering by book-entry transfer to the Exchange Agent's account at DTC should execute the tender through ATOP, for which the transaction will be eligible. DTC participants that are accepting the exchange offer as set forth in the Prospectus and this Letter of Transmittal (together, the "Exchange Offer") must transmit their acceptance to DTC which will edit and verify the acceptance and execute a book-entry delivery to the Exchange Agent's account at DTC, DTC will then send an Agent's Message to the Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of the Offer as the execution and delivery of a Letter of Transmittal by the participant identified in the Agent's Message. DTC participants may also accept the Exchange Offer by submitting a notice of guaranteed delivery through ATOP. Holders of Outstanding Notes whose certificates (the "Certificates") for such Outstanding Notes are not immediately available or who cannot deliver their Certificates, this Letter of Transmittal and all other required documents to the Exchange Agent on or prior to the Expiration Date or who cannot complete the procedures for book-entry transfer on a timely basis, may tender their Outstanding Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY List below the Outstanding Notes of which you are a holder. If the space provided below is inadequate, list the certificate numbers and principal amount on a separate signed schedule and attach that schedule to this Letter of Transmittal. See Instruction 3. ALL TENDERING HOLDERS COMPLETE THIS BOX: Description of Outstanding Notes Tendered - -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Fill in, if blank) Outstanding Notes Tendered - -------------------------------------------------------------------------------------------------------- Certificate Number(s)* (Attach additional Principal Amount Principal Amount list (Attach additional Tendered (if less if necessary) list if necessary) than all)** -------------------------------------------------------------------- $ -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Total Amount Tendered: $ $
- ------------------------------------------------------------------------------- * Need not be completed by book-entry holders. Such holders should check the appropriate box below and provide the requested information. ** Need not be completed if tendering for exchange all Outstanding Notes held. Outstanding Notes may be tendered in whole or in part in integral multiples of $1,000 principal amount. All Outstanding Notes held shall be deemed tendered unless a lesser number is specified in this column. See Instruction 4. 2 (Boxes Below To Be Checked By Eligible Institutions Only. See Instruction 1) [_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: _____________________________________________ DTC Account Number: ________________________________________________________ Transaction Code Number: ___________________________________________________ [_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ___________________________________________ Window Ticket Number (if any): _____________________________________________ Date of Notice of Guaranteed Delivery: _____________________________________ Institution Which Guaranteed Delivery: _____________________________________ If Guaranteed Delivery is to be made by book-entry transfer: Name of Tendering Institution: _____________________________________________ DTC Account Number: ________________________________________________________ Transaction Code Number: ___________________________________________________ [_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ Address: ___________________________________________________________________ ___________________________________________________________________ Telephone Number and Contact Person: _______________________________________ 3 Ladies and Gentlemen: The undersigned hereby tenders to Mohegan Tribal Gaming Authority (the "Authority"), the above described principal amount of the Authority's 8 3/4% Senior Subordinated Notes due January 1, 2009 (the "Outstanding Notes") in exchange for a like principal amount of the Authority's 8 3/4% Senior Subordinated Notes due January 1, 2009 (the "Exchange Notes"), which have been registered under the Securities Act of 1933 (the "Securities Act"), upon the terms and subject to the conditions set forth in the Prospectus dated January 29,1999 (as the same may be amended or supplemented from time to time, the "Prospectus"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Exchange Offer"). Subject to and effective upon the acceptance for exchange of the Outstanding Notes tendered herewith, the undersigned hereby sells, assigns and transfers to or upon the order of the Authority all right, title and interest in and to such Outstanding Notes as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent is also acting as agent of the Authority in connection with the Exchange Offer and as Trustee under the Senior Subordinated Notes Indenture for the Outstanding Notes and the Exchange Notes) with respect to the tendered Outstanding Notes, with full power of substitution (such power of attorney being an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to: (i) deliver such Outstanding Notes to the Authority together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Authority upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to be issued in exchange for such Outstanding Notes; (ii) present Certificates for such Outstanding Notes for transfer, and to transfer such Outstanding Notes on the account books maintained