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CASH COLLATERAL AND DISBURSEMENT AGREEMENT

Cash Collateral Agreement

CASH COLLATERAL AND DISBURSEMENT AGREEMENT | Document Parties: DIAMOND JO, LLC | U.S. BANK NATIONAL ASSOCIATION, | DIAMOND JO WORTH CORP., You are currently viewing:
This Cash Collateral Agreement involves

DIAMOND JO, LLC | U.S. BANK NATIONAL ASSOCIATION, | DIAMOND JO WORTH CORP.,

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Title: CASH COLLATERAL AND DISBURSEMENT AGREEMENT
Governing Law: New York     Date: 8/25/2005
Law Firm: Peninsula Gaming Partners, LLC    

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Exhibit 10.2

 

EXECUTION COPY

 

CASH COLLATERAL AND DISBURSEMENT AGREEMENT

 

 

among

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as the Disbursement Agent,

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as the Trustee,

 

 

and

 

 

DIAMOND JO WORTH, LLC

 

and

 

DIAMOND JO WORTH CORP.,

 

together, as the Issuers

 

 

Dated as of July 19, 2005

 



 

TABLE OF CONTENTS

 

1.

Definitions

 

 

1.1

Defined Terms

 

 

1.2

Additional Defined Terms

 

 

1.3

Rules of Interpretation

 

 

 

 

 

2.

Establishment of Accounts

 

 

2.1

Appointment of Disbursement Agent

 

 

2.2

Establishment of Accounts

 

 

2.3

Pledge Agreement

 

 

2.4

Investment of Funds in Accounts

 

 

2.5

Agency

 

 

2.6

Waiver of Set-off Rights

 

 

 

 

 

3.

Disbursements from Accounts

 

 

3.1

Conditions to Disbursement

 

 

3.2

Method of Disbursement

 

 

3.3

Disbursement Agent’s Compensation

 

 

3.4

Transfer of Funds to the Trustee

 

 

 

 

 

4.

Agreements of the Issuers, the Disbursement Agent and the Trustee

 

 

4.1

Disbursement Requests and Disbursements

 

 

4.2

Insufficient Available Funds

 

 

 

 

 

5.

Interest Reserve

 

 

5.1

Interest Disbursements

 

 

5.2

Interest Reserve Account Amounts

 

 

 

 

 

6.

Certain Covenants

 

 

6.1

Notice of Opening

 

 

6.2

Issuers’ Officer’s Certificates.

 

 

6.3

Officer’s Certificate as Representation and Warranty

 

 

 

 

 

7.

Construction Disbursement Account

 

 

7.1

Conditions to Initial Disbursements

 

 

7.2

Conditions to Subsequent Disbursements

 

 

7.3

Advance Disbursements

 

 

7.4

Disbursements after an Event of Default

 

 

7.5

Final Disbursement of Funds Following Opening

 

 

7.6

First Disbursement Request.

 

 

 

 

 

8.

Amendments to Construction Disbursement Budget; Amendments to Contracts; Amendments to Facility Cost Schedule and Cost Overruns.

 

 

8.1

Construction Disbursement Budget Amendment Process

 

 

8.2

Contract Amendment Process

 

 

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8.3

Contracts Entered into after the Issue Date

 

 

8.4

Facility Cost Schedule and Cost Overruns

 

 

 

 

 

9.

Events of Default

 

 

9.1

Indenture

 

 

9.2

Exception to Prior Disbursement

 

 

9.3

Insufficient Funds

 

 

9.4

Performance of Certain Obligations

 

 

9.5

Failure to Deliver Collateral Agreements

 

 

9.6

Abandonment of Facility

 

 

9.7

Termination or Invalidity of Construction Documents

 

 

 

 

 

10.

Disbursed Funds Account

 

 

10.1

Rights of the Issuers to Disbursed Funds Account

 

 

10.2

Right to Substitute Disbursed Funds Account

 

 

 

 

 

11.

Indemnity.

 

 

11.1

Limitation of Liability

 

 

11.2

Reliance on Certificates

 

 

 

 

 

12.

Indemnity

 

 

 

 

13.

Termination

 

 

 

 

14.

Substitution or Resignation

 

 

14.1

Disbursement Agent

 

 

 

 

15.

