SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-4
Registration Statement
Under the
Securities Act of 1933
CASINO MAGIC OF LOUISIANA, CORP.
(Exact Name of registrant as specified in its charter)
Louisiana 7999 64-0878110
- ------------------------- ------------------------- -------------------
(State or other juris- (Primary Standard (I.R.S. Employer
diction of incorporation Industrial Classification Identification No.)
or organization) Code Number)
and, as. Guarantor,
JEFFERSON CASINO CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 7999 72-1310739
- ------------------------- ------------------------- -------------------
(State or other juris- (Primary Standard (I.R.S. Employer
diction of incorporation Industrial Classification Identification No.)
or organization) Code Number)
1701 Old Minden Road, Bossier City, Louisiana 71111 (318)746-0711
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(Address, Including Zip Code and Telephone Number, Including Area Code of
Registrants' Principal Executive Offices)
Robert A. Callaway, Vice President/General Counsel,
Casino Magic of Louisiana, Corp.
711 Casino Magic Drive, Bay Saint Louis, Mississippi 39520 (601) 466-8000
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(Name, Address, Including Zip Code and Telephone Number Including
Area Code, of Agent for Service)
copy to:
J. Patrick Ryan
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1500 NationsBank Plaza
300 Convent Street
San Antonio, Texas 78205
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of the
Registration Statement.
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. |__|
<PAGE>
CALCULATION OF REGISTRATION FEE
===============================
Proposed Proposed
Title of Each Maximum Maximum Amount
Class of Offering Aggregate of
Securities to Amounts to Price Offering Registration
be Registered be Registered per Unit (1) Price (1) Fee
- ---------------- ------------- ----------- ------------ -------------
13% Series B First
Mortgage Notes
due 2003 with
Contingent
Interest $115,000,000 100% $115,000,000 $34,849
Guarantees
of Jefferson
Corp. (2) (3) (3) None (3)
(1) In accordance with Rule 457(f)(2), the registration fee is calculated
based on the book value, which has been computed as of October 18, 1996, of
the outstanding 13% Series A First Mortgage Notes due 2003 with Contingent
Interest to be cancelled in the exchange transaction hereunder.
(2) The 13% Series B First Mortgage Notes due 2003 with Contingent
Interest of Casino Magic of Louisiana, Corp. being registered will be
guaranteed by its parent corporation, Jefferson Casino Corporation.
(3) No additional consideration will be paid by the recipients of the 13%
Series B First Mortgage Notes due 2003 for the Guarantees. Pursuant to Rule
457(n) under the Securities Act of 1933, no separate fee is payable for the
Guarantees.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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.
============================================================================ =
<PAGE>
CASINO MAGIC OF LOUISIANA, CORP.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
FORM S-4 ITEM NUMBER HEADING OR SUBHEADING IN PROSPECTUS
- ---------------------------------- -----------------------------------
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration and
Outside Front Cover Page of
Prospectus............................Facing Page of Registration
Statement; Cross Reference Sheet;
Outside Front Cover Page of
Prospectus.
2. Inside Front and Outside Back
Cover Pages of Prospectus.............Inside Front Cover Page of
Prospectus; Outside Back Cover
Page of Prospectus.
3. Risk Factors, Ratio of Earnings to
Fixed Charges, and Other Information..Prospectus Summary; Risk Factors;
Selected Financial Data; Business.
4. Terms of the Transaction..............Prospectus Summary; The Exchange
Offer; Description of the Notes;
Certain Federal Income Tax
Considerations.
5. Pro Forma Financial Information.......Not Applicable
6. Material Contacts with the Company
Being Acquired........................Not Applicable
7. Additional Information Required For
Reoffering by Persons and Parties
Deemed to be Underwriters.............Not Applicable
8. Interests of Named Experts and
Counsel...............................Not Applicable
9. Disclosure of Commission Position on
Information for Securities Act
Liabilities...........................Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3
Registrants...........................Not Applicable
11. Incorporation of Certain Information
by Reference..........................Not Applicable
12. Information with Respect to S-2 or
S-3 Registrants.......................Not Applicable
13. Incorporation of Certain Information
by Reference..........................Not Applicable
14. Information With Respect to Registrants
Other Than S-2or S-3 Registrants......Prospectus Summary; Selected
Financial Data; Capitalization;
Management's Discussion and
Analysis of Financial Condition
and Results of Operations;
Business; Regulatory Matters;
Description of Notes; Financial
Statements.
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3
Companies.............................Not Applicable.
16. Information With Respect to S-2 or
S-3 Companies.........................Not Applicable.
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies.......Not Applicable.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited....Not Applicable.
19. Information if Proxies, Consents or
Authorization are not to be
Solicited, or in an Exchange Offer... Management; Principal
Shareholders; Certain
Relationships and Related
Transactions.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION DATED _______________, 1996
CASINO MAGIC OF LOUISIANA, CORP.
OFFER TO EXCHANGE
13% SERIES B FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT INTEREST
FOR ALL OUTSTANDING
13% SERIES A FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT INTEREST
______________________________
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME
ON, 1996, UNLESS EXTENDED
_____________________________
Casino Magic of Louisiana, Corp. (the "Company"), a Louisiana corporation,
hereby offers, upon the
(Continued on next page)
See "Risk Factors" for a discussion of certain material factors to be
considered by Holders prior to tendering their Series A Notes in the Exchange
Offer.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NEITHER THE LOUISIANA GAMING CONTROL BOARD NOR ANY OTHER GAMING AUTHORITY HAS
PASSED UPON THE ACCURACY OF ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is ____________________, 1996
<PAGE>
(Cover page continued)
terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to an aggregate of $115,000,000 principal amount of
13% Series B First Mortgage Notes Due 2003 with Contingent Interest (the
"Series B Notes") of the Company for a like principal amount of 13% Series A
First Mortgage Notes due 2003 with Contingent Interest (the "Series A Notes"
and, together with the Series B Notes, the "Notes") of the Company. The form
and terms of the Series B Notes are substantially identical to the Series A
Notes in all material respects, except that the Series B Notes will be
registered under the Securities Act of 1933, as amended (the "Securities
Act"), and therefore will not bear legends restricting the transfer thereof.
The Series B Notes will evidence the same debt as the Series A Notes, and
together with the Series A Notes will be subject to the terms of the Indenture
dated as of August 22, 1996, (the "Indenture") among the Company, Jefferson
Casino Corporation ("Jefferson Corp."), and First Union Bank of Connecticut as
Trustee (the "Trustee").
The Company will accept for exchange any and all Series A Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City
time, on _____________, 1996, unless extended by the Company in its sole
discretion (the "Expiration Date"). The Expiration Date will not in any event
be extended to a date later than _____________, 1996. Tenders of Series A
Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the Expiration Date. In the event the Company terminates the Exchange Offer
and does not accept for exchange any Series A Notes with respect to the
Exchange Offer, the Company will promptly return the Series A Notes to the
holders thereof. The Exchange Offer is not conditioned upon any minimum
principal amount of Series A Notes being tendered for exchange, but is
otherwise subject to certain customary conditions. The Series A Notes may be
tendered only in integral multiples of $1,000. See "The Exchange Offer."
Payment of principal and interest on the Series B Notes will be
unconditionally guaranteed on a senior secured basis by Jefferson Corp.(the
"Jefferson Guarantee"), the parent of the Company and a wholly owned
subsidiary of Casino Magic Corp. ("Casino Magic") and all future subsidiaries
of the Company (the "Subsidiary Guarantees" and, together with the Jefferson
Guarantee, the "Guarantees"). Fixed interest on the Notes is payable
semi-annually on February 15 and August 15 of each year, commencing February
15, 1997. The Notes will mature on August 15, 2003. Contingent Interest (as
defined herein) is payable on the Notes, on each such interest payment date,
in an aggregate amount equal to 5% of the Company's Adjusted Consolidated Cash
Flow (as defined herein) for the six-month period ending on June 30 or
December 31 (each, a "Semiannual Period") most recently completed prior to
such interest payment date; provided that no Contingent Interest shall be
payable with respect to any period prior to the Commencement Date (as defined
herein). The Company, at its option, may defer payment of all or a portion of
any installment of Contingent Interest then otherwise due subject to certain
conditions described herein. See "Description of Notes-Principal, Maturity
and Interest." Except as set forth below, the Series B Notes will not be
redeemable prior to August 15, 2000. The Series B Notes are redeemable at the
option of the Company, in whole or in part, on or after August 15, 2000 at the
redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages (as defined herein), if any, to the redemption date. On
November 5, 1996, a referendum is scheduled in which voters in Louisiana will
vote on a parish-by-parish basis (the "Louisiana Referendum") to determine,
among other things, whether to approve existing forms of gaming in their
respective parishes. If the voters in the Louisiana Referendum disapprove the
continuation of riverboat gaming in Bossier City, the legislation mandating
the Louisiana Referendum provides that the Company would nevertheless be
permitted to conduct riverboat gaming operations for the remaining term of its
existing Louisiana gaming license, through August 1, 2001. Should voters in
the Louisiana Referendum disapprove the continuation of riverboat gaming in
either Bossier or Caddo parish, subject to certain exceptions, the Company
will be required, within 90 days after the end of each Operating Year (as
defined herein), to redeem the maximum principal amount of Series B Notes that
may be redeemed with 100% of Excess Cash Flow (as defined herein) with respect
to such Operating Year at a price in cash equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of redemption. Upon the occurrence of a Change of Control
(as defined herein), each holder of the Series B Notes (a "Holder") will have
the right to require the Company to repurchase such Holder's Series B Note at
a purchase price equal to 101% of the principal amount thereof plus accrued
and unpaid interest and Liquidated Damages, if any, to the date of repurchase.
The Series B Notes will be senior secured obligations of the Company and
will rank pari passu in right of payment with any existing and future senior
Indebtedness (as defined herein) of the Company, including any Series A Notes
which are not tendered for exchange. As of June 30, 1996, after giving pro
forma effect to the sale of the Series A Notes and the application of the net
proceeds therefrom, the total senior Indebtedness of the Company would have
been approximately $120.7 million, consisting of $115.0 million aggregate
principal amount of Notes and $5.7 million in existing equipment financing of
the Company. In addition, the Company intends to incur approximately $1.8
million of additional equipment financing. The Series B Notes will rank
senior in right of payment to all subordinated Indebtedness of the Company.
The Company's obligations under the Series B Notes will be secured by, among
other things, a first priority security interest, subject to Permitted Liens
(as defined herein), in substantially all of the Company's existing and future
assets, including a recently constructed riverboat (the "Bossier Riverboat")
and substantially all of the other assets that will comprise Casino
Magic-Bossier City, and a pledge of the funds in the Cash Collateral Accounts
(as defined herein). The Jefferson Guarantee will be secured by a pledge of
all of the capital stock of the Company. Any Subsidiary Guarantees will be
secured by a first priority security interest, subject to Permitted Liens, in
substantially all of such subsidiary's existing and future assets.
The Series B Notes are being offered hereunder in order to satisfy
certain obligations of the Company and Jefferson Corp. pursuant to the
Registration Rights Agreement dated August 22, 1996 (the "Registration Rights
Agreement"), entered into in connection with the offering of the Series A
Notes (the "Note Offering"). See "Description of Notes-Registration Rights;
Liquidated Damages." Based on interpretations by the staff of the Securities
and Exchange Commission (the "SEC"), Series B Notes issued pursuant to the
Exchange Offer in exchange for Series A Notes may be offered for resale,
resold and otherwise transferred by any Holder thereof (other than any
broker-dealer who acquired such Series A Notes directly from the Company to
resell pursuant to Rule 144A under the Securities Act, or any such Holder
which is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Series B Notes
are acquired in the ordinary course of such Holder's business and such Holder
has no arrangement with any person to participate in the distribution of such
Series B Notes. Notwithstanding the foregoing, each broker-dealer that
receives Series B Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any
resale of such Series B Notes. The Letter of Transmittal states that by so
acknowledging 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. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with any resale of
Series B Notes received in exchange for Series A Notes where such Series A
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of one year after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale.
See "Plan of Distribution". EXCEPT AS DESCRIBED IN THIS PARAGRAPH, THIS
PROSPECTUS MAY NOT BE USED FOR AN OFFER TO RESELL, RESALE OR OTHER TRANSFER OF
SERIES B NOTES.
Prior to the Exchange Offer, there has been no public market for the
Series B Notes. The Series A Notes are not, and the Series B Notes are not
expected to be, listed on any securities exchange or authorized for trading on
the Nasdaq Stock Market. There can be no assurances as to the liquidity of
any markets that may develop for the Series B Notes, the ability of Holders to
sell the Series B Notes, or the price at which Holders would be able to sell
the Series B Notes. Future trading prices of the Series B Notes will depend
on many factors, including among other things, prevailing interest rates, the
Company's operating results and the market for similar securities.
Historically, the market for securities similar to the Series B Notes,
including non-investment grade debt, has been subject to disruptions that have
caused substantial volatility in the prices of such securities. There can be
no assurance that any market for the Series B Notes, if such market develops,
will not be subject to similar disruptions. Wasserstein, Perella Securities,
Inc., Jefferies & Company, Inc. and Deutsche Morgan Grenfell (the Initial
Purchasers) have advised the Company that they currently intend to make a
market in the Series B Notes offered hereby. However, the Initial Purchasers
are not obligated to do so and any market making may be discontinued at any
time without notice.
The Series A Notes were initially purchased by accredited investors and
"qualified institutional buyers" (as such term is defined in Rule 144A under
the Securities Act). The Series A Notes purchased by qualified institutional
buyers were initially represented by a single global note in fully registered
form (the "Global Senior Note"), registered in the name of a nominee of The
Depository Trust Company ("DTC"), as depositary. The Series B Notes exchanged
for Series A Notes represented by the Global Senior Notes will be represented
by a single global note in fully registered form (the "Global Senior Exchange
Note") registered in the name of the nominee of DTC. The Global Senior
Exchange Note will be exchangeable for Series B Notes in registered form, in
denominations of $1,000 and integral multiples thereof as described herein.
The Series B Notes in global form will trade in DTC's Same-Day Funds
Settlement System, and secondary market trading activity in such Series B
Notes will therefore settle in immediately available funds. See "Description
of Notes -- Form, Denomination and Book-Entry Procedures."
Neither the Company nor Jefferson Corp. will receive any proceeds from
the Exchange Offer, but pursuant to the Registration Rights Agreement, the
Company and Jefferson Corp. will be responsible for certain expenses for the
Exchange Offer (which shall not include the expenses of any Holder in
connection with resales of the Series B Notes). No underwriter is being
utilized in connection with the Exchange Offer.
AVAILABLE INFORMATION
The Company and Jefferson Corp. have jointly filed with the SEC a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act with respect to the Series B Notes being offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made
to the exhibit for a more complete description of the matter involved.
Pursuant to the Indenture, the Company has agreed to furnish to the
Trustee and the registered Holders of the Notes, without cost to the Trustee
or such registered Holders, copies of the quarterly and annual reports, and
any other documents it is required to file with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), within 15 days after it files the same with the SEC (or documents
containing equivalent information within such time period in the event that
the Company is not required to file such reports with the SEC).
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
financial statements appearing elsewhere in this Prospectus. Unless the
context otherwise requires, the financial information contained herein gives
pro forma effect to the transfer on August 22, 1996 at the closing of the Note
Offering, of a 23-acre real estate parcel in Bossier City, Louisiana from
Jefferson Corp. to the Company and the assumption by the Company of the
obligation represented by the Louisiana Land Note (as defined herein). The
information contained herein relating to the design, construction and
operations of Casino Magic-Bossier City is based upon the Company's current
plans relating thereto, which, subject to limitations in the Cash Collateral
and Disbursement Agreement, may change from time to time. As used herein, the
term "Bossier City/Shreveport Market" means the gaming market in the cities of
Bossier City and Shreveport, Louisiana ("Bossier City/Shreveport").
Statistical information presented in this Prospectus with respect to average
daily win per unit is derived by management from publicly available revenue
and operating data and, with respect to information regarding Louisiana gaming
markets, assumes that 70% and 30% of casino revenues are attributable to slot
machines and table games, respectively. Prospective investors are urged to
read this Prospectus in its entirety, including, without limitation, the "Risk
Factors" beginning on page 9.
THE COMPANY
The Company is developing a new dockside riverboat casino and
entertainment complex, Casino Magic-Bossier City, on a 23-acre site in Bossier
City, Louisiana. While construction continues on the landside portions of the
casino and entertainment complex, the Company commenced gaming operations on
the completed and fully equipped Bossier Riverboat on October 4, 1996, using
temporary mooring, boarding and paved parking facilities. Completion of
permanent facilities for Casino Magic-Bossier City is scheduled for December
1996. The casino site enjoys high visibility and convenient access from
Interstate Highway 20, a major artery between Bossier City/Shreveport and the
Dallas-Fort Worth area approximately 180 miles to the west. The Company
conducts its casino operations on the recently constructed Bossier Riverboat,
which measures 254 feet long and 78 feet wide with approximately 58,000 square
feet of interior space, including 30,000 square feet of gaming space (the
maximum allowed under current Louisiana law) with 984 slot machines and 44
table games. Upon completion of the landside development, Casino
Magic-Bossier City is also expected to include a 37,000 square foot
entertainment pavilion and covered parking for approximately 1,550 cars. The
entertainment pavilion is designed to include a 350-seat buffet restaurant, a
gift shop, a bar and lounge area, and a stage area designed to showcase live
entertainment, including dance productions, bands and individual performers,
with an open seating area that will accommodate up to 300 customers. Casino
Magic-Bossier City has been designed to highlight a new "Magic" theme which
Casino Magic intends to implement at its other properties to strengthen the
"Casino Magic" brand identity. Management believes that its premier facility,
the first new gaming facility in more than two years in the Bossier
City/Shreveport Market, will attract a substantial number of customers and
that its "Magic" theme will foster brand identity and customer loyalty.
The Company believes the Bossier City/Shreveport Market presents a
significant opportunity based upon the strong population density of its target
market and the current regulations allowing dockside riverboat gaming in
Bossier City/Shreveport. The Bossier City/Shreveport Market is the only market
in Louisiana that currently permits continuous dockside gaming without
requiring cruising or simulated cruising schedules. This allows Casino
Magic-Bossier City to operate 24 hours a day with uninterrupted and convenient
casino access for gaming patrons. The Company believes that the Bossier
City/Shreveport Market has one of the highest ratios of adults within a
200-mile radius to gaming positions of any drive-in gaming market in the
United States and that this market is underserved. Based on the approximately
6,591 gaming positions expected for the Bossier City/Shreveport Market,
including those of Casino Magic-Bossier City and the three other existing
casinos, and those assumed for Casino Magic-Bossier City and a possible fifth
riverboat which in the future may be licensed to commence gaming operations,
there will be approximately one gaming position in the Bossier City/Shreveport
Market for every 1,009 adults within 200 miles. According to reports published
by the Louisiana State Police, total gaming revenues for the 12 months ended
May 31, 1996 for the three riverboat casinos operating in the Bossier
City/Shreveport Market were $473.3 million. Management estimates that these
revenues represent an average daily win per slot of $309 and win per table of
$2,310. The estimated win per unit figures in the Bossier City/Shreveport
Market are second only to the Chicago area riverboat gaming market and compare
favorably to Atlantic City, which generated an average daily win per slot of
$244 and win per table of $2,463 for the same period. See "Business-Bossier
City/Shreveport Market."
Excluding amounts expended in May 1996 in connection with Jefferson
Corp.'s acquisition of the Company, the total project cost for Casino
Magic-Bossier City is estimated to be $71.4 million which includes: (i)
approximately $13.6 million expended for the acquisition of the 23-acre site,
(ii) $20.0 million expended for the acquisition of the Bossier Riverboat, and
(iii) $37.8 million as the amended development and construction budget for the
buildings and other improvements at Casino Magic-Bossier City (including
approximately $8.4 million of preopening costs, opening bankroll and
additional gaming equipment but excluding estimated fees and expenses and
$11.7 million aggregate remaining reserves for completion costs, operating
expenses and fixed interest). At the closing of the Note Offering,
approximately $45.2 million of the net proceeds thereof were deposited in
collateral accounts (the "Cash Collateral Accounts") to be disbursed only in
accordance with the Cash Collateral and Disbursement Agreement executed at the
closing of the Note Offering. As of October 18, 1996, all of the originally
deposited amounts, plus accrued interest thereon, remained in the Interest
Reserve Account (intended to fund the first payment of fixed interest on the
Notes in February 1997) and in the Operating Reserve Account (intended to fund
operating losses, if any, occuring during the period of operations with
temporary mooring, boarding and parking facilities which commenced October 4,
1996). As of October 18, 1996, the Company had finalized all plans and
specifications for Casino Magic-Bossier City, had agreed upon a guaranteed
maximum price of $19.4 million with its general contractor for completion of
Casino Magic-Bossier City in accordance with such plans (although there can be
no assurance that there will not be change orders to certain aspects of the
project as construction continues that could increase the cost to an extent)
and amended the construction budget to an extent that will require, in
addition to the amount deposited in the Construction Disbursement Account, an
additional $3.8 million to be funded from the Completion Reserve Account
(established with an original deposit of $5.0 million to fund cost overruns
arising in connection with developing and constructing Casino Magic-Bossier
City).
In May 1996, Casino Magic, through its wholly owned subsidiary, Jefferson
Corp., acquired the Company (which at the time of acquisition held the
Louisiana gaming license that is being used for Casino Magic-Bossier City) for
$50.0 million and the assumption of $5.7 million in equipment financing. The
assets acquired as a part of such transaction included gaming and related
equipment and surveillance equipment which the Company is using at Casino
Magic-Bossier City and a second riverboat owned by the Company, the Crescent
City Queen riverboat (the "Crescent City Riverboat"). The Crescent City
Riverboat is one of the largest gaming riverboats in the United States,
measuring approximately 430 feet by 100 feet with 88,000 square feet of
interior space spread across three decks. While the Crescent City Riverboat is
part of the collateral for the Notes, the Company does not intend to use the
Crescent City Riverboat in connection with its gaming activities at Casino
Magic-Bossier City. The Company anticipates selling the Crescent City
Riverboat, in which case the Company will be required either to reinvest the
proceeds in Casino Magic-Bossier City or apply such proceeds to a repurchase
offer for the Notes. The Company can give no assurances that it will be able
to dispose of the Crescent City Riverboat on acceptable terms or in a timely
manner.
The Casino Magic-Bossier City facilities will initially utilize
approximately 12 of the site's 23 acres, allowing substantial room for future
expansion. Subject to an outcome of the Louisiana Referendum permitting
continued riverboat gaming in Bossier City, the Company intends to expand
Casino Magic-Bossier City through the future development of an adjacent
400-room hotel and related amenities, including restaurants, banquet space, a
theater, a swimming pool, a health club and a child care facility. Management
does not anticipate commencing development and construction of the hotel and
related amenities until after construction of the pavilion and parking
facilities has been completed and Casino Magic-Bossier City has commenced
gaming operations at the permanent facilities. The development and
construction of subsequent improvements is largely dependent upon receipt of
proceeds from a future sale of the Crescent City Riverboat and operating cash
flow of Casino Magic-Bossier City and no assurances can be given that such
funds will become available or that such hotel and related facilities will
ever be developed.
Current Louisiana law limits the number of riverboat casino licenses in
the state to 15, of which 14 have been awarded, and limits the concentration
of riverboat casino licenses in any one parish to six. Four of those licenses
(including the Company's) have been granted in the Bossier City/Shreveport
Market which encompasses both Caddo and Bossier parishes. The relative success
of gaming operations in the Bossier City/Shreveport Market compared to other
Louisiana markets may increase the possibility that existing licenses may be
relocated to the Bossier City/Shreveport Market, especially in the event that
the continuation of riverboat gaming in other parishes is disapproved in the
Louisiana Referendum and voters in Caddo and Bossier parishes approve
continued riverboat gaming. However, the relocation of existing licenses to
another parish or of riverboats within the same parish will be restricted by a
recently passed Constitutional Amendment (as defined herein) which requires,
among other things, a local parish-wide election to approve, by majority vote,
the licensing of any additional riverboats in a parish with existing licensed
riverboats or the relocation of any operating riverboat to a different berth
in the same parish. If, on the other hand, the outcome of the Louisiana
Referendum is unfavorable to the continuation of gaming in Bossier and Caddo
parishes, each of the casino operators in these parishes will be permitted to
operate through the expiration of the five-year terms of their respective
initial licenses, which will occur between April and July of 1999 for the
three casinos currently in operation. The Company's initial license term will
expire on August 1, 2001, thus creating a significant period of time during
which the Company could substantially benefit from the reduced number of
casinos available to satisfy customer demand in the Bossier City/Shreveport
Market. See "Risk Factors-Competition."
The Company was incorporated as a Louisiana corporation on June 11, 1993
under the name Crescent City Capital Development Corporation ("Crescent
City"), and was owned by a corporation with which Jefferson Corp. and Casino
Magic had no affiliation. In April 1995, Crescent City commenced gaming
activities in New Orleans, Louisiana for a 65-day period before a bankruptcy
proceeding was commenced against it in July 1995. In May 1996, Casino Magic,
through Jefferson Corp., purchased all of the capital stock of Crescent City
for $50.0 million, plus the assumption of $5.7 million of equipment financing
pursuant to a court-approved plan of reorganization (the "Plan of
Reorganization"). The purchase price was paid in cash plus the issuance of
$35.0 million principal amount of senior secured notes (the "Louisiana Notes")
which were repaid from proceeds of the Note Offering in August 1996. See
"Business-Background."
The Company's principal executive and administrative offices are located
at 1701 Old Minden Road, Bossier City, Louisiana 71111. The Company's
telephone number is (318)746-0711.
CASINO MAGIC CORP.
Casino Magic, through its wholly owned subsidiaries, develops, owns and
operates casinos and related amenities primarily in the southeastern United
States, including two major facilities on the Mississippi Gulf Coast. Casino
Magic owns and operates a major dockside casino and entertainment complex and
adjacent hotel in Bay Saint Louis, Mississippi ("Casino Magic-BSL") and a
major dockside casino and entertainment complex ("Casino Magic-Biloxi") in the
midst of a four-casino "Strip" in Biloxi, Mississippi. Casino Magic also owns
or operates two small casinos in Argentina and two American-style casinos in
Greece. For the 12 months ended June 30, 1996, Casino Magic's revenues and
EBITDA were $174.9 million and $37.7 million, respectively. EBITDA for the
purposes hereof means earnings before interest, taxes, depreciation,
amortization, preopening and special charges. Casino Magic's principal
executive and administrative offices are located at 711 Casino Magic Drive,
Bay Saint Louis, Mississippi 39520. Casino Magic's telephone number is (601)
466-8000.
Since late 1995, Casino Magic has strengthened its management team with
the addition of a new Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, and several other key executives who collectively possess
substantial development and operational experience within the gaming industry.
The new management team has identified Casino Magic's strategic priorities as
(i) focused development of domestic growth projects, particularly Casino
Magic-Bossier City, and (ii) increased attention to, and investment in, its
core Mississippi properties. Management of Casino Magic believes that
establishing a significant brand name presence will be an increasingly
important competitive tool in each of its existing and future markets.
The Company entered into a management agreement (the "Management
Agreement") with Casino Magic and Casino Magic Management Services, Corp. (the
"Manager"), a wholly owned subsidiary of Casino Magic, on August 22, 1996,
pursuant to which Casino Magic licensed the use of the "Casino Magic" name to
the Company and the Manager will manage Casino Magic-Bossier City.
<PAGE>
THE EXCHANGE OFFER
SECURITIES OFFERED:
$115.0 million aggregate principal amount of 13% Series B First Mortgage Notes
due 2003 with Contingent Interest. The form and terms of the Series B Notes
are substantially identical to the Series A Notes in all material respects,
except that the Series B Notes will be registered under the Securities Act,
and therefore will not bear legends restricting the transfer thereof.
THE EXCHANGE OFFER:
Each $1,000 principal amount of the Series B Notes is being offered in
exchange for $1,000 principal amount of the Series A Notes. The issuance of
the Series B Notes is intended to satisfy obligations of the Company and
Jefferson Corp. contained in the Registration Rights Agreement relating to the
Series A Notes. For procedures for tendering, see "The Exchange Offer."
TENDERS, EXPIRATION DATE; WITHDRAWAL:
The Exchange Offer will expire at 5:00 p.m., New York City time, on _______,
1996, or such later date and time to which it is extended (the "Expiration
Date"). The Exchange Offer is not conditioned upon any minimum principal
amount of Series A Notes being tendered for exchange. Tenders of Series A
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company does not accept for exchange any
Series A Notes for any reason, the Company will promptly return such Series A
Notes to the Holders thereof.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER:
The Exchange Offer is subject to certain customary conditions, which may be
waived by the Company. See "The Exchange Offer -- Certain Conditions to the
Exchange Offer."
PROCEDURES FOR TENDERING SERIES A NOTES:
Each holder of Series A Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such facsimile, together with
such Series A Notes and any other required documentation to the Exchange Agent
(as defined herein) at the address set forth herein. By executing the Letter
of Transmittal, each holder will represent to the Company that, among other
things, (i) any Series B Notes to be received by it will be acquired in the
ordinary course of its business, (ii) it has no arrangement with any person to
participate in the distribution of the Series B Notes, and (iii) it is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company.
BENEFICIAL OWNERS:
Any beneficial owner whose Series A Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Series A Notes in the Exchange Offer should contact such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering his
Series A Notes, either make appropriate arrangements to register ownership of
the Series A Notes in such owner's name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may
take considerable time and may not be completed prior to the Expiration Date.
GUARANTEED DELIVERY PROCEDURES:
Holders of Series A Notes who wish to tender their Series A Notes and whose
Series A Notes are not immediately available or who cannot deliver their
Series A Notes, the Letter of Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent, prior to the Expiration Date,
must tender their Series A Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
REGISTRATION OBLIGATIONS:
The Company agreed to use its best efforts to consummate the registered
Exchange Offer by January 14, 1997 pursuant to which holders of the Series A
Notes will be offered an opportunity to exchange their Series A Notes for the
Series B Notes which will be issued without legends restricting the transfer
thereof. In the event that applicable interpretations of the staff of the SEC
do not permit the Company to effect the Exchange Offer or in certain limited
circumstances, the Company has agreed to file a shelf registration statement
covering resales of the Series A Notes and to use its best efforts to cause
such shelf registration statement to be declared effective under the
Securities Act and, subject to certain exceptions, keep such shelf
registration statement effective until the earlier of three years following
the date of original issuance of the Series A notes and such time as all the
Series A Notes have been sold thereunder or are otherwise no longer restricted
securities.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS:
For a discussion of certain federal income tax considerations relating to the
exchange of the Series A Notes for the Series B Notes, see "Certain Federal
Income Tax Considerations."
USE OF PROCEEDS:
There will be no proceeds to the Company from the exchange pursuant to the
Exchange Offer.
RISK FACTORS:
For a discussion of certain material factors to be considered by Holders prior
to tendering their Series A Notes, see "Risk Factors."
EXCHANGE AGENT:
First Union Bank of Connecticut (the "Exchange Agent") has agreed to serve as
Exchange Agent in connection with the Exchange Offer.
<PAGE>
SUMMARY DESCRIPTION OF THE SERIES B NOTES
The form and terms of Series B Notes are substantially identical to the
Series A Notes in all material respects, except that the Series B Notes will
be registered under the Securities Act, and therefore will not bear legends
restricting the transfer thereof. For a more complete description of the
Notes, see "Description of the Notes."
SECURITIES OFFERED:
Up to $115.0 million aggregate amount of the Company's 13% Series B First
Mortgage Notes due 2003 with Contingent Interest.
MATURITY DATE:
August 15, 2003.
FIXED INTEREST:
13% per annum.