by DTC; and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding Notes, all in accordance with the terms and conditions of the Exchange Offer. THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE AUTHORITY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE OUTSTANDING NOTES TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER. The name(s) and address(es) of the registered holder(s) of the Outstanding Notes tendered hereby should be printed above, if they are not already set forth above, as they appear on the Certificates representing such Outstanding Notes. The Certificate number(s) and the Outstanding Notes that the undersigned wishes to tender should be indicated in the appropriate boxes above. If any tendered Outstanding Notes are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Outstanding Notes than are tendered or accepted for exchange, Certificates for such nonexchanged or nontendered Outstanding Notes will be returned (or, in the case of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes will be credited to an account maintained at DTC), without expense to the tendering holder promptly following the expiration or termination of the Exchange Offer. 4 The undersigned understands that tenders of Outstanding Notes pursuant to any one of the procedures described in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and in the instructions herein will, upon the Company's acceptance for exchange of such tendered Outstanding Notes, constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Outstanding Notes tendered hereby. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, the undersigned hereby directs that the Exchange Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Outstanding Notes, that such Exchange Notes be credited to the account indicated above maintained at DTC. If applicable, substitute Certificates representing Outstanding Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Outstanding Notes, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery Instructions," please deliver Exchange Notes to the undersigned at the address shown below the undersigned's signature. BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT: (i) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF THE AUTHORITY (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT), OR IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT TO THE EXTENT APPLICABLE; (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS; AND (iii) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IF THE UNDERSIGNED IS NOT A BROKER-DEALER, BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES THAT IT IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF EXCHANGE NOTES. IF THE UNDERSIGNED IS A BROKER-DEALER THAT WILL RECEIVE EXCHANGE NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER, BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES THAT SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER A PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT). THE COMPANY HAS AGREED THAT STARTING ON THE EXPIRATION DATE AND ENDING ON THE CLOSE OF BUSINESS ON THE FIRST ANNIVERSARY OF THE EXPIRATION DATE, IT WILL MAKE THE PROSPECTUS AVAILABLE TO ANY PARTICIPATING BROKER-DEALER IN CONNECTION WITH ANY SUCH RESALE. All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. Except as stated in the Prospectus and in the Instructions contained in this Letter of Transmittal, this tender is irrevocable. 5 PLEASE SIGN HERE PLEASE SIGN HERE _____________________________________ _______________________________________ Authorized Signature Authorized Signature Name:________________________________ Name:__________________________________ Title:_______________________________ Title:_________________________________ Address:_____________________________ Address:_______________________________ _____________________________________ _______________________________________ Telephone Number:____________________ Telephone Number:______________________ Dated:_______________________________ Dated:_________________________________ _____________________________________ _______________________________________ Taxpayer Identification or Social Taxpayer Identification or Social Security Number Security Number (NOTE: Signature(s) must be guaranteed if required by Instructions 2 and 5. This Letter of Transmittal must be signed by the registered holder(s) exactly as the name(s) appear(s) on Certificate(s) for the Outstanding Notes hereby tendered or on a security position listing, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith, including such opinions of counsel, certifications and other information as may be required by the Authority or the Trustee for the Outstanding Notes to comply with the restrictions on transfer applicable to the Outstanding Notes. If signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary capacity or representative capacity, please set forth the signer's full title. See Instructions 2 and 5. Please complete substitute Form W-9 below.) 