Account Statement

 

 

 

 

16.

Notice

 

 

 

 

17.

Miscellaneous

 

 

17.1

Waiver

 

 

17.2

Invalidity

 

 

17.3

No Authority

 

 

17.4

Assignment

 

 

17.5

Benefit

 

 

17.6

Time

 

 

17.7

Governing Law; Waiver of Jury Trial

 

 

17.8

Entire Agreement; Amendments

 

 

17.9

Notices

 

 

17.10

Counterparts

 

 

17.11

Captions

 

 

17.12

Right to Consult Counsel

 

 

17.13

Disputes

 

 

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EXHIBITS

 

Exhibit A

 

Form of Initial Disbursements Certificate

Exhibit B-1

 

Form of Issuers’ Closing Certificate

Attachment A to Exhibit B-1

 

Form of Issuers’ Officer’s Certificate to Issuers’ Closing Certificate

Exhibit B-2

 

Form of Disbursement Agent’s Closing Certification

Exhibit B-3

 

Form of Trustee’s Closing Certification

Exhibit C

 

Form of Interest Disbursement Request

Exhibit D-1

 

Form of Construction Disbursement Request and Certificate

Attachment A to Exhibit D-1

 

Form of Issuers’ Officer’s Certificate to Construction Disbursement Request and Certificate

Exhibit D-2

 

Form of Advance Disbursement Request and Certificate

Attachment A to Exhibit D-2

 

Form of Issuers’ Officer’s Certificate to Advance Disbursement Request and Certificate

Exhibit D-3

 

Form of First Disbursement Officer’s Certificate

Exhibit E

 

Form of Construction Disbursement Budget Amendment Certificate

Exhibit F-1

 

Form of Contract Amendment Certificate

Exhibit F-2

 

Form of Additional Contract Certificate

Exhibit G

 

Form of Consent to Collateral Assignment of Contract

Exhibit H

 

Form of Pro Forma Title Policy

Exhibit I

 

Property Legal Description

 

iii



 

CASH COLLATERAL AND DISBURSEMENT AGREEMENT

 

THIS CASH COLLATERAL AND DISBURSEMENT AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “ Agreement ”) is dated as of July 19, 2005, by and among U.S. Bank National Association, having an office at 60 Livingston Avenue, St. Paul, Minnesota 55107, as trustee (together with its successors and assigns, the “ Trustee ”) under the Indenture (as defined below), U.S. Bank National Association, as disbursement agent (together with its successors and assigns, the “ Disbursement Agent ”), Diamond Jo Worth, LLC, a Delaware limited liability company (the “ Company ”), and Diamond Jo Worth Corp., a Delaware corporation (“ DJW Corp. ” and, together with the Company, the “Issuers” ).

 

R E C I T A L S

 

A.            Notes .  The Issuers have issued Forty Million Dollars ($40,000,000) in aggregate principal amount of their 11% Senior Secured Notes due 2012 (the “ Original Notes ” and, together with any additional Notes issued under the Indenture and any new notes issued in exchange for the Original Notes or such additional Notes, the “ Notes ”) concurrently herewith.  The Notes have been issued pursuant to the provisions of an Indenture (as amended, supplemented or otherwise modified from time to time, the “ Indenture ”) dated the date hereof, among the Issuers and the Trustee, on behalf of itself and the holders of the Notes.  Net proceeds from the issuance of Notes will be disbursed as follows:  (a) Thirty Four Million Two Hundred Thousand Dollars ($34,200,000.00) (the “ Construction Proceeds ”) will be deposited contemporaneously with the execution of this Agreement into Account No. 790235001 held at the Disbursement Agent (said account, or any substitute account selected in accordance with the terms of this Agreement, is referred to herein as the “ Construction Disbursement Account ”), to be maintained by the Disbursement Agent pursuant to Section 2 of this Agreement; and (b) Three Million Three Hundred Thousand Dollars ($3,300,000) (the “ Interest Reserve Proceeds ,” which, together with the Construction Proceeds shall be referred to herein as the “ Proceeds ”), will be deposited contemporaneously with the execution of this Agreement into Account No. 790235002, held at the Disbursement Agent (said account, or any substitute account selected in accordance with the terms of this Agreement, is referred to herein as the “ Interest Reserve Account ”), to be maintained by the Disbursement Agent pursuant to Section 2 of this Agreement.