CONTINGENT INTEREST:
Contingent Interest is payable on the Notes, on each interest payment date, in
an aggregate amount equal to 5% of the Company's Adjusted Consolidated Cash
Flow for the six-month period ending on June 30 or December 31 (each, a
"Semiannual Period") most recently completed prior to such interest payment
date; provided that no Contingent Interest shall be payable with respect to
any period prior to the Commencement Date (as defined herein). Payment of all
or a portion of any installment of Contingent Interest may be deferred, at the
option of the Company, if, and only to the extent that, (i) the payment of
such portion of Contingent Interest will cause the Company's Adjusted Fixed
Charge Coverage Ratio (as defined herein) for the Company's most recently
completed Reference Period prior to such interest payment date to be less than
1.5 to 1.0 on a pro forma basis after giving effect to the assumed payment of
such Contingent Interest and (ii) the principal amount of the Notes
corresponding to such Contingent Interest has not then matured and become due
and payable (at stated maturity, upon acceleration, upon redemption, upon
maturity of a repurchase obligation or otherwise). The aggregate amount of
Contingent Interest payable in any Semiannual Period will be reduced pro rata
for reductions in the outstanding principal amount of Notes prior to the close
of business on the record date immediately preceding such payment of
Contingent Interest. The payment of Contingent Interest is subject to certain
restrictions set forth herein. See "Description of Notes-Principal, Maturity
and Interest."
INTEREST PAYMENT DATES:
Each February 15 and August 15, commencing February 15, 1997.
GUARANTEES:
The Series B Notes will be unconditionally guaranteed on a senior secured
basis by Jefferson Corp. and by all future subsidiaries of the Company
(collectively, the "Guarantors"). See "Description of Notes-Guarantees."
RANKING:
The Series B Notes will be senior secured obligations of the Company and will
rank pari passu in right of payment with any existing and future senior
Indebtedness of the Company, including any Series A Notes which are not
tendered for exchange. As of June 30, 1996, after giving pro forma effect to
the Note Offering and the application of the net proceeds therefrom, the total
senior Indebtedness of the Company would have been approximately $120.7
million, consisting of $115.0 million aggregate principal amount of Notes and
$5.7 million in existing equipment financing of the Company. In addition, the
Company intends to incur approximately $1.8 million of additional equipment
financing. The Series B Notes will rank senior in right of payment to all
subordinated Indebtedness of the Company.
SECURITY:
The Notes will be secured by a first priority security interest, subject to
Permitted Liens, in substantially all of the existing and future assets of the
Company, including the Bossier Riverboat and substantially all of the other
assets that comprise Casino Magic-Bossier City, the Crescent City Riverboat,
an assignment of the construction contracts pursuant to which Casino
Magic-Bossier City is being constructed and a pledge of that portion of the
net proceeds from the Note Offering deposited and held as collateral in the
Cash Collateral Accounts pending disposition pursuant to the Cash Collateral
and Disbursement Agreement. The Jefferson Guarantee is secured by a pledge of
all of the capital stock of the Company. See "Description of Notes-Security."
MANDATORY REDEMPTION:
In the event that the voters in the Louisiana Referendum disapprove the
continuation of riverboat gaming in either Bossier or Caddo parish, the
Company will be required, within 90 days after the end of each Operating Year,
to redeem the maximum principal amount of Notes that may be redeemed with 100%
of the Excess Cash Flow with respect to such Operating Year, at a redemption
price in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest to the date of redemption; provided that if the voters in one
but not the other parish disapprove continuation of riverboat gaming and the
Company has obtained a determination prior to the end of its first Operating
Year that the outcome of the Louisiana Referendum does not limit its ability
to conduct its gaming operations at Casino Magic-Bossier City, the Company
will not be required to make such Excess Cash Flow Redemptions (as defined
herein). See "Description of Notes-Mandatory Redemption."
OPTIONAL REDEMPTION:
Except as set forth above, the Series B Notes will not be redeemable prior to
August 15, 2000 (except as otherwise required by a Gaming Authority). The
Series B Notes will be redeemable at the option of the Company, in whole or in
part, on or after August 15, 2000, at the redemption prices set forth herein
plus accrued and unpaid interest thereon to the redemption date. See
"Description of Notes-Optional Redemption."
CHANGE OF CONTROL:
In the event of a Change of Control, the Holders of the Series B Notes will
have the right to require the Company to purchase such Holders' Series B Notes
at a purchase price equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest thereon to the date of purchase. See
"Description of Notes-Repurchase at the Option of Holders-Change of Control."
CERTAIN COVENANTS:
The Indenture pursuant to which the Series A Notes have been issued and the
Series B Notes will be issued contains certain covenants that limit the
ability of the Company and its subsidiaries to, among other things, incur
additional Indebtedness and issue preferred stock, pay dividends, make
investments or make other restricted payments, incur liens, enter into mergers
or consolidations, enter into transactions with affiliates or sell assets. See
"Description of Notes-Certain Covenants."
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act. Discussions containing such forward-looking
statements may be found in the material set forth under "Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources," "Business" and "Description of
Notes," as well as within this Prospectus generally. Actual results may differ
materially from those projected in the forward-looking statements. Those
Holders considering exchanging Series A Notes for Series B Notes should
carefully consider the following factors, together with other information
contained herein, before exchanging the Series A Notes for Series B Notes.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT
After the Note Offering, the Company is highly leveraged, with
substantial debt service in addition to construction and operating expenses.
Prior to May 1996, the Company was owned by entities unaffiliated with Casino
Magic or Jefferson Corp., and in May 1996, Casino Magic, through Jefferson
Corp., purchased all of the capital stock of the Company (formerly known as
Crescent City Capital Development Corporation) pursuant to a court approved
Plan of Reorganization. Pursuant to the Plan of Reorganization, Crescent City
was discharged from substantially all of its liabilities prior to the
acquisition. From the May 1996 acquisition of Crescent City until the October
4, 1996 opening of Casino Magic-Bossier City, the Company's activities were
limited to development activities and, as a result, the Company had no
revenues or earnings. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." As of June 30, 1996, after giving pro
forma effect to the Note Offering and the application of the net proceeds
therefrom, the total senior Indebtedness of the Company was approximately
$120.7 million, consisting of $115.0 million aggregate principal amount of
Series A Notes and $5.7 million of equipment financing assumed in connection
with the May 1996 acquisition of Crescent City. See "Capitalization." In
addition, the Company intends to incur approximately $1.8 million of
additional equipment financing in connection with the initial development of
Casino Magic-Bossier City.
The Company's ability to meet its debt obligations is entirely dependent
upon the successful completion of Casino Magic-Bossier City and the Company's
future operating performance, which is itself dependent on a number of
factors, many of which are outside of the Company's control, including voter
approval in the Louisiana Referendum of continued riverboat gaming in the
parish in which the Company intends to operate, prevailing economic conditions
and financial, business, regulatory and other factors affecting the Company's
operations and business. Any significant increases in the construction budget
or delays in completing the construction of Casino Magic-Bossier City would
adversely affect the operating results of the Company and could result in the
Company's inability to make required payments on its debt obligations.
Assuming timely completion of Casino Magic-Bossier City and its successful
operation thereafter, management believes that the Company's operating cash
flow will be sufficient to meet its expenses, including interest costs. There
can be no assurance, however, that the Company will be profitable or will
generate sufficient operating cash flow to enable the Company to (i) service
its Indebtedness, including the Notes or (ii) purchase Notes tendered pursuant
to an offer to repurchase in circumstances required by the terms of the
Indenture. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital Resources" and "Description of
Notes."
If the Company is unable to generate sufficient cash flow, it could be
required to adopt one or more alternatives, such as reducing or delaying
planned capital expenditures, selling assets, restructuring debt or obtaining
additional equity capital. There can be no assurance that any of these
alternatives could be effected on satisfactory terms, and any need to resort
to alternative sources of funds could impair the Company's competitive
position and reduce its future cash flow. Jefferson Corp. has no significant
assets or operations which could provide a source of liquidity or capital to
the Company. Casino Magic will have no obligations under the Notes, nor does
it have any obligation to provide any financing to the Company. In addition,
Casino Magic will be restricted from providing additional capital to the
Company, subject to certain exceptions, by the terms of certain debt
agreements to which it is subject, including the indenture governing the
$135.0 million aggregate principal amount of 11 % First Mortgage Notes due
2001 issued by an indirect subsidiary of Casino Magic and guaranteed by Casino
Magic (the "Casino Magic Notes").
The degree to which the Company is leveraged could have important
consequences to the Holders, including, but not limited to, the following: (i)
the Company's increased vulnerability to adverse general economic and industry
conditions, (ii) the dedication of a substantial portion of the Company's
operating cash flow to the payment of principal and interest on Indebtedness,
thereby reducing the funds available for operations and further development of
Casino Magic-Bossier City and (iii) the Company's impaired ability to obtain
additional financing for future working capital, capital expenditures,
acquisitions or other general corporate purposes. There can be no assurance
that any such additional financing will be available in the future on terms
satisfactory to the Company, if at all. Failure by the Company to obtain any
required additional financing in the future could have a material adverse
effect on its financial condition and results of operations.
CONSTRUCTION AND BUDGET RISKS
Construction and Budget. The Company commenced casino operations on the
completed and fully equipped Bossier Riverboat on October 4, 1996 using
temporary mooring, boarding and paved parking facilities. Completion of
permanent facilities for Casino Magic-Bossier City is scheduled for December
1996. The estimated cost of completing Casino Magic-Bossier City is budgeted
to be approximately $37.8 million, including $5.5 million of preopening costs
and opening bankroll and $2.9 million in additional gaming equipment but
excluding financing fees and expenses. Such construction budget (which
includes the costs of the temporary facilities) is based on the plans and
specifications prepared by the Company and its architects and assumes that
Casino Magic-Bossier City will be completed in December 1996. As of October
18, 1996, the Company had finalized all plans and specifications for Casino
Magic-Bossier City, had agreed upon a guaranteed maximum price of $19.4
million with its general contractor for competion of Casino Magic-Bossier City
in accordance with such plans (although there can be no assurance that there
will not be change orders to certain aspects of the project as construction
continues that could increase the cost to an extent) and amended the
construction budget to an extent that will require, in addition to the amount
deposited in the Construction Disbursement Account, an additional $3.8 million
to be funded from the Completion Reserve Account (established with an original
deposit of $5.0 million to fund cost overruns arising in connection with
developing and constructing Casino Magic-Bossier City). It is possible that
the plans and specifications will change as construction continues. Changes
in the plans or delays in the anticipated schedule may cause the costs of
construction of Casino Magic-Bossier City to increase and such increases may
be material. Construction of Casino Magic-Bossier City is being performed by
W. S. Bellows Construction Corporation ("Bellows") as general contractor. The
Company does not intend to require Bellows to obtain a bond covering its
performance under any contract with the Company.
The Company purchased the Bossier Riverboat from Boyd Gaming Corporation
for $20.0 million at the closing of the Note Offering. Boyd Gaming
Corporation did not provide the Company with any representations or warranties
with respect to the fitness or suitability of the Bossier Riverboat.
Furthermore, warranties relating to the Bossier Riverboat may not be available
from the builder or any suppliers of engines or any component thereof.
Accordingly, the Company may have no contractual recourse in the event defects
are discovered on the Bossier Riverboat and the Company will be required to
make any required repairs or modifications at its own expense.
Approximately $29.7 million and $5.0 million of the net proceeds from the
Note Offering were deposited in the Construction Disbursement Account and the
Completion Reserve Account, respectively, pending disbursement upon
satisfaction of certain conditions set forth therein, including certain
conditions subject to the satisfaction of an independent construction
consultant (the "Independent Construction Consultant"). Pursuant to the Cash
Collateral and Disbursement Agreement, the Disbursement Agent requires certain
certifications from the Independent Construction Consultant to determine the
satisfaction of conditions for disbursements. The primary purpose of the
Independent Construction Consultant is to ensure that Casino Magic-Bossier
City will be completed on schedule and within budget. There can be no
assurance that the Independent Construction Consultant will discharge its
responsibilities in a manner that will ensure that Casino Magic-Bossier City
will be completed on time and within budget, nor can there be any assurance
that if the Independent Construction Consultant breaches its responsibilities,
that it will have assets sufficient to satisfy the damages created as a
consequence of such breach.
Construction projects such as the Company's entail significant
construction risks, including, but not limited to, cost overruns, delay in
receipt of governmental approvals, shortages of materials or skilled labor,
labor disputes, unforeseen environmental or engineering problems, work
stoppages, fire and other natural disasters, construction scheduling problems
and weather interferences, any of which, if it occurred, could delay
construction or result in a substantial increase in costs to the Company. Such
risks may be compounded by the Company's decision to construct Casino
Magic-Bossier City on an accelerated schedule under which construction has
progressed while final plans were being completed and which includes the use
of multiple shifts, early ordering of materials, fast tracking, and a
seven-day work week (when feasible). An accelerated construction schedule may
cause actual construction costs to exceed budgeted amounts.
Neither Casino Magic nor any of its subsidiaries is providing any
guaranty with respect to the completion of construction of Casino
Magic-Bossier City. There can be no assurance that Casino Magic-Bossier City
will be completed within the time frames and budgets currently contemplated.
Failure to complete Casino Magic-Bossier City within the budget or on schedule
may have a material adverse effect on the results of operations and financial
condition on the Company.
Permits and Approvals. The completion and opening of the landside
facilities at Casino Magic-Bossier City will be contingent upon, among other
things, the Company's receipt of all required licenses, permits and
authorizations. The scope of the approvals required for a project of this
nature is extensive, including, without limitation, state and local land-use
permits, building and zoning permits, health and safety permits and liquor
licenses. In addition, unexpected changes or concessions required by local,
regulatory and state authorities could involve significant additional costs
and could delay or prevent the completion of construction of parts of the
landside facilities at Casino Magic-Bossier City. There can be no assurance
that the Company will receive the necessary permits, licenses and approvals
for the construction and operation of Casino Magic-Bossier City that it has
not yet obtained, or that such permits, licenses and approvals will be
obtained within the anticipated time frame.
REFERENDUM REGARDING CONTINUATION OF LEGALIZED GAMING IN LOUISIANA
On April 19, 1996, the Louisiana legislature approved legislation
mandating local option elections on a parish-by-parish basis to determine
whether to prohibit or continue to permit existing forms of gaming authorized
by law to be conducted in each such parish. The Louisiana Referendum is
scheduled to be held on November 5, 1996 and will be in a menu format giving
voters in each parish where gaming, including riverboat gaming, is now
authorized the option to accept or reject, individually, each of the various
forms of gaming, including riverboat gaming, now authorized by law to be
conducted in such parish.
The legislation mandating the Louisiana Referendum requires a majority of
votes cast in a parish in order to approve a particular form of gaming in such
parish. With respect to riverboat gaming specifically, the Louisiana
Referendum will be conducted in each parish that is contiguous to a
statutorily designated river or waterway, including the Red River (on which
Casino Magic-Bossier City is located). The Red River runs between the parishes
of Bossier and Caddo. Due to changes in the course of the Red River since the
original surveys were performed establishing the boundaries of Caddo and
Bossier parishes, there is uncertainty as to whether the intended riverbank
site of Casino Magic-Bossier City's gaming operations is located in Bossier
Parish or Caddo Parish. If voters in either Bossier or Caddo parish disapprove
the continuation of riverboat gaming, the Company's Louisiana gaming license
will remain in effect until August 1, 2001, during which time the Company
would be permitted to conduct dockside riverboat gaming operations at Casino
Magic-Bossier City.
While the Company has no reason to believe that the outcome of the
Louisiana Referendum will be different in Caddo and Bossier parishes, if the
outcome is different, there may be litigation brought by parties other than
the Company to clarify the boundary lines and to determine the parish in which
the gaming operations of Casino Magic-Bossier City is located. Such litigation
may be disruptive to the Company's operations, and any such disruption may
have a material adverse effect on the Company. In the event that voters in
either Bossier or Caddo parish disapprove the continuation of riverboat
gaming, the Company would, subject to certain exceptions, be required to apply
certain amounts to the redemption of Notes in accordance with the Indenture.
See "Description of Notes-Mandatory Redemption." In such event the Company
would reevaluate its plans accordingly.
The discontinuation of riverboat gaming in the parish where the Company
operates would have a material adverse effect on the Company and could affect
the ability of the Company to make interest payments on the Notes when due or
to repay the principal thereof on the maturity date. Moreover, in the event
that the continuation of riverboat gaming is approved in the parish in which
the Company operates, but not in other parishes where riverboat gaming is
presently conducted, licensees presently conducting riverboat gaming in other
parishes may seek to relocate their operations to the parish in which the
Company operates, or to a nearby parish, thereby potentially increasing
competition for the Company. However, on September 21, 1996, a constitutional
amendment (the "Constitutional Amendment") was approved by a majority of
Louisiana voters, thus allowing local option elections to be held before new
forms of gaming can be brought into a parish. The Constitutional Amendment
also requires a local option referendum before an additional riverboat can
move into a parish, regardless of whether such parish has authorized riverboat
gaming in the Louisiana Referendum. See "-Competition-General."
In addition, the legislation mandating the Louisiana Referendum does not
provide for any moratorium that must expire before future referenda on gaming
could be mandated or allowed. Even if voters in the parish in which the
Company operates elect in the Louisiana Referendum to continue riverboat
gaming, there can be no assurance that future referenda on gaming activities
will not occur, that voters in the parish in which the Company operates will
not subsequently vote to discontinue, limit or, alternatively, further expand
riverboat gaming in that parish, or that the Louisiana legislature will not
mandate other referenda or electoral confirmations or otherwise limit,
restrict, prohibit or, alternatively, further expand gaming in Louisiana.
RISK OF NEW VENTURE; LACK OF PRIOR OPERATING HISTORY
From the May 1996 acquisition of Crescent City until the October 4, 1996
opening of Casino Magic-Bossier City, the Company's activities were limited to
development activities and, as a result, the Company had no revenues or
earnings or operations. See "Business-Background." Although several members
of Casino Magic's management have experience constructing and operating
riverboat casinos in the Bossier City/Shreveport Market and elsewhere, neither
the Company nor the Manager, which will manage the Company's gaming
operations, has previously been involved in constructing or operating a
riverboat casino in the Bossier City/Shreveport Market. Moreover, Casino
Magic-Bossier City is a start-up development and, as such, will be subject to
all of the risks inherent in establishing a new business enterprise,
including, but not limited to, unanticipated construction, licensing,
permitting or operating problems, as well as having no proven ability to
market and operate a new venture in the Bossier City/Shreveport Market, where
neither the Company nor Casino Magic has previously conducted business. The
Company will rely on the Manager to manage Casino Magic-Bossier City and will
grant it a significant degree of independence in operating matters, including
day-to-day financial control and authority over hiring and training personnel.
There can be no assurance that the Company or the Manager will be able to
successfully market Casino Magic-Bossier City or that the operations thereof
will be profitable or will generate sufficient operating cash flow to enable
the Company to make payments of principal and interest on the Notes. The
Series B Notes, like the Series A Notes, will be without recourse to Casino
Magic or its affiliates other than the Company and Jefferson Corp.
COMPETITION
General
The Company will be highly dependent on the Bossier City/Shreveport
Market and on the principal markets to which it caters, such as the
Dallas-Fort Worth market. Current Louisiana law limits the number of riverboat
casino licenses in the state to 15, of which 14 have been awarded, and limits
the concentration of riverboat casino licenses in any one parish to six. Four
gaming licenses (including the Company's) have been granted in the Bossier
City/Shreveport Market which encompass both Caddo and Bossier parishes.
Fourteen riverboat casinos (including the Company's) currently operate in
Louisiana, all of which have opened since 1993.
The Company expects its strongest competition to be the three other
riverboat casinos currently operating in the Bossier City/Shreveport Market,
all of which have been operating in Bossier City/Shreveport since 1994. All
three offer substantially similar gaming facilities. Casino Magic-Bossier City
will face competition from these existing operators, particularly to the
extent that additions or enhancements to their existing amenities are made.
For example, one Bossier City/Shreveport casino operator recently broke ground
on a 606-room all-suites hotel at its riverboat casino location in Bossier
City. Furthermore, additional operators, including certain competitors
operating in Bossier City/Shreveport, have applied for a license to operate a
fifth dockside riverboat casino in the Bossier City/Shreveport Market, which
would further increase the Company's competition. The relative success of
gaming operations in the Bossier City/Shreveport Market compared to other
Louisiana markets may increase the possibility that existing licenses may be
relocated to the Bossier City/Shreveport Market, especially in the event that
the continuation of riverboat gaming in other parishes is disapproved in the
Louisiana Referendum and voters in the Caddo and Bossier parishes approve
continued riverboat gaming. The relocation of existing licenses to another
parish or of riverboats within the same parish will be restricted by the
Constitutional Amendment which requires, among other things, a local
parish-wide election to approve, by majority vote, the licensing of any
additional riverboats in a parish with existing licensed riverboats or the
relocation of any operating riverboat to a different berth in the same parish.
However, a riverboat located in the New Orleans market receieved approval to
relocate to the Bossier City/Shreveport Market. The relocation of this
riverboat will occur after the land based casino in New Orleans opens or on
October 31, 1997, which ever event occurs first. This would bring the number
of riverboats in the Bossier City/Shreveport Market up to six facilities.
Certain of the Company's competitors have more experienced management and
greater name recognition, marketing capabilities and financial resources than
the Company. The Company may also face increasing competition from the new and
existing casinos developed elsewhere in Louisiana, on the Mississippi Gulf
Coast (including other casinos operated by Casino Magic) and surrounding
market areas and other jurisdictions throughout the United States and abroad,
and from established gaming centers such as those in Nevada and Atlantic City,
New Jersey. The Company also faces competition from other forms of lawful
gaming, such as state-sponsored lotteries and video lottery terminals,
pari-mutuel betting on horse and dog racing and bingo parlors, as well as from
other forms of entertainment. It is possible that increased competition could
have a material adverse effect on the Company.
Risk of Texas Gaming Legalization
Casino gaming is currently prohibited in several jurisdictions adjacent
to Louisiana. As a result, residents of these jurisdictions, principally
Texas, comprise a significant portion of the customers of existing gaming
operations in Bossier City/Shreveport and of the anticipated customers of
Casino Magic-Bossier City.
Although casino gaming is not currently permitted in Texas and the Texas
Attorney General has issued an opinion that gaming in Texas would require an
amendment to the Texas Constitution, the Texas Legislature has considered
various proposals to authorize casino gaming. No gaming legislation was
enacted in the most recent legislative session ended May 29, 1995. A
constitutional amendment would require a two-thirds vote of those present and
voting in each house of the Texas Legislature and approval by the electorate
in a referendum. The legalization of casino gaming in Texas and the opening of
one or more casinos in the Dallas-Fort Worth area, which is a major market for
Bossier City/Shreveport gaming operations, would have a material adverse
effect on the Company's results of operations.
DEPENDENCE UPON SINGLE GAMING SITE
The Company does not currently anticipate having operations other than
Casino Magic-Bossier City and therefore may be entirely dependent upon Casino
Magic-Bossier City for its revenues. Because the Company may be entirely
dependent on a single gaming site for its revenues, it will consequently be
subject to greater risks than a geographically diversified gaming operation,
including, but not limited to, risks related to local economic and competitive
conditions, changes in local governmental regulations and natural and other
disasters. Any decline in the number of residents in the Bossier
City/Shreveport Market, a downturn in the overall economy of the Bossier
City/Shreveport Market, a decrease in gaming activities in the Bossier
City/Shreveport Market or an increase in competition could have a material
adverse effect on the Company.
POSSIBLE CONFLICTS OF INTEREST
Affiliates of the Company, including Casino Magic, are actively involved
in the gaming industry. Casinos owned or managed by such affiliated persons
may directly or indirectly compete with the Company. The potential for
conflicts of interest exists among the Company and affiliated persons for
future business opportunities that may not be presented to the Company.
However, the Company and Casino Magic have agreed that Casino Magic and its
other affiliates will not engage in other gaming activities within a 200-mile
radius of Casino Magic-Bossier City, excluding the cities of Lake Charles,
Louisiana and Vicksburg, Mississippi.
GAMING AND OTHER GOVERNMENT REGULATION
Gaming Regulation
The Company's casino will be subject to extensive regulation by the State
of Louisiana. In May 1996, regulatory oversight of gaming operations in
Louisiana, including riverboat gaming, was transferred to and vested in the
Louisiana Gaming Control Board (the "Louisiana Board"). The Louisiana Board
will consist of nine members appointed by the governor of Louisiana. A
chairman and four other members of the Board, constituting a quorum to conduct
business, have been appointed by the governor as of October 17, 1996. The
Company and certain of its key personnel are required to obtain and hold
various licenses and approvals and are subject to other forms of regulation
under applicable Louisiana law. Additionally, certain beneficial owners,
lenders and landlords of the Company may be required to be licensed.
Generally, Louisiana gaming authorities have broad discretion in granting,
suspending, renewing and revoking licenses and requiring various persons and
entities to be found suitable. The suspension or revocation of the gaming
license held by the Company or the failure to obtain a renewal of its gaming
license would have a material adverse effect on the Company's business. In
some circumstances, the suspension or revocation of a gaming license in one
jurisdiction may trigger the suspension or revocation of a license or affect
eligibility for a license in another jurisdiction and the Company could
accordingly be adversely affected by regulatory actions in other jurisdictions
directed principally at Casino Magic or its employees. If additional gaming
regulations are adopted in Louisiana in the future, those regulations could
impose additional restrictions or costs that could have a material adverse
effect on the Company.
Substantially all loans, leases, private sales of securities, extensions
of credit and similar financing transactions entered into by the Company,
including the Note Offering, must be reported to the Louisiana Board within
thirty days after the consummation of any such transactions. The Louisiana
Board is required to investigate all reported loans or extensions of credit,
and to either approve or disapprove the same. If disapproved, the pertinent
loan or extension of credit must be rescinded by the Company.
Gaming companies are typically subject to significant taxes and fees in
addition to normal federal and state corporate income taxes, and such taxes
and fees are subject to increase at any time. Additionally, from time to time,
certain federal legislators have proposed the imposition of a federal tax on
gaming revenues. Any such federal tax or any material increase in existing
taxes or fees would adversely affect the Company.
The operations of the Company are subject to a variety of other
regulations in addition to gaming regulations, including, without limitation,
environmental regulations, alcoholic beverage regulations and regulations
applicable to marine vessels.
Security Ownership Regulations
Typically, gaming authorities, including those in Louisiana, have
discretionary authority to require a Holder of a security such as the Notes to
file an application, to be investigated and to be found suitable as an owner,
debtholder or landlord of a gaming establishment for any reason, including in
the event of a foreclosure on and the taking of possession of the collateral
by the Trustee following a default under the applicable indenture. While
individual holders of securities such as the Notes are generally not required
to be investigated and found suitable, gaming authorities retain the
discretion to do so for any reason, including but not limited to, a default,
or where the Holder of the debt instrument seeks to exercise a material or
significant influence over the gaming operations of the entity in question or
to elect one or more members of its Board of Directors. Each Holder shall be
deemed to have agreed (to the extent permitted by law) that if the relevant
gaming authorities determine that such Holder or beneficial owner of the Notes
must be licensed, qualified or found suitable under applicable law (whether as
the result of a foreclosure sale or for any other reason), and if such Holder
or beneficial owner is not so licensed, qualified or found suitable, such
Holder shall dispose of such Holder's Notes within the time frame and in
accordance with the procedures prescribed by the applicable gaming regulatory
authorities. Any Holder required to apply for licensing, qualification or a
finding of suitability must pay all investigative fees and costs of the gaming
authorities in connection with such an investigation. In addition, the
Indenture for the Notes provides that if any Gaming Authority requires a
Holder or beneficial owner of the Notes to be licensed, qualified or found
suitable under any applicable gaming law and such Holder or beneficial owner
fails to apply for a license, qualification or a finding of suitability within
thirty (30) days after being requested to do so by the gaming authority, or if
such Holder or such beneficial owner is not so licensed, qualified or found
suitable (a "Disqualified Holder"), the Disqualified Holder must immediately
dispose of his Notes or the Company shall have the option to redeem all of the
Disqualified Holder's Notes, at the lesser of (i) the aggregate principal
amount of such Notes, or (ii) the Disqualified Holder's cost thereof.
Immediately upon a determination of unsuitability, the Disqualified Holder
shall have no further rights whatsoever with respect to the Notes and shall
not have the right (i) to exercise, directly or indirectly through any
Trustee, nominee or any other person or entity, any right conferred by the
Notes, nor (ii) to receive any interest or any other distribution or payment
with respect to the Notes nor any remuneration in any form from the Company
for services rendered or otherwise.
Possible Legislation
On August 3, 1996, President Clinton signed a bill creating a nine-member
National Gambling Impact Study Commission to study the economic and social
impact of gaming and report its findings to Congress and the President within
two years after the first meeting of the Commission. The Commission could
recommend changes in state or federal gaming policies. The President, House
Speaker and Senate Majority Leader are each to select three of the
Commission's members. Additional federal regulation of the gaming industry
could occur as a result of investigations or hearings by the committee, which
could have a material adverse effect on the Company.
MECHANICS' LIENS
Laws in Louisiana provide certain contractors, subcontractors and
material suppliers with a lien on the property being improved by their
services or supplies in order to secure their right to be paid. Such parties
may seek foreclosure on their liens if they are not paid in full. The Company
has not obtained and does not intend to obtain payment or performance bonds
for Casino Magic-Bossier City to satisfy such liens.
Construction began before the mortgage on the real estate at Casino
Magic-Bossier City that secures the Notes was recorded. In Louisiana, the
priority of a mechanic's lien arising out of a particular construction project
relates back to the date on which construction of the project was first
commenced by any contractor. Accordingly, contractors, subcontractors and
suppliers providing goods or services in connection with Casino Magic-Bossier
City who otherwise comply with local law requirements may have a lien on the
project senior in priority to the lien of the mortgage. However, the Cash
Collateral and Disbursement Agreement requires that no progress payments be
released unless lien subordinations or releases have been obtained from all
material subcontractors and suppliers. In addition, as a condition to the
closing of the Note Offering, the Company obtained a title insurance policy
for the benefit of the Holders of the Notes insuring against any loss incurred
as a result of mechanics' liens, although the Company and Casino Magic are
required to indemnify the title insurance company for any losses resulting
from claims arising from mechanics' liens. With respect to any vessel, or
interests therein, which serve as collateral for the Notes, parties providing
goods and services, as well as tort claimants, could have priority over the
lien of the collateral documents encumbering such vessel, to the extent such
parties remain unpaid.
ABILITY TO REALIZE ON COLLATERAL; BANKRUPTCY CONSIDERATIONS
The Series A Notes are, and the Series B Notes will be, secured by a
first priority lien, subject to Permitted Liens, on substantially all of the
assets of the Company, including the Bossier Riverboat, the real property and
improvements to be constructed thereon in Bossier City and the Crescent City
Riverboat. The Company's Louisiana gaming license is not pledgeable or
transferable. Under Louisiana gaming laws and the regulations promulgated
thereunder, the Trustee may be precluded from or otherwise limited in selling
collateral at a foreclosure sale. In addition, the Trustee may be delayed in
its efforts to sell collateral due to various legal restrictions, including,
without limitation, requirements that an operator of a gaming facility be
licensed by state authorities or that prior approval of a sale or disposition
of collateral be obtained.
After application of any proceeds from a foreclosure sale, the Trustee
may be entitled to a deficiency judgment under certain circumstances.
However, there can be no assurance that the Trustee would be successful in
obtaining any deficiency judgment, what the amount of any such judgment if
obtained might be, or that the Company or Jefferson Corp. would be able to
satisfy any such judgment, if obtained.
In addition to being subject to gaming law restrictions, the Trustee's
ability to foreclose upon and sell collateral will be subject to the
procedural and other restrictions of state real estate law or the Uniform
Commercial Code or, in the case of gaming vessels, certain federal admiralty
law statutes. Furthermore, any efforts by the Trustee to demand and foreclose
upon any collateral of a Jefferson Corp. could be limited by the invocation of
state law suretyship defenses and fraudulent transfer laws. See "Description
of Notes-Remedies Upon Default Under Notes."
The right of the Trustee under the Indenture, as the secured party under
the Collateral Documents related thereto, to foreclose upon and sell the
collateral subject thereto upon an acceleration after any Event of Default is
likely to be significantly impaired by applicable bankruptcy laws if a
bankruptcy proceeding were to be commenced by or against the Company or
Jefferson Corp. prior to or possibly even after the Trustee has foreclosed
upon and sold the collateral. In view of the broad discretionary powers of a
bankruptcy court, it is impossible to predict if payments under the Notes
would be made following commencement of and during a bankruptcy case, whether
or when the Trustee could foreclose upon or sell the collateral or whether or
to what extent Holders of the Notes would be compensated for any delay in
payment or loss of value of the collateral. Furthermore, to the extent a
bankruptcy court were to determine that the value of the collateral is not
sufficient to repay all amounts due on the Notes, the Holders would hold
"undersecured claims." Applicable federal bankruptcy laws do not permit the
payment and/or accrual of interest, costs and attorneys' fees for
"undersecured claims" during the debtor's bankruptcy case.