6 Guarantee of Signature(s) (If required--see Instructions 2 and 5) Signature(s) Guaranteed by an Eligible Institution:_____________________________ Date:______________________ Authorized Signature Name of Eligible Institution Guaranteeing Signature:_______________________________________________________ Address:_______________________________ _______________________________________ Capacity (full title):_______________ ______________________________________ Telephone Number:____________________ SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 2, 5 and 6) (See Instructions 2, 5 and 6) To be completed ONLY if the Ex- To be completed ONLY if Exchange change Notes or any Outstanding Notes or any Outstanding Notes Notes that are not tendered are to that are not tendered are to be be issued in the name of someone sent to someone other than the other than the registered hold- registered holder(s) of the er(s) of the Outstanding Notes Outstanding Notes whose name(s) whose name(s) appear(s) above. appear(s) above, or to such registered holder(s) at an address other than that shown above. Issue: Mail: [_] Outstanding Notes not tendered, [_] Outstanding Notes not tendered, to: to: [_] Exchange Notes, to: [_] Exchange Notes, to: Name(s) ___________________________ Name(s)____________________________ Address ___________________________ Address ___________________________ ___________________________________ ___________________________________ Telephone Number:__________________ Telephone Number:__________________ ___________________________________ ___________________________________ (Tax Identification or Social (Tax Identification or Social Security Number) Security Number) 7 INSTRUCTIONS (Forming part of the terms and conditions of the Exchange Offer) 1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed if physical Outstanding Notes ("Certificates") are to be forwarded herewith. If tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus instructions must be transmitted through the DTC Automated Tender Offer Program (ATOP). Certificates, or timely confirmation of a book- entry transfer of such Outstanding Notes into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or execution thereof on ATOP), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. The term "book-entry confirmation" means a timely confirmation of book-entry transfer of Outstanding Notes into the Exchange Agent's account at DTC. Outstanding Notes may be tendered in whole or in part in integral multiples of $1,000 principal amount. Holders who wish to tender their Outstanding Notes and: (i) whose Certificates for such Outstanding Notes are not immediately available; (ii) who cannot deliver their Certificates, this Letter of Transmittal and all other required documents to the Exchange Agent prior to the Expiration Date; or (iii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Outstanding Notes by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form accompanying this Letter of Transmittal, or an Agent's message with respect to guaranteed delivery that is accepted by the Company must be received by the Exchange Agent prior to the Expiration Date; and (iii) the Certificates (or a book-entry confirmation) representing all tendered Outstanding Notes, in proper form for transfer, together with a Letter of Transmittal (or facsimile thereof), or in the case of a book-entry transfer, a properly transmitted Agent's message and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile or mail to the Exchange Agent and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. For Outstanding Notes to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery prior to the Expiration Date. As used herein and in the Prospectus, "Eligible Institution" means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," which is a member of one of the following recognized signature guarantee programs: 1. the Securities Transfer Agents Medallion Program (STAMP) 2. the New York Stock Exchange Medallion Signature Program (MSP) 3. the Stock Exchanges Medallion Program (SEMP). THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. 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 TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO 8 LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE AUTHORITY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS. The Authority will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a Letter of Transmittal (or execution thereof on ATOP), waives any right to receive any notice of the acceptance of such tender. 2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if: (i) this Letter of Transmittal is signed by the registered holder (which shall include any participant in DTC whose name appears on a security position listing as the owner of the Outstanding Notes) of Outstanding Notes tendered herewith, unless such holder has completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" above; or (ii) such Outstanding Notes are tendered for the account of a firm that is an Eligible Institution. In all other cases, an Eligible Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. 3. Inadequate Space. If the space provided in the box captioned "Description of Outstanding Notes Tendered" is inadequate, the Certificate number(s) and/or the principal amount of Outstanding Notes and any other required information should be listed on a separate signed schedule and attached to this Letter of Transmittal. 