 

B.            Collateral and Collateral Assignment .  As security for their obligations under the Notes and the Indenture, the Issuers have granted security interests to the Trustee, on behalf of itself and the holders of Notes, in certain assets and have collaterally assigned certain contracts to the Trustee.  As further security for their obligations under the Notes and the Indenture, the Issuers also have granted pursuant to the Pledge Agreement a security interest to the Trustee, on behalf of itself and the holders of the Notes, in all of the Issuers’ right, title and interest in the Construction Disbursement Account, the Interest Reserve Account and the Disbursed Funds Account (as defined herein) and any Proceeds or other amounts held in any such accounts.

 

C.            Purpose .  The parties intend that portions of the Proceeds and the other amounts deposited from time to time in the Construction Disbursement Account be used for the design, development, construction, equipping and operation of the Facility (as defined herein), all in accordance with this Agreement and the Indenture.  The parties have entered into this Agreement

 

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in order to set forth the conditions upon which, and the manner in which, funds will be disbursed in order to permit the Company to design, develop, construct, equip and operate the Facility and to pay certain Debt Financing Costs when due and payable under the Notes.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Definitions .

 

1.1            Defined Terms .  In this Agreement (including the preamble and Recitals), the terms defined in this Section 1 shall have the meanings herein specified, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined:

 

Accounts ” means the Interest Reserve Account and the Construction Disbursement Account.

 

Additional Contract Certificate ” means the Officer’s Certificate of the Issuers in the form of Exhibit F-2 attached hereto.

 

Additional Revenue ” means revenue (including, without limitation, investment income (loss), less any losses or costs associated therewith, earned on amounts in the Construction Disbursement Account) generated by the Issuers (other than from disposition of its assets), but only to the extent that such revenue is held by the Issuers, free and clear of any claims of any other parties whatsoever, other than claims of the Trustee and holders of the Notes; provided , however , that as of any date of measurement, Additional Revenue also shall include investment income (loss), less any losses or costs associated therewith, which the Issuers reasonably determine (with the reasonable concurrence of the Disbursement Agent) will be earned on funds in the Construction Disbursement Account through the reasonably anticipated date of Opening, taking into account the current and future reasonably anticipated rates of return on Cash Equivalents in the Construction Disbursement Account and the reasonably anticipated times and amounts of draws therefrom for the payment of Construction Expenses or in connection with permitted amendments to the Construction Disbursement Budget (as applicable).

 

Advance Disbursements ” means a disbursement from the Construction Disbursement Account to the Issuers pursuant to Section 7.3 and in accordance with the Construction Disbursement Budget, notwithstanding the fact that not all certifications and lien releases have been obtained and other disbursement conditions have not been satisfied; provided , however , that the aggregate amount of Advance Disbursements outstanding at any time shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000).

 

Advance Disbursement Certificate ” means an Officer’s Certificate from the Issuers in the form of Exhibit D-2 attached hereto.

 

Advance Disbursement Officer’s Certificate ” has the meaning set forth in Section 6.2.3 .

 

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Affiliate ” has the meaning given in the Indenture.

 

Agreed Permits ” has the meaning given in Attachment A to Exhibit B-1 attached hereto.

 

Applicable Permits ” means the national, state and local license authorizations, certifications, filings, recordings, permits or other approvals with or of any Governmental Instrumentality, including, without limitation, environmental, construction, operating or occupancy permits and any agreements, consents or approvals that are required for the design, construction, operation or maintenance of the Facility in accordance with the Operative Documents.  Without limiting the foregoing, Applicable Permits also include Construction Period permits for temporary construction utilities and temporary sanitary facilities, dump permits, road use permits, permits related to the use, storage and disposal of hazardous materials introduced to the Property for or in connection with the performance of the design, construction, operation or maintenance of the Facility, and permits issued pursuant to any building, mechanical, electrical, plumbing or similar codes.

 

Architect ” means Kittrell Garlock and Associates, AIA, Ltd., d/b/a KGA Architecture, and its successors identified by notice from the Company to the Disbursement Agent.