In the event of a foreclosure sale of the assets comprising Casino
Magic-Bossier City or of the capital stock of the Company, licensing
requirements of applicable gaming authorities may limit the number of
potential bidders for such assets or such stock and may delay the sale
thereof, which could adversely affect the sale price therefor in such event.
Furthermore, such licensing requirements may limit the Trustee's ability to
foreclose upon the collateral.
Subject to a favorable outcome of the Louisiana Referendum permitting
continued riverboat gaming in Bossier City, the Company intends to expand
Casino Magic-Bossier City through the future development of an adjacent
400-room hotel and related amenities, including restaurants, banquet space, a
theater, a swimming pool, a health club and a child care facility. Management
does not anticipate commencing development and construction of the hotel and
related amenities until after construction of the pavilion and parking
facilities has been completed and Casino Magic-Bossier City has commenced
gaming operations at the permanent facilities. Subject to the restrictions in
the Indenture, including pro forma compliance with the indebtedness coverage
and loan to value ratios set forth therein, the Company is permitted to incur
indebtedness to finance the costs of constructing the hotel. In the event that
the Company determines to incur such indebtedness on a secured basis, the
Indenture provides that (i) the Trustee will release the land on which the
hotel is to be built from the lien for the benefit of the Notes and (ii) the
Company will have the right to grant a security interest for the benefit of
the new lender in such real property and all improvements constructed thereon,
including the hotel. Under such circumstances the Holders of the Notes will
have no security interest in the hotel or the land on which it is constructed.
Certain of the Company's affiliates are involved in activities that are
related to the Company's business and assets. In addition, the Company and
many of its affiliates have overlapping officers and directors. In the event
that an affiliate of the Company is the subject of a proceeding under the
United States Bankruptcy Code, the creditors of such affiliated entity or the
trustee in bankruptcy may argue that the assets and liabilities of the various
entities, including the Company, should be consolidated so as to cause the
assets of the Company to be available for satisfaction of claims against the
bankrupt affiliate. Although the Company believes that it is a distinct and
separate legal entity from its affiliates, there can be no assurance that in
the event of a bankruptcy of one of its affiliated entities a bankruptcy court
would not order consolidation of the assets of the Company and its affiliates.
FRAUDULENT CONVEYANCE CONSIDERATIONS
The Company and Jefferson Corp. have granted, and all future
subsidiaries of the Company will grant, security interests in collateral to
the Trustee, including, without limitation, in certain after-acquired property
of the Company and its subsidiaries, to secure the Notes. Various fraudulent
conveyance and revocatory laws have been enacted for the protection of
creditors and may be utilized by a court of competent jurisdiction to avoid
any security interest in collateral granted by the Company, Jefferson Corp. or
future subsidiaries of the Company. The requirements for establishing a
fraudulent conveyance or revocatory transfer vary depending on the law of the
jurisdiction which is being applied. Generally, if under federal and certain
state statutes in a bankruptcy, reorganization, rehabilitation or similar
proceeding in respect of the Company, Jefferson Corp. or future subsidiaries
of the Company, or in a lawsuit by or on behalf of creditors against the
Company, Jefferson Corp. or future subsidiaries of the Company, a court were
to find that (a) the Company, Jefferson Corp. or such a future subsidiary of
the Company (each hereinafter referred to as a "Grantor"), as the case may be,
incurred the indebtedness in connection with the Notes (including the
Guarantees thereof) or granted security interests in the collateral with the
intent of hindering, delaying or defrauding current or future creditors of the
Grantor, or (b)(i) the Grantor received less than reasonably equivalent value
or fair consideration for incurring the indebtedness in connection with the
Notes (including the Guarantees thereof) or for granting security interests in
the collateral and (ii) the Grantor, (A) was insolvent or was rendered
insolvent by reason of incurring the indebtedness in connection with the Notes
(including the Guarantees thereof) or the granting of security interests in
the collateral, (B) was engaged or about to engage in a business or
transaction for which its assets constituted unreasonably small capital, (C)
intended to incur, or believed that it would incur, debts beyond its ability
to pay as such debts matured (as all of the foregoing terms are defined in or
interpreted under the applicable fraudulent conveyance or revocatory
statutes), or (D) was a defendant in an action for money damages, or had a
judgment for money damages docketed against it (if, in either case, after
final judgment the judgment is unsatisfied), such court could, subject to
applicable statutes of limitations, with respect to the Grantor, avoid in
whole or in part the security interests granted in the collateral or
subordinate claims with respect to the Notes (including the Guarantees
thereof) to all other debts of the Grantor. The measures for insolvency for
purposes of the foregoing considerations will vary depending upon the law
applied in any such proceeding. Generally, however, a company will be
considered insolvent if the sum of its debts was greater than the fair
saleable value of all of its assets at a fair valuation or if the present fair
saleable value of its assets was less than the amount that would be required
to pay its probable liability on its existing debts, as they become fixed in
amount and mature.
CASINO MAGIC INDENTURE VIOLATION
On June 13, 1996, Casino Magic sold the capital stock of Atlantic-Pacific
Corp., which operates "Goldiggers," a small casino-hotel in Deadwood, South
Dakota, with approximately 8,500 square feet of gaming area and nine hotel
rooms, to Royal Casino Group, Inc. ("RCG"), an unaffiliated party whose common
stock trades in the over-the-counter market. Goldiggers generated revenues of
$2.1 million and a loss from operations, excluding depreciation and
amortization expense, of approximately $536,000 during 1995 and, except for
its negative cash flow impact, had not been regarded by Casino Magic as
material to its operations for several years. In consideration for the sale of
such stock, Casino Magic received shares of RCG Series A Convertible Preferred
Stock and warrants to acquire shares of RCG common stock. The indenture
governing the Casino Magic Notes required that at least 85% of the
consideration received by Casino Magic in respect of such asset sale be in the
form of cash. By selling such securities for cash to a subsidiary that is not
subject to the investment covenants of such indenture, Casino Magic has taken
steps which it believes are sufficient to cure such violation, although there
can be no assurance that Holders of the Casino Magic Notes will not allege
that such actions constitute an event of default or seek to accelerate the
payment thereof. If the payment of the Casino Magic Notes were accelerated,
Casino Magic would be required to refinance such obligations, and if such
refinancing could not be obtained, Casino Magic could be forced to seek
bankruptcy protection. In the latter event, Holders of the Notes would be
adversely affected if there were to be a substantive consolidation of the
Company with Casino Magic in Casino Magic's bankruptcy proceeding and no
assurance can be given that such substantive consolidation would not occur.
See "-Ability to Realize on Collateral; Bankruptcy Considerations."
ADVERSE WEATHER CONDITIONS
A flood or other severe weather conditions could adversely affect the
Company's gaming operations. The Company maintains insurance policies that
provide coverage for casualty losses resulting from severe weather, including
floods. However, floods or other severe weather could cause significant
physical damage to the Company's casino and for a period of time could
potentially result in reduced hours of operation or access to the casino, or
the complete closure of the casino for a period of time, any of which would
have a material adverse effect on the Company.
ENVIRONMENTAL MATTERS
The Company is subject to a wide variety of federal, state and local laws
and regulations relating to the use, storage, discharge, emission and disposal
of hazardous materials and the protection of natural resources, such as
wetlands and endangered species. While management believes that the Company is
presently in material compliance with all environmental laws, failure to
comply with such laws could result in the imposition of severe penalties,
conditions or restrictions in connection with project development or
operations by government agencies or courts that could adversely affect such
development or operations. The Company completed a Phase I environmental site
assessment (the "Phase I ESA") at the Bossier City site in November 1993,
prior to the publication of the ASTM Standard Practice for Environmental Site
Assessments: Phase I Site Assessment Process in June 1994 (Designation: E
1527-94) (a current, widely accepted industry standard). The Phase I ESA,
which was updated by visual inspection only, in August 1995, includes certain
suggestions relative to certain conditions and areas of potential
environmental concerns. The Phase I ESA, and subsequent soil and groundwater
sampling conducted in October 1995, did not, however, identify any
environmental conditions or non-compliance at the site, the remediation,
mitigation or correction of which management believes would have a material
adverse impact on the business or financial condition of the Company. The
Company is not aware of any environmental conditions or non-compliance not
identified in the Phase I ESA, the August 1995 update, or the subsequent soil
and groundwater sampling.
Under environmental laws and regulations, a beneficiary of a deed of
trust or mortgage on real property, such as the Trustee, may be held liable,
under certain circumstances, for the costs of remediating or preventing
releases or threatened releases of hazardous materials at a mortgaged
property, and for other rights and liabilities relating to hazardous
materials, although such liability rarely has been imposed. Under the
Indenture and the Collateral Documents, the Trustee is indemnified against its
costs, expenses and liabilities, including environmental cleanup costs and
liabilities. Remediation costs could potentially reduce foreclosure proceeds
available to the Holders of the Notes. If the Holders exercise that right,
they could be subject to the risks discussed above.
RESTRICTIONS ON EXCHANGE OFFER
Issuance of Series B Notes in exchange for Series A Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Exchange Agent
of a properly completed and duly executed Letter of Transmittal, including all
other documents required by such Letter of Transmittal. Therefore, Holders of
Series A Notes desiring to tender such Series A Notes in exchange for Series B
Notes should allow sufficient time to ensure timely delivery. The Exchange
Agent and the Company are under no duty to give notification of defects or
irregularities with respect to the tenders of Series A Notes for exchange.
Series A Notes that are not tendered or are tendered but not accepted will,
following the consummation of the Exchange Offer, continue to be subject to
the existing restrictions upon transfer thereof and the Company will have no
further obligation to provide for the registration under the Securities Act of
such Series A Notes. All untendered Series A Notes will continue to be
subject to the restrictions on transfers set forth in the Indenture and the
Series A Notes. Each broker-dealer that received Series B Notes for its own
account in exchange for Series A Notes, where such Series A Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of Series B Notes. See "Plan of Distribution."
To the extent that Series A Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Series A
Notes could be adversely affected. See "The Exchange Offer."
ABSENCE OF PUBLIC MARKET
The Series A Notes are eligible for trading in the Private Offerings,
Resale and Trading through Automated Linkages ("PORTAL") market by "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act,
"QIBs"). The Series B Notes are new securities for which there currently is
no active trading market. The Initial Purchasers have advised the Company
that they currently intends to make a market in the Series B Notes. However,
the Initial Purchasers are not obligated to do so and any market-making may be
discontinued at any time without notice. There can be no assurance as to the
liquidity of any markets that may develop for the Series B Notes, the ability
of Holders to sell their Series B Notes, or the price at which Holders would
be able to sell their Series B Notes. Future trading prices of the Series B
Notes will depend upon many factors including among other things, prevailing
interest rates, the market for similar securities and other factors, including
general economic conditions and the financial condition of, performance of and
prospects for the Company. The Company does not intend to apply for listing
of the Series B Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Series A Notes were sold by the Company on August 22, 1996, to three
Initial Purchasers, Wasserstein Perella Securities, Inc., Jefferies & Company,
Inc. and Deutsche Morgan Grenfell, which in turn sold the Series A Notes to
institutional investors or certain other accredited investors. In connection
therewith, the Company entered into the Registration Rights Agreement, which
provided that, promptly following the sale of the Series A Notes by the
Initial Purchasers, the Company would file with the SEC a registration
statement under the Securities Act with respect to an issue of Series B Notes
of the Company identical in all material respects to the Series A Notes, would
use its best efforts to cause such registration statement to become effective
under the Securities Act and, upon the effectiveness of that registration
statement, would offer to the Holders of the Series A Notes the opportunity to
exchange their Series A Notes for a like principal amount of Series B Notes
which would be issued without restrictive legends and may be reoffered and
resold by the Holder without restrictions or limitations under the Securities
Act. Copies of the Registration Rights Agreement have been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
term "Holder" with respect to the Exchange Offer means any person in whose
name Notes are registered on the books of the Company or any other person who
has obtained a properly completed bond power from the registered Holder.
Based on interpretations by the staff of the SEC, Series B Notes issued
pursuant to the Exchange Offer in exchange for Series A Notes may be offered
for resale, resold or otherwise transferred by any Holder thereof (other than
any broker-dealer who acquired such Series A Notes directly from the Company
to resell pursuant to Rule 144A under the Securities Act or any such Holder
which is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Series B Notes
are acquired in the ordinary course of such Holder's business and such Holder
has no arrangement with any person to participate in the distribution of such
Series B Notes. If any Holder has any arrangement or understanding with
respect to the distribution of the Series B Notes to be acquired pursuant to
the Exchange Offer, such Holder (i) could not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, each broker-dealer that
receives Series B Notes for its own account in exchange for Series A Notes,
where such Series A Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Series B
Notes. See "Plan of Distribution."
By tendering in the Exchange Offer, each Holder of Series A Notes will
represent to the Company that, among other things, (i) the Series B Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Series B Notes, whether or not
such person is such Holder, (ii) neither the Holder of Series A Notes nor any
such other person intends to participate or has an arrangement or
understanding with any person to participate in the distribution of such
Series B Notes, (iii) neither the Holder nor any such other person is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, and (iv) the Holder and such other person acknowledge that (a) any person
participating in the Exchange Offer for the purpose of distributing the Series
B Notes must, in the absence of an exemption therefrom, comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the Series B Notes and cannot rely on
the interpretations by the staff of the SEC referenced above, and (b) failure
to comply with such requirements in such instance could result in such Holder
incurring liability under the Securities Act for which such Holder is not
indemnified by the Company.
As a result of the filing of the registration statement, the prospect of
the Company's paying "Liquidated Damages" as defined and as required to be
paid in certain circumstances described in the Registration Rights Agreements
has been reduced. Following the consummation of the Exchange Offer, the
Company will not be liable for any Liquidated Damages, and Holders of Series A
Notes not tendered will not have any further registration rights and the
Series A Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for the Series A Notes
could be adversely affected.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING SERIES A NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Series A Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on __________________, 1996; provided, however, that if
the Company, in its sole discretion, has extended the period of time for which
the Exchange Offer is open, the term "Expiration Date" means the latest time
and date to which the Exchange Offer is extended.
As of the date of this Prospectus, an aggregate of $115,000,000 principal
amount of Series A Notes was outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about ________________, 1996,
to all Holders of Series A Notes known to the Company. The Company's
obligation to accept Series A Notes for exchange pursuant to the Exchange
Offer is subject to certain conditions as set forth under "- Certain
Conditions to the Exchange Offer" below.
The Company expressly reserves the right at any time or from time to time
to extend the period of time during which the Exchange Offer is open and
thereby delay acceptance for exchange of any Series A Notes, by giving oral or
written notice of such extension to the Holders thereof. During any such
extension, all Series A Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any Series A
Notes not accepted for exchange for any reason will be returned without
expense to the tendering Holder thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Series A Notes not
theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified below under "- Certain Conditions
to the Exchange Offer." The Company will give oral or written notice of any
extension, amendment, non-acceptance or termination to the Holders of the
Series A Notes as promptly as practicable, such notice in the case of any
extension to be issued by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING SERIES A NOTES
The tender to the Company of Series A Notes by a Holder thereof as set
forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a Holder who
wishes to tender Series A Notes for exchange pursuant to the Exchange Offer
must transmit a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to First
Union Bank of Connecticut, the Exchange Agent, at the address set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition,
either (i) certificates for such Series A Notes must be received by the
Exchange Agent along with the Letter of Transmittal or (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Series A Notes, if such procedure is available, into the Exchange Agent's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the
Holder must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SERIES A NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR SERIES A
NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Series A Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered Holder of the
Series A Notes who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution (as defined below). In the
event that signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantees must be by a
firm which is a member of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the
United States (collectively, "Eligible Institutions"). If Series A Notes are
registered in the name of a person other than a signer of the Letter of
Transmittal, the Series A Notes surrendered for exchange must be endorsed by,
or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Company in its sole
discretion, duly executed by the registered Holder with the signature thereon
guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Series A Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and
all tenders of any particular Series A Notes not properly tendered or to not
accept any particular Series A Notes which acceptance might, in the judgment
of the Company or its counsel, be unlawful. The Company also reserves the
absolute right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Series A Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any Holder
who seeks to tender Series A Notes in the Exchange Offer). The interpretation
of the terms and conditions of the Exchange Offer as to any particular Series
A Notes either before or after the Expiration Date (including the Letter of
Transmittal and the instructions thereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Series A Notes for exchange must be cured within
such reasonable period of time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to
give notification of any defect or irregularity with respect to any tender of
Series A Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered Holder or Holders of Series A Notes, such Series A Notes must
be endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names of the registered Holder or Holders that
appear on the Series A Notes.
If the Letter of Transmittal or any Series A Notes or powers of attorney
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,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, the Series B Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such
Series B Notes, whether or not such person is the Holder, that neither the
Holder nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Series B Notes and that
neither the Holder nor any such other person is an "affiliate", as defined
under Rule 405 of the Securities Act, of the Company.
ACCEPTANCE OF SERIES A NOTES FOR EXCHANGE; DELIVERY OF SERIES B NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will accept, promptly after the Expiration Date, all Series
A Notes properly tendered and will issue the Series B Notes promptly after
acceptance of the Series A Notes. See "- Certain Conditions to the Exchange
Offer" below. For purposes of the Exchange Offer, the Company shall be deemed
to have accepted properly tendered Series A Notes for exchange when, as and if
the Company has given oral or written notice thereof to the Exchange Agent.
In all cases, issuance of Series B Notes for Series A Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Series A Notes
or a timely Book-Entry Confirmation of such Series A Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Series A Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Series A Notes are submitted for a
greater principal amount than the Holder desires to exchange, such unaccepted
or non-exchanged Series A Notes will be returned without expense to the
tendering Holder thereof (or, in the case of Series A Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
below, such non-exchanged Series A Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
BOOK ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Series A Notes at the Book-Entry Transfer Facility for purposes
of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of Series
A Notes by causing the Book-Entry Transfer Facility to transfer such Series A
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures for transfer.
However, although delivery of Series A Notes may be effected through
book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal or facsimile thereof, with any required signature guarantees and
any other required documents, must, in any case, be transmitted to and
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent" on, or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Series A Notes desires to tender such
Series A Notes and the Series A Notes are not immediately available, or time
will not permit such Holder's Series A Notes or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) prior
to the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and Notice of Guaranteed Delivery, substantially in the
form provided by the Company (by telegram, telex, facsimile transmission, mail
or hand delivery), setting forth the name and address of the Holder of Series
A Notes and the amount of Series A Notes tendered, stating that the tender is
being made thereby and guaranteeing that within five business days after the
date of execution of the Notice of Guaranteed Delivery, the certificates for
all physically tendered Series A 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 Exchange Agent, and (iii) the certificates for all physically
tendered Series A Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five business
days after the date of execution of the Notice of Guaranteed Delivery.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Exchange Offer.
The party tendering Series A Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Series A Notes to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Series A Notes to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Series A
Notes and to acquire Series B Notes issuable upon the exchange of such
tendered Series A Notes, and that, when the same are accepted for exchange,
the Company will acquire good and unencumbered title to the tendered Series A
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor also warrants that it will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Series A Notes or transfer
ownership of such Series A Notes on the account books maintained by the
Book-Entry Transfer Facility. The Transferor further agrees that acceptance
of any tendered Series A Notes by the Company and the issuance of Series B
Notes in exchange therefor shall constitute the performance in full by the
Company of its obligations under the Registration Rights Agreement and that
the Company shall have no further obligations or liabilities thereunder. All
authority conferred by the Transferor will survive the death, bankruptcy or
incapacity of the Transferor and every obligation of the Transferor shall be
binding upon the heirs, legal representatives, successors, assigns, executors
and administrators of such Transferor.
By executing the letter of Transmittal, each Holder will make to the
Company the representations set forth above under the heading "-Purpose and
Effect of the Exchange Offer."
WITHDRAWAL RIGHTS
Tenders of Series A Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the name of the person
having tendered the Series A Notes to be withdrawn, identify the Series A
Notes to be withdrawn (including the principal amount of such Series A Notes),
and (where certificates for Series A Notes have been transmitted) specify the
name in which such Series A Notes are registered, if different from that of
the withdrawing Holder. If certificates for Series A Notes have been
delivered or otherwise identified to the Exchange Agent, then, prior to the
release of such certificates, the withdrawing Holder must also submit the
serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Holder is an Eligible Institution. If Series A Notes have been
tendered pursuant to the procedure for book-entry transfer described above,
any notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Series A
Notes and otherwise comply with the procedures of such facility. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall
be final and binding on all parties. Any Series A Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Series A Notes which have been tendered for exchange, but
which are not exchanged for any reason, will be returned to the Holder thereof
without cost to such Holder (or, in the case of Series A Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
above, such Series A Notes will be credited to an account maintained with such
Book-Entry Transfer Facility for the Series A Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Series A Notes may be re-tendered by following one of the
procedures described under "-Procedures for Tendering Series A Notes" above at
any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue Series B Notes in
exchange for, any Series A Notes and may terminate or amend the Exchange
Offer, if at any time before the acceptance of such Series A Notes for
exchange or the exchange of the Series B Notes for such Series A Notes, there
shall be threatened, instituted or pending any action or proceeding before, or
any injunction, order or decree shall have been issued by, any court or
governmental agency or other governmental regulatory or administrative agency
or commission (i) seeking to restrain or prohibit the making or consummation
of the Exchange Offer or any other transaction contemplated by the Exchange
Offer, or assessing or seeking any damages as a result thereof, or (ii)
resulting in a material delay in the ability of the Company to accept for
exchange or to exchange some or all of the Series A Notes pursuant to the
Exchange Offer, or any statute, rule, regulation, order or injunction shall be
sought, proposed, introduced, enacted, promulgated or deemed applicable to the
Exchange Offer or any of the transactions contemplated by the Exchange Offer
by any government or governmental authority, domestic or foreign, or any
action shall have been taken, proposed or threatened by any government,
governmental authority, agency or court, domestic or foreign, that in the sole
judgment of the Company might directly or indirectly result in any of the
consequences referred to in clause (i) or (ii) above or in the sole judgment
of the Company, might result in the Holders of Series B Notes having
obligations with respect to resales and transfers of Series B Notes which
exceed those described in the interpretation of the SEC referred to on the
cover page of this Prospectus, or would otherwise make it inadvisable to
proceed with the Exchange Offer.
The foregoing condition is for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Series A Notes
tendered, and no Series B Notes will be issued in exchange for any such Series
A Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or with respect to the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
EXCHANGE AGENT
First Union Bank of Connecticut has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at the address set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or
of the Letter of Transmittal and requests for Notices of Guaranteed Delivery
should be directed to the Exchange Agent, addressed as follows:
Delivery to: First Union Bank of Connecticut, Exchange Agent
By Mail or by Hand
10 State Street Square
Hartford, Connecticut 06103-3698
Attention: Corporate Trust Department
By Facsimile:
(860) 247-1356
Confirm By Telephone:
____________________________________
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company and are estimated in the aggregate to be
$_______________. The Company will pay all transfer taxes, if any, applicable
to the exchange of Series A Notes pursuant to the Exchange Offer. If a
transfer tax is imposed for any reason other than the transfer and exchange of
Series A Notes to the Company or its order pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering Holder.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the respective dates as
of which information is given herein. The Exchange Offer is not being made to
(nor will tenders be accepted from or on behalf of) Holders of Series A Notes
in any jurisdiction in which the making of the Exchange Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Company may, at its discretion, take such action
as it may deem necessary to make the Exchange Offer in any such jurisdiction
and extend the Exchange Offer to Holders of Series A Notes in such
jurisdiction. In any jurisdiction the securities laws or blue sky laws of
which require the Exchange Offer to be made by a licensed broker or dealer,
the Exchange Offer must be made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
ACCOUNTING TREATMENT
The Series B Notes will be recorded at the same carrying value as the
Series A Notes. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the
term of the Series B Notes.
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders of the Series A Notes are urged
to consult their financial and tax advisors in making their own decisions on
what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Series A Notes pursuant to the terms of this Exchange Offer,
the Company will have fulfilled a covenant contained in the terms of the
Series A Notes and the Registration Rights Agreement. Holders of the Series A
Notes who do not tender their certificates in the Exchange Offer will continue
to hold such certificates and will be entitled to all the rights, and
limitations applicable thereto under the Indenture except for any such rights
under the Registration Rights Agreement. All untendered Series A Notes will
continue to be subject to the restrictions on transfer set forth in the
Indenture and the Series A Notes. To the extent that Series A Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for
untendered Series A Notes could be adversely affected.
<PAGE>
USE OF PROCEEDS
USE OF PROCEEDS OF SERIES B NOTES
The Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any proceeds from the issuance of the Series B Notes offered hereby. In
consideration for issuing the Series B Notes as contemplated in this
Prospectus, the Company will receive, in exchange, Series A Notes in like
principal amount. The form and terms of the Series B Notes are substantially
identical in all material respects to the form and terms of the Series A
Notes, except as otherwise described herein under "The Exchange Offer -- Terms
of the Exchange Offer." The Series A Notes surrendered in exchange for the
Series B Notes will be retired and cancelled and cannot be reissued.
Accordingly, issuance of the Series B Notes will not result in any increase in
the outstanding debt of the Company.
USE OF PROCEEDS OF SERIES A NOTES
On August 22, 1996, the Company received approximately $110,300,000 of
net proceeds from the Note Offering. Of that amount, (i) $20.0 million was
used to purchase the Bossier Riverboat simultaneously with the closing of the
Note Offering, (ii) approximately $43.1 million was applied to repay the
Louisiana Notes and the Louisiana Land Note, including accrued interest
thereon through the date of closing of the Note Offering, and (iii)
approximately $45.2 million was deposited in the Cash Collateral Accounts. The
Cash Collateral Accounts included $29.7 million deposited in the Construction
Disbursement Account which has been or is being used, together with $1.8
million incremental equipment financing and a portion of the $1.4 million
incremental capital contribution, to finance the cost of developing,
constructing, equipping and opening Casino Magic-Bossier City. As of October
18, 1996, the Company had finalized all plans and specifications for Casino
Magic-Bossier City, had agreed upon a guaranteed maximum price of $19.4
million with its general contractor for competion of Casino Magic-Bossier City
in accordance with such plans (although there can be no assurance that there
will not be change orders to certain aspects of the project as construction
continues that could increase the cost to an extent) and amended the
construction budget to an extent that will require, in addition to the amount
deposited in the Construction Disbursement Account, an additional $3.8 million
to be funded from the Completion Reserve Account (established with an original
deposit of $5.0 million to fund cost overruns arising in connection with
developing and constructing Casino Magic-Bossier City). Of the remaining
amount in the Cash Collateral Accounts, approximately $7.3 million was used to
purchase the Pledged Securities deposited in the Interest Reserve Account, and
$3.2 million was deposited in the Operating Reserve Account to provide
liquidity during the period from commencement of operations through the date
when Casino Magic-Bossier City is Operating.
The portion of the net proceeds from the Note Offering which were
deposited in the Cash Collateral Accounts have been assigned to the Trustee as
collateral security for the Notes. Funds are being disbursed from the Cash
Collateral Accounts only upon satisfaction of certain conditions set forth in
the Cash Collateral and Disbursement Agreement. Pending disbursement of the
net proceeds deposited in the Cash Collateral Accounts, such proceeds are
invested in Cash Equivalents. See "Description of Notes-Cash Collateral and
Disbursement Agreement."
The amount of net proceeds used to purchase Pledged Securities deposited
in the Interest Reserve Account is net of interest to be earned on the Pledged
Securities pending disbursement for payment of interest on the Notes through
and including the first interest payment date.
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents and
capitalization of the Company: (i) at June 30, 1996, (ii) on a pro forma basis
giving effect to the contribution by Jefferson Corp. to the Company of the
initial 20 acre portion of the Casino Magic-Bossier City site acquired prior
to June 30, 1996 and the assumption by the Company of $6.8 million of
Indebtedness initially incurred by Jefferson Corp. in connection with the
acquisition of such land (the "Contribution and Assumption") both of which
occurred concurrently with the closing of the Note Offering, and (iii) on a
pro forma as adjusted basis giving effect to the Contribution and Assumption
and the Note Offering and the application of the net proceeds therefrom.
June 30, 1996
---------------------------------
(in thousands)
Pro
Forma As
Actual Pro Forma Adjusted (1)
-------- -------- ----------
Cash and cash equivalents $ -- $ -- $ 67,157
-------- -------- --------
Current maturities of long-term
and capital lease obligations 931 2,277 931
-------- -------- --------
Long-term debt
Notes -- -- 115,000
Louisiana Notes 35,000 35,000 --
Louisiana Land Note -- 5,454 --
Gaming Equipment financing 4,742 4,742 4,742
-------- -------- --------
Total long-term debt, including
current maturities 40,673 47,473 120,673
-------- -------- --------
Total shareholder's equity 15,071 20,925 20,925
-------- -------- ---------
Total capitalization $ 55,744 $ 68,398 $141,598
======== ======== ========
______________
(1) Does not give effect to the purchase of the Bossier Riverboat which
occurred at the closing of the .
<PAGE>
SELECTED FINANCIAL DATA
Beginning in April 1995, Crescent City conducted gaming activities in New
Orleans, Louisiana for a 65-day period before a bankruptcy proceeding was
commenced against it. Pursuant to the court approved Plan of Reorganization,
Crescent City was acquired by Jefferson Corp. in May 1996. Because the
Company will be operating in a different market, with a different vessel and
facility, with different management, ownership, and employees and using a
different name and marketing theme, management believes that the financial
position and operating results of Crescent City prior to the acquisition are
not meaningful to the Company or prospective investors, and such financial
information is therefore not presented.
The selected balance sheet data of the Company at June 30, 1996 presented
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the consolidated
financial statements of Jefferson Corp. and notes thereto included elsewhere
in this Prospectus. The historical balance sheet data at June 30, 1996 have
been derived from the consolidated financial statements of Jefferson Corp.
which have been audited by Arthur Andersen LLP, independent auditors of
Jefferson Corp. and the Company. From May 13, 1996 through June 30, 1996, the
Company was in the development stage and capitalized all costs. Accordingly,
the Company had no operating results for such period. The ratio of earnings
to fixed charges is not applicable as the Company was in the development stage
and, accordingly, had no operating earnings during the periods presented.
June 30, 1996
-----------------------
Actual Pro Forma (1)
--------- ------------
(in thousands)
BALANCE SHEET DATA:
Cash and cash equivalents $ -- $ --
Total assets 57,854 70,646
Total long-term debt, including
current maturities 40,673 47,473
Total liabilities 42,783 49,721
Shareholder's equity 15,071 20,925
_______________
(1) Gives effect to the contribution by Jefferson Corp. to the Company of
the initial 20 acres of the Casino Magic-Bossier City site, which was acquired
for $12.7 million, and the assumption by the Company of the $6.8 million of
indebtedness incurred in connection with such acquisition, both of which
transactions occurred concurrently with the closing of the Note Offering.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Company's financial statements, the notes
thereto, and certain other financial information included elsewhere in this
Prospectus.
DEVELOPMENT ACTIVITIES
On May 13, 1996 Jefferson Corp. acquired all the outstanding capital
stock of Crescent City pursuant to the Plan of Reorganization. Pursuant to the
Plan of Reorganization, Crescent City was discharged from substantially all of
its liabilities prior to the acquisition. From that time until the October 4,
1996 opening of Casino Magic-Bossier City using temporary boarding, mooring
and paved parking facilities, the Company had been in the development stage
and its activities had been limited to arranging for the design, preliminary
site work, construction, and financing for Casino Magic-Bossier City.
Following completion of construction of the permanent landside facilities, it
is anticipated that Casino Magic-Bossier City will consist of a dockside
riverboat gaming facility containing 30,000 square feet of gaming space with
984 slot machines and 44 table games, and a 37,000 square foot entertainment
pavilion and covered parking for 1,550 cars. Casino Magic-Bossier City is
scheduled for completion in December 1996.