4. Partial Tenders and Withdrawal Rights. (Not applicable to Holders who tender by book-entry transfer). Tenders of Outstanding Notes will be accepted only in integral multiples of $1,000 principal amount. If less than all the Outstanding Notes evidenced by any Certificate submitted are to be tendered, fill in the principal amount of Outstanding Notes which are to be tendered in the box entitled "Principal Amount Tendered (if less than all)." In such case, new Certificate(s) for the remainder of the Outstanding Notes that were evidenced by the old Certificate(s) will be sent to the tendering holder, unless the appropriate boxes on this Letter of Transmittal are completed, promptly after the Expiration Date. All Outstanding Notes represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided herein, tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date. In order for a withdrawal to be effective, a written, telegraphic or facsimile transmission of such notice of withdrawal must be timely received by the Exchange Agent at its address set forth above prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Outstanding Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to be withdrawn, and (if Certificates for such Outstanding Notes have been tendered) the name of the registered holder of the Outstanding Notes as set forth on the Certificate(s), if different from that of the person who tendered such Outstanding Notes. If Certificates for Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, the notice of withdrawal must specify the serial numbers on the particular Certificates for the Outstanding Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Outstanding Notes tendered for the account of an Eligible Institution. If Outstanding Notes have been tendered pursuant to the procedures for book-entry transfer set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Outstanding Notes and must otherwise comply with the procedures of DTC. Withdrawals of tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in the Prospectus under "The Exchange Offer--Procedures for Tendering Outstanding Notes." 9 All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Authority, in its sole discretion, which determination shall be final and binding on all parties. Neither the Authority, any affiliates of the Authority, the Exchange Agent or any other person shall be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Outstanding Notes which have been tendered but which are withdrawn will be returned to the holder thereof promptly after withdrawal. 5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Outstanding Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) or on a security position listing, without alteration, enlargement or any change whatsoever. If any of the Outstanding Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Outstanding Notes are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are names in which Certificates are registered. If this Letter of Transmittal or any Certificates 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 must submit proper evidence satisfactory to the Company, in its sole discretion, of such persons' authority to so act. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Outstanding Notes listed and transmitted hereby, the Certificate(s) must be endorsed or accompanied by appropriate bond power(s), signed exactly as the name(s) of the registered owner appear(s) on the Certificate(s), and also must be accompanied by such opinions of counsel, certifications and other information as the Company or the Trustee for the Outstanding Notes may require in accordance with the restrictions on transfer applicable to the Outstanding Notes. Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution. 6. Special Issuance and Delivery Instructions. If Exchange Notes or Certificates for Outstanding Notes not exchanged are to be issued in the name of a person other than the signer of this Letter of Transmittal, or are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. In the case of issuance in a different name, the taxpayer identification number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at DTC as such holder may designate. If no such instructions are given, Outstanding Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. 7. Irregularities. The Authority will determine, in its sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Outstanding Notes, which determination shall be final and binding on all parties. The Authority reserves the absolute right, in its sole and absolute discretion, to reject any and all tenders determined by it not to be in proper form or the acceptance for exchange of which may, in the view of counsel to the Authority, be unlawful. The Authority also reserves the absolute right, subject to applicable law, to waive any of the conditions of the Exchange Offer set forth in the Prospectus under "The Exchange Offer--Conditions to the Exchange Offer" or any defect or irregularity in any tender of Outstanding Notes of any particular holder whether or not similar defects or irregularities are waived in the case of other holders. The Authority's interpretation of the terms and conditions of the 10 Exchange Offer (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of Outstanding Notes will be deemed to have been validly made until all defects or irregularities with respect to such tender have been cured or waived. Neither the Authority, any affiliates of the Authority, the Exchange Agent, or any other person shall be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. 8. Questions, Requests for Assistance and Additional Copies. Questions and requests for assistance may be directed to the Exchange Agent at its address and telephone number set forth above. Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 9. Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax law, a holder whose tendered Outstanding Notes are accepted for exchange is required to provide the Exchange Agent with such holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not provided with the correct TIN, the Internal Revenue Service (the "IRS") may subject the holder or other payee to a $50 penalty. In addition, payments to such holders or other payees with respect to Outstanding Notes exchanged pursuant to the Exchange Offer may be subject to 31% backup withholding. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent. The Exchange Agent will retain such amounts withheld during the 60 day period following the date of the Substitute Form W- 9. If the holder furnishes the Exchange Agent with its TIN within 60 days after the date of the Substitute Form W-9, the amounts retained during the 60 day period will be remitted to the holder and no further amounts shall be retained or withheld from payments made to the holder thereafter. If, however, the holder has not provided the Exchange Agent with its TIN within such 60 day period, amounts withheld will be remitted to the IRS as backup withholding. In addition, 31% of all payments made thereafter will be withheld and remitted to the IRS until a correct TIN is provided. The holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered owner of the Outstanding Notes or of the last transferee appearing on the transfers attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes are registered in more than one name or are not in the name of the actual owner, consult the Instructions to Form W-9 (Request for Identification Number and Certification) for additional guidance on which number to report. Certain holders (including, among others, corporations, financial institutions and certain foreign persons) may not be subject to these backup withholding and reporting requirements. Such holders should nevertheless complete the attached Substitute Form W-9 below, and write "exempt" on the face thereof, to avoid possible erroneous backup withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. Please consult the Instructions to Form W-9 (Request for Identification Number and Certification) for additional guidance on which holders are exempt from backup withholding. 11 Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 10. Mutilated, Lost, Destroyed or Stolen Certificates. If any Certificate representing Outstanding Notes has been mutilated, lost, destroyed or stolen, the holder should promptly notify the Exchange Agent. The holder will then be instructed as to the steps that must be taken in order to replace the Certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing mutilated, lost, destroyed or stolen Certificates have been followed. 11. Security Transfer Taxes. Holders who tender their Outstanding Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that if Exchange Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Outstanding Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes in connection with the Exchange Offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such transfer tax or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer tax will be billed directly to such tendering holder. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER WITH CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. 12 TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS: (See Instruction 9) PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY Part 1--PLEASE PROVIDE YOUR TIN ON THE LINE AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Social security number or SUBSTITUTE Employer identification number Form W-9 ----------------------- ---------------------------------------------------------- Department of Part 2--CERTIFICATION--Under penalties of perjury, I the Treasury certify that: Internal (1) The number shown on this form is my correct Revenue Service taxpayer identification number (or I am waiting for a number to be issued to me); Payer's (2) I am not subject to backup withholding either Request for because: (a) I am exempt from backup withholding; Taxpayer's (b) I have not been notified by the Internal Identification Revenue Service ("IRS") that I am subject to backup Number (TIN) withholding as a result of a failure to report all interest or dividends; or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) Any other information provided on this form is true and correct. Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. ---------------------------------------------------------- SIGNATURE ____________________________ Part 3-- Awaiting TIN [_] DATE _________________________________ ---------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. ---------------------------------------------------------- YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments made to me on account of the Exchange Notes shall be retained until I provide a taxpayer identification number to the Exchange Agent and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a taxpayer identification number. SIGNATURE: _________________ DATE: __________________ 13 EX-99.6 20 EXHIBIT 99.6 Exhibit 99.6 NOTICE OF GUARANTEED DELIVERY for Tender of 8 3/4% Senior Subordinated Notes Due January 1, 2009 (the "Outstanding Notes") of Mohegan Tribal Gaming Authority This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be used to tender Outstanding Notes pursuant to the Exchange Offer described in the Prospectus dated April , 1999 (as the same may be amended or supplemented from time to time, the "Prospectus") of Mohegan Tribal Gaming Authority (the "Authority"), if certificates for the Outstanding Notes are not immediately available, or time will not permit the Outstanding Notes, the Letter of Transmittal and all other required documents to be delivered to State Street Bank and Trust Company (the "Exchange Agent") prior to 5:00 p.m., New York City time, on [June 2,] 1999 or such later date and time to which the Exchange Offer may be extended (the "Expiration Date"), or