 

Architect Agreement ” means the Standard Form of Agreement Between Owner and Architect (AIA Document B141-1997 edition) for the Facility, executed by the Architect and the Company, dated March 1, 2005 (as amended, modified or supplemented from time to time in accordance with this Agreement).

 

Available Funds ” means, at any given time, the sum of (a) the balance of the Construction Disbursement Account (taking into account any additional amounts deposited by the Issuers in the Construction Disbursement Account pursuant to clause (ii)  of Section 7.6 ), (b) so long as there is no Default or Event of Default, Additional Revenue expected to be earned from and after such time, (c) the net proceeds of any FF&E Financing that the Issuers have incurred or reasonably expect to incur as permitted under the Indenture, less all amounts previously drawn upon from such FF&E Financing, and (d) the net proceeds available for loan under any Senior Credit Facility that the Issuers enter into or reasonably expect to enter into as permitted under the Indenture, less all amounts previously drawn upon from such Senior Credit Facility.

 

Business Day ” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York, are authorized or obligated by law or executive order to close.

 

Cash Equivalents ” has the meaning given in the Indenture.

 

Collateral ” has the meaning given in the Indenture.

 

Construction Contract ” means the Standard Form of Agreement Between Owner and Contractor (AIA Document A111-1997 edition) and General Conditions of the Contract for Construction (AIA Document A201-1997 edition) for the construction of the Facility, executed

 

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by the General Contractor and the Company, dated June 6, 2005 (as amended, modified or supplemented from time to time in accordance with this Agreement).

 

Construction Disbursement Budget ” means the Initial Construction Disbursement Budget, as the same may be amended, modified or supplemented from time to time in accordance with this Agreement.

 

Construction Disbursement Budget Amendment Certificate ” means an Officer’s Certificate from the Issuers in the form of Exhibit E attached hereto.

 

Construction Disbursement Certificate ” means an Officer’s Certificate from the Issuers in the form of Exhibit D-1 attached hereto.

 

Construction Disbursement Officer’s Certificate ” has the meaning set forth in Section 6.2.2 .

 

Construction Documents ” means the Construction Contract, the Architect Agreement, and any other Contract entered into by the Company on, prior to or after the Issue Date with respect to construction of all or any portion of the Facility (other than the Financing Agreements and the documents evidencing or securing the FF&E Financing or a Senior Credit Facility), as the same may be amended, modified or supplemented from time to time as permitted thereunder and in accordance with this Agreement.

 

Construction Expenses ” means expenses incurred in connection with the design, development, engineering, construction, installation or equipping of the Facility in accordance with the Construction Disbursement Budget, excluding, however (a) any such expenses paid on or prior to the Issue Date, (b) any Debt Financing Costs and (c) any Issue Fees and Expenses.

 

Construction Period ” means the period from the Issue Date to and including the date of the Opening.

 

 “ Contract ” means a contract to which the Company is a party pertaining to the design, development, engineering, installation or construction of all or any portion of the Facility, including, without limitation, any contract, license and performance and payment bond or guarantee, if any; provided , however , such term shall not include any of the Subcontracts, the Subcontractors, the Financing Agreements or any of the documents evidencing or securing the FF&E Financing or any Senior Credit Facility.

 

Contract Amendment Certificate ” is an Officer’s Certificate from the Issuers in the form of Exhibit F-1 attached hereto.

 

Contractor ” means a party to a Contract other than the Company.

 

Control Account Agreement ” means one or more Deposit Account Control Agreements dated as of even date herewith by and among the Trustee, the Issuers, and the institution at which the Disbursed Funds Account is held.

 

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Debt Financing Costs ” means all principal, interest, premium fees and other amounts payable or accrued from time to time under the Notes.

 

Default ” means any event, omission or failure of a condition that is, or with the passage of time or the giving of notice or both could be, an Event of Default.

 

Disbursed Funds Account ” means Account No. 2013837 and Account No. 201162, each held at American Trust (ABA Number 073900522), in the name of the Company, or any substitute account selected by the Issuers in accordance with this Agreement, which account shall be funded from disbursements from the Construction Disbursement Account pursuant to this Agreement and shall be pledged as collateral to the Trustee pursuant to the Control Account Agreement, for the benefit of itself and the holders of the Notes, and, with respect to at least one such account, from which the Company shall have general check writing authority.