RESULTS OF OPERATIONS
Crescent City discontinued all gaming activities after only a very brief
period of operations in the New Orleans market and its only significant assets
at the time of the Plan of Reorganization consisted of the Crescent City
Riverboat, a Louisiana gaming license, and the furniture, fixtures and gaming
equipment located on the Crescent City Riverboat. As a result of the foregoing
factors and because the Company will be operating in a different market, with
a different vessel and facility, different management and a different name and
marketing theme, management believes that the financial position and operating
results of Crescent City prior to the acquisition are not meaningful to the
Company or prospective investors, and such financial information is therefore
not presented.
From the May 1996 acquisition of the Company by Jefferson Corp. through
June 30, 1996, the Company had capitalized all of its costs. Accordingly, the
Company does not have any historical operating results for such period. The
capitalized costs consist primarily of interest on construction and deferred
gaming license cost, all associated with the development of Casino
Magic-Bossier City.
Of the net proceeds from the sale of the Series A Notes, $3.2 million was
deposited in the Operating Reserve Account and invested in Cash Equivalents
subject to the conditions of the Cash Collateral and Disbursement Agreement to
provide liquidity during the period from commencement of operations on October
4, 1996 through completion of construction of the entertainment pavilion and
parking garage. The Company anticipates that its initial results may be
adversely affected by opening with limited facilities while construction is
proceeding on the permanent land-based amenities, as well as by the expensing
of preopening costs. However, the Company believes that it will be able to
generate sufficient revenues to cover its direct operating expenses during the
period from its initial opening until completion of Casino Magic-Bossier City
based on the high revenues generated by and profitability of existing
operators and the lack of new gaming capacity in the Bossier City/Shreveport
Market during the prior two years. Management believes that the Company's
initial results should not be indicative of future operations. Future
operating results will be subject to significant business, economic,
regulatory and competitive uncertainties and contingencies, many of which are
beyond the control of the Company. While the Company believes that, once
completed, Casino Magic-Bossier City will be able to attract a sufficient
number of customers and achieve the level of activity necessary to permit the
Company to meet its payment obligations in connection with the Notes, there
can be no assurances with respect thereto.
LIQUIDITY AND CAPITAL RESOURCES
The acquisition of the Company and the land upon which Casino
Magic-Bossier City is located, as well as the Company's other development
stage activities, were initially funded by capital contributions and advances
from Casino Magic, and the issuance or assumption of certain indebtedness,
most of which was repaid with proceeds from the Note Offering. Jefferson Corp.
acquired the initial 20 acres of the Casino Magic-Bossier City site for a
total purchase price of $12.7 million, paid through the issuance of $5.3
million in Casino Magic common stock, $0.6 million in cash and the issuance of
the $6.8 million Louisiana Land Note. Jefferson Corp. acquired the Company for
a purchase price of $50.0 million, of which $15.0 million was paid in cash and
the remainder was funded through the issuance of $35.0 million of Louisiana
Notes, plus the assumption of equipment financing, of which $5.7 million was
outstanding at June 30, 1996. In July 1996, the Company acquired an additional
three acres of land which are contiguous with or within the boundaries of the
20-acre site. This subsequent land acquisition was funded with a $0.9 million
advance from Casino Magic. Through the date of closing of the Note Offering,
the total advances from Casino Magic to the Company for Casino Magic-Bossier
City construction and development activities were $3.4 million, exclusive of
$20.9 million for its original capital contributions consisting, as described
above, of cash and real estate acquired for Casino Magic common stock. Of this
$3.4 million advance, $1.4 million was contributed as capital and the balance
was repaid to Casino Magic from the proceeds of the sale of the Series A
Notes.
The net proceeds received by the Company from the sale of the Series A
Notes, after deducting underwriting discounts and commissions and estimated
offering expenses, were approximately $110.3 million. The Company used $43.1
million of the net proceeds from the Note Offering to repay in full the
Louisiana Land Note and the Louisiana Notes including accrued interest through
the closing on the Series A Notes and used $20.0 million to purchase the
Bossier Riverboat. The $45.2 million remaining net proceeds from the sale of
the Series A Notes were deposited into the Cash Collateral Accounts and
invested in Cash Equivalents pending disbursement pursuant to the Cash
Collateral and Disbursement Agreement. As of October 18, 1996, all of the
originally deposited amounts, plus accrued interest thereon, remained in the
Interest Reserve Account (intended to fund the first payment of fixed interest
on the Notes in February 1997) and in the Operating Reserve Account (intended
to fund operating losses, if any, occuring during the period of operations
with temporary mooring, boarding and parking facilities which commenced
October 4, 1996). As of October 18, 1996, the Company had finalized all plans
and specifications for Casino Magic-Bossier City, had agreed upon a guaranteed
maximum price of $19.4 million with its general contractor for completion of
Casino Magic-Bossier City in accordance with such plans (although there can be
no assurance that there will not be change orders to certain aspects of the
project as construction continues that could increase the cost to an extent)
and amended the construction budget to an extent that will require, in
addition to the amount deposited in the Construction Disbursement Account, an
additional $3.8 million to be funded from the Completion Reserve Account
(established with an original deposit of $5.0 million to fund cost overruns
arising in connection with developing and constructing Casino Magic-Bossier
City). Management believes that the net proceeds from the sale of the Series
A Notes, together with incremental equipment financing and capital
contribution, will be sufficient to complete construction of Casino
Magic-Bossier City, assuming there are no delays or other construction cost
overruns which are not covered by the remaining completion reserve. In
addition, the Company has obtained a commitment from a bank for a $2.5 million
unsecured revolving credit facility which is expected to be available as a
financing source for the Company.
Following completion of Casino Magic-Bossier City and the initial
interest payment on the Notes which will be funded from the Interest Reserve
Account, the Company expects to fund its working capital and debt service
requirements from operating cash flow, which management believes will be
sufficient for such purposes. However, the adequacy of the Company's operating
cash flow will depend, among other things, upon customer acceptance of Casino
Magic-Bossier City, efficiency of operations, depth of customer demand, the
effectiveness of marketing and promotional efforts and the successful
performance by the Manager of the responsibilities delegated to it.
The Casino Magic-Bossier City development will initially utilize
approximately 12 of the site's 23 acres, allowing substantial room for future
expansion. Subject to a favorable outcome of the Louisiana Referendum
permitting continued riverboat gaming in Bossier City, the Company intends to
expand Casino Magic-Bossier City through the future development of an adjacent
400-room hotel and related amenities, including restaurants, banquet space, a
theater, a swimming pool, a health club and a child care facility. Management
does not anticipate commencing development and construction of the hotel and
related amenities until after Casino Magic-Bossier City has completed
construction of the entertainment pavilion and parking garage and commenced
operations at the permanent facilities. The development and construction of
these subsequent improvements is dependent upon the receipt of proceeds from a
future sale of the Crescent City Riverboat and operating cash flow of Casino
Magic-Bossier City and no assurances can be given that such funds will become
available or that such hotel and related amenities will ever be developed.
RECENT PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles to be held and used be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Additionally, long-lived assets and
certain identifiable intangible assets to be disposed of are required to be
reported at the lower of carrying amount or fair value, less selling costs.
SFAS No. 121 is effective for fiscal years beginning after December 15, 1995.
The Company does not anticipate that the adoption of this statement will have
a material impact on the financial statements of the Company.
<PAGE>
BUSINESS
GENERAL
The Company is developing a new dockside riverboat casino and
entertainment complex, Casino Magic-Bossier City, on a 23-acre site in Bossier
City, Louisiana. While construction continues on the landside portions of the
casino and entertainment complex, the Company commenced gaming operations on
the completed and fully equipped Bossier Riverboat on October 4, 1996, using
temporary mooring, boarding and paved parking facilities. Completion of
permanent facilities for Casino Magic-Bossier City is scheduled for December
1996. The casino site enjoys high visibility and convenient access from
Interstate Highway 20, a major artery between Bossier City/Shreveport and the
Dallas-Fort Worth area approximately 180 miles to the west. The Company
conducts its casino operations on the recently constructed Bossier Riverboat,
which measures 254 feet long and 78 feet wide with approximately 58,000 square
feet of interior space, including 30,000 square feet of gaming space (the
maximum allowed under current Louisiana law) with 984 slot machines and 44
table games. Upon completion of the landside development, Casino
Magic-Bossier City is also expected to include a 37,000 square foot
entertainment pavilion and covered parking for approximately 1,550 cars. The
entertainment pavilion is designed to include a 350-seat buffet restaurant, a
gift shop, a bar and lounge area, and a stage area designed to showcase live
entertainment, including dance productions, bands and individual performers,
with an open seating area that will accommodate up to 300 customers. Casino
Magic-Bossier City has been designed to highlight a new "Magic" theme which
Casino Magic intends to implement at its other properties to strengthen the
"Casino Magic" brand identity. Management believes that its premier facility,
the first new gaming facility in more than two years in the Bossier
City/Shreveport Market, will attract a substantial number of customers and
that its "Magic" theme will foster brand identity and customer loyalty.
Completion of permanent facilities for Casino Magic-Bossier City is
scheduled for December 1996. Excluding amounts expended in May 1996 in
connection with Jefferson Corp.'s acquisition of the Company, the total
project cost for Casino Magic-Bossier City is estimated to be $71.4 million
which includes: (i) approximately $13.6 million expended for the acquisition
of the 23-acre site, (ii) $20.0 million expended for the acquisition of the
Bossier Riverboat, and (iii) $37.8 million as the amended development and
construction budget for the buildings and other improvements at Casino
Magic-Bossier City (including approximately $8.4 million of preopening costs,
opening bankroll and additional gaming equipment but excluding estimated fees
and expenses and $11.7 million aggregate remaining reserves for completion
costs, operating expenses and fixed interest). At the closing of the Note
Offering, approximately $45.2 million of the net proceeds thereof were
deposited in collateral accounts (the "Cash Collateral Accounts") to be
disbursed only in accordance with the Cash Collateral and Disbursement
Agreement executed at the closing of the Note Offering. As of October 18,
1996, all of the originally deposited amounts, plus accrued interest thereon,
remained in the Interest Reserve Account (intended to fund the first payment
of fixed interest on the Notes in February 1997) and in the Operating Reserve
Account (intended to fund operating losses, if any, occuring during the period
of operations with temporary mooring, boarding and parking facilities which
commenced October 4, 1996). As of October 18, 1996, the Company had finalized
all plans and specifications for Casino Magic-Bossier City, had agreed upon a
guaranteed maximum price of $19.4 million with its general contractor for
completion of Casino Magic-Bossier City in accordance with such plans
(although there can be no assurance that there will not be change orders to
certain aspects of the project as construction continues that could increase
the cost to an extent) and amended the construction budget to an extent that
will require, in addition to the amount deposited in the Construction
Disbursement Account, an additional $3.8 million to be funded from the
Completion Reserve Account (established with an original deposit of $5.0
million to fund cost overruns arising in connection with developing and
constructing Casino Magic-Bossier City).
In May 1996, Casino Magic, through its wholly owned subsidiary, Jefferson
Corp., acquired the Company (which at the time of acquisition held the
Louisiana gaming license that is being used for Casino Magic-Bossier City) for
$50.0 million and the assumption of $5.7 million in equipment financing. The
assets acquired as a part of such transaction included gaming and related
equipment and surveillance equipment which the Company is using at Casino
Magic-Bossier City and a second riverboat owned by the Company, the Crescent
City Riverboat. The Crescent City Riverboat is one of the largest gaming
riverboats in the United States, measuring approximately 430 feet by 100 feet
with 88,000 square feet of interior space spread across three decks. While the
Crescent City Riverboat is part of the collateral for the Notes, the Company
does not intend to use the Crescent City Riverboat in connection with its
gaming activities at Casino Magic-Bossier City. The Company anticipates
selling the Crescent City Riverboat, in which case the Company will be
required either to reinvest the proceeds in Casino Magic-Bossier City or apply
such proceeds to a repurchase offer for the Notes. The Company can give no
assurances that it will be able to dispose of the Crescent City Riverboat on
acceptable terms or in a timely manner.
The Casino Magic-Bossier City facilities will initially utilize
approximately 12 of the site's 23 acres, allowing substantial room for future
expansion. Subject to an outcome of the Louisiana Referendum permitting
continued riverboat gaming in Bossier City, the Company intends to expand
Casino Magic-Bossier City through the future development of an adjacent
400-room hotel and related amenities, including restaurants, banquet space, a
theater, a swimming pool, a health club and a child care facility. Management
does not anticipate commencing development and construction of the hotel and
related amenities until after construction of the pavilion and parking
facilities has been completed and Casino Magic-Bossier City has commenced
gaming operations at the permanent facilities. The development and
construction of subsequent improvements is largely dependent upon receipt of
proceeds from a future sale of the Crescent City Riverboat and operating cash
flow of Casino Magic-Bossier City and no assurances can be given that such
funds will become available or that such hotel and related facilities will
ever be developed.
BOSSIER CITY/SHREVEPORT MARKET
The Company believes the Bossier City/Shreveport Market presents it with
a significant gaming development opportunity based upon the strong population
density of its target market and the current regulations allowing dockside
riverboat gaming in Bossier City/Shreveport. The Bossier City/Shreveport
Market is the only market in Louisiana that currently permits continuous
dockside gaming without requiring cruising or simulated cruising schedules.
This will allow Casino Magic-Bossier City to operate 24 hours a day with
uninterrupted and convenient access for gaming patrons. The Company believes
that the Bossier City/Shreveport Market has one of the highest ratios of
adults within a 200-mile radius to gaming positions of any drive-in gaming
market in the United States and that this market is underserved. Based on the
approximately 6,591 gaming positions expected for the Bossier City/Shreveport
Market, including those of Casino Magic-Bossier City and the other three
existing casinos, and those assumed for a possible fifth riverboat which in
the future may be licensed to commence gaming operations, there will be
approximately one gaming position in the Bossier City/Shreveport Market for
every 1,009 adults within 200 miles. According to reports published by the
Louisiana State Police, total gaming revenues for the 12 months ended May 31,
1996 for the three riverboat casinos operating in the Bossier City/Shreveport
Market were $473.3 million. Management estimates that these revenues represent
an average daily win per slot of $309 and win per table of $2,310. The
estimated win per unit figures in the Bossier City/Shreveport Market are
second only to the Chicago market and compare favorably to Atlantic City,
which generated an average daily win per slot of $244 and win per table of
$2,463 for the same period.
The table below compares demographic and certain key operating statistics
of the Bossier City/Shreveport Market with other major day-trip gaming markets
for the 12 months ended May 31, 1996.
Adult
Population Win/ Win/
Gaming to Slot/ Table/
Metropolitan Area(1) Slot Tables Positions Positions(2) Day(3) Day(3)
- ----------------- ------ ------ --------- --------- ----- ------
Chicago (4) 10,356 565 13,745 1,097 379 $3,063
BOSSIER CITY/SHREVEPORT(5) 4,983 268 6,591 1,009 309 2,310
Lake Charles (6) 5,510 274 7,154 936 194 1,297
New Orleans 3,652 179 4,726 849 135 1,272
Atlantic City 31,139 1,345 39,209 730 244 2,463
Biloxi 8,624 408 11,072 388 110 975
Tunica 11,483 472 14,315 328 126 1,271
_____________________
(1) Excludes areas in states, such as Iowa and Missouri, which restrict
the amount of individual wagers or aggregate loss. Also excludes the area
served by the Ledyard, Connecticut Indian Casino.
(2) Compares the number of adults within a 200 mile radius to the number
of gaming positions in the metropolitan area for the cities indicated.
(3) Information is derived by management from publicly available revenue
and operating data and, with respect to information regarding the Louisiana
market, assumes that 70% and 30% of casino revenues are attributable to slot
machines and table games, respectively.
(4) Includes 8,503 additional gaming positions added or expected to be
added in northern Indiana from the Hammond, East Chicago, Gary and Michigan
City casinos.
(5) Includes Casino Magic-Bossier City with 984 slots and 44 table games
and a possible fifth riverboat casino with an assumed 1,050 slots and 50
tables.
(6) Includes Grand Coushatta, a land-based Indian casino with 1,911 slots
and 72 tables.
MARKETING STRATEGY
The Company intends to focus its marketing activities on the 6.6 million
adults residing within a 200-mile radius of Bossier City/Shreveport, including
residents of the Dallas-Fort Worth area, located approximately 180 miles to
the west. Casino Magic-Bossier City's convenient location will provide easy
and convenient access from Interstate Highway 20, the major east-west artery
connecting Dallas-Fort Worth to Bossier City/Shreveport.
The Company intends to employ marketing programs similar to those which
have been successfully utilized at Casino Magic's other properties. The
Company anticipates engaging in a variety of advertising, direct mail and
promotional programs intended to encourage initial and repeat visits to Casino
Magic-Bossier City, including:
Magic Money Players Club. The Company intends to utilize the Magic
Money Players Club at Casino Magic-Bossier City. Management believes that this
slot club, which Casino Magic successfully utilizes at its other properties,
will be an important marketing tool. Management believes that, like a frequent
flier airline card or cash-back credit card, it promotes customer loyalty and
frequent use. Guests who enroll in this free club complete a questionnaire
that provides the Company with useful demographic information, including name,
address, age, entertainment interests and gaming preferences. Specific groups
can be targeted for direct-mail offers and promotions, and each member of the
Magic Money Players Club receives a bi-monthly newsletter that includes
upcoming events, entertainment schedules, current membership incentives and
photos of recent winning patrons.
The Magic Money Players Club also provides customer benefits such as cash
rewards and club perquisites designed to increase length of stay and frequency
of visits. Because gaming members earn points that are redeemable for cash,
the Magic Money Players Club provides an effective way to give back to loyal
customers a portion of their play. Active members with high play levels are
also rewarded with complimentary entertainment and event tickets, as well as
free dining. A recent upgrade to the member tracking system will, in the near
future, allow customers to accumulate and redeem rewards at any Casino Magic
property.
Promotions, Special Events and Entertainment. Gaming promotions are
expected to be a major focus of the Company's marketing effort. Similar to
programs employed at Casino Magic's other properties, the Company intends to
schedule mid-week gaming promotions designed to attract players and increase
customer counts. The Company intends to use local advertising and direct mail
to target the player base and general public for large promotions. Additional
direct-mail offers, including gaming packages, car drawings, free buffets,
event tickets and party invitations will be sent to high-end players.
As it has for its other properties, Casino Magic will monitor promotions
utilized for Casino Magic-Bossier City through the Magic Money Players Club
for cost effectiveness. Management believes that the success of each promotion
not only depends on player appeal, but also the level of internal and external
advertising related to the promotion. The objective of each promotion is to
accomplish at least one of the following strategies: add to the Company's
player base, generate more frequent visits from the existing player base; or
increase the length of stay and play levels of the player base.
Motor Coach Programs. The Company also intends to promote motor coach
group package programs for Casino Magic-Bossier City, which the Company
believes has been an important part of Casino Magic's marketing programs for
its other properties. Intended to maintain customer volume during
traditionally non-peak times, Magic Bus programs typically originate at
locations 50 to 200 miles from the casino, are completed in one day and are
generally organized by one of the participants. The motor coach program
experience that Casino Magic has gained in Mississippi is expected to be
beneficial for the development of similar programs in connection with Casino
Magic-Bossier City.
Advertising Programs. Casino Magic uses television, radio and outdoor
and print media to promote its services and name recognition. Casino Magic's
advertising programs are designed and executed by Casino Advertising, Inc., a
wholly owned subsidiary of Casino Magic. The Company believes that Casino
Magic's in-house operations will ensure the Company of timely product
delivery, a more focused creative direction, a standardized image and overall
cost efficiency.
COMPETITION
The Company will be highly dependent on the Bossier/Shreveport Market and
on the principal markets to which it caters, such as the Dallas-Fort Worth
market, and it expects to compete most directly with the three other casino
owners currently operating in the Bossier/Shreveport market. There are
currently 14 riverboat casinos operating in Louisiana, all of which have
opened since September 1993. Of these 14 riverboat casinos, three in addition
to Casino Magic-Bossier City are currently licensed and have been operating in
the Bossier City/Shreveport Market since 1994 and offer substantially similar
gaming facilities. Casino Magic-Bossier City will face competition from those
existing operations, particularly to the extent that they add to or enhance
existing amenities. For example, one Bossier City/Shreveport casino operator
recently broke ground on a 606-room all suites hotel at its riverboat casino
location in Bossier City. Furthermore, additional operators, including certain
competitors operating in Bossier City/Shreveport, have applied for a license
to operate a fifth dockside riverboat casino in the Bossier City/Shreveport
Market, which would increase competition in such market. Certain of the
Company's competitors have more experienced management and greater name
recognition, marketing capabilities and financial resources. In attempting to
attract customers to its casino, the Company may also face increasing
competition from the new or existing casinos developed elsewhere in Louisiana,
on the Mississippi Gulf Coast (including other casinos operated by Casino
Magic) and surrounding market areas and other jurisdictions throughout the
United States and abroad, and from established gaming centers such as those in
Nevada and Atlantic City, New Jersey. The Company also faces competition from
other forms of lawful gaming, such as state-sponsored lotteries and video
lottery terminals, parimutuel betting on horse and dog racing, and bingo
parlors, as well as from other forms of entertainment. It is possible that
increased competition could have a material adverse effect on the Company.
Current Louisiana law limits the number of riverboat casino licenses in
the state to 15, of which 14 have been awarded, and limits the concentration
of riverboat casino licenses in any one parish to six. Four of those licenses
(including the Company's) have been granted in the Bossier City/Shreveport
Market which encompasses both the Caddo and Bossier parishes. The relative
success of gaming operations in the Bossier City/Shreveport Market, as
compared to other Louisiana Markets, may increase the possibility that
existing licenses may be relocated to the Bossier City/Shreveport Market,
especially in the event that in the Louisiana Referendum other parishes vote
to end riverboat gaming in such parishes and voters in Caddo and Bossier
parishes allow continued riverboat gaming. The relocation of existing
licenses to another parish or of riverboats within the same parish will be
restricted by the recently passed Constitutional Amendment which requires,
among other things, a local parish-wide election to approve, by a majority of
those voting on the matter, the licensing of any additional riverboats in a
parish with existing licensed riverboats or the relocation of any operating
riverboat to a different berth in the same parish. However, a riverboat
located in the New Orleans market received approval to relocate to the Bossier
City/Shreveport Market. The relocation of this riverboat will occur after the
land based casino in New Orleans opens or on October 31, 1997, which ever
event occurs first. This would bring the number of riverboats in the Bossier
City/Shreveport Market up to six facilities. If, on the other hand, the
outcome of the Louisiana Referendum is unfavorable to the continuation of
gaming in Bossier and Caddo parishes, each of the casino operators in these
parishes will be permitted to operate through the expiration of the five-year
terms of their respective initial licenses, which will occur between April and
July of 1999 for the three casinos currently in operation. The Company's
initial license term will expire on August 1, 2001, thus creating a
significant period of time during which the Company could substantially
benefit from the reduced number of casinos available to satisfy customer
demand in the Bossier City/Shreveport Market.
Casino gaming is currently prohibited in several jurisdictions adjacent
to Louisiana. As a result, residents of these jurisdictions, principally
Texas, comprise a significant portion of the customers of existing gaming
operations in the Bossier City/Shreveport area and of the anticipated
customers of Casino Magic-Bossier City. Although casino gaming is not
currently permitted in Texas and the Texas Attorney General has issued an
opinion that gaming in Texas would require an amendment to the Texas
Constitution, the Texas Legislature has considered various proposals to
authorize casino gaming. No gaming legislation was enacted in the most recent
legislative session ended May 29, 1995. A constitutional amendment would
require a two-thirds vote of those present and voting in each house of the
Texas Legislature and approval by the electorate in a referendum. The
legalization of casino gaming in Texas and the opening of one or more casinos
in the Dallas-Fort Worth area, which is a major market for Bossier
City/Shreveport gaming operations, would have a material adverse effect on the
Company's Casino Magic-Bossier City operations.
CONSTRUCTION SUMMARY
The Company commenced casino operations on the completed and fully
equipped Bossier Riverboat on October 4, 1996, using temporary mooring,
boarding and paved parking facilities. Completion of permanent facilities for
Casino Magic-Bossier City is scheduled for December 1996. The remaining cost
of completing Casino Magic-Bossier City is budgeted to be approximately $37.8
million. As of October 18, 1996, the Company had finalized all plans and
specifications for Casino Magic-Bossier City, had agreed upon a guaranteed
maximum price of $19.4 million with its general contractor for completion of
Casino Magic-Bossier City in accordance with such plans (although there can be
no assurance that there will not be change orders to certain aspects of the
project as construction continues that could increase the cost to an extent)
and amended the construction budget to an extent that will require, in
addition to the amount deposited in the Construction Disbursement Account, an
additional $3.8 million to be funded from the Completion Reserve Account
(established with an original deposit of $5.0 million to fund cost overruns
arising in connection with developing and constructing Casino Magic-Bossier
City).
The Company has received a permit from the Army Corps of Engineers for
the development of the dockside riverboat casino. In addition, the Company has
received structural permits and foundation permits for the construction of the
Casino Magic-Bossier City pavilion and parking garage. The 12-acre portion of
the Company's 23-acre site which the Company will initially utilize for the
Casino Magic-Bossier City facilities has been cleared, foundations for the
pavilion and parking garage have been laid and erection of the structural
steel for the parking garage has commenced.
Approximately $29.7 million of the net proceeds from the sale of the
Series A Notes was deposited in the Construction Disbursement Account pending
disbursement upon satisfaction of certain conditions set forth therein,
including certain conditions subject to the satisfaction of an Independent
Construction Consultant. Pursuant to the Cash Collateral and Disbursement
Agreement, the Disbursement Agent will require certain certifications from the
Independent Construction Consultant to determine the satisfaction of
conditions to disbursements. The primary purpose of the Independent
Construction Consultant is to ensure that Casino Magic-Bossier City will be
operating by the Operating Deadline (as defined herein) and completed in
accordance with the Construction Budget (as defined herein).
DESIGN AND CONSTRUCTION TEAM
Kuhlmann design Group, Inc. ("KdG") is the architect for Casino
Magic-Bossier City and is providing basic architectural, interior design and
in-house engineering services, utilizing local engineers for many of the more
specialized areas such as marine design, surveying, traffic design and
off-site utility design. KdG has substantial experience in the past several
years in projects similar to Casino Magic-Bossier City, including the Isle of
Capri Casino in Bossier City.
Bellows is the general contractor for Casino Magic-Bossier City. Casino
Magic and Bellows have entered into a standard form AIA cost-plus construction
contract, which provides for a contractor's fee of 4% of the cost of the work.
Casino Magic assigned such contract to the Company on the closing of the Note
Offering. As of October 18, 1996, the Company had finalized all plans and
specifications for Casino Magic-Bossier City, had agreed upon a guaranteed
maximum price of $19.4 million with its general contractor for completion of
Casino Magic-Bossier City in accordance with such plans (although there can be
no assurance that there will not be change orders to certain aspects of the
project as construction continues that could increase the cost to an extent)
and amended the construction budget to an extent that will require, in
addition to the amount deposited in the Construction Disbursement Account, an
additional $3.8 million to be funded from the Completion Reserve Account
(established with an original deposit of $5.0 million to fund cost overruns
arising in connection with developing and constructing Casino Magic-Bossier
City).
CASINO MAGIC CORP.
Casino Magic, through the Manager, will manage Casino Magic-Bossier City
pursuant to a management agreement entered into with the Company at the
closing of the Note Offering. Casino Magic, through its wholly owned
subsidiaries, develops, owns and operates casinos and related amenities
primarily in the southeastern United States, including two major facilities on
the Mississippi Gulf Coast. Casino Magic owns and operates Casino Magic-BSL in
Bay Saint Louis, Mississippi, and Casino Magic-Biloxi in the midst of a
four-casino "Strip" in Biloxi, Mississippi. Casino Magic also owns or operates
two small casinos in Argentina and two American-style casinos in Greece. For
the 12 months ended June 30, 1996, Casino Magic's revenues and EBITDA were
$174.9 million and $37.7 million, respectively.
The following summarizes certain properties owned or managed by Casino
Magic at June 1, 1996, and, as adjusted, to give pro forma effect to Casino
Magic-Bossier City:
Casino
square Slot Table Hotel
footage machines games rooms
------- -------- ----- -----
EXISTING OPERATIONS:
Bay St. Louis 39,500 1,108 43 201
Biloxi 47,700 1,190 41 --
Argentina (1) 29,000 401 56 --
Porto Carras, Greece (2) 18,500 425 47 400
Xanthi, Greece (3) 8,000 88 24 --
------- ----- ---- ----
Total Existing Operations 142,700 3,212 211 601
PRO FORMA ADDITIONS:
Casino Magic-Bossier City 30,000 984 44 --
------- ----- ---- ----
Total Pro Forma Additions 172,700 4,196 255 601
======= ====== ==== ====
___________________
(1) Represents two casinos.
(2) Casino Magic's 49% equity interest relates only to the casino at Casino
Magic-Porto Carras and not to the hotel, which is managed by Casino Magic
for a fee.
(3) Casino Magic manages this facility, but has no ownership interest
therein.
Since late 1995, Casino Magic has strengthened its management team with
the addition of a new Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer and several other key executives who collectively possess
substantial development and operational experience within the gaming industry.
Casino Magic's new management team has identified its strategic priorities as
(i) focused development of domestic growth projects, particularly Casino
Magic-Bossier City, and (ii) increased attention to, and investment in, its
core Mississippi properties. In addition, management is redefining and
developing a new "Magic" theme throughout its properties to enhance the
customer experience, as well as to strengthen the "Casino Magic" brand
identity. Management of Casino Magic believes that establishing a significant
brand name presence will be an
increasingly important competitive tool in each of its existing and future
markets.
MANAGEMENT AGREEMENT
Term. The Company entered into a management agreement with Casino Magic
and the Manager ("Management Agreement") for a ten year term at the closing of
the Note Offering on August 22, 1996.
Management Fee. In consideration for the license of the "Casino Magic"
name and the services provided under the Management Agreement, the Company has
agreed to pay the Manager a management fee equal to 10% of Adjusted
Consolidated Cash Flow. The payment of management fees will commence at such
time as Casino Magic-Bossier City is Operating (as defined in the Indenture).
The management fee will be paid monthly to the extent that the Company's Fixed
Charge Coverage Ratio (as defined in the Indenture) is at least 1.5 to 1.0
after giving effect to such payment. If the management fee cannot be paid, the
management fee will accrue; provided, however, the Company's obligation to pay
the management fee will terminate if the voters in the Louisiana Referendum do
not approve the continuation of riverboat gaming in either Bossier or Caddo
parishes, unless the Company has obtained a determination that the outcome of
the Louisiana Referendum does not limit its ability to conduct gaming
operations at Casino Magic-Bossier City. In such event, the Manager will still
have the obligation to provide management services to the Company. No
management fee will be payable if a default or event of default has occurred
and is continuing under the Indenture. In the event of a bankruptcy,
reorganization, insolvency, dissolution or other winding-up of the Company,
payment of the management fee will be subordinated to the prior payment in
full in cash of all obligations under the Indenture and the Notes.
Expenses. Except where the Management Agreement expressly provides
otherwise, all costs, expenses, funding or operating deficits and operating
capital, real property and personal property taxes, insurance premiums and
other liabilities incurred in connection with the operation of Casino
Magic-Bossier City shall be the sole and exclusive financial responsibility of
the Company. After commencement of operations, the Company will advance to the
Manager or otherwise provide, on a timely and prompt basis, the funds
necessary to conduct the affairs and maintenance of Casino Magic-Bossier City,
including legal and accounting fees incurred by the Company and payable to
third parties in connection with the Company's reporting requirements.
Accounting and Financial Records. The Manager will cause the Company's
employees to maintain a complete accounting system in connection with the
operation of Casino Magic-Bossier City. Books and records will be maintained
in accordance with generally accepted accounting principles, on a calendar
year basis, and will be retained at Casino Magic-Bossier City.
Employees. All persons employed in connection with the operations of
Casino Magic-Bossier City above the General Manager level will not be deemed
employees of the Company, however, all those at the General Manager level and
below will be employees of the Company. The Company will not be responsible
for the compensation of persons who are not deemed employees of the Company.
The Manager will also be responsible for determining the fitness and
qualifications of all casino employees, subject to Louisiana riverboat gaming
licensing standards.