the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be delivered by hand or sent by facsimile transmission or mail to the Exchange Agent, and must be received by the Exchange Agent prior to the Expiration Date. See "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus. The Exchange Agent for the Exchange Offer is: STATE STREET BANK AND TRUST COMPANY By Facsimile: By Mail: By Hand before 4:30 p.m.: (617) 664-5290 State Street Bank and State Street Bank and Attention: Customer Trust Company Trust Company Service Confirm by Corporate Trust Corporate Trust Telephone to: (617) 664-5249 Department Department P.O. Box 778 Two International Place Boston, MA 02102 --4th Floor Attention: Ralph Jones Boston, MA 02110 Attention: Ralph Jones By Overnight Courier and By Hand after 4:30 p.m.: State Street Bank and Trust Company Corporate Trust Department Two International Place--4th Floor Boston, MA 02110 Attention: Ralph Jones DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to the Authority, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, the Outstanding Notes indicated below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Procedures for Tendering Outstanding Notes." Name(s) of Registered Holder(s): ______________________________________________ (Please Print or Type) Signature(s): _________________________________________________________________ Address(es): __________________________________________________________________ _______________________________________________________________________________ Area Code(s) and Telephone Number(s): _________________________________________ Account Number: _______________________________________________________________ Date: _________________________________________________________________________ Certificate No(s). Principal Amount of Outstanding (if available) Notes Tendered* _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ _________________________________ _____________________________________ * Must be in integral multiples of $1,000 principal amount. GUARANTEE OF DELIVERY (Not to be used for signature guarantee) The undersigned, 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 a correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that the undersigned will deliver to the Exchange Agent the certificates representing the Outstanding Notes being tendered hereby in proper form for transfer (or a confirmation of book-entry transfer of such Outstanding Notes, into the Exchange Agent's account at the book-entry transfer facility of The Depository Trust Company ("DTC")) with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, all within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. Name of Firm: ___________________ _____________________________________ Address: ________________________ Authorized Signature _________________________________ Name: _______________________________ Zip Code Please Print or Type Telephone No.: __________________ Title: ______________________________ Dated: ______________________________ The institution that completes this form must communicate the guarantee to the Exchange Agent and must deliver the certificates representing any Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent's account at DTC) and the Letter of Transmittal to the Exchange Agent within the time period shown herein. Failure to do so could result in a financial loss to such institution. 2 EX-99.7 21 EXHIBIT 99.7 Exhibit 99.7 Mohegan Tribal Gaming Authority Offer to Exchange its 8 3/4% Senior Subordinated Notes Due January 1, 2009 Which Have Been Registered Under the Securities Act of 1933 For Any and All of its Outstanding 8 3/4% Senior Subordinated Notes Due January 1, 2009 Pursuant to the Prospectus Dated April , 1999 TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: Mohegan Tribal Gaming Authority (the "Authority") is offering to exchange (the "Exchange Offer"), upon and subject to the terms and conditions set forth in the enclosed Prospectus, dated April , 1999 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of Transmittal"), its 8 3/4% Senior Subordinated Notes due January 1, 2009 which have been registered under the Securities Act of 1933 (the "Exchange Notes") for any and all of its outstanding 8 3/4% Senior Subordinated Notes due January 1, 2009 (the "Outstanding Notes"). The Exchange Offer is being made in order to satisfy certain obligations of the Authority contained in the Registration Rights Agreement dated as of March 3, 1999, among the Authority, Salomon Smith Barney, NationsBanc Montgomery Securities LLC, SG Cowen, Bear, Stearns & Co. Inc., BancBoston Robertson Stephens, Inc. and Fleet Securities Inc. In connection with the Exchange Offer, we are requesting that you contact your clients for whom you hold Outstanding Notes registered in your name or in the name of your nominee, or who hold Outstanding Notes registered in their own names. The Authority will not pay any fees or commissions to any broker, dealer or other person in connection with the solicitation of tenders pursuant to the Exchange Offer. However, you will, upon request, be reimbursed for reasonable out-of-pocket expenses incurred in connection with soliciting acceptances of the Exchange Offer. The Authority will pay or cause to be paid all transfer taxes applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer, except as set forth in the Prospectus and the Letter of Transmittal. For your information and for forwarding to your clients, we are enclosing the following documents: 1. Prospectus dated April , 1999; 2. A Letter of Transmittal for your use and for the information of your clients; 3. A form of Notice of Guaranteed Delivery; and 4. A form of letter which may be sent to your clients for whose account you hold Outstanding Notes registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Exchange Offer. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [JUNE 2,] 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY THE COMPANY (IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED). THE OUTSTANDING NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL, AT ANY TIME PRIOR TO THE EXPIRATION DATE. To participate in the Exchange Offer, a duly executed and properly completed Letter of Transmittal (or execution on ATOP), with any required signature guarantees and any other required documents, should be sent to the Exchange Agent and certificates representing the Outstanding Notes should be delivered to the Exchange Agent, all in accordance with the instructions set forth in the Prospectus and the Letter of Transmittal. If holders of Outstanding Notes wish to tender, but it is impracticable for them to forward their certificates for Outstanding Notes prior to the expiration of the Exchange Offer or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus and the Letter of Transmittal. Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to the Exchange Agent for the Outstanding Notes, at its address and telephone number set forth on the front of the Letter of Transmittal. Very truly yours, Mohegan Tribal Gaming Authority NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. 2 EX-99.8 22 EXHIBIT 99.8 Exhibit 99.8 Mohegan Tribal Gaming Authority Offer to Exchange its 8 3/4% Senior Subordinated Notes Due January 1, 2009 Which Have Been Registered Under the Securities Act of 1933 For Any and All of its Outstanding 8 3/4% Senior Subordinated Notes Due January 1, 2009 TO OUR CLIENTS: Enclosed for your consideration is a Prospectus, dated April , 1999 (the "Prospectus"), and a form of Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of Mohegan Tribal Gaming Authority (the "Authority") to exchange its 8 3/4% Senior Subordinated Notes due January 1, 2009, which have been registered under the Securities Act of 1933 (the "Exchange Notes"), for any and all of its outstanding 8 3/4% Senior Subordinated Notes due January 1, 2009 (the "Outstanding Notes"), upon the terms and subject to the conditions described in the Prospectus and the Letter of Transmittal. The Exchange Offer is being made in order to satisfy certain obligations of the Authority contained in the Registration Agreement dated as of March 3, 1999, among the Authority, Salomon Smith Barney, NationsBanc Montgomery Securities LLC, SG Cowen, Bear, Stearns & Co. Inc., BancBoston Robertson Stephens Inc. and Fleet Securities Inc. This material is being forwarded to you as the beneficial owner of the Outstanding Notes carried by us in your account but not registered in your name. A TENDER OF SUCH OUTSTANDING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf the Outstanding Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Outstanding Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York City time, on [June 2,] 1999, unless extended by the Authority (the "Expiration Date"). Any Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus and the Letter of Transmittal, at any time prior to the Expiration Date. If you wish to have us tender your Outstanding Notes, please so instruct us by completing, executing and returning to us the instruction form included with this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OUTSTANDING NOTES. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein, including the Prospectus and the accompanying form of Letter of Transmittal, relating to the Exchange Offer made by Mohegan Tribal Gaming Authority with respect to its Outstanding Notes. This will instruct you as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the Letter of Transmittal. The aggregate principal amount of the Outstanding Notes held by you for the account of the undersigned is (fill in amount): $ ___________________________________ of the 8 3/4% Senior Subordinated Notes due January 1, 2009 With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box): [_]To TENDER the following Outstanding Notes held by you for the account of the undersigned (insert aggregate principal amount at maturity of Outstanding Notes to be tendered, in integral multiples of $1,000): $ ___________________________________ of the 8 3/4% Senior Subordinated Notes due January 1, 2009 [_]NOT to tender any Outstanding Notes held by you for the account of the undersigned. 2 If the undersigned instructs you to tender the Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations, warranties and agreements contained in the Letter of Transmittal that are to be made with respect to the undersigned as beneficial owner. SIGN HERE Name of beneficial owner(s): __________________________________________________ Signature(s): _________________________________________________________________ Name(s) (please print): _______________________________________________________ Address: ______________________________________________________________________ Telephone Number: _____________________________________________________________ Taxpayer Identification or Social Security Number(s): _________________________ Date: _________________________________________________________________________ None of the Outstanding Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all the Outstanding Notes held by us for your account. 3 -----END PRIVACY-ENHANCED MESSAGE-----