 

Disbursement ” means any disbursement of funds pursuant to a Disbursement Request.

 

Disbursement Agent’s Closing Certificate ” is an Officer’s Certificate from the Disbursement Agent in the form of Exhibit B-2 attached hereto.

 

Disbursement Request ” means any Initial Disbursement Request, Construction Disbursement Request, Interest Disbursement Request, Advance Disbursement Request and any other request for disbursement from the Accounts made pursuant to this Agreement.

 

Facility ” means the design, development, construction, equipping and commencement of operations of the improvements described in the Construction Documents and in accordance therewith.

 

Facility Cost Schedule ” means an itemized schedule in the form of Schedule 1 to the Construction Disbursement Officer’s Certificate, a form of which is attached hereto as Schedule 1 to Attachment A to Exhibit D-1 .

 

 “ FF&E Financing ” has the meaning given in the Indenture.

 

Final Plans ” means Plans which (a) have received all required approvals from all Governmental Instrumentalities required to approve such Plans prior to commencement of that portion of the Facility reflected in such Plans; (b) contain sufficient specificity to permit the completion of the work or improvement reflected in such Plans and collectively contain sufficient specificity to permit completion of the Facility; (c) are consistent with constructing the Facility to include the Minimum Facilities; (d) have been signed by an architect licensed to practice architecture in the State of Iowa; and (e) have been delivered to the Disbursement Agent.

 

Financing Agreements ” means, collectively, this Agreement, the Indenture, the Security Documents, the Notes and any other loan or security agreement entered into on, prior to or after the Issue Date with or for the benefit of the Trustee to finance all or any portion of the Facility, as each of the same may be amended, modified or supplemented from time to time as permitted thereunder and in accordance with the terms and conditions of this Agreement.

 

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First Disbursement Request ” means the first Disbursement Request (other than an Interest Disbursement Request) made pursuant to this Agreement.

 

First Disbursement Officer’s Certificate ” has the meaning set forth in Section 6.2.4 .

 

Gaming Laws ” has the meaning given in the Indenture.

 

Gaming Licenses ” has the meaning given in the Indenture.

 

General Contractor ” means Henkel Construction.

 

Governmental Instrumentality ” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including any Gaming Authority, any zoning authority, the FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law.

 

Hard Costs ” means the costs and expenses in respect of supplying goods, materials and labor for the construction of improvements relating to the Facility or other amounts payable pursuant to the Construction Documents.

 

Initial Construction Disbursement Budget ” means the itemized schedule, in the form attached as Exhibit 1 to the First Disbursement Officer’s Certificate, setting forth on a line item-basis all of the costs which the Company anticipates to expend from and after the Issue Date in connection with the design, development, engineering, construction, installation, equipping and commencement of operations of the Facility, including all Construction Expenses but excluding all Debt Financing Costs, which costs in the aggregate shall not exceed the Available Funds.

 

Initial Disbursements Certificate ” means an Officer’s Certificate from the Issuers in the form attached hereto as Exhibit A .

 

Interest Disbursement Certificate ” means an Officer’s Certificate from the Issuers in the form attached hereto as Exhibit C .

 

Interest Payment Date ” has the meaning given in the Notes.

 

Issue Fees and Expenses ” means fees and expenses incurred on or before the Issue Date by the Issuers or for which the Issuers are liable in connection with the offering of the Notes.

 

Issue Date” has the meaning given in the Indenture.

 

Issuers’ Closing Certificate ” means an Officer’s Certificate from the Issuers in the form of Exhibit B-1 attached hereto.

 

Issuer’s Closing Officer’s Certificate ” has the meaning set forth in Section 6.2.1 .

 

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Lien ” has the meaning given in the Indenture.

 

Manager ” means Peninsula Gaming, LLC and its permitted successors and assigns identified by notice from the Issuers to the Disbursement Agent.

 

 “ Material Construction Document ” means any of the Construction Contract, the Architect Agreement, and without duplication, any other Contract with a total contract amount in excess of $100,000.

 

Minimum Facilities ” means a casino offering not less than 500 slot machines.