Bank Accounts. The Company will establish bank accounts that are
necessary for the operation of Casino Magic-Bossier City. Gross revenues from
operations will be deposited in the bank accounts and the Company will pay out
of the bank accounts, to the extent of the funds therein, all of its operating
expenses and other amounts as directed by the Manager.
Events of Default
Manager. The Manager will be in default under the Management Agreement
if it fails to perform or materially comply with any of the covenants,
agreements, terms or conditions contained in the Management Agreement
applicable to the Manager and such failure continues for a period of 30 days
after written notice thereof from the Company specifying in detail the nature
of such failure, or, if such failure is of a nature that it cannot, with due
diligence and good faith, be cured within 30 days, if the Manager fails to
proceed promptly and with due diligence and in good faith to cure the same and
thereafter to prosecute the curing of such failure to completion with due
diligence within 90 days thereafter.
The Company. If the Company (a) fails to make any monetary payment
required under the Management Agreement on or before the due date and such
failure continues for five business days after written notice from the Manager
specifying such failure, (b) fails to pay the entire management fee for a
period of six consecutive months, or (c) fails to perform or materially comply
with any of the other covenants, agreements, terms or conditions contained in
the Management Agreement applicable to the Company (other than monetary
payments) and such failure continues for a period of 30 days after written
notice thereof from the Manager to the Company specifying in detail the nature
of such failure, the Company will be in default under the Management
Agreement. Notwithstanding the foregoing, failure to pay any management fee
which is not permitted to be paid under the Indenture will not be a default
under the Management Agreement.
Termination. The Management Agreement shall terminate upon the
occurrence of the following:
(a) upon the occurrence of an event of default under the Management
Agreement and the expiration of the time to cure such event of default; or
(b) upon the consummation of a condemnation of substantially all of
Casino Magic-Bossier City.
BACKGROUND
The Company was incorporated on June 11, 1993, as a Louisiana
corporation, under the name Crescent City Capital Development Corporation (as
defined herein, "Crescent City") and was a wholly owned subsidiary of Capital
Gaming International, Inc., a corporation with which Jefferson Corp. and
Casino Magic had no affiliation. Crescent City obtained a Louisiana gaming
license and on April 4, 1995 began gaming operations on a riverboat docked on
the Mississippi River at New Orleans, Louisiana. On June 9, 1995, Crescent
City ceased gaming operations and on July 26, 1995, an involuntary bankruptcy
petition was filed against Crescent City, which was subsequently converted by
Crescent City into a voluntary proceeding under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the Eastern District of
Louisiana (Case No. 95-12735 (TMB)). The Bankruptcy Court confirmed Crescent
City's Plan of Reorganization on April 29, 1996. Casino Magic, through
Jefferson Corp., agreed to purchase Crescent City contingent upon the receipt
of approvals from the Louisiana State Police and the Louisiana Gaming
Commission of the change of ownership of Crescent City and the relocation of
the gaming license site from New Orleans to Bossier City, Louisiana. All such
approvals were obtained by April 30, 1996 and on May 13, 1996 Jefferson
Corp.'s purchase of the outstanding capital stock of Crescent City was
effected as part of the Plan of Reorganization.
Prior to Jefferson Corp.'s acquisition of Crescent City, Crescent City
had discontinued all gaming activities and its only significant assets
consisted of the Crescent City Riverboat, a three deck self-powered riverboat
upon which Crescent City had conducted its gaming operations, its gaming
license and the furniture, fixtures and gaming equipment which were located on
the Crescent City Riverboat.
PROPERTY
Jefferson Corp. was the fee simple owner of 23 acres of land on the Red
River in Bossier City, Louisiana (with 3 acres having been acquired in July
1996 for $900,000 in cash advanced as a capital contribution to Jefferson from
Casino Magic). Jefferson Corp. transferred the fee simple interest in the 23
acres to the Company at the closing of the Note Offering.
As part of the Company's acquisition of Crescent City pursuant to the
Plan of Reorganization, the Company acquired the Crescent City Riverboat, one
of the largest gaming riverboats in the United States. The Crescent City
measures approximately 430 feet by 100 feet with a total area of 88,000 square
feet. The Company does not intend to use the Crescent City Riverboat in
connection with its gaming activities at Casino Magic-Bossier City. The
Company anticipates selling the Crescent City Riverboat. The Crescent City
Riverboat is currently berthed in Morgan City, Louisiana. The Company can give
no assurance that it will be able to dispose of the Crescent City Riverboat on
acceptable terms or in a timely manner.
SERVICE MARKS
Casino Magic is the owner of U.S. service mark registrations for the
service marks "Casino Magic", "A Cut Above" and "Casino Magic Getaways"
granted by the U.S. Patent and Trademark Office on July 13, 1993, June 21,
1994, and October 18, 1994, respectively. Casino Magic is also the owner of a
Canadian service mark registration for "Casino Magic" granted on March 3,
1995. Casino Magic has filed service mark registration applications for the
"Casino Magic" service mark in Greece and Mexico. A service mark application
with respect to the service mark "Magic Money TM"has been filed with the U.S.
Patent and Trademark Office, and an opposition proceeding is currently
underway in connection with such application. Casino Magic through its
subsidiaries also uses and claims rights to several additional service marks.
Casino Magic will license the right to use such marks and related marks to the
Company on a royalty-free basis in connection with the operation of Casino
Magic-Bossier City pursuant to the Management Agreement. There are no
assurances that any of the service marks used by the Company, whether or not
registered, will be free from future challenge by others as to prior use or as
otherwise being unprotectable.
PERSONNEL
For temporary operations at Casino Magic-Bossier City which commenced on
October 4, 1996, the Company has approximately 750 employees. After completion
of the permanent landside facilities at Casino Magic-Bossier City, the Company
anticipates having approximately 1,600 employees.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
REGULATORY MATTERS
The ownership and operation of a casino gaming business within the United
States are subject to extensive and complex governmental regulation and
control under federal, state or local laws and regulations. These laws and
regulations are subject to change, including the repeal of laws which permit
gaming. The Company and certain of its officers, directors, key employees,
shareholders and other affiliates ("Regulated Persons") will be subject to
strict legal and regulatory requirements, including mandatory licensing and
approval requirements, suitability requirements, and ongoing regulatory
oversight with respect to its gaming operations. Such legal and regulatory
requirements and oversight will be administered and exercised by the relevant
regulatory agency or agencies in its jurisdiction of operation.
The Company and the Regulated Persons will need to satisfy licensing,
approval and suitability requirements of the Louisiana gaming authorities.
These requirements generally concern the responsibility, financial stability
and character of the owners and managers of gaming operations, as well as
persons financially interested or involved in operations. In general, the
procedures for gaming licensing, approval and findings of suitability require
that the Company and each Regulated Person submit detailed background and
financial information and that the Company demonstrate that the proposed
gaming operation has adequate financial resources generated from suitable
sources and adequate procedures to comply with the operating controls and
requirements imposed by law and regulation in each jurisdiction. This
submission is normally followed by a thorough investigation by the regulatory
authorities. An application for any gaming license, approval or finding of
suitability may be denied for any cause that the regulatory authorities deem
reasonable. There can be no assurance that the Company or the Regulated
Persons will obtain or maintain all of the necessary licenses, approvals and
findings of suitability to permit the Company to continue its development
plans and casino operations. Once a license or approval is obtained, the
Company will be required to periodically submit detailed financial and
operating reports to regulatory authorities. Such licenses and approvals may
be subject to periodic renewal and generally are not transferable. The
regulatory authorities may at any time revoke, suspend, condition, limit or
restrict a license, approval, or finding of suitability for any cause they
deem reasonable. Fines for violations may be levied against the Holder of a
license and in some jurisdictions gaming operation revenues can be forfeited
to the state under certain circumstances. The laws, regulations and procedures
pertaining to gaming are subject to the interpretation of the regulatory
authorities and may be amended. Any changes in such laws or regulations, or
their current interpretations, could have a material adverse effect on the
Company.
LOUISIANA GAMING REGULATIONS
In 1991 the Louisiana legislature enacted the Louisiana Riverboat
Economic Development and Gaming Control Act, La Rev. Stat. Ann 4:501, et seq.
(the "Louisiana Gaming Act"). The Louisiana Gaming Act authorized the
licensing of up to 15 riverboats to conduct gaming on designated rivers and
waterways. Pursuant to the Louisiana Gaming Act, the Riverboat Gaming
Commission (the "Louisiana Commission"), was created within the Department of
Public Safety and Corrections for the State of Louisiana. Additionally, a
riverboat gaming regulatory group within the Louisiana State Police (the
"State Police") was created. The Louisiana Commission and the State Police
were authorized to and did promulgate the existing rules and regulations
governing the licensing and operations of riverboats.
The Louisiana legislature in the First Extraordinary Session, 1996,
enacted new legislation (the "Louisiana Board Act") which transferred the
regulatory oversight of most gaming operations in Louisiana, including
riverboat gaming, to the Gaming Control Board (the "Louisiana Board"),
effective as of May 1, 1996. The Louisiana Commission was abolished as of that
same date. The Louisiana Board will consist of nine members appointed by the
Governor of Louisiana. As of October 17, 1996, the chairman and four members
of the Louisiana Board have been appointed, which constitutes a quorum
necessary for the Louisiana Board to conduct business.
The Louisiana Board is empowered to regulate four forms of gaming
activities and operations in the state: riverboat, video poker, the land-based
casino in New Orleans, and all state regulated aspects of Indian gaming
(excluded is the regulation and oversight of horse racing and offtrack
betting, the state lottery, and charitable gaming). Accordingly, the
Louisiana Board has all regulatory authority, control, and jurisdiction,
including investigation, licensing, and enforcement, and all power incidental
to or necessary for such regulatory authority, control and jurisdiction, over
all aspects of gaming activities and operations as authorized pursuant to the
provisions of the Louisiana Gaming Act, the Louisiana Economic Development and
Gaming Corporation Act (Land-Based Casino in New Orleans), and the Video Draw
Poker Devices Control Act.
The Louisiana Board has been authorized to promulgate rules and
regulations to govern the aforesaid types of gaming in Louisiana; however, all
administrative rules and regulations promulgated by entities whose powers have
been transferred to the Louisiana Board are to be considered valid and remain
in effect until repealed by the Louisiana Board.
The construction, ownership and operation of riverboat gaming vessels
will now be subject to regulation by the Louisiana Board. The independent
authority previously granted to the State Police by the Louisiana Gaming Act
has been significantly reduced by the Louisiana Board Act. The State Police
will now conduct investigations and audits regarding the qualifications of
applicants for licenses or permits requiring suitability determinations,
submit all investigative reports to the Louisiana Board, conduct audits to
assist the Louisiana Board, issue certain licenses and permits in accordance
with rules adopted by the Louisiana Board, and perform all other duties and
functions necessary for the efficient and thorough regulation and control of
gaming activities and operations under the Louisiana Board's jurisdiction.
The Louisiana Board Act did not repeal the Louisiana Gaming Act, the
original 1991 statute authorizing riverboat gaming in Louisiana, but rather
amended it to transfer licensing and regulatory authority to the Louisiana
Board and to redefine the authority of the State Police. Otherwise the
Louisiana Gaming Act remains in effect. Accordingly, the Louisiana Gaming Act
continues to authorize up to 15 licenses to conduct gaming activities on
riverboats, with no more than six licenses to be granted to riverboats
operating in any one parish.
Local regulation remains restricted to the imposition of an admission fee
of up to $2.50 per passenger ($3.00 per passenger in Shreveport and Bossier
City).
In April 1996, the Louisiana legislature passed a new law which provides
for the Louisiana Referendum, a local option election in which the voters in
each parish in which gaming is authorized by law to be conducted will be
allowed to accept or reject, individually, the various forms of gaming,
including riverboat gaming, currently authorized by law to be conducted in
each such parish. If a majority of the voters in a parish voting in this local
option election to be held in November 1996 vote in favor of permitting the
continuation of any gaming activity, such as riverboat gaming, then such
gaming activity may be conducted in that parish as provided by law. If the
majority votes not to continue the gaming activity in that parish, then no
license or permit shall be issued to conduct that gaming activity, and that
gaming activity will not be permitted in that parish after the expiration or
termination of licenses then in effect. If riverboat gaming was previously
authorized, licensed or permitted and conducted in a parish in which the
voters vote against the continuance of that gaming activity, the riverboat
gaming licensees must discontinue that gaming activity in that parish upon
expiration of their current gaming license or upon revocation, suspension, or
return thereof if such revocation, suspension, or return occurs prior to the
expiration of the license; and such licensees would not be permitted to move
their berths to another parish unless riverboat gaming was authorized by law
to be conducted in such other parish at the time of the Louisiana Referendum
and the voters of such other parish approved the continuation of riverboat
gaming in their parish in the Louisiana Referendum. Even in such circumstance,
however, a relocation to another parish would be subject to approval by the
Louisiana Board.
In a related measure, the voters of the State of Louisiana, in a
September 21, 1996, statewide election, approved a Constitutional Amendment.
The Amendment requires a local option elections in parishes before new forms
of gaming could be conducted therein or before existing forms of gaming may be
conducted in new areas. For example, the Constitutional Amendment requires a
local option referendum before an additional riverboat could move into a
parish, regardless of whether such parish has authorized the continuation of
riverboat gaming in such parish in the Louisiana Referendum. In this respect,
(i.e., relocation of riverboat gaming vessels to new locations) the
Constitutional Amendment would appear to be more restrictive than the
legislation requiring the Louisiana Referendum.
Licenses may be and have been issued for dockside riverboat gaming along
the Red River in the Bossier City/Shreveport area. Dockside gaming is
presently prohibited at other locations in the state. A riverboat gaming
license has an initial term of five years, with subsequent annual renewals
thereafter. Pursuant to the decision of the State Police at a hearing held on
April 30, 1996, the Louisiana riverboat gaming license acquired by the Company
has an unexpired term of five years less the sixty-five days that the previous
licensee conducted riverboat gaming operations. The unexpired term of the
license has recommenced as of October 4, 1996, the date that the Company began
riverboat gaming operations in Bossier City. Assuming a favorable outcome of
the Louisiana Referendum, upon expiration of the Company's Louisiana license,
the Company must apply for renewal. The application for renewal consists of a
sworn statement of all changes in information, including financial
information, provided in any previous applications. The transfer of a license
is prohibited. The Louisiana Board may restrict, suspend or revoke a license
or permit. Suspension or revocation of the Company's license would have a
material adverse effect upon the business of the Company.
Pursuant to the existing laws, rules and regulations, the Company must
submit detailed financial, operating and other reports to the Louisiana Board
periodically. Substantially all loans, leases, private sales of securities,
extensions of credit and similar financing transactions entered into by any of
the Regulated Persons, including the sale and issuance of the Notes offered
hereby, must be reported to the Louisiana Board within thirty days after the
consummation of any such transactions. The Louisiana Board is required to
investigate all reported loans or extensions of credit, and to either approve
or disapprove the same. If disapproved, the pertinent loan or extension of
credit must be rescinded by the appropriate Regulated Person. The Company is
also required to periodically submit detailed financial and operating reports
to the Louisiana Board and furnish any other information which the Louisiana
Board may require.
The applicant for a gaming license, its directors, officers, key
personnel, partners, and persons holding a 5% or greater equity interest in
the applicant will be required to be found suitable by the Louisiana Board.
This requires the filing of an extensive application to the Louisiana Board
disclosing personal, financial, criminal, business and other information. The
applicant is required to pay all costs of investigation. There can be no
assurance that such person will be found suitable by the Louisiana Board. An
application for licensing of an individual may be denied for any cause deemed
reasonable by the Louisiana Board. Any individual who is found to have a
material relationship to or a material involvement with, the Company may be
required to be investigated in order to be found suitable or be licensed as a
business associate of an applicant. Key employees, controlling persons or
others who exercise significant influence upon the management or affairs of
the Company may also be deemed to have such a relationship or involvement.
If the Louisiana Board were to find a director, officer or key employee
unsuitable for licensing or unsuitable to continue having a relationship with
an applicant, the applicant would have to suspend, dismiss and sever all
relationships with such person. The applicant would have similar obligations
with regard to any person who refuses to file appropriate applications. Each
gaming employee must obtain a gaming employee permit which may be revoked upon
the occurrence of certain specified events.
The sale, assignment, transfer, pledge or disposition of securities which
represent 5% or more of the total outstanding equity shares issued by a
corporate licensee is subject to Louisiana Board approval. After a license is
granted, any person acquiring an economic interest of 5% or more in a license
must obtain the Louisiana Board's prior approval for the transaction. Failure
to obtain that approval is grounds for license revocation. A security issued
by a corporate licensee must generally disclose these restrictions.
If the Louisiana Board finds that an individual Holder of a corporate
licensee's securities or a director, partner, officer or manager of the
licensee is not qualified pursuant to the existing laws, rules and
regulations, and if as a result the licensee is no longer qualified to
continue as a licensee, it can propose action necessary to protect the public
interest, including the suspension or revocation of a license or permit. It
may also issue, under penalty of revocation of license, a condition of
disqualification naming the person and declaring that such person may not (a)
receive dividends or interest on securities of the licensee, (b) exercise any
right conferred by securities of the licensee, (c) receive remuneration or any
other economic benefit from the licensee or continue in an ownership or
economic interest in the licensee or remain as a director, partner, officer,
or manager of the licensee.
Fees for riverboat gaming include a $50,000 first-year operation fee for
each riverboat increasing to $100,000 per year per riverboat thereafter, plus
18.5% of net gaming proceeds.
FEDERAL REGULATION
On August 3, 1996, President Clinton signed a bill creating a nine-member
National Gambling Impact Study Commission to study the economic and social
impact of gaming and report its findings to Congress and the President within
two years after the first meeting of the Commission. The Commission could
recommend changes in state or federal gaming policies. The President, House
Speaker and Senate Majority Leader each select three of the Commission's
members. Additional federal regulation of the gaming industry could occur as a
result of investigations or hearings by the committee, which legislation could
have a material adverse affect on the Company.
NON-GAMING REGULATION
The Company is subject to certain federal, state and local safety and
health laws, regulations and ordinances that apply to non-gaming businesses
generally, such as the Clean Air Act, Clean Water Act, Occupational Safety and
Health Act, Resource Conservation Recovery Act and the Comprehensive
Environmental Response, Compensation and Liability Act. The Company has not
made, and does not anticipate making, material expenditures with respect to
such environmental laws and regulations. However, the coverage and attendant
compliance costs associated with such laws, regulations and ordinances may
result in future additional costs to the Company's operations. For example, in
1990 the U.S. Congress enacted the Oil Pollution Act to consolidate and
rationalize mechanisms under various oil spill response laws. The Department
of Transportation has proposed regulations requiring owners and operators of
certain vessels to establish through the U.S. Coast Guard evidence of
financial responsibility in the amount of $5.5 million for clean-up of oil
pollution. This requirement would be satisfied by either proof of adequate
insurance (including self-insurance) or the posting of a surety bond or
guaranty.
Traditional riverboats capable of cruising, including those that are not
required to cruise, must comply with U.S. Coast Guard requirements as to boat
design, on-board facilities, equipment, personnel and safety. Each of them
must be approved by the American Bureau of Shipping ("ABS") for stabilization
and flotation, and may also be subject to local zoning and building codes, if
such local codes have been implemented at the berthing site. They must hold
Certificates of Documentation and Inspection issued by the U.S. Coast Guard.
The U.S. Coast Guard requirements establish design standards, set limits on
the operation of the vessels and require individual licensing of all personnel
involved with the operation of the vessels. Loss of a vessel's ABS approval or
of its Certificates of Documentation and Inspection would preclude its use as
a floating casino.
All shipboard employees of the Company, even those who have nothing to do
with the actual operation of the vessel, such as dealers, waiters and security
personnel, may be subject to the Jones Act which, among other things, exempts
those employees from state limits on workers' compensation awards.
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The Company, drawing upon the gaming and development expertise of Casino
Magic, has assembled an experienced management team to oversee the development
and operation of Casino Magic-Bossier City. The name, age and respective
position of each director and executive officer of the Company, each of whom
holds a comparable position with Casino Magic, are as follows:
NAME AGE POSITION
----- ---- ---------
Marling R. Torguson .........51 Chairman of the Board
James E. Ernst .............45 President, Chief Executive Officer
and a Director
Jay S. Osman ...............35 Executive Vice President, Chief
Financial Officer and Treasurer
Robert A. Callaway .........48 Vice President/General Counsel
and Secretary
Juris Basens ...............40 Vice President/Chief Operating Officer
Ken Schultz ................46 Vice President/Construction and
Development
David L. Paltzik ...........52 Vice President/Marketing
Allen Kokesch ..............44 Director
Roger H. Frommelt ..........60 Director
Wayne Lund .................48 Director
E. Thomas Welch ............57 Director
Marlin F. Torguson. Mr. Torguson has been Casino Magic's Chairman of
the Board since December 1, 1994 and has served in the same capacity for the
Company since May 1996. Mr. Torguson was President and Chief Executive Officer
of Casino Magic from April 1992 through November 1994, and, from April 1992 to
February 1993, Mr. Torguson also served as Casino Magic's Chief Financial
Officer and Treasurer. Mr. Torguson has been a 50% owner and a Vice President
of G.M.T. Management Co. since December 1983. G.M.T. Management Co. was
responsible for the operation and management of the Jackpot Junction Casino
from December 1983 until January 1, 1992. Jackpot Junction Casino is a gaming
casino owned by the Mdewakanton band and the Sioux Indian tribe, located in
Morton, Minnesota, approximately 120 miles west of Minneapolis, Minnesota.
James E. Ernst. Mr. Ernst became Casino Magic's President, Chief
Executive Officer and a director in December 1995 and has served in the same
capacity for the Company since May 1996. From June 1992 until September 1995,
Mr. Ernst served as President and Chief Executive Officer of Casino America,
Inc., a casino developer and operator which has gaming operations in
Mississippi and Louisiana, including a Bossier City casino developed during
his tenure with that company. From June 1991 to June 1992, Mr. Ernst was
President of Steamboat Development Co., an operator of riverboat casinos in
Iowa. From 1976 to June 1991, Mr. Ernst was with the public accounting firm of
McGladrey & Pullen in their Davenport, Iowa office; Mr. Ernst was a partner
with such firm from 1982 through his departure.
Jay S. Osman. Mr. Osman became Casino Magic's Executive Vice President,
Chief Financial Officer and Treasurer, in October 1995 and has served in the
same capacity for the Company since May 1996. Mr. Osman served as Corporate
Director of Financial Planning, Budgets and Analysis at Boyd Gaming
Corporation, a casino developer and operator based in Las Vegas, Nevada, from
August 1995 to October 1995. Mr. Osman served as Vice President of Finance and
Administration, Chief Financial Officer and Assistant Secretary of Belle
Casinos, Inc., a casino developer and operator based in Biloxi, Mississippi,
from June 1993 through August 1995. From December 1989 through May 1993, Mr.
Osman acted as Manager of Financial Analysis for Bally's Park Place, an
Atlantic City, New Jersey-based casino operator and developer which is a
subsidiary of Bally Entertainment Corporation. In August 1994, Belle Casinos,
Inc. filed a bankruptcy proceeding under Chapter 11 in the United States
Bankruptcy Court in Biloxi, Mississippi, which was subsequently converted into
a liquidation proceeding. As a related matter, a certain lawsuit was brought
by creditors of Belle Casinos, Inc. against its directors and executive
officers, including Mr. Osman; Mr. Osman has been dismissed without prejudice
as a defendant in such lawsuit.
Robert A. Callaway. Mr. Callaway has been Casino Magic's Vice
President/General Counsel since September 1994 and its Secretary since
December 1994 and has served in the same capacity for the Company since May
1996. Prior to joining Casino Magic, Mr. Callaway was a partner in the law
firm of Beckley, Singleton, DeLanoy, Jemison & List, in Reno and Las Vegas,
Nevada. Mr. Callaway's association with the firm, where his practice focused
on legal and regulatory issues relating to the gaming industry, began in 1987.
For the five years immediately prior to joining such firm, Mr. Callaway served
with the office of the Attorney General of the State of Nevada as counsel for
the Nevada State Gaming Control Board and Nevada Gaming Commission.
Juris Basens. Mr. Basens became Casino Magic's Vice President and Chief
Operating Officer in July 1996 and has also served the Company in such
capacity since that date. Prior to joining Casino Magic, Mr. Basens served as
Vice President and Chief Operating Officer of Casino America, Inc. from July
1994 until July 1996. From March 1993 through June 1994, Mr. Basens was the
General Manager of the Isle of Capri Casino in Bossier City. From October 1991
to March 1993, Mr. Basens was the General Manager of the Par-A-Dice Riverboat
Casino in East Peoria, Illinois. From August 1990 to October 1991, Mr. Basens
was the General Manager of Steamboat Development Corporation's Diamond Lady
Riverboat Casino in Bettendorf, Iowa. From 1989 to 1990, Mr. Basens was
employed in various management positions at Carnival's Crystal Palace Casino
in Nassau, Bahamas. From 1978 to 1989, Mr. Basens was employed in various
management positions at Resorts International Casino Hotel.
Ken Schultz. Mr. Schultz joined Casino Magic as Vice
President/Construction and Development in June 1996 and has also served the
Company in such capacity since that date. Mr. Schultz served as Vice President
of Construction and Development for Casino America, Inc. from July 1995 to
June 1996. Prior to joining Casino America, Inc. Mr. Schultz had been involved
in the development and construction of the Isle of Capri Casino-Bossier City,
Louisiana, the Isle of Capri Casino-Lake Charles, Louisiana, and the Isle of
Capri Casino Crowne Plaza Resort-Biloxi, Mississippi through DeBartolo
Property Management, Inc. He had been associated with DeBartolo Property
Management, Inc. as Vice President of Construction Services since 1989.
David L. Paltzik. Mr. Paltzik joined Casino Magic as Vice
President-Marketing in July 1996 and has also served the Company in such
capacity since that date. From June 1992 until joining Casino Magic, Mr.
Paltzik was Vice President-Marketing at Casino America, Inc., where he was
Vice President-Marketing of Riverboat Services, Inc., a wholly owned
subsidiary of Casino America, from May 1991 until June 1992.
Allen J. Kokesch. Mr. Kokesch has served as a director of Casino Magic
since August 1992 and has served as a director of the Company since May 1996.
Mr. Kokesch served as Executive Vice President of Casino Magic from December
1992 through December 1994 and as Casino Magic's general manager from April
1992 to December 1992. From September 1984 to April 1992, Mr. Kokesch was the
general manager of Jackpot Junction Casino located in Morton, Minnesota.
Roger H. Frommelt. Mr. Frommelt has served as a director of Casino
Magic since October 1992 and has served as a director of the Company since May
1996. Mr. Frommelt served as Casino Magic's Secretary from May 1993 until
December 1994 when he was appointed Casino Magic's Assistant Secretary. Mr.
Frommelt is the President and a principal shareholder of Frommelt & Eide,
Ltd., a law firm located in Minneapolis, Minnesota. He has been engaged in the
private practice of law in Minneapolis, Minnesota since 1965, practicing with
Frommelt & Eide, Ltd. and its predecessor partnership since 1974.
Wayne K. Lund. Mr. Lund has served as a director of Casino Magic since
October 1992 and has served as a director of the Company since May 1996. Mr.
Lund has been the President and a principal shareholder of Lund Associates,
Inc., an architectural firm located in Rapid City, South Dakota, since August
1980.
E. Thomas Welch. Mr. Welch has served as a director of Casino Magic
since May 1993 and has served as a director of the Company since May 1996. Mr.
Welch has been the President of Resource Bank & Trust, located in Minneapolis,
Minnesota since March 1987. Mr. Welch is also a member of the Board of
Directors of Eastcliff Funds, Inc., a mutual fund company located in
Minneapolis, Minnesota.
MANAGEMENT AGREEMENT AND EXECUTIVE COMPENSATION
Each of the foregoing executive officers of the Company is also a
full-time salaried employee of Casino Magic and in accordance with the
Management Agreement will not be compensated by the Company but will provide
management services to the Company with respect to the operations of Casino
Magic-Bossier City. See "Business-Management Agreement" and "-Casino Magic
Executive Compensation."
CASINO MAGIC EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for: (i)
each person who served as the Chief Executive Officer of Casino Magic at any
time during the year ended December 31, 1995, regardless of compensation
level; (ii) Casino Magic's four most highly compensated executive officers,
other than the Chief Executive Officer, serving as executive officers at
December 31, 1995; and (iii) two former executive officers who would have been
included in (ii) above but for the fact that each such person's employment
with Casino Magic terminated prior to December 31, 1995. The foregoing persons
are collectively referred toherein as the "Named Executive Officers."
Compensation information is shown for fiscal years 1993, 1994 and 1995.
Annual Other Securities All
Compen- Annual Restricted Underlying Other
Name/ sations Compen- Stock Options/ Compen-
Principal Salary Bonus sation Awards SARs sation
Position Year ($) ($) ($) ($) (#) ($)
- --------- ----- ------- ----- ------- ------- ------- --------
James E. Ernst... 1995(1) 13,792 -- --(2) -- 590,000 12,970(3)
President and
Chief Executive
Officer
Marlin F. Torguson
Chairman of 1995 425,000 -- --(2) -- -- 2,832(4)
the Board 1994 408,654 174,573 --(2) -- -- 1,500(5)
1993 160,000 965,460 -- -- -- --
Robert A.
Callaway ....... 1995(2) 181,154 -- -- -- 40,000 481(5)
Vice President/ 1994 51,040 -- --(2) -- 35,000 4,650(6)
General Counsel
and Secretary
Dual B. Cooper... 1995(2) 425,500 25,000(8)-- -- -- 38,623(11)
Former President 1994 230,192 -- --(2) 396,875(9) 150,000(10) --
and Chief Operating
Officer
Joseph E
Anderson ....... 1995 102,461 -- -- -- -- 1,281(5)
Former Chief 1994 104,015 7,000 -- -- -- 1,110(5)
Accounting 1993 72,000 26,875 -- -- -- --
Officer
Leonard S Krick 1995 125,000 -- -- -- -- 1,500(5)
Former Senior 1994 129,169 7,000 -- -- -- 1,362(5)
President of 1993 77,000 38,875 --(2) -- -- --
Development
Patrick M.
Sidders 1995(1) 170,493 70,833 -- -- -- --
Former Executive 1994 153,846 -- --(2) 396,875(12) 150,000(13) --
Vice President,
Treasurer and
Chief Financial
Officer
Hugh J. Shaddick 1995(1) 277,309 -- -- -- -- --
Former Managing 1994 236,635 -- --(2) 396,875(14) 150,000(15) --
Director and
President of
Casino Magic B.V.
________________
(1) No compensation information is provided for prior year(s), as the Named
Executive Officer first joined Casino Magic during the earliest year for which
compensation information is provided.
(2) Did not receive perquisites and other personal benefits from Casino
Magic in excess of $50,000 or 10 percent of the Named Executive Officer's
total annual salary and bonus paid for the years indicated.
(3) Includes partial forgiveness of indebtedness owed by Mr. Ernst to Casino
Magic in the amount of $8,208 and approximately $1,631 in compensation
resulting from an interest-free loan by Casino Magic to Mr. Ernst which
assumes a 10% annual market rate of interest. See "-Employment and
Termination."
(4) Contributions to Casino Magic's 401(k) plan made by Casino Magic in the
amount of $1,500 and an automobile allowance of $1,332.
(5) Contributions to Casino Magic's 401(k) plan made by Casino Magic on
behalf of the Named Executive Officer.
(6) Living allowance.
(7) Although the Board of Directors of Casino Magic did not elect a Chief
Executive Officer in 1995 prior to December, pursuant to the terms of the
by-laws Mr. Cooper was deemed to be Casino Magic's Chief Executive Officer by
virtue of his position as Casino Magic's President.
(8) Bonus paid in accordance with the terms of an agreement between Casino
Magic and Mr. Cooper which relates to Mr. Cooper's resignation.
(9) Mr. Cooper was awarded a total of 25,000 restricted shares of Casino
Magic common stock in 1994 that were to vest over five years. As of December
31, 1995, 8,750 restricted shares had vested, and the balance had been
canceled.
(10) Options to purchase 75,000 shares of Casino Magic common stock
exercisable at $15.75 per share granted to Mr. Cooper in March 1994 that were
canceled and reissued at an exercise price of $7.20 per share in July 1994. At
December 31, 1995, Mr. Cooper held options to purchase a total of 25,000
shares of Casino Magic common stock exercisable at $7.20 per share and the
balance had been canceled.