 

 “ Officer’s Certificate ” means a certificate signed by one of the following officers of the Person on whose behalf or for whose benefit the certificate is being executed or delivered:  the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Executive Vice President, Vice President, Treasurer or Assistant Treasurer.

 

Opening ” means the time when the Facility shall have been opened to the general public, is receiving customers in the ordinary course of business and has received, and has in full force and effect, all material Permits required for operation.

 

Operative Documents ” means the Financing Agreements and the Construction Documents.

 

Permits ” has the meaning given in the Indenture.

 

Person ” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, or any other entity.

 

Plans ” means the plans, specifications, working drawings, design documents and any change orders relating thereto, which may be amended by the Company as necessary or appropriate, that collectively:  (a) provide for and detail the manner of construction of improvements for the Facility; (b) call for construction which will permit the Opening to occur; (c) call for construction which will cause the Facility to be completed for a total cost consistent with the Construction Disbursement Budget and the line items set forth therein, taking into consideration the availability of Available Funds, including Realized Savings; (d) are consistent with constructing the Facility to include the Minimum Facilities; (e) have been signed by an architect who is licensed to practice architecture in the State of Iowa; and (f) to the extent such Plans are amended, such Plans are consistent with previous Plans and are reasonably inferable therefrom, as the same may be amended or supplemented from time to time.

 

Pledge Agreement ” means each of the Security Agreement and/or Control Account Agreement among any of the Disbursement Agent, the Trustee and the Issuers relating to the Trustee’s security interest in the Accounts and the Disbursed Funds Account and the proceeds thereof.

 

Property ” means the real property located in Worth County, Iowa, on which the Issuers will construct the Facility, as more particularly described in Exhibit I hereto.

 

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Property Documents ” means each easement or material agreement affecting the Property or the Company’s use thereof.

 

Realized Savings ” means the excess of the amount budgeted in the Construction Disbursement Budget for a line item over the amount of funds expended or owed by the Company to complete the tasks set forth in such line item and for the materials and services used to complete such tasks, so long as the terms for such tasks are final and unconditional (other than the satisfactory completion of such tasks), including without limitation the execution of fixed price purchase orders to acquire the materials that are the subject of such line item (as applicable); provided , however , that Realized Savings for any line item shall be deemed to be zero (i) if such savings are obtained in a manner that materially detracts from the overall value, quality and amenities of the Facility and (ii) unless and until the Issuers have delivered a fully executed Construction Disbursement Budget Amendment Certificate (together with all exhibits thereto) which includes such Realized Savings.

 

Remaining Costs ” means, at any given time, the amount of Construction Expenses (including Retainage Amounts) set forth in the Construction Disbursement Budget that remain unpaid at such time (including amounts that have not yet accrued at such time).

 

Reserved Construction Amount ” means the amount (exclusive of any Retainage Amounts) necessary as of the date of the Final CDA Disbursement to complete the Facility in accordance with the Final Plans and containing the Minimum Facilities, including punch list items.

 

Retainage Amounts ” means, at any given time, amounts which have accrued and are owing under the terms of a Contract for work or services to the Company already provided but which at such time (and in accordance with the terms of the Contract) are being withheld from payment to the respective Contractor until certain subsequent events (e.g., completion benchmarks or required release to a Subcontractor) have been achieved under the Contract.

 

Security Agreement ” means that certain Security Agreement dated as of even date herewith, made by the Issuers in favor of the Trustee, acting in the capacity of collateral agent for the benefit of itself and the holders of the Notes.

 

Security Documents ” has the meaning given in the Indenture.

 

Senior Credit Facility ” has the meaning given in the Indenture.

 

Soft Costs ” means all costs and expenses (other than Hard Costs) set forth in the Construction Disbursement Budget, including without limitation pre-opening costs.

 

Subcontracts ” has the meaning given in the Construction Contract.

 

Subcontractors ” means the Persons performing the obligations under the Subcontracts.

 

Title Insurer ” means Chicago Title Insurance Company.

 

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Title Policy ” means the lender’s policy or policies of title insurance to be provided by the Title Insurer to the Trustee with respect to the Property, together with all endorsements thereto, in the form attached hereto as Exhibit H .

 

Trustee’s Closing Certificate ” is the Officer’s Certificate from the Trustee in the form of Exhibit B-3 attached hereto.

 

1.2            Additional Defined Terms .  In addition, the terms listed below in the left column below shall have the respective meanings assigned to such terms in the Section of this Agreement listed opposite such terms in the right column below.  All other capitalized terms not defined herein, but defined in the Indenture, shall have the meanings ascribed to them in the Indenture.

 

Defined Terms

 

Section

 

 

 

Advance Disbursement Request

 

4.1

Agreement

 

Introduction

Company

 

Introduction

Construction Disbursement Account

 

A of Recitals

Construction Disbursement Request

 

4.1

Construction Proceeds

 

A of Recitals

Disbursement Agent

 

Introduction

Event of Default

 

9

Final CDA Disbursement

 

7.5.1

GMP

 

7.6

GMP Change Order

 

7.6

Indenture

 

A of Recitals

Initial Disbursements

 

7.1

Initial Disbursement Request

 

4.1

Interest Disbursement Request

 

4.1

Interest Reserve Account

 

A of Recitals

Interest Reserve Proceeds

 

A of Recitals

Issuers

 

Introduction

Maximum GMP

 

7.6

Notes

 

A of Recitals

Original Notes

 

A of Recitals

Proceeds

 

A of Recitals

Trustee

 

Introduction

 

1.3            Rules of Interpretation .  The following rules of interpretation shall apply herein.

 

1.3.1        The singular includes the plural and the plural includes the singular.

 

1.3.2        The word “or” is not exclusive.

 

1.3.3        A reference to a Person includes its permitted successors and permitted assigns.

 

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1.3.4        Accounting terms have the meanings assigned to them by U.S. GAAP (as defined in the Indenture), as applied by the accounting entity to which they refer.

 

1.3.5        The words “ include ,” “ includes ” and “ including ” are not limiting.

 

1.3.6        A reference in a document to an Article, Section, Exhibit, Schedule, Annex, Attachment or Appendix is to the Article, Section, Exhibit, Schedule, Annex, Attachment or Appendix of such document unless otherwise indicated.  Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated by reference in such document.

 

1.3.7        References to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (c) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time.

 

1.3.8        The words “ hereof ,” “ herein ” and “ hereunder ” and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document.

 

1.3.9        References to “ days ” shall mean calendar days, unless the term “Business Days” shall be used.

 

2.             Establishment of Accounts .

 

2.1            Appointment of Disbursement Agent .  The Trustee and the Issuers hereby appoint U.S. Bank National Association as the Disbursement Agent, and U.S. Bank National Association hereby accepts such appointment as the Disbursement Agent, in each case upon the terms and conditions set forth in this Agreement.  The Disbursement Agent agrees to act in good faith at all times.

 

2.2            Establishment of Accounts .  Concurrently with the execution and delivery hereof, the Disbursement Agent shall establish the Accounts at the Disbursement Agent and credit thereto, in accordance with the provisions of Recital A hereof, the Proceeds.  All funds in the Accounts and the Disbursed Funds Account shall be held in trust and not commingled with any deposit or commercial bank account.  All funds accepted by the Disbursement Agent pursuant to this Agreement shall be held in the appropriate Account or the Disbursed Funds Account for the benefit of the Issuers subject to the terms and conditions of this Agreement and the Pledge Agreement (including, without limitation, the rights of the Trustee hereunder and thereunder).  The Disbursement Agent may, upon the request of the Issuers, establish sub-accounts for accounting purposes within the Accounts and the Disbursed Funds Account, it being understood and agreed that the creation of such sub-accounts shall in no way affect the pledge in favor of the Trustee in the Accounts and the Disbursed Funds Account hereunder.

 

2.3            Pledge Agreement .  Pursuant to the Pledge Agreement, the Issuers have granted to the Trustee, for the benefit of the holders of the Notes, a first priority security interest in the Accounts and the Disbursed Funds Account and all funds and assets from time to time deposited therein, and all products and proceeds thereof.  The Disbursement Agent shall note in its records

 