(11) Relocation allowance of $20,000 and forgiven indebtedness of $18,623.
(12) Mr. Sidders was awarded a total of 25,000 restricted shares of Casino
Magic common stock in 1994 that were to vest over five years. As of December
31, 1995, 3,750 restricted shares had vested and the balance had been
canceled.
(13) Consists of: (i) options to purchase 31,000 shares of Casino Magic
common stock exercisable at $16.00 per share granted to Mr. Sidders in March
1994 that were canceled and repriced at an exercise price of $7.20 per share
in July 1994; and (ii) options to purchase 44,000 shares of Casino Magic
common stock exercisable at $15.75 per share granted to Mr. Sidders in March
1994 that were canceled and reissued at an exercise price of $7.20 per share
in July 1994. As of December 31, 1995, all of Mr. Sidders' options had been
terminated.
(14) Mr. Shaddick was awarded a total of 25,000 restricted shares of Casino
Magic common stock in 1994 that were to vest over five years. As of December
31, 1995, 3,750 restricted shares had vested, and the balance had been
canceled.
(15) Includes: (i) options to purchase 31,000 shares of Casino Magic common
stock exercisable at $13.50 per share granted to Mr. Shaddick in January 1994
that were canceled and reissued at an exercise price of $7.20 per share in
July 1994; and (ii) options to purchase 44,000 shares of Casino Magic common
stock exercisable at $14.25 per share granted to Mr. Shaddick in February 1994
that were canceled and reissued at an exercise price of $7.20 per share in
July 1994. At December 31, 1995, Mr. Shaddick held options to purchase a total
of 12,800 shares of Casino Magic common stock at an exercise price of $7.20
per share, 6,200 of which have since been terminated.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table provides certain information regarding the number of
stock options to purchase shares of Casino Magic's common stock granted to the
Named Executive Officers during the year ended December 31, 1995.
Percentage of
Total Options
Granted to Potential Realizable
Number of Employees Value at Assumed
Securities in Per Share Annual Rates of Stock
Underlying Fiscal Exercise Price Appreciation
Options Year or Base Expiration for Option Term
Name Granted 1995 Price(1) Date 5% 10%
----- -------- ----- ------- -------- -------------------
James E. Ernst 490,000 68% $4.75 12/19/01 $643,045 1,420,962
100,000 14% $4.75 12/20/01 $131,234 289,992
Robert A. Callaway 40,000 6% $5.30 11/10/01 $ 58,572 129,428
__________________
(1) The exercise price of such options was repriced in 1996 to $3.63.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table provides certain information regarding the exercise
of stock options to purchase shares of Casino Magic's common stock during the
year ended December 31, 1995, by the Named Executive Officers, and the fiscal
year-end value of stock options held by such officers.
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at the-Money Options/SARs
Number of Shares Fiscal Year End (#) at Fiscal Year End ($)
Acquired
Name On Exercise Exercisable Unexercisable Excisable Unexercisable
------ ----------- ----------- ------------- --------- -------------
Marlin F. Torguson None 360,000 240,000 $614,880 $409,920
James E. Ernst None None 590,000 0 0
Robert A. Callaway None 9,250 65,750 0 0
Dual B. Cooper None 15,450 9,600 0 0
Joseph E. Anderson None 45,000 30,000 $ 79,110 $ 52,740
Leonard S. Krick None 126,000 84,000 $126,756 $ 84,504
Patrick M. Sidder None None None 0 0
Hugh J. Shaddick None 12,800 0 0 0
________________
(1) Based on a fiscal year end of December 31, 1995, and a closing Casino
Magic common stock price of $3.125 per share on December 29, 1995. The value
of in-the-money options is calculated as the difference between the fair
market value of the Casino Magic common stock underlying the options at fiscal
year end and the exercise price of the options. Exercisable options refer to
those options that are exercisable as of December 31, 1995, while
unexercisable options refer to those options that become exercisable at
various times thereafter.
DIRECTOR COMPENSATION
Each non-employee member of the Casino Magic Board of Directors is
entitled to receive $2,000 for attendance at each Board of Directors meeting
and $500 for attendance at each meeting of a Committee of the Board of
Directors, or of the non-employee directors, provided that if a meeting of the
Board of Directors and a Committee or non-employee director meeting were
attended by a Director on the same day, the maximum compensation for
attendance at such meetings was $2,000 per day. Certain independent members of
the Board of Directors were compensated at the rate of $150 per hour for
special services as requested by the Board of Directors. Casino Magic has
granted stock options to non-employee members of the Board of Directors.
However, no such grants were made in 1995.
EMPLOYMENT AND TERMINATION
Marlin F. Torguson. Mr. Torguson, Casino Magic's Chairman of the Board,
originally entered into an employment agreement with Casino Magic in June
1992, which has since been amended. Salaries and bonuses under the agreement
became discretionary in 1994, and the Compensation Committee authorized Mr.
Torguson to receive a salary at the annual rate of $425,000. Mr. Torguson is
entitled to (i) an annual family travel allowance and (ii) a bonus payable in
such amounts and under such terms and conditions as the Board of Directors or
the Compensation Committee may determine. Casino Magic also provides Mr.
Torguson with an automobile allowance. The employment agreement is terminable
by Casino Magic or Mr. Torguson upon four weeks' prior written notice.
However, if terminated by Casino Magic without cause, Casino Magic will be
obligated to pay Mr. Torguson a severance allowance equal to one year's salary
at the rate being paid at termination.
James E. Ernst. Mr. Ernst, Casino Magic's President and Chief Executive
Officer, entered into an employment agreement dated December 20, 1995, which
provides for, among other things, an initial annual base salary of $425,000,
and a $500,000 loan subject to partial repayment by Mr. Ernst based on the
number of days he is employed by Casino Magic during the two-year period
beginning December 20, 1995. Under the terms of the repayment formula,
approximately $684 of the original $500,000 loan to Mr. Ernst is forgiven each
day over the two-year period. Interest at an annual rate of 8% is payable on
the outstanding balance of the loan, beginning as of the date Mr. Ernst's
employment is terminated. Additionally, pursuant to the agreement, Casino
Magic granted to Mr. Ernst a non-statutory option to purchase up to 490,000
shares of Casino Magic's common stock at a price of $4.75 per share vesting
over a five-year period at the rate of 98,000 shares per year. Mr. Ernst also
received an incentive stock option to purchase up to 100,000 shares of Casino
Magic's common stock, which vests over a five-year period at the rate of
20,000 shares per year. The exercise price of such options is $3.63 per share.
The initial term of the employment agreement is two years and is terminable by
Casino Magic or the employee upon 30 days' prior written notice. However, if
terminated by Casino Magic without cause, Casino Magic will be obligated to
pay Mr. Ernst a severance allowance equal to six months' salary at the rate
being paid at termination.
Jay S. Osman. Mr. Osman became Casino Magic's Executive Vice President,
Chief Financial Officer and Treasurer in October 1995. Mr. Osman and Casino
Magic entered into a two-year employment agreement in October 1995, which
agreement has been extended through July 1998. The agreement provides for,
among other things, a current annual base salary of $210,000, a $20,000 bonus
paid upon commencement of employment and the right to participate in any bonus
plan established for executives of Casino Magic. Additionally, the agreement
obligates Casino Magic to grant to Mr. Osman a restricted stock award of
25,000 shares of Casino Magic's common stock which vest over a four-year
period, and an option to purchase 75,000 shares of Casino Magic's common stock
which vests over a four-year period. The exercise price of such options is
$3.63 per share.
Robert A. Callaway. Mr. Callaway, Casino Magic's Vice President/General
Counsel and Secretary, entered into a two-year employment agreement with
Casino Magic in September 1994, which agreement has been extended through July
1998. The employment agreement provides for, among other things, a current
annual salary of $210,000, a one-time bonus of $10,000 and the right to
participate in any bonus plan established by Casino Magic for its employees.
In connection with such agreement, Casino Magic granted Mr. Callaway an option
to purchase 35,000 shares of Casino Magic's common stock. The Company
subsequently granted Mr. Callaway options to purchase an additional 40,000
shares of Casino Magic's common stock. Each such option vests over a four year
period. The exercise price of such options is $3.63 per share. Casino Magic
has also subsequently agreed to grant Mr. Callaway a restricted stock award of
25,000 shares of Casino Magic's common stock, which vest over a four-year
period.
Juris Basens. Mr. Basens became Casino Magic's Vice President/Chief
Operating Officer in July 1996, and Mr. Basens and Casino Magic entered into a
three-year employment agreement at the time of Mr. Basens' commencing
employment. The agreement provides, among other things, for an initial annual
base salary of $200,000 and the right to participate in any bonus plan
established for executives of Casino Magic. Additionally, the agreement
obligates Casino Magic to grant to Mr. Basens a restricted stock award of
25,000 shares of Casino Magic's common stock to vest over a four-year period,
and an option to purchase 75,000 shares of Casino Magic's common stock at or
above fair market value to vest over a four-year period. Mr. Basens is
entitled to a signing bonus of $20,000.
Kenneth N. Schultz. Mr. Schultz became Casino Magic's Vice President in
charge of Construction and Development on June 25, 1996, and Mr. Schultz and
Casino Magic entered into a three-year employment agreement at the time of Mr.
Schultz' commencing employment. The agreement provides for, among other
things, an initial annual base salary of $200,000 and the right to participate
in any bonus plan established for executives of Casino Magic. Additionally,
the agreement obligates Casino Magic to grant to Mr. Schultz a restricted
stock award of 25,000 shares of Casino Magic's common stock to vest over a
four-year period, and an option to purchase 75,000 shares of Casino Magic's
common stock at or above fair market value to vest over a four-year period.
Mr. Schultz received a signing bonus of $82,500.
David L. Paltzik. Mr. Paltzik became Casino Magic's Vice
President/Marketing in July 1996, and Mr. Paltzik and Casino Magic entered
into a three-year employment agreement at the time of Mr. Paltzik's commencing
employment. The agreement provides for, among other things, an initial annual
base salary of $200,000 and the right to participate in any bonus plan
established for executives of Casino Magic. Additionally, the agreement
obligates Casino Magic to grant to Mr. Paltzik a restricted stock award of
25,000 shares of Casino Magic's common stock to vest over a four-year period,
and an option to purchase 75,000 shares of Casino Magic's common stock at or
above fair market value to vest over a four-year period. Mr. Paltzik is
entitled to a signing bonus of $20,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1995, E. Thomas Welch and W. William
Bednarczyk served as members of the Compensation Committee. During 1995, no
member of Casino Magic's Compensation Committee was an officer, former officer
or employee of the Company or any of its subsidiaries. No executive officer of
Casino Magic served as a member of: (i) the compensation committee of another
entity in which one of the executive officers of such entity served on Casino
Magic's Compensation Committee; (ii) the Board of Directors of another entity
in which one of the executive officers of such entity served on Casino Magic's
Compensation Committee; or (iii) the compensation committee of another entity
in which one of the executive officers of such entity served as a member of
Casino Magic's Board of Directors, during the year ended December 31, 1995.
<PAGE>
PRINCIPAL SHAREHOLDERS
Casino Magic is the sole shareholder of Jefferson Corp. which is the sole
shareholder of the Company. The following table sets forth certain information
as of August 15, 1996 with respect to the beneficial ownership of Casino Magic
common stock by: (i) each director of the Company; (ii) each executive officer
of the Company; (iii) each other person known to hold 5% or more of the
outstanding shares of Casino Magic common stock; and (iv) all current
executive officers (regardless of salary and bonus level) and directors of the
Company as a group. Unless otherwise indicated, the persons listed in the
table below have sole voting and investment powers with respect to the shares
indicated.
Number of
Shares of Casino Magic Percentage of
Common Stock Casino Magic
Name of Beneficial Owner Beneficially Owned Common Stock Outstanding
- ------------------------ -------------------- ------------------------
Marlin F. Torguson ......... 9,275,000 (1) 25.7%
James E. Ernst ............. 115,000 *
Allen Kokesch .............. 1,087,000 (2) 3.1%
Wayne Lund ................. 965,400 (3) 2.7%
Roger H. Frommelt .......... 103,000 (4) *
E. Thomas Welch ............ 63,000 (5) *
Robert A Callaway .......... 50,250 (6) *
Jay S. Osman ............... 45,000 (7) *
Grand Casinos, Inc. (8) .... 2,125,000 6.0%
13795 First Avenue North
Minneapolis, MN 55441
All current executive ...... 11,778,650 (9) 32.3%
officers and directors
as a group (11 persons)
*Less than one percent
(1) Includes 600,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days and 60,000 shares owned
of record by an Individual Retirement Account established for the benefit of
Mr. Torguson.
(2) Includes 201,500 shares owned of record by the spouse of Mr. Kokesch
of which Mr. Kokesch disclaims beneficial ownership.
(3) Includes 120,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days.
(4) Includes 100,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days.
(5) Includes 60,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days.
(6) Includes 23,750 shares subject to options that are currently
exercisable or will become exercisable within 60 days and restricted stock
awards for 25,000 shares.
(7) Includes 15,000 shares subject to options that will become exercisable
within 60 days and restricted stock awards for 25,000 shares.
(8) The shares are held of record by GCA Acquisition Subsidiary, Inc., a
wholly owned subsidiary of Grand Casino, Inc.
(9) Includes the shares described in notes (1)-(7) above.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Concurrently with the closing of the Note Offering, the Company entered
into a Management Agreement with Casino Magic and the Manager for a term
through August 22, 2006, pursuant to which Casino Magic will license the
"Casino Magic" name to the Company and the Manager will provide management
services to the Company. Casino Magic is the direct parent corporation of
Jefferson Corp. which holds a 100% beneficial ownership interest in the
Company. In consideration for the services provided under the Management
Agreement, the Company has agreed to pay the Manager a management fee equal to
10% of Adjusted Consolidated Cash Flow, subject to certain limitations set
forth in the Indenture. See "Business-Management Agreement" and "Management."
The Company, Jefferson Corp. and all future subsidiaries of the Company
will be parties to a Tax-Sharing Agreement (as defined herein) between Casino
Magic and each of its domestic subsidiaries (the "Consolidated Group")
pursuant to which Casino Magic will file a consolidated federal income tax
return on behalf of the Consolidated Group and timely pay the Consolidated
Group's federal income tax liability and the Company, Jefferson Corp. and each
such future subsidiary will pay Casino Magic an amount equal to their
respective share of the Consolidated Group's federal income tax liability
calculated in the manner prescribed in such Tax-Sharing Agreement.
<PAGE>
DESCRIPTION OF NOTES
GENERAL
On August 22, 1996, the Company issued $115,000,000 principal amount of
Series A Notes under an indenture (the "Indenture") among the Company,
Jefferson Corp. and First Union Bank of Connecticut, as trustee (the
"Trustee"), in a private transaction. The Series B Notes will evidence the
same debt as the Series A Notes, and together with the Series A Notes will
constitute one class under the Indenture, a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus constitutes a
part. The form and terms of the Series B Notes are substantially identical to
the Series A Notes in all material respects, except that the Series B Notes
will be registered under the Securities Act, and therefore will not bear
legends restricting the transfer thereof. The terms of the Notes include
those stated in the Indenture, the Collateral Documents and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Notes are subject to all such terms, and Holders
of Notes are referred to the Indenture, the Collateral Documents and the Trust
Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture and the Collateral Documents does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. A copy of the
proposed form of Indenture and each of the Collateral Documents are available
as set forth under "-Additional Information." The definitions of certain terms
used in the following summary are set forth below under "-Certain
Definitions."
The Series A Notes will be senior secured obligations of the Company and
will rank pari passu in right of payment with any existing and future senior
Indebtedness of the Company. The Notes will rank senior in right of payment to
all subordinated Indebtedness of the Company. The Notes are and, upon issuance
pursuant to the Exchange Offer, the Series B Notes will be guaranteed on a
senior secured basis by Jefferson Corp. (the "Jefferson Guarantee") and all
future Subsidiaries of the Company (the "Subsidiary Guarantees" and, together
with Jefferson Guarantee, the "Guarantees"). As of June 30, 1996, after giving
pro forma effect to the Note Offering and the application of the net proceeds
thereof, the total senior Indebtedness of the Company would have been
approximately $120.7 million.
GUARANTEES
The Indenture provides that (i) Jefferson Corp. and (ii) if the Company
or any of its Subsidiaries shall acquire or create another Subsidiary after
the date of the Indenture, then such newly acquired or created Subsidiary,
shall execute a Guarantee and deliver an opinion of counsel, containing
customary qualifications, limitations and exceptions, relating to the
enforceability and authorization of such Guarantee in accordance with the
terms of the Indenture, pursuant to which Jefferson Corp. or such newly
acquired or created Subsidiary, as the case may be, shall become a Guarantor,
on a senior secured basis, of the Company's obligations under the Series B
Notes and the Indenture. The obligations of each Guarantor under its Guarantee
will be limited so as to reduce the risk that such obligations would be found
to constitute a fraudulent conveyance under applicable law. See, however,
"Risk Factors-Fraudulent Conveyance Considerations."
The Indenture provides that no Guarantor may consolidate with or merge
with or into (whether or not such Jefferson Corp. is the surviving Person),
another corporation, Person or entity whether or not affiliated with such
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 Guarantor) assumes, pursuant to a supplemental indenture and appropriate
Collateral Documents in form and substance reasonably satisfactory to the
Trustee, all the obligations of such Guarantor under the Notes, the Indenture
and the Collateral Documents; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Guarantor, or
any Person formed by or surviving any such consolidation or merger, would have
Consolidated Net Worth (immediately after giving effect to such transaction),
equal to or greater than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction; (iv) the Company would be permitted by
virtue of the Company's pro forma Fixed Charge Coverage Ratio, immediately
after giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
covenant described below under the caption "-Certain Covenants-Incurrence of
Indebtedness and Issuance of Preferred Stock"; (v) the Fixed Charge Coverage
Ratio of such Guarantor, or any Person formed by or surviving any such
consolidation or merger, for the Reference Period immediately preceding the
date on which such consolidation or merger occurred, determined on a pro forma
basis (including a pro forma application of the proceeds therefrom) as if such
consolidation or merger had occurred at the beginning of such Reference
Period, would be no less than 85% of such Guarantor 's or such Person's Fixed
Charge Coverage Ratio for such Reference Period prior to giving effect to such
consolidation or merger; (vi) such transaction would not result in the loss or
suspension or material impairment of any Gaming License (unless a comparable
replacement Gaming License is effective prior to or simultaneously with such
loss, suspension or material impairment); and (vii) such transaction would not
require any Holder or beneficial owner of Notes to obtain a Gaming License or
be qualified under the laws of any applicable gaming jurisdiction; provided,
that such Holder or beneficial owner would not have been required to obtain a
Gaming License or be qualified under the laws of any applicable gaming
jurisdiction in the absence of such transaction; provided, further, however,
that the requirements set forth in the preceding clauses (iii), (iv) and (v)
will not prohibit any merger or consolidation among the Company and one or
more Wholly Owned Subsidiaries of the Company.
The Indenture provides that in the event of a sale or other disposition
of all or substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
Capital Stock of any Guarantor, then such 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 such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Jefferson Corp.) will be released and relieved of
any obligations under its Guarantee and the Collateral Documents; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See "-Repurchase
at the Option of Holders-Asset Sales."
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $115 million
and will mature on August 15, 2003.
Interest on the Notes will accrue at the rate of 13% per annum (the
"Fixed Interest") and will be payable semi-annually in arrears on February 15
and August 15, commencing on February 15, 1997, to Holders of record on the
immediately preceding February 1 and August 1. Fixed Interest on the Notes
will accrue from the most recent date to which such interest has been paid or,
if no such interest has been paid, from the date of original issuance. Fixed
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
In addition, the Notes will bear Contingent Interest, calculated as
described below, from the Commencement Date to the date of payment of the
Notes. Installments of accrued or deferred Contingent Interest will become due
and payable semi-annually on each February 15 and August 15 after the
Commencement Date to the Holders of record at the close of business on the
preceding February 1 or August 1; provided that all or a portion of such
installment of Contingent Interest is not permitted to be deferred on such
date; and provided further, that no Contingent Interest is payable with
respect to any period prior to the Commencement Date. Additionally, all
installments of accrued or deferred Contingent Interest will become due and
payable (and may not be further deferred) with respect to any principal amount
of the Notes that matures (whether at stated maturity, upon acceleration, upon
redemption, upon maturity of repurchase obligation or otherwise) upon such
maturity of such principal amount of the Notes.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the
extent that, (a) the payment of such portion of Contingent Interest will cause
the Company's Adjusted Fixed Charge Coverage Ratio for the Company's most
recently completed Reference Period prior to such interest payment date to be
less than 1.5 to 1.0 on a pro forma basis after giving effect to the assumed
payment of such Contingent Interest (but may not defer such portion, which, if
paid, would not cause such Adjusted Fixed Charge Coverage Ratio to be less
than 1.5 to 1.0) and (b) the principal amount of the Notes corresponding to
such Contingent Interest has not then matured and become due and payable (at
stated maturity, upon acceleration, upon redemption, upon maturity of
repurchase obligation or otherwise). Contingent Interest that is deferred
shall become due and payable, in whole or in part, on the earlier of (i) the
next succeeding interest payment date on which all or a portion of such
Contingent Interest is not permitted to be deferred, and (ii) upon the
maturity of the corresponding principal amount of the Notes (whether at stated
maturity, upon acceleration, upon redemption, upon maturity of repurchase
obligation or otherwise). No interest will accrue on any Contingent Interest
deferred and which does not become due and payable. To the extent permitted by
law, interest will accrue on overdue Fixed Interest or Contingent Interest at
the same rate as the Fixed Interest plus one percent (1%) per annum.
Each installment of Contingent Interest is calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to, and including, either (a) the last day of the
next Semiannual Period if the corresponding principal amount of the Notes has
not become due and payable or (b) the date of payment if the corresponding
principal amount of the Notes has become due and payable (whether at stated
maturity or upon acceleration, redemption or maturity of repurchase obligation
or otherwise). With respect to each Accrual Period, interest will accrue daily
on the principal amount of each Note outstanding during such period as
follows: (i) for any portion of an Accrual Period which consists of all or
part of a Semiannual Period that ends during such Accrual Period, 1/180 of the
Contingent Interest with respect to such principal amount for such Semiannual
Period until fully accrued and (ii) for any other portion of an Accrual
Period, 1/180 of the Contingent Interest with respect to such principal amount
for the Semiannual Period that began and last ended after the Commencement
Date.
Any reference in this Prospectus to "accrued and unpaid interest" on the
Notes includes the amount of Fixed Interest, unpaid Contingent Interest and
Liquidated Damages, if any, due and payable thereon.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Adjusted Consolidated Cash Flow of such
Person and its Subsidiaries for such period to the Fixed Charges of such
Person and its Subsidiaries for such period (calculated in the same manner as
the Fixed Charge Coverage Ratio is calculated); provided that the amount of
Contingent Interest on a pro forma basis shall equal the Contingent Interest
accrued and reflected in the financial statements for the last two Semiannual
Periods with respect to which Contingent Interest was accruable or payable or,
if two such Semiannual Periods have not occurred, then the amount accrued and
reflected in the financial statements with respect to the most recently
completed Reference Period beginning after the Commencement Date.
"Contingent Interest" means with respect to any principal amount of Notes
as of any date after the Commencement Date, an amount equal to the product of
(i) 5% of the Company's Adjusted Consolidated Cash Flow for the Semiannual
Period last completed times (ii) a fraction, the numerator of which is the
amount of such principal and the denominator of which is $115.0 million.
"Commencement Date" means the first day on which Casino Magic-Bossier
City becomes Operating.
"Semiannual Period" means each period that begins on July 1 and ends on
the next succeeding December 31 or each period that begins on January 1 and
ends on the next succeeding June 30.
Principal, premium, if any, interest and Liquidated Damages, if any, on
the Notes will be payable at the office or agency of the Company maintained
for such purpose within the City and State of New York or, at the option of
the Company, payment of interest and Liquidated Damages, if any, may be made
by check mailed to the Holders of the Notes at their respective addresses set
forth in the register of Holders of the Notes; provided that all payments with
respect to (i) Global Notes and (ii) $5.0 million or more in principal amount
of Certificated Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
Until otherwise designated by the Company, the Company's office or agency in
New York will be the office of the Trustee maintained for such purpose. The
Notes will be issued in denominations of $1,000 and integral multiples
thereof.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to August
15, 2000. Thereafter, the Notes will be subject to redemption at the option of
the Company, 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 interestand Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on August 15 of the years indicated below:
YEAR PERCENTAGE
------ --------------
2000 106.500%
2001 104.332%
2002 102.166%
Notwithstanding the foregoing or any other provision of the Indenture, if
any Gaming Authority requires that a Holder or beneficial owner of the Notes
must be licensed, qualified or found suitable under any applicable Gaming Law
in order to maintain any or obtain any applied-for Gaming License or franchise
of the Company or any of its Subsidiaries under any applicable Gaming Law, and
such 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 Authority (or such lesser period that may be required by such Gaming
Authority or Gaming Law) or if such Holder or beneficial owner is not so
licensed, qualified or found suitable by such Gaming Authority (a
"Disqualified Holder"), the Company shall have the right, at its option, (i)
to require such Disqualified Holder or beneficial owner to dispose of such
Disqualified Holder's or beneficial owner's Notes within 30 days of notice of
such finding by the applicable Gaming Authority that such Disqualified Holder
or beneficial owner will not be licensed, qualified or found suitable as
directed by such Gaming Authority (or such earlier date as may be required by
the applicable Gaming Authority or Gaming Law) or (ii) to call for redemption
of the Notes of such Holder or beneficial owner at a redemption price equal to
the lesser of 100% of the principal amount thereof or the price at which such
Holder or beneficial owner acquired such Notes together with, in either case,
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
earlier of the date of redemption or the date of the finding of unsuitability
by such Gaming Authority, which may be less than 30 days following the notice
of redemption if so ordered by such Gaming Authority. In connection with any
such redemption, and except as otherwise may be required by a Gaming
Authority, the Company shall comply with the procedures contained in the
Indenture for redemption of the Notes. Immediately upon a determination of
unsuitability, the Disqualified Holder shall have no further rights whatsoever
with respect to the Notes (i) to exercise, directly or indirectly, through any
trustee, nominee or any other Person or entity, any right conferred by the
Notes or (ii) to receive any interest or any other distribution or payment
with respect to the Notes, or any remuneration in any form from the Company
for services rendered or otherwise, except the redemption price of the Notes.
Under the Indenture, the Company is not required to pay or reimburse any
Holder or beneficial owner of Notes who is required to apply for such license,
qualification or finding of suitability for the costs of such application
including investigatory costs. Such expenses will, therefore, be the
obligation of such Holder or beneficial owner. See "Risk Factors-Gaming and
Other Government Regulation" and "Regulatory Matters."
MANDATORY REDEMPTION
The Indenture provides that if the voters in the Louisiana Referendum
disapprove the continuation of riverboat gaming in either Bossier Parish or
Caddo Parish, Louisiana, within 90 days after the end of each Operating Year,
the Company will redeem (the "Excess Cash Flow Redemption") the maximum
principal amount of Notes that is an integral multiple of $1,000, that may be
redeemed with 100% of the Company's Excess Cash Flow (the "Excess Cash Flow
Redemption Amount") with respect to such Operating Year, at a redemption price
in cash equal to 100% of the principal amount of Notes to be redeemed, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of redemption, in accordance with the procedures set forth in the
Indenture; provided, however, that the Excess Cash Flow Redemption Amount will
be reduced by the minimum amount necessary to allow the balance of Cash
Equivalents held by the Company to exceed $5.0 million; provided, further,
however, that if (i) the voters in the Louisiana Referendum disapprove the
continuation of riverboat gaming in one but not the other of Bossier Parish or
Caddo Parish, Louisiana and (ii) the Company, prior to the end of its first
Operating Year, has obtained a determination that the outcome of the Louisiana
Referendum does not limit its ability to conduct riverboat gaming operations
at Casino Magic-Bossier City, the Company's obligations to make Excess Cash
Flow Redemptions shall terminate.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company will mail a notice to each Holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Notes pursuant to the procedures required by the
Indenture and described in such notice. The Company 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 Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all 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 Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being repurchased
by the Company. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The source of funds for any repurchase of Notes upon a Change of Control
will be the Company's cash or cash generated from operations or other sources,
including borrowings or sales of assets; however, there can be no assurance
that sufficient funds will be available at the time of any Change of Control
to make any required repurchases of the Notes. Any failure by the Company to
repurchase Notes tendered pursuant to a Change of Control Offer will
constitute an Event of Default. See "Risk Factors-Substantial Leverage and
Ability to Service Debt."
The Company 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 set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and repurchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the assets of Casino Magic or the Company and their
respective Subsidiaries, taken as a whole. Although there is a developing body
of case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under New York law, which is the law
governing the Indenture and the Notes. Accordingly, the ability of a Holder of
Notes to require the Company to repurchase such Notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the
assets of Casino Magic or the Company and their respective Subsidiaries, taken
as a whole, to another Person or group may be uncertain.
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, engage in an Asset Sale unless (i) the Company or the
Subsidiary, as the case may be, receives consideration at the time of such
Asset Sale at least equal to the fair market value (evidenced by a resolution
of the Board of Directors of the Company set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) (a) with respect to an Asset Sale of the
Crescent City Riverboat, at least 25% of the consideration received by the
Company therefor is in the form of Cash Equivalents and the remaining
consideration is in the form of Permitted Securities or (b) with respect to
any Asset Sale of any other asset, at least 85% of the consideration therefor
received by the Company or such Subsidiary is in the form of Cash Equivalents;
provided, that the amount of (x) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet) of the Company or any Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated in right of payment to the Notes or any Guarantee thereof) that
are assumed by the transferee of any such assets pursuant to an agreement that
releases and indemnifies the Company or such Subsidiary from further liability
with respect thereto and (y) any notes or other obligations received by the
Company or any such Subsidiary from such transferee that are within 30 days
converted by the Company or such Subsidiary into cash or as to which the
Company or such Subsidiary has received at or prior to the consummation of the
Asset Sale a commitment from a nationally recognized investment, merchant or
commercial bank to convert into cash within 90 days of the consummation of
such Asset Sale unless not actually converted into cash within such 90-day
period (to the extent of the cash received), shall be deemed to be Cash
Equivalents for purposes of this provision. Notwithstanding the foregoing, the
Company shall not engage in any transfer, lease, conveyance or disposition,
other than a sale, of the Crescent City Riverboat.
Within 180 days after the receipt by the Company or any of its
Subsidiaries of any Net Proceeds from an Asset Sale, the Company or such
Subsidiary, as the case may be, may (i) apply such Net Proceeds to the making
of a capital expenditure or the acquisition of long-term assets, in either
case, which shall be owned by the Company or such Subsidiary and be used by or
useful to the Company or such Subsidiary in any line of business in which the
Company or such Subsidiary is permitted to be engaged pursuant to the covenant
described under "-Certain Covenants-Line of Business," or (ii) contractually
commit to apply such Net Proceeds to the payment of the costs of construction
of real property improvements (including, without limitation, to commit to
apply Net Proceeds from an Asset Sale of the Crescent City Riverboat to the
construction of the Casino Magic-Bossier City Hotel), which improvements shall
be owned by the Company or such Subsidiary and be used by or useful to the
Company or such Subsidiary in any line of business in which the Company or
such Subsidiary is permitted to be engaged pursuant to the covenant described
under "-Certain Covenants-Line of Business;" provided, however, that the Net
Proceeds from an Asset Sale of the Crescent City Riverboat may be applied only
to the making of a capital expenditure or the acquisition of long-term assets
or the payment of the costs of construction of real property improvements, in
any case, to be used by the Company at Casino Magic-Bossier City or the Casino
Magic-Bossier City Hotel; provided, further, that, in any case, the Company or
such Subsidiary, as the case may be, grants to the Trustee, on behalf of the
Holders, a first priority perfected security interest on any such properties
or assets acquired or constructed with the Net Proceeds of any such Asset Sale
on the terms set forth in the Indenture and the Collateral Documents. Pending
the final application of any such Net Proceeds, the Company or such Subsidiary
shall invest such Net Proceeds in Cash Equivalents which shall be pledged to
the Trustee as security for the Notes. Any Net Proceeds from an Asset Sale
(other than Net Proceeds from an Asset Sale of the Crescent City Riverboat)
that are not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $10.0 million, the Company will be required
to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase
the maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 101% (or, to the
extent that the Excess Proceeds relate to an Asset Sale of the Crescent City
Riverboat, 100%) of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase,
which date shall be no less than 30 or more than 60 days from the date of such
Asset Sale Offer, in accordance with the procedures set forth in the
Indenture. Notwithstanding the foregoing, any Net Proceeds of an Asset Sale of
the Crescent City Riverboat (including without limitation, any cash received
upon the conversion or sale of any Permitted Securities or other notes or
obligations received in consideration of such Asset Sale) received prior to
the determination of the outcome of the Louisiana Referendum shall immediately
be deposited in the Escrow Account in which the Trustee shall have a first
priority perfected security interest. If the voters in the Louisiana
Referendum approve the continuation of riverboat gaming in Bossier Parish and
Caddo Parish, Louisiana, such Net Proceeds shall be released from the Escrow
Account and may be applied by the Company in accordance with the provisions of
the first sentence of this paragraph. If the voters in the Louisiana
Referendum disapprove the continuation of riverboat gaming in Bossier Parish
or Caddo Parish, Louisiana, the Company shall make an Asset Sale Offer to all
Holders of Notes within 90 days after the end of the first Operating Year to
purchase the maximum principal amount of Notes that may be purchased out of
such Net Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, which date shall be no less
than 30 or more than 60 days from the date of such Asset Sale Offer, in
accordance with the procedures set forth in the Indenture.
To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may, subject to
the provisions in the Indenture and the Collateral Documents, use any
remaining Excess Proceeds for any general corporate purpose. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased in the
manner described below under the caption "-Selection and Notice." Upon
completion of an Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Event of Loss
The Indenture provides that within 360 days after any Event of Loss with
respect to any Note Collateral comprising Casino Magic-Bossier City on the
date that it becomes Operating with a fair market value (or replacement cost,
if greater) in excess of $1.0 million, the Company or the affected Subsidiary
of the Company, as the case may be, may apply the Net Loss Proceeds from such
Event of Loss to the rebuilding, repair, replacement or construction of
improvements to Casino Magic-Bossier City, with no concurrent obligation to
make any purchase of any Notes; provided that (i) the Company delivers to the
Trustee within 90 days of such Event of Loss a written opinion from a
reputable architect that Casino Magic-Bossier City with at least the Minimum
Facilities can be rebuilt, repaired, replaced, or constructed and Operating
within 180 days of such Event of Loss, (ii) an Officers' Certificate
certifying that the Company has available from Net Loss Proceeds or other
sources sufficient funds to complete such rebuilding, repair, replacement or
construction, and (iii) the Net Loss Proceeds are less than $25.0 million. If
the Net Loss Proceeds to be used for such rebuilding, repair, replacement or
construction exceeds $12.0 million, then such Net Loss Proceeds shall be
deposited in the Construction Disbursement Account and disbursed in accordance
with the Cash Collateral and Disbursement Agreement. Any Net Loss Proceeds
from an Event of Loss with respect to any Note Collateral comprising Casino
Magic-Bossier City on the date that it becomes Operating that are not
reinvested or are not permitted to be reinvested as provided in the first
sentence of this paragraph will be deemed "Excess Loss Proceeds." When the
aggregate amount of Excess Loss Proceeds exceeds $10.0 million, the Company
shall make an offer to all Holders (an "Event of Loss Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess Loss
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, which date shall not be less
than 30 or more than 60 days from the date of such Event of Loss Offer, in
accordance with the procedures set forth in the Indenture. If the aggregate
principal amount of Notes tendered pursuant to an Event of Loss Offer exceeds
the Excess Loss Proceeds, the Trustee will select the Notes to be purchased in
the manner described below under the caption "-Selection and Notice." To the
extent that the aggregate amount of Notes tendered pursuant to any Event of
Loss Offer is less than the Excess Loss Proceeds, the Company may, subject to
the other provisions of the Indenture and the Collateral Documents, use any
remaining Excess Loss Proceeds for general corporate purposes. Upon completion
of any such Event of Loss Offer, the amount of Excess Loss Proceeds shall be
reset at zero. Pending any permitted rebuilding, repair, replacement or
construction or the completion of any Event of Loss Offer, the Company or the
affected Subsidiary, as the case may be, shall pledge to the Trustee as
additional Note Collateral any Net Loss Proceeds or other cash on hand
required for such permitted rebuilding, repair, replacement or construction
pursuant to the terms of the Collateral Documents relating to Casino
Magic-Bossier City. Such pledged funds will be released to the Company to pay
for or reimburse the Company for the actual cost of such permitted rebuilding,
repair, replacement or construction, or such Event of Loss Offer, pursuant to
the terms of the Collateral Documents relating to Casino Magic-Bossier City.
Pending the final application of the Net Loss Proceeds, such proceeds shall be
invested in Cash Equivalents which shall be pledged to the Trustee as security
for the Notes. The Indenture also requires the Company or such Subsidiary to
grant to the Trustee, on behalf of the Holders, a first priority lien, subject
to Permitted Liens, on any properties or assets rebuilt, repaired, replaced or
constructed with such Net Loss Proceeds on the terms set forth in the
Indenture and the Collateral Documents.
The Indenture also provides that with respect to any Event of Loss
pursuant to clause (iii) of the definition of "Event of Loss" that has a fair
market value (or replacement cost, if greater) in excess of $5.0 million, the
Company (or the affected Subsidiary, as the case may be), will be required to
receive consideration at least (i) equal to the fair market value (evidenced
by a resolution of the Board of Directors of the Company set forth in an
Officers' Certificate delivered to the Trustee) of the assets subject to an
Event of Loss and (ii) at least 90% of which is in the form of Cash
Equivalents.
SELECTION AND NOTICE
If less than all of the Notes are to be purchased in an Asset Sale Offer
or Event of Loss Offer, or redeemed at any time, selection of Notes for
purchase or redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or such other method as the Trustee shall deem fair and appropriate
(and in such manner as complies with applicable legal requirements); provided,
that no Notes of $1,000 or less shall be purchased or redeemed in part.
Notices of purchase or redemption shall be mailed by first class mail, postage
prepaid, except as otherwise provided in the Indenture, at least 30 but not
more than 60 days before the purchase or redemption date to each Holder of
Notes to be purchased or redeemed at such Holder's registered address. If any
Note is to be purchased or redeemed in part only, any notice of purchase or
redemption that relates to such Note shall state the portion of the principal
amount thereof that has been or is to be purchased or redeemed. A new Note in
principal amount equal to the unpurchased or unredeemed portion of any Note
purchased or redeemed in part will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the purchase or
redemption date, unless the Company defaults in payment of the purchase or
redemption price, interest and Liquidated Damages, if any, shall cease to
accrue on Notes or portions thereof purchased or called for redemption.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving the
Company) or to the direct or indirect Holders of the Company's Equity
Interests in any capacity (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or dividends
or distributions payable by a Wholly Owned Subsidiary or Substantially Owned
Subsidiary of the Company or any Wholly Owned Subsidiary or Substantially
Owned Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire
or retire for value any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than
any such Equity Interests owned by the Company or any Wholly Owned Subsidiary
or Substantially Owned Subsidiary of the Company that is a Guarantor); (iii)
make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is pari passu with or
subordinated in right of payment to the Notes (other than Notes), in each case
except at final stated maturity and, in the case of pari passu Indebtedness,
except in accordance with any sinking fund or mandatory redemption provisions
thereof; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being 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; and
(b) the voters in the Louisiana Referendum have approved the continuation
of riverboat gaming in both Bossier Parish and Caddo Parish, Louisiana or the
voters in the Louisiana Referendum have disapproved the continuation of
riverboat gaming in one but not the other of Bossier Parish or Caddo Parish,
Louisiana and the Company has obtained a determination that the outcome of the
Louisiana Referendum does not limit its ability to conduct riverboat gaming
operations at Casino Magic-Bossier City; and
(c) all Contingent Interest accrued through the interest payment date
immediately preceding the date of such Restricted Payment has been paid; and
(d) the Company 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 Reference Period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant described
below under caption "-Incurrence of Indebtedness and Issuance of Preferred
Stock"; and
(e) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after the
date of the Indenture (excluding Restricted Payments permitted by clauses (A)
(1), (2), (3), (5) and (B) of the next succeeding paragraph), is less than the
sum of (i) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing prior to the date of the Indenture to the end of the
Company'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 received by the
Company from the issue or sale since the date of the Indenture of Equity
Interests of the Company or of debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted Investment
that was made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment.
(A) If (i) no Default or Event of Default has occurred and is continuing,
or would occur as a consequence thereof, and (ii) the voters in the Louisiana
Referendum have approved the continuation of riverboat gaming in Bossier
Parish and Caddo Parish, Louisiana, if the voters in the Louisiana Referendum
have disapproved the continuation of riverboat gaming in one but not the other
of both Bossier Parish or Caddo Parish, Louisiana and the Company has obtained
a determination that the outcome of the Louisiana Referendum does not limit
its ability to conduct riverboat gaming operations at Casino Magic-Bossier
City, and (iii) all Contingent Interest accrued through the interest payment
date immediately preceding the date of such Restricted Payment has been paid,
the foregoing provisions will not prohibit (1) the payment of any dividend
within 60 days after the date of declaration thereof, if at such date of
declaration such payment would have complied with the provisions of the
Indenture; (2) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (e) (ii) of the preceding paragraph; (3) the
defeasance, redemption or repurchase of Indebtedness that is pari passu with
or subordinated in right of payment to the Notes with the net cash proceeds
from an incurrence of applicable Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Equity Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (e) (ii) of the preceding paragraph; (4) the payment of Restricted
Payments not otherwise permitted in an aggregate amount not to exceed $10.0
million; provided that the Fixed Charge Coverage Ratio for the Company's most
recently ended Reference Period preceding the date on which such Restricted
Payment is made would have been at least 2.5 to 1.0, determined on a pro forma
basis, as if the Restricted Payment had been made at the beginning of such
Reference Period; (5) the payment on a monthly basis of Management Fees to the
Manager pursuant to the covenant described below under the caption
"-Restrictions on Payment of Management Fees" in an amount not to exceed 10%
of the Adjusted Consolidated Cash Flow of the Company for the Company's most
recently ended Reference Period; (6) repurchases by the Company of its
outstanding Capital Stock which are required to be made under applicable
Gaming Law; provided, however, that the declaration of each dividend paid in
accordance with clause (1) above and each payment, redemption or repurchase
made under clauses (4) or (6) shall each be counted for purposes of computing
amounts expended pursuant to clause (e) in the immediately preceding
paragraph, and (B) if no Default or Event of Default has occurred and is
continuing, or would occur as a consequence thereof, the foregoing provisions
will not prohibit payments to Casino Magic pursuant to the Tax Sharing
Agreement.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (in the case of any individual Restricted Payment or series of
related Restricted Payments in an amount greater than $100,000), evidenced by
a resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not less than once each
fiscal quarter, the Company shall deliver to the Trustee an Officers'
Certificate stating that each Restricted Payment made during the prior fiscal
quarter was permitted and setting forth the basis upon which the calculations
required by the covenant "-Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly liable, contingently or
otherwise (collectively, "incur"), with respect to any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock
or other Disqualified Stock; provided, however, that so long as no Default or
Event of Default has occurred or is continuing the Company may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
if:
(i) the Fixed Charge Coverage Ratio of the Company for the Company's most
recently ended Reference Period immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.5 to 1.0, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such Reference Period; and
(ii) the final maturity of such Indebtedness is beyond the maturity date
of the Notes and the Weighted Average Life to Maturity of such Indebtedness is
greater than the remaining Weighted Average Life to Maturity, of the Notes.
So long as no Default or Event of Default has occurred and is continuing,
the foregoing provisions will not apply to:
(i) the incurrence by the Company and its Subsidiaries of Indebtedness
represented by the Notes or a Guarantee or obligations arising under the
Collateral Documents, to the extent that such obligations would constitute
Indebtedness;
(ii) the incurrence by the Company of Permitted Refinancing Debt in
exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, decease or refund, Indebtedness that was permitted by the
Indenture to be incurred;
(iii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Substantially Owned Subsidiaries; provided, however, that (A) such
Indebtedness is expressly subordinate to the payment in full of all
Obligations with respect to the Notes, or the Guarantees, as the case may be,
(B)(1) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Substantially Owned Subsidiary and (2) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Substantially
Owned Subsidiary shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Subsidiary, as the case may be, and
(C) if any Subsidiary is the obligor on such Indebtedness, such Indebtedness
is represented by a Subsidiary Intercompany Note that is pledged to the
Trustee as security for the Notes;
(iv) the incurrence by the Company 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
Indenture to be outstanding;
(v) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an aggregate
principal amount (or accreted value, as applicable) at any time outstanding
not to exceed $5.0 million;
(vi) the incurrence by the Company of Indebtedness, the proceeds of which
are utilized solely to purchase FF&E; provided, however, that (A) the
principal amount of such Indebtedness does not exceed the cost (including
sales and excise taxes, installation and delivery charges and other direct
costs of, and other direct expenses paid or charged in connection with, such
purchase) of the FF&E purchased with the proceeds thereof and (B) the
aggregate principal amount of such Indebtedness does not exceed $7.5 million
outstanding at any time prior to the opening of the Casino Magic-Bossier City
Hotel and $10.0 million thereafter; and
(vii) the incurrence by the Company of secured Indebtedness to finance
the Project Costs of the Casino Magic-Bossier City Hotel in an aggregate
principal amount at any time outstanding not to exceed 50% of the aggregate
Project Costs of such Casino Magic-Bossier City Hotel if the Fixed Charge
Coverage Ratio of the Company for the Company's most recently ended Reference
Period immediately preceding the date on which such additional Indebtedness is
incurred would have been at least 2.5 to 1.0, 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 Reference
Period.
Liens
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) the Indenture, the Notes or
the Collateral Documents, (b) applicable law or (c) by reason of customary
non-assignment provisions in leases entered into in the ordinary course of
business.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes, the Indenture and the Collateral
Documents pursuant to a supplemental indenture or other documents or
instruments in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; (iv)
such transaction would not result in the loss or suspension or material
impairment of any Gaming License unless a comparable replacement Gaming
License is effective prior to or simultaneous with such loss, suspension or
material impairment; (v) except in the case of a merger of the Company with or
into a Wholly Owned Subsidiary of the Company, the Company or the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the transaction, (B) will, upon
the consummation of such transaction and after giving pro forma effect thereto
as if such transaction had occurred at the beginning of the applicable
Reference Period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "-Incurrence
of Indebtedness and Issuance of Preferred Stock" and (C) will have a Fixed
Charge Coverage Ratio for the Reference Period immediately preceding the date
on which such transaction occurred, determined on a pro forma basis (including
a pro forma application of the proceeds therefrom) as if such transaction had
occurred at the beginning of such Reference Period, that is no less than 85%
of the Company's or such Person's Fixed Charge Coverage Ratio for such period
prior to giving effect to such transaction; and (vi) such transaction would
not require any Holder or beneficial owner of Notes to obtain a Gaming License
or be qualified or found suitable under the law of any applicable gaming
jurisdiction; provided, that such Holder or beneficial owner would not have
been required to obtain a Gaming License or be qualified or found suitable
under the laws of any applicable gaming jurisdiction in the absence of such
transaction.
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its 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 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
Company or the relevant Subsidiary than those that would have been obtained in
a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board
of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of
the Board of Directors and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing; provided, however,
that (w) payments made pursuant to the Tax Sharing Agreement or the Management
Agreement, (x) any employment or indemnification agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business on terms
customary in the gaming industry, (y) transactions between or among the
Company and/or its Subsidiaries, and (z) Restricted Payments and Permitted
Investments that are permitted by the provisions of the Indenture described
above under the caption "-Restricted Payments," in each case, shall not be
deemed Affiliate Transactions.
Construction
The Indenture provides that the Company will cause construction of Casino
Magic-Bossier City, including the furnishing, fixturing and equipping thereof,
to be prosecuted with diligence and continuity in a good and workmanlike
manner substantially in accordance with the Plans and within the Construction
Budget. The Indenture also provides that the Company will cause Casino
Magic-Bossier City to be Operating by the Operating Deadline.
Limitations on Use of Proceeds
As required by the Indenture, the Company used $20 million of the net
proceeds from the Note Offering to purchase the Bossier Riverboat pursuant to
the Vessel Purchase Agreement, free and clear of any Liens, and to grant to
the Trustee for the benefit of the Notes a first priority perfected security
interest in the Bossier Riverboat, and of the remaining Net Proceeds from the
Note Offering, the Company deposited approximately $45.2 million in the Cash
Collateral Accounts, including $7.3 million in the Interest Reserve Account,
$3.2 million in the Operating Reserve Account, $29.7 million in the
Construction Disbursement Account, and $5.0 million in the Completion Reserve
Account, in each case to be disbursed only in accordance with the Cash
Collateral and Disbursement Agreement.
Limitation on Status as Investment Company
The Indenture prohibits the Company and Jefferson Corp. from being
required to register as an "investment company" (as that term is defined in
the Investment Company Act of 1940, as amended), or from otherwise becoming
subject to regulation under the Investment Company Act of 1940.
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company may enter into a sale and leaseback transaction if
(i) the Company 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 the first paragraph of the
covenant described above under the caption "-Incurrence of Additional
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," (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 Board of Directors of the Company and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, the covenant described above
under the caption "-Repurchase at the Option of Holders-Asset Sales."
Restrictions on Preferred Stock of Subsidiaries
The Indenture provides that the Company will not permit any of its
Subsidiaries to issue any preferred stock, or permit any Person to own or hold
an interest in any preferred stock of any such Subsidiary, except for
preferred stock issued to the Company or a Wholly Owned Subsidiary of the
Company.
Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries
Except with respect to transactions in which a Wholly Owned Subsidiary
becomes a Substantially Owned Subsidiary, the Indenture provides that the
Company (i) will not, and will not permit any Wholly Owned Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Wholly Owned Subsidiary of the Company to any Person (other than
the Company or a Wholly Owned Subsidiary of the Company), unless (a) such
transfer, conveyance, sale, lease or other disposition is of all the Capital
Stock of such Wholly Owned 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
Subsidiary of the Company 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 Company or a Wholly Owned Subsidiary
of the Company.
Line of Business
The Indenture provides that the Company will not, and will not permit any
Subsidiary to, engage in any business or investment activities other than the
gaming business and such business activities as are incidental or related
thereto including, without limitation, related hotel, sports and entertainment
activities and food services; provided that such incidental or related
business activities are engaged only at or in conjunction with any Gaming
Facility owned and operated by the Company or any Substantially Owned
Subsidiary of the Company. Notwithstanding any other provision of the
Indenture, the Company shall not, and shall not permit any of its Subsidiaries
to, engage in any business, development or investment activity other than at
or in conjunction with Casino Magic-Bossier City until Casino Magic-Bossier
City is Operating and the Casino Magic-Bossier City Hotel is an Operating
Hotel.
Advances to Subsidiaries
The Indenture provides that all advances (other than equity contributions
of not more than $1,000) to Subsidiaries made by the Company from time to time
after the date of the Indenture will be evidenced by unsecured Subsidiary
Intercompany Notes in favor of the Company that will be pledged to the Trustee
as Note Collateral to secure the Notes. Each Subsidiary Intercompany Note will
be payable upon demand, and will bear interest at the same rate as the Notes.
A form of Subsidiary Intercompany Note will be attached as an exhibit to the
Indenture. Repayments of principal with respect to any Subsidiary Intercompany
Note may be used by the Company, subject to the other provisions of the
Indenture and the Collateral Documents for any general corporate purpose.
Payments for Consent
The Indenture provides that neither the Company nor any of its
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of the Indenture or the Notes unless such
consideration is offered to be paid or is paid to all Holders of the 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.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the SEC (and within 15 days of the date that is or would be
prescribed thereby) so long as any Notes are outstanding, the Company will
furnish to the Holders of Notes (i) all annual and quarterly financial
information that would be required to be contained in a filing with the SEC on
Forms 10-K (without exhibits) and 10-Q if the Company 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 Company and its Subsidiaries and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports. In addition, whether or not required by the rules and
regulations of the SEC, the Company will file a copy of all such information
and reports with the SEC for public availability (unless the SEC will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company and
Jefferson Corp. have agreed that, for so long as any Series A Notes remain
outstanding, they 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.
Insurance
The Indenture provides that the Company will, and will cause its
Subsidiaries to, maintain insurance with responsible carriers against such
risks and in such amounts as is customarily carried by similar businesses with
such deductibles, retentions, self insured amounts and coinsurance provisions
as are customarily carried by similar businesses of similar size, including,
without limitation, property and casualty, and, with respect to insurance on
the Note Collateral, shall have provided insurance certificates evidencing
such insurance to the Trustee prior to the Issuance Date and shall thereafter
provide such certificates prior to the anniversary or renewal date of each
such policy, which certificate shall expressly state the expiration date for
each policy listed. Customary insurance coverage shall be deemed to include
the following:
(i) workers' compensation insurance to the extent required to comply with
all applicable state, territorial, or United States laws and regulations, or
the laws and regulations of any other applicable jurisdiction;
(ii) comprehensive general liability insurance with minimum limits of
$1.0 million;
(iii) umbrella or excess liability insurance providing excess liability
coverages over and above the foregoing underlying insurance policies up to a
minimum limit of $25.0 million;
(iv) business interruption insurance (which, with respect to the Bossier
Riverboat, covers reasonable continuing expenses for loss attributable to the
loss or damage to the Bossier Riverboat); and
(v) property insurance protecting the property against loss or damage by
fire, lightning, windstorm, tornado, water damage, vandalism, riot,
earthquake, civil commotion, malicious mischief, hurricane, and such other
risks and hazards as are from time to time covered by an "all-risk" policy or
a property policy covering "special" causes of loss. Such insurance shall
provide coverage in not less than the lesser of 120% of the outstanding
principal amount of the Notes plus accrued and unpaid interest and 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
customarily insured consistent with industry standards and with a deductible
no greater than 2% of the insured value of Casino Magic-Bossier City or such
greater amount as is available on commercially reasonable terms (other than
earthquake or flood insurance, for which the deductible may be up to 10% of
such replacement value).
All insurance with respect to the Note Collateral required under the
Indenture (except worker's compensation) shall name the Company and the
Trustee as additional insurers or loss payees, as the case may be, with losses
in excess of $10.0 million payable jointly to the Company and the Trustee
(unless a Default or Event of Default has occurred and is then continuing, in
which case all losses are payable solely to the Trustee), with no recourse
against the Trustee for the payment of premiums, deductibles, commissions or
club calls, and for at least 30 days notice of cancellation. All such
insurance policies will be issued by carriers having an A.M. Best & Company,
Inc. rating of A or higher and a financial size category of not less than X,
or if such carrier is not rated by A.M. Best & Company, Inc., having the
financial stability and size deemed appropriate by an opinion from a reputable
insurance broker. The Indenture will provide that the Company will deliver to
the Trustee on the Issuance Date and each anniversary thereafter a certificate
of an insurance agent stating that the insurance policies obtained by the
Company and its Subsidiaries comply with this covenant and the related
applicable provisions of the Collateral Documents.
Collateral Documents
The Indenture provides that neither the Company nor any of its
Subsidiaries will amend, waive or modify, or take or refrain from taking any
action that has the effect of amending, waiving or modifying any provision of
the Collateral Documents, to the extent that such amendment, waiver,
modification or action could have an adverse effect on the rights of the
Trustee or the Holders of the Notes; provided, that: (i) the Note Collateral
may be released or modified as expressly provided in the Indenture and in the
Collateral Documents; (ii) any Guarantee and pledges may be released as
expressly provided in the Indenture and in the Collateral Documents; and (iii)
the Indenture and any of the Collateral Documents may be otherwise amended,
waived or modified as set forth under the caption "-Amendment, Supplement and
Waiver."
Restriction on Payment of Management Fees
The Company shall not, directly or indirectly, pay to Casino Magic or any
of its Affiliates any Management Fee except pursuant to the Management
Agreement and in accordance with the Indenture, and in the event that the
voters in the Louisiana Referendum do not approve the continuation of
riverboat gaming in Bossier Parish and Caddo Parish, Louisiana (or, if the
voters in the Louisiana Referendum disapprove the continuation of riverboat
gaming in one but not the other of Bossier Parish or Caddo Parish, Louisiana
until the Company has obtained a determination that the outcome of the
Louisiana Referendum does not limit its ability to conduct riverboat gaming
operations at Casino Magic-Bossier City), the Company shall not, directly or
indirectly, pay any Management Fee to Casino Magic or any of its Affiliates.
No payment of Management Fees, either current or accrued, shall be made if at
the time of payment of such Management Fees, (i) a Default or an Event of
Default shall have occurred and be continuing or shall occur as a result
thereof or (ii) the Company's Fixed Charge Coverage Ratio for the Reference
Period immediately preceding the date of such payment would have been less
than 1.5 to 1.0 (calculated on a pro forma cash basis after only deducting
such fees to the extent paid in cash and not deferred for such period
including any fees deferred from a prior period to be paid in cash during such
period and not deducting any such fees to the extent deferred and not paid in
cash during such period). Any Management Fees not permitted to be paid
pursuant to this covenant will be deferred and will accrue and may be paid
only at such time that they would otherwise be permitted to be paid hereunder.
The right to receive payment of the Management Fee shall be subordinate in
right of payment to the right of the Holders of the Notes to receive payment
pursuant to the Notes. The terms of the Management Agreement cannot be amended
to increase amounts to be paid thereunder, or in any other manner which would
be adverse to the Company or the Holders of the Notes, including without
limitation, to amend the requirement that the Management Fee payable
thereunder be based on the Company's Adjusted Consolidated Cash Flow;
provided, however, that the foregoing shall not prohibit any amendment
required under any Gaming Law or by any Gaming Authority.
Additional Subsidiary Guarantees
The Indenture provides that if the Company or any of its Subsidiaries
shall acquire or create another Subsidiary after the date of the Indenture,
then such newly acquired or created Subsidiary shall execute a Guarantee and
deliver an opinion of counsel, in accordance with the terms of the Indenture.
Further Assurances
The Indenture provides that the Company will (and will cause each of its
Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, as applicable, any and all such further
acts, deeds, conveyances, security agreements, mortgages, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments as may be required from time to time in order
(i) to carry out more effectively the purposes of the Collateral Documents,
(ii) to subject to the Liens created by any of the Collateral Documents any of
the properties, rights or interests required to be encumbered thereby, (iii)
to perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Trustee any of the rights granted now or hereafter intended by the
parties thereto to be granted to the Trustee or under any other instrument
executed in connection therewith or granted to the Company under the
Collateral Documents or under any other instrument executed in connection
therewith.
SECURITY
Subject to Permitted Liens, the Notes and the Guarantees are secured by a
first lien on the Note Collateral owned by the Company or Guarantor,
respectively, whether now owned or hereafter acquired. The Note Collateral
securing the Notes includes, without limitation, and subject to Permitted
Liens (i) a pledge of the Pledged Securities and any funds deposited and held
in the Interest Reserve Account until such time as such funds are disbursed in
accordance with the terms of the Cash Collateral and Disbursement Agreement,
(ii) a pledge of the funds held in the Construction Disbursement Account,
Operating Reserve Account, and Completion Reserve Account, which proceeds will
be held in such accounts until disbursed in accordance with the terms of the
Cash Collateral and Disbursement Agreement, (iii) the fee simple interest in
all of the real property comprising Casino Magic-Bossier City, additions and
improvements and component parts related thereto, issues and profits
therefrom, furniture, fixtures, machinery and equipment forming a part thereof
or used in connection therewith, (iv) the Bossier Riverboat, the Crescent City
Riverboat and all other vessels and related improvements and personal property
related thereto held by the Company, (v) all of the Company's accounts
receivable, general intangibles, inventory and other personal property and
(vi) certain construction contracts, operating agreements, the Management
Agreement, other agreements, licenses and permits entered into by, or granted
to the Company or any Jefferson Corp. in connection with the development,
construction, ownership and operation of Casino Magic-Bossier City. Such liens
and security interests may be subordinate or junior to mechanics' liens, which
under applicable Louisiana law may have priority over the mortgage of the real
property comprising Casino Magic-Bossier City and additions, improvements and
component parts relating thereto; provided, however, that, as the Indenture
requires, the title insurance obtained for the benefit of the Holders insures
against losses from the enforcement of such mechanics' liens. In addition, the
lien of the Holders may be subordinate to, or may not include (if precluded by
the terms of such security interests) security interests granted in connection
with indebtedness incurred to purchase FF&E. Holders of the Notes will have a
preferred ship's mortgage in the Bossier Riverboat and the Crescent City
Riverboat. Secured lenders of indebtedness incurred to purchase FF&E may be
granted a limited preferred ship's mortgage in the Bossier Riverboat for the
sole purpose of perfecting such lenders' security interest in such FF&E.
Subject to the restrictions in the Indenture, including pro forma
compliance with the covenant described under the caption "-Certain
Covenants-Incurrence of Indebtedness and Issuance of Preferred Stock," the
Company is permitted to incur indebtedness to finance the costs of
constructing the Casino Magic-Bossier City Hotel. In the event that the
Company determines to incur such indebtedness on a secured basis, the
Indenture provides that (i) the Trustee will release the land on which the
hotel is to be built from the lien for the benefit of the Notes and (ii) the
Company will have the right to grant a security interest for the benefit of
the new lender in such real property and all improvements constructed thereon,
including the hotel. Under such circumstances the Holders will have no
security interest in the hotel or the land on which it is constructed.
The Jefferson Guarantee is secured by a pledge of all of the Capital
Stock of the Company and secured by a first priority security interest in
substantially all existing and future assets of such entity. In addition, the
Notes will be secured by a pledge of the Capital Stock of each Subsidiary now
or hereafter owned by the Company and of any Subsidiary Intercompany Notes
held by the Company unless such pledge would in any way jeopardize obtaining
or maintaining a Gaming License or would require the Trustee or a Holder or
beneficial owner of the Notes to be licensed, qualified or found suitable by
any applicable Gaming Authority.
So long as no Default or Event of Default shall have occurred and be
continuing, and subject to certain terms and conditions in the Indenture and
the Collateral Documents, the Company and its Subsidiaries will be entitled to
receive all cash dividends, interest and other payments made upon or with
respect to the Note Collateral pledged by them (other than interest earned on
the Pledged Securities in the Interest Reserve Account except in accordance
with the Cash Collateral and Disbursement Agreement) and to exercise any
voting and other consensual rights pertaining to the Note Collateral pledged
by them. Upon the occurrence and during the continuance of a Default or Event
of Default, (a) all rights of the Company and its Subsidiaries to exercise
such voting or other consensual rights shall cease, and all such rights shall
become vested in the Trustee which, to the extent permitted by law, shall have
the sole right to exercise such voting and other consensual rights and (b) all
rights of the Company and its Subsidiaries to receive all cash dividends,
interest and other payments made upon or with respect to the pledged
collateral will cease and such cash dividends, interest and other payments
will be paid to the Trustee, and (c) the Trustee may sell the pledged
collateral or any part thereof in accordance with the terms of the Collateral
Documents. All funds distributed under the Collateral Documents and received
by the Trustee for the benefit of the Holders of the Notes will be distributed
by the Trustee in accordance with the provisions of the Indenture.
Under the terms of the Collateral Documents, the Trustee will determine
the circumstances and manner in which the pledged collateral shall be disposed
of, including, but not limited to, the determination of whether to release all
or any portion of the pledged collateral from the Liens created by the
Collateral Documents and whether to foreclose on the pledged collateral
following a Default or Event of Default. Moreover, upon the full and final
payment and performance of all Obligations of the Company under the Indenture
and the Notes, the Collateral Documents shall terminate and the pledged
collateral shall be released. In addition, in the event that the Capital Stock
of any Subsidiary of the Company is sold and the Net Proceeds are applied in
accordance with the terms of the covenant entitled "-Repurchase at the Option
of Holders-Asset Sales," the Trustee shall release the Liens in favor of the
Trustee in the assets sold; provided, that the Trustee shall have received
from the Company an Officers' Certificate certifying that such Net Proceeds
have been or will be so applied.