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that all funds and other assets in the Accounts and the Disbursed Funds Account have been pledged to the Trustee and that the Disbursement Agent is holding such items as agent for the Trustee, as secured party.  The Disbursement Agent shall maintain dominion and control over the Accounts and the Disbursed Funds Account and the funds and assets therein solely for the benefit of the Trustee, as secured party, and for no other parties or Persons; provided , however , that the Issuers shall be able to obtain disbursements from the Accounts and the Disbursed Funds Account in accordance with the terms hereof and upon such disbursement to the Issuers, such pledge and security interest shall be extinguished and released with respect to the amount so disbursed.  Accordingly, it is the intention of the parties that all such funds and assets shall not be within the bankruptcy “estate” (or corresponding term used in the bankruptcy or insolvency laws governing the Disbursement Agent) of the Disbursement Agent.  All such funds and all earnings accruing from time to time thereon shall be held in the applicable Account or the Disbursed Funds Account until disbursed or transferred in accordance with the terms hereof.

 

2.4            Investment of Funds in Accounts .  All funds from time to time credited to and contained in each of the Construction Disbursement Account (other than those to be disbursed pursuant to the Initial Disbursement Request, which shall be so disbursed on the Issue Date) and the Interest Reserve Account shall be invested only in Cash Equivalents from time to time by written instructions by the Issuers delivered to the Disbursement Agent, pending disbursement of such funds pursuant to this Agreement; provided , however , that the Disbursement Agent shall have concluded that such investments conform with the requirements of the Indenture and each Pledge Agreement and that appropriate steps have been taken with respect to each such investment so as to assure the continuing perfection of the Trustee’s first priority security interest in such investment.  For purposes of determining the steps to be taken in order to achieve and maintain such perfection, the Disbursement Agent shall have the right to require the delivery of, and to rely upon, an opinion of counsel to the Issuers or the Disbursement Agent (the reasonable expense of which shall be paid by the Issuers) specifying (A) that the counsel is familiar with the legal requirements applicable to the perfection of security interests in said investments and (B) the steps required to perfect and maintain a first priority security interest in favor of the Trustee in such investments.  If no such investment instructions are received by the Disbursement Agent, after the occurrence and during a continuance of a Default or Event of Default, such funds shall be invested in Cash Equivalents selected by the Disbursement Agent in conformity with the requirements of the Indenture and the Pledge Agreement.  The Disbursement Agent shall not be liable for any investment, reinvestment or similar losses, fees, taxes or charges or for the availability or liquidity of funds in the Accounts as a result of any investments made or reduced to cash in accordance with this Agreement, and the Disbursement Agent is hereby authorized to direct the Securities Intermediary (as defined in the Pledge Agreement) in writing (i) to purchase Cash Equivalents in accordance herewith and (ii) to reduce to cash any Cash Equivalents (without regard to maturity) in any Account in order to make any application or disbursement required hereunder.

 

2.5            Agency .  The Disbursement Agent shall act solely as the Trustee’s agent in connection with its duties under this Agreement, notwithstanding any other provision contained herein, without any authority to obligate the Trustee outside of the scope of the authority set forth in this Agreement or to compromise or pledge its security interest hereunder; provided , however , that the Disbursement Agent is authorized to make disbursements from the Accounts on behalf of the Trustee pursuant to the terms of this Agreement.  The Issuers acknowledge and

 

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agree that in no event shall the Trustee or the holders of the Notes be liable for, nor shall the obligations of the Issuers under the Indenture, the Notes or the other Security Documents be affected or diminished as a consequence of, any action or inaction of the Disbursement Agent with respect to the Accounts or the Disbursed Funds Account or any funds or other assets credited thereto or deposited herein.

 

2.6            Waiver of Set-off Rights .  The Disbursement Agent hereby acknowledges the Trustee’s security interest as set forth in this Agreement and the Pledge Agreement and waives any and all security interests, claims, encumbrances, liens and rights of set off which it may have in the Accounts or the Disbursed Funds Account or any funds or other assets credited thereto or deposited therein (including any and all rights of offset, deduction and lien), whether statutory or otherwise afforded by law, agreement or otherwise) and further waives any right to set-off said funds, assets or investments now or in the future against any indebtedness of the Issuers to the Disbursement Agent.  The waivers set forth in this Section are of rights which may exist now or hereafter in favor of the Disbursement Agent in its individual capacity, and not of any such rights which may exist now or hereafter in favor of the Disbursement Agent in its capacity as agent for the Trustee.  Nothing in this Section shall be co


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