The proceeds of any sale of the Note Collateral in whole pursuant to the
Indenture and the related Collateral Documents following an Event of Default
may not be sufficient to satisfy payments due on the Notes. In addition, the
ability of the Holders of the Notes to realize upon the Note Collateral may be
limited pursuant to gaming laws, in the event of a bankruptcy and pursuant to
other applicable laws, including securities laws, all as described below. See
"-Remedies Upon Default Under Notes" below, and "Risks Factors-Ability to
Realize on Collateral; Bankruptcy Considerations," "-Mechanics' Liens," and
"-Fraudulent Conveyance Considerations."
The Indenture provides that the Net Proceeds of all Asset Sales (if
unapplied Net Proceeds of Asset Sales exceed $2.0 million at any time) and the
Net Loss Proceeds of all Events of Loss of any Note Collateral other than Note
Collateral existing on the date that Casino Magic-Bossier City began Operating
(other than Permitted Investments), as well as Excess Proceeds, shall be
promptly and without any commingling deposited with the Trustee subject to a
lien in favor of the Trustee for the benefit of the Holders of the Notes
unless and until applied as permitted under the covenant described under
"-Repurchase at the Option of Holders-Asset Sales" or "-Event of Loss," as the
case may be. The Trustee shall release to the Company any Excess Proceeds or
Excess Loss Proceeds, as the case may be, that remain after making an offer to
purchase the Notes in compliance with the covenant described under
"-Repurchase at the Option of Holders-Asset Sales" or "-Event of Loss," as
the case may be. Amounts so paid to the Trustee shall be invested or released
in accordance with the provisions of the Indenture.
Certain Gaming Law Limitations
The Trustee's ability to foreclose upon the Note Collateral will be
limited by relevant gaming laws, which generally require that persons who own
or operate a casino or purchase, possess or sell gaming equipment hold a valid
gaming license. No person can hold a license in the State of Louisiana unless
the person is found qualified or suitable by the relevant Gaming Authorities.
In order for the Trustee or a purchaser at or after foreclosure to be found
qualified or suitable, such Gaming Authorities would have discretionary
authority to require the Trustee, any or all of the Holders of the Notes and
any such purchaser to file applications, be investigated and be found
qualified or suitable as an owner or operator of gaming establishments. The
applicant for qualification, a finding of suitability or licensing must pay a
filing fee and all costs of such investigation. If the Trustee is unable or
chooses not to qualify, be found suitable, or licensed to own, operate or sell
such assets, it would have to retain or sell to an entity licensed to operate
or sell such assets. In addition, in any foreclosure sale or subsequent resale
by the Trustee, licensing requirements under the relevant gaming laws may
limit the number of potential bidders and may delay any sale, either of which
events would have an adverse effect on the sale price of the Note Collateral.
Therefore, the practical value of realizing on the Note Collateral may,
without the appropriate approvals, be limited.
Certain Bankruptcy Limitations
The right of the Trustee to repossess and dispose of the Note Collateral
upon the occurrence of an Event of Default is likely to be significantly
impaired by applicable bankruptcy law if a bankruptcy proceeding were to be
commenced by or against the Company or a Jefferson Corp. prior to the Trustee
having repossessed and disposed of the Note Collateral. Under the Bankruptcy
Code, a secured creditor such as the Trustee is prohibited from repossessing
its security from a debtor in a bankruptcy case, or from disposing of security
repossessed from such debtor, without bankruptcy court approval. Moreover, the
Bankruptcy Code permits the debtor to continue to retain and to use collateral
(and the proceeds, products, offspring, rents or profits of such collateral)
even though the debtor is in default under the applicable debt instruments,
provided that the secured creditor is given "adequate protection." The meaning
of the term "adequate protection" may vary according to circumstances, but it
is intended in general to protect the value of the secured creditor's interest
in the collateral and may include, if approved by the court, cash payments or
the granting of additional security for any diminution in the value of the
collateral as a result of the stay of repossession or the disposition or any
use of the collateral by the debtor during the pendency of the bankruptcy
case. The court has broad discretionary powers in all these matters, including
the valuation of the Note Collateral. In addition, since the enforcement of
the Lien of the Trustee in cash, deposit accounts and cash equivalents (other
than the Construction Disbursement Account) may be limited in a bankruptcy
proceeding, the Holders of the Notes may not have any consent rights with
respect to the use of those funds by the Company or any of its Subsidiaries
during the pendency of the proceeding. In view of these considerations, it is
impossible to predict how long payments under the Notes could be delayed
following commencement of a bankruptcy case, whether or when the Trustee could
repossess or dispose of the Note Collateral or whether or to what extent
Holders of the Notes would be compensated for any delay in payment or loss of
value of the Note Collateral.
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
Pursuant to the Cash Collateral and Disbursement Agreement entered into
among the Company, the Trustee and First National Bank of Commerce (the
"Disbursement Agent") in connection with Casino Magic-Bossier City,
approximately $45.2 million of the net proceeds of the sale of the Series A
Notes was placed into the Cash Collateral Accounts and invested in Cash
Equivalents or Pledged Securities, to be disbursed pursuant to the Cash
Collateral and Disbursement Agreement.
Interest Reserve Account
Of such net proceeds deposited in the Cash Collateral Accounts,
approximately $7.3 million was deposited in the Interest Reserve Account and
used to purchase Pledged Securities which, upon receipt of scheduled interest
and principal payments thereon will, in the opinion of the Chief Financial
Officer of the Company as set forth in an Officer's Certificate, provide for
payment in full of the interest payments due on the Notes through February 15,
1997. The Pledged Securities are pledged by the Company to the Trustee for the
benefit of the Holders of Notes pursuant to the Cash Collateral and
Disbursement Agreement and will be held by the Disbursement Agent in the
Interest Reserve Account. Pursuant to the Cash Collateral and Disbursement
Agreement, immediately prior to the first interest payment due on the Notes,
the Disbursement Agent shall release from the Interest Reserve Account funds
sufficient to pay interest then due. In the event that any funds remain in the
Interest Reserve Account after all such interest payments are made, the
Trustee will release such funds to the Company.
Interest earned on the Pledged Securities will be added to the Interest
Reserve Account. In the event that the aggregate amount of funds and Pledged
Securities held in the Interest Reserve Account exceeds the amount sufficient
in the opinion of the Chief Financial Officer as set forth in an Officer's
Certificate to provide for payment in full of the interest payments due on the
Notes through February 15, 1997, the Disbursement Agent will deposit such
excess amount into the Construction Disbursement Account.
Operating Reserve Account
In addition, approximately $3.2 million of the net proceeds of the Note
Offering was deposited in the Operating Reserve Account. Funds held in the
Operating Reserve Account are pledged to the Trustee for the benefit of the
Holders of the Notes and invested in Cash Equivalents by the Disbursement
Agent in accordance with the Company's instructions until needed from time to
time to fund the operations of Casino Magic-Bossier City. All such funds will
be held in the Operating Reserve Account until disbursed in accordance with
the Cash Collateral and Disbursement Agreement. The Disbursement Agent will
authorize the disbursement of funds from the Operating Reserve Account only
upon the satisfaction of the disbursement conditions set forth in the Cash
Collateral and Disbursement Agreement. Such conditions generally include the
requirement that the Company deliver a certificate certifying as to, among
other things, the application of the funds to be disbursed which may include
application to payroll obligations, gaming losses and other operating expenses
at Casino Magic-Bossier City (but in no event will any such funds be permitted
to be used to pay for any construction related expenses) and the absence of an
Event of Default under the Indenture. In addition, the Cash Collateral and
Disbursement Agreement will provide (a) that funds may be disbursed from the
Operating Reserve Account only during the period from the commencement of
gaming operations at the Casino Magic-Bossier City casino, which occurred on
October 4, 1996, (b) that subsequent to the initial disbursement of funds from
the Operating Reserve Account, the Company will provide the Disbursement Agent
with an Officers' Certificate certifying that all previous disbursements from
the Operating Reserve Account were used in substantially the manner certified
by the Company and (c) after giving effect to the requested disbursement, no
more than $1.0 million in funds from the Operating Reserve Account will have
been disbursed at any one time prior to receipt of the certificate described
in subparagraph (b) above. The Cash Collateral and Disbursement Agreement also
provides that if any funds remain in the Operating Reserve Account at the time
Casino Magic-Bossier City becomes Operating and no Event of Default exists
under the Cash Collateral and Disbursement Agreement, the Disbursement Agent
shall, upon the direction of the Company, subject to certain exceptions set
forth in the Cash Collateral and Disbursement Agreement, disburse all
remaining funds, if any, in the Operating Reserve Account.
Completion Reserve Account
Approximately $5.0 million of the net proceeds of the Note Offering was
deposited in the Completion Reserve Account. Funds held in the Completion
Reserve Account are pledged to the Trustee for the benefit of the Holders of
the Notes and invested in Cash Equivalents by the Escrow Agent in accordance
with the Company's instructions until needed from time to time to ensure
completion of construction of Casino Magic-Bossier City. All such funds will
be held in the Completion Reserve Account until disbursed in accordance with
the Cash Collateral and Disbursement Agreement. The Disbursement Agent will
authorize the disbursement of funds from the Completion Reserve Account to the
Construction Disbursement Account only upon the satisfaction of the
disbursement conditions set forth in the Cash Collateral and Disbursement
Agreement. Such conditions generally include the requirement that the Company
deliver to the Disbursement Agent and the Independent Construction Consultant,
in form satisfactory to the Disbursement Agent, evidence that (a) the funds
will not be applied in violation of the terms of the Indenture, (b) such funds
will be used for the sole purpose of completion of Casino Magic-Bossier City,
(c) an explanation of the circumstances causing the cost of completing Casino
Magic-Bossier City to exceed the amounts previously forecast in the
Construction Budget therefor, and evidence that such circumstances were not
reasonably expected as of the last date of amendment of the Construction
Budget (or if none, the date of issuance of the Notes), (d) an amendment to
the Construction Budget confirming the revised estimated costs to complete
Casino Magic-Bossier City (which amendment shall satisfy the conditions for
Construction Budget amendments as provided below), and (e) evidence that after
giving effect to the requested disbursements, the funds in the Construction
Disbursement Account will be sufficient to complete Casino Magic-Bossier City
in accordance with the Construction Budget, as amended, on or before the
Operating Deadline. In addition, the Disbursement Agent shall have received
from the Independent Construction Consultant a certification stating that the
Independent Construction Consultant has reviewed such disbursement request,
that the Independent Construction Consultant has inspected Casino
Magic-Bossier City during the previous month and that the Independent
Construction Consultant concurs with certain of the certifications made by the
Company in such disbursement request. Following disbursement of funds from the
Completion Reserve Account to the Construction Disbursement Account, the
Company must comply with all requirements of the Cash Collateral and
Disbursement Agreement relating to disbursement of funds from the Construction
Disbursement Account.
Construction Disbursement Account
Approximately $29.7 million of the net proceeds of the Note Offering was
deposited in the Construction Disbursement Account, and is being held in
escrow and invested in Cash Equivalents by the Disbursement Agent in
accordance with the Company's instructions until needed from time to time to
fund the construction of Casino Magic-Bossier City. All such funds will be
held in the Construction Disbursement Account until disbursed in accordance
with the Cash Collateral and Disbursement Agreement. Subject to certain
exceptions set forth in the Cash Collateral and Disbursement Agreement, the
Disbursement Agent will authorize the disbursement of funds from the
Construction Disbursement Account for the payment of costs for the
construction of improvements only upon the satisfaction of the disbursement
conditions set forth in the Cash Collateral and Disbursement Agreement. Such
conditions generally include the requirements that the Company deliver to the
Disbursement Agent and the Independent Construction Consultant, in form
satisfactory to the Disbursement Agent, (a) certification that no Event of
Default exists under the Indenture, (b) evidence of the conformity with the
Plans of the construction undertaken to the date of the request, (c)
appropriate lien releases and title insurance endorsements assuring the
continuing priority of the lien in favor of the Holders on the Casino
Magic-Bossier City real property, and confirmation that such disbursements are
appropriate given the percentage of construction completed and the amount of
stored materials, (d) a description of the purposes to which the requested
funds will be applied following disbursement, (e) confirmation that the
Construction Budget as in effect continues to accurately portray in all
material respects all costs to be incurred in completing Casino Magic-Bossier
City and (f) evidence that after giving effect to the requested disbursement,
the funds in the Construction Disbursement Account will be sufficient to
complete Casino Magic-Bossier City (and the component parts thereof) in
accordance with the aggregate amounts (and line items) set forth in the
Construction Budget, as amended to date, on or before the Operating Deadline.
In addition, the Disbursement Agent shall have received from the Independent
Construction Consultant a certification stating that the Independent
Construction Consultant has reviewed such disbursement request, that the
Independent Construction Consultant has inspected Casino Magic-Bossier City
during the previous month and that the Independent Construction Consultant
concurs with certain of the certifications made by the Company in such
disbursement request.
In connection with the disbursement of funds from the Construction
Disbursement Account for the payment of all costs set forth in the
Construction Budget other than costs for the construction of improvements
related to Casino Magic-Bossier City, the Disbursement Agent will authorize
the disbursement of such funds only upon the satisfaction of the disbursement
conditions set forth in the Cash Collateral and Disbursement Agreement. Such
conditions generally include the requirements that the Company deliver to the
Disbursement Agent and the Independent Construction Consultant, in form
satisfactory to the Disbursement Agent, (a) certification that no Event of
Default exists under the Indenture, (b) a description of the purposes to which
the requested funds will be applied following disbursement, (c) confirmation
that, after giving effect to the requested disbursement, the remaining amounts
in the line item not yet disbursed are sufficient to cover all costs within
said line item to be paid or incurred on or before the Operating Date, (d) an
Officers' Certificate certifying that all previous disbursements for the
payment of costs set forth in the Construction Budget other than costs for the
construction of improvements related to Casino Magic-Bossier City were
disbursed in the manner certified by the Company and (e) after giving effect
to the requested disbursement, no more than $500,000 of such funds will have
been disbursed at any one time prior to receipt of the certificate described
in subparagraph (d) above. In addition, the Disbursement Agent shall have
received from the Independent Construction Consultant a certification stating
that the Independent Construction Consultant has reviewed such disbursement
request, that the Independent Construction Consultant has inspected Casino
Magic-Bossier City during the previous month and that the Independent
Construction Consultant concurs with certain of the certifications made by the
Company in such disbursement request.
The Cash Collateral and Disbursement Agreement provides that the
Construction Budget may be amended only upon the satisfaction of certain
conditions set forth in the Cash Collateral and Disbursement Agreement. Such
conditions generally include that the Company deliver to the Disbursement
Agent and the Independent Construction Consultant, in form satisfactory to the
Disbursement Agent, (a) a description of the circumstances giving rise to the
amendment, and that the circumstances were not reasonably expected as of the
date of the last amendment of the Construction Budget (or if none, the date of
issuance of the Notes), (b) evidence that after giving effect to the
amendment, the Construction Budget will in all material respects accurately
portray all costs to be incurred in completing Casino Magic-Bossier City, and
(c) evidence that after giving effect to the amendment, the funds in the
Construction Disbursement Account will be sufficient to complete Casino
Magic-Bossier City (and the component parts thereof) in accordance with the
aggregate amounts (and line items) set forth in the Construction Budget and on
or before the Operating Deadline. In addition, the Disbursement Agent shall
have received from the Independent Construction Consultant a certification
stating that the Independent Construction Consultant has reviewed such
proposed Construction Budget amendment, that the Independent Construction
Consultant has inspected Casino Magic-Bossier City during the previous month
and that the Independent Construction Consultant concurs with certain of the
certifications made in the Construction Budget amendment certification
submitted by the Company to the Disbursement Agent and the Independent
Construction Consultant. In addition, the Cash Collateral and Disbursement
Agreement will provide that construction line items may only be reduced upon
delivery to the Disbursement Agent, in form satisfactory to the Disbursement
Agent, of evidence that the completion of the work represented by said line
item will be completed for a total cost less than the amount set forth in the
Construction Budget, and that any such savings may be reallocated (by
amendment to the Construction Budget) to other line items.
In making the certifications called for above, the Independent
Construction Consultant may rely (so long as such reliance is in good faith)
upon certificates from the material contractors, architects and engineers
involved in the construction of Casino Magic-Bossier City confirming the
fundamental facts necessary for such certifications.
The Cash Collateral and Disbursement Agreement also provides that if any
funds remain in the Construction Disbursement Account or the Completion
Reserve Account on the date that Casino Magic-Bossier City is Operating (which
shall have occurred on or before the Operating Deadline) and Casino
Magic-Bossier City shall have generated Consolidated Cash Flow in an amount
equal to or greater than the amount remaining in the Construction Disbursement
Account, the Disbursement Agent shall, upon the direction of the Company,
subject to certain exceptions set forth in the Cash Collateral and
Disbursement Agreement, disburse all remaining funds, if any, in the
Completion Reserve Account to the Construction Disbursement Account and in the
Construction Disbursement Account to any account or accounts specified by the
Company.
Escrow Account
In the event that the Crescent City Riverboat is sold prior to the date
on which the voters in the Louisiana Referendum approve the continuation of
riverboat gaming in Bossier Parish and Caddo Parish, the Company shall
immediately deposit all proceeds from such sale into the Escrow Account. Funds
held in the Escrow Account will be pledged to the Trustee for the benefit of
the Holders of the Notes and invested in Cash Equivalents by the Disbursement
Agent in accordance with the Company's instructions until disbursed pursuant
to the terms of the Cash Collateral and Disbursement Agreement. The
Disbursement Agent will authorize the disbursement of funds from the Escrow
Account only upon the satisfaction of the disbursement conditions set forth in
the Cash Collateral and Disbursement Agreement. Such conditions generally
include that the Louisiana Referendum has been approved by the voters in
Bossier Parish and Caddo Parish and that the Company will use such funds
pursuant to the requirements set forth in the Indenture concerning funds
obtained by the Company due to an Asset Sale of the Crescent City Riverboat.
In the event that the continuation of riverboat gaming is not approved in the
Louisiana Referendum by the voters in Bossier Parish and Caddo Parish, the
Company will, subject to certain exceptions, make an offer to purchase Notes
pursuant to the Indenture and the funds contained in the Escrow Account shall
be used to purchase such Notes. See "-Mandatory Redemption."
Events of Default Under the Cash Collateral and Disbursement Agreement
The Cash Collateral and Disbursement Agreement also provides that an
event of default shall exist thereunder if any of the following shall occur:
(i) an Event of Default occurs and is continuing under the Indenture; (ii) the
Independent Construction Consultant, after appropriate consultation with the
Company, is unable to deliver a certificate in connection with a requested
disbursement or an amendment to the Construction Budget; (iii) the Independent
Construction Consultant reviewing prior disbursements reports an exception
within a certain amount of days after each disbursement request and such
exception continues for a period of 10 days; (iv) any representation,
warranty, certification or statement by the Company in the Cash Collateral and
Disbursement Agreement or any certificate required to be delivered therein is
untrue in any material respect on the date given or made and such
untruthfulness continues for a period of 5 business days after notice thereof;
(v) if at any time the amount remaining in the Construction Disbursement
Account or the Completion Reserve Account, is less than the amount required in
the Construction Budget to cause Casino Magic-Bossier City to be Operating on
or before the Operating Deadline and such deficiency continues for a period of
30 days; and (vi) the Company fails to deliver certain other documents
necessary to perfect the Trustee's security interest in the Construction
Disbursement Agreement and investments therein and such failure continues for
a period of 10 days. If an event of default exists under the Cash Collateral
and Disbursement Agreement, the Disbursement Agent will not be permitted to
authorize the disbursement of funds from the Construction Disbursement
Account, the Completion Reserve Account or the Operating Reserve Account or
the Escrow Account, provided that the Disbursement Agent may continue to
disburse funds from the Construction Reserve Account, the Completion Reserve
Account or the Operating Reserve Account, (a) in an amount up to $4 million if
necessary to prevent the condition of Casino Magic-Bossier City from
deteriorating or to preserve work completed on Casino Magic-Bossier City, (b)
to pay for work already completed or materials already purchased or (c) to pay
for retainage amounts if an Event of Default continues for more than 3 months.
All funds in the Cash Collateral Accounts are pledged as security for the
repayment of the Notes.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes or under any Guarantee;
provided, that payments of Contingent Interest that are permitted to be
deferred as provided in the Notes will not become due for this purpose until
such payment is required to be made pursuant to the terms of the Notes; (ii)
default in payment when due of the principal of or premium, if any, on the
Notes; (iii) failure by the Company to comply with the provisions described
under the captions "-Mandatory Redemption," "-Repurchase at the Option of
Holders-Change of Control," "-Asset Sales," "-Event of Loss," "-Certain
Covenants-Restricted Payments," "-Incurrence of Indebtedness and Issuance of
Preferred Stock," "-Merger, Consolidation or Sale of Assets" or "-Limitation
on Use of Proceeds" or certain covenants of the First Preferred Ship Mortgage
on the Bossier Riverboat or the Crescent City Riverboat; (iv) failure by the
Company for 30 days after notice to comply with any of its other agreements in
the Indenture or the Notes; (v) 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 Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the Indenture, which default (a) 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 (b) 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
$5.0 million or more; (vi) failure by the Company or any of its Subsidiaries
to pay final judgments aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days; (vii) breach by
the Company or any Guarantor of any material representation or warranty set
forth in the Collateral Documents, or failure by the Company or any Guarantor
for three business days after notice to comply with any covenant set forth in
the Collateral Documents requiring the payment of money or failure by the
Company or any Guarantor for 30 days after notice to comply with any other
covenant set forth in the Collateral Documents, or repudiation by the Company
or any Guarantor of its obligations under the Collateral Documents or the
unenforceability of the Collateral Documents against the Company or any
Guarantor for any reason; (viii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Significant Subsidiaries; (ix)
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 any Gaming
Facility of the Company or any of its Subsidiaries; (x) the failure of Casino
Magic-Bossier City to be Operating by the Operating Deadline or to remain
Operating thereafter, except as the hours of operation of Casino Magic-Bossier
City may be limited by any Gaming Authority or Gaming Law; or (xi) except as
permitted by the Indenture, any 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 Guarantor, or any Person acting on behalf of
any Guarantor, shall deny or disaffirm its obligations under its Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary of the Company or any group of Subsidiaries of the Company that,
taken together, would constitute a Significant Subsidiary of the Company, all
outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
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 Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
August 15, 2000, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to August 15, 2000, then the
premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages, if any, on, premium, if any, or the
principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company 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.
REMEDIES UPON DEFAULT UNDER NOTES
Specific rights and remedies of the Trustee, as the secured party under
the Collateral Documents, include the right of the Trustee under federal or
state law to foreclose upon and sell Note Collateral encumbered thereby and to
apply the net proceeds realized upon such Note Collateral to the Indebtedness
evidenced by the Notes in accordance with the terms of the Indenture and the
Collateral Documents. The Collateral Documents generally provide for the
application of the internal laws of the state in which the Collateral is
located or federal admiralty law, while the Indenture, the Notes and the
Guarantees of Jefferson Corp. and of any future subsidiaries of the Company
provide or will provide, with certain exceptions, for the application of the
internal laws of the state of New York. There is no certainty that the
stipulated governing law would be applied by any court with respect to the
enforcement of remedies under the Notes, the Indenture, the Guarantees, or the
Collateral Documents.
Enforcement of rights under certain of the Collateral Documents requires
that the Trustee initiate a judicial foreclosure against the Note Collateral.
In such event, the Trustee would be required to file a suit in the appropriate
local court. If the court found in favor of the Trustee, judgment of
foreclosure and order of sale would be entered, and the court would order the
sale of the affected Note Collateral, and such foreclosure would be subject to
certain notice and other procedural limitations. With respect to vessels
constituting Note Collateral, or leasehold or other interests therein, the
Trustee may be required to foreclose through a federal admiralty court
proceeding. Such a proceeding would entail compliance with notice and other
procedural requirements and could require posting of a substantial bond with
the United States Marshal. After application of proceeds of such sale to the
Indebtedness, the Trustee may be entitled to a deficiency judgment under
certain circumstances; however, there can be no assurance that the Trustee
would be successful in obtaining any deficiency judgment, what the amount of
any such judgment if obtained might be, or that the Company or the Guarantors
would be able to satisfy any such judgment, if obtained.
Due to the legal restrictions on the ability to engage in gaming
activities in gaming jurisdictions, the Trustee may incur delays or possibly
frustration in its efforts to sell all or a portion of the Note Collateral.
Operators of gaming facilities are required to be licensed by Gaming
Authorities and may be required by Gaming Authorities to file applications, to
be investigated and to be found suitable as owners or landlords of a gaming
establishment. Such requirements for approval by Gaming Authorities may delay
or preclude a sale of the Note Collateral to a potential buyer at a
foreclosure sale or sales. This may effectively limit the number of potential
bidders and may delay such sales, either of which could adversely affect the
sale price of the Note Collateral. In addition, the disposition of Note
Collateral consisting of gaming devices may be subject to the prior approval
of the applicable Gaming Authority. Moreover, the gaming industry could become
subject to different or additional regulations during the term of the Notes,
which could further adversely affect the practical rights and remedies that
the Trustee would have upon the occurrence of an event of default under the
Notes or the Indenture.
In addition to being subject to gaming law restrictions, the Trustee's
ability to foreclose upon and sell Note Collateral will be subject to the
procedural and other restrictions of state real estate law or the Uniform
Commercial Code or, in the case of gaming vessels, certain federal admiralty
law statutes. Further, certain limitations exist under federal admiralty law
statutes on the ability of non-U.S. citizens to realize upon Note Collateral
consisting of vessels documented under the laws of the United States. In
addition, the Note Collateral includes stock of a company, and may in the
future include stock of other companies, that is not publicly traded and may
only be sold in compliance with applicable Federal and state securities laws.
This may effectively limit the number of potential bidders for such stock or
other Note Collateral and may delay such sales, either of which could
adversely affect the sale price of such Note Collateral. In addition, certain
direct or indirect leasehold interests, contracts and other assets may not be
sold without the consent of certain third parties.
With regard to proceeding against any Guarantor and its assets, the
Trustee may either foreclose upon any intercompany loans made by the Company
to such Guarantor and pledged by the Company to secure the Notes or proceed
under the Guarantee of such Guarantor, or both. If the Trustee chooses to
foreclose upon intercompany loans, the necessity of first foreclosing on the
pledge of such loans might result in delay and increase the risk that a
petition for relief under bankruptcy or insolvency law could be filed by or
against any one or more of the Company and Guarantor. If, on the other hand,
the Trustee chooses to proceed by demand and foreclosure upon a Guarantee of a
Guarantor, its ability to realize upon Note Collateral could be limited by the
invocation of state-law suretyship defenses and fraudulent transfer laws.
The ability to foreclose upon and dispose of Note Collateral directly or
indirectly securing the Notes is also likely to be significantly impaired or
delayed by applicable bankruptcy laws if a bankruptcy case were to be
commenced by or against the Company or Guarantor owning the Note Collateral.
Under applicable bankruptcy laws, the Trustee and the Holders of Notes would
be prohibited from foreclosing upon, taking possession or disposing of the
Note Collateral absent bankruptcy court approval. Moreover, the Company or
such Guarantor would be permitted to retain and use Note Collateral as long as
the Trustee and the Holders of Notes are being provided "adequate protection"
in the form of a cash payment or periodic cash payments or an additional or
replacement lien or in some other form approved by the court in its
discretion. While this requirement is generally intended to protect the value
of the security, it cannot be predicted what form of "adequate protection"
might be approved by the court in the particular case. The court has broad
discretionary powers in all these matters, including the valuation of Note
Collateral. In view of these considerations, it is not possible to predict for
how long payments on the Notes would be delayed following the filing of a
bankruptcy case, whether or when the Trustee could foreclose upon or take
possession of or sell the Note Collateral or to what extent the Holders of the
Notes would be compensated for any delay in payment or loss of value of the
Note Collateral.
The Indenture provides that the Company will, and will cause each of
Guarantor to, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances,
security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination, statements, notice of
assignment, transfers, certificates, assurances and other instruments as
reasonably may be required from time to time in order (i) to carry out more
effectively the purposes of the Collateral Documents, (ii) to subject to the
Liens created by any of the Collateral Documents any of the properties, rights
or interests required to be encumbered thereby, (iii) to perfect and maintain
the validity, effectiveness and priority of any of the Collateral Documents
and the Liens intended to be created thereby and (iv) to better assure,
convey, grant, assign, transfer, preserve, protect and confirm to the Trustee
any and all rights granted or now or hereafter intended by the parties thereto
to be granted to the Trustee or the Company under the Collateral Documents, or
under any other instrument executed in connection therewith.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Company or the Guarantors, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Indenture,
any Guarantee or the Collateral Documents, as applicable, or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
and the Guarantors' obligations discharged with respect to the outstanding
Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding
Notes to receive payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages, if any, on such Notes when such payments are
due from the trust referred to below, (ii) the Company's obligations with
respect to the Notes concerning issuing temporary Notes, registration of
Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payment and money for security payments held in trust,
(iii) the rights, powers, trusts, duties and immunities of the Trustee, and
the Company's obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Indenture. In addition, the Company may, at its
option and at any time, elect to have the obligations of the Company and the
Guarantors released with respect to certain covenants that are described in
the Indenture ("Covenant Defeasance") and thereafter any omission to comply
with such obligations shall not constitute a Default or Event of Default with
respect to the Notes. In the event Covenant Defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under "Events of Default" will no longer
constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the 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
Liquidated Damages, if any, on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or
to a particular redemption date; (ii) in the case of Legal Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of the 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 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; (iii) in the case of Covenant Defeasance, the Company 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 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; (iv) 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; (v) 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
Indenture) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel 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; (vii) the Company must deliver to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders of Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (viii) the Company must
deliver to the Trustee 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.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Holder of a Note will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the
Indenture, the Notes, the Guarantees or the Collateral Documents may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Notes), and any existing default or compliance
with any provision of the Indenture or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
Without the consent of the Holders of at least 85% in aggregate principal
amount of the Notes then outstanding, an amendment or waiver may not affect
the Liens in favor of the Trustee and the Holders of the Notes created under
the Collateral Documents in a manner adverse to the Holders (other than
pursuant to the release of Note Collateral in accordance with the provisions
of the Indenture and of the applicable Collateral Documents) or release all or
substantially all of the Note Collateral.
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder): (i) reduce
the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed
maturity of any Note or alter the provisions with respect to the redemption of
the Notes (other than provisions relating to the covenants described above
under the caption "-Repurchase at the Option of Holders-Change of Control" and
"-Asset Sales," which shall require the consent of the Holders of at least
662/3% in principal amount of the Notes then outstanding), (iii) reduce the
rate of or change the time for payment of interest on any Note, (iv) waive a
Default or Event of Default in the payment of principal of or premium, or
Liquidated Damages, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration), (v) make any Note payable in money other
than that stated in the Notes, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of Holders of
Notes to receive payments of principal of, premium or Liquidated Damages, if
any, or interest on the Notes, (vii) waive a redemption payment with respect
to any Note (other than a payment required by one of the covenants described
above under the caption "-Repurchase at the Option of Holders"), or (viii)
make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of
Notes, the Company and the Trustee may amend or supplement the Indenture, the
Notes, the Guarantee or the Collateral Documents to cure any ambiguity, defect
or inconsistency, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to provide for the assumption of the Company's
and the Guarantors' obligations to Holders of Notes in the case of a merger
or consolidation, to make any change that would provide any additional rights
or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture or the Collateral Documents of any such
Holder, or to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, 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. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the SEC for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture,
the Collateral Documents and Registration Rights Agreement without charge by
writing to Casino Magic of Louisiana, Corp., 711 Casino Magic Drive, Bay St.
Louis, Mississippi, 39520, Attention: Corporate Secretary.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Series B Notes to be
resold as set forth herein will initially be issued in the form of one or more
Global Notes (collectively, the "Global Note"). The Global Note will be
deposited on the date of the closing of the sale of the Series B Notes offered
hereby (the "Closing Date") with, or on behalf of, The Depository Trust
Company (the "Depositary") and registered in the name of Cede & Co., as
nominee of the Depositary (such nominee being referred to herein as the
"Global Note Holder").
Series B Notes that are issued as described below under "-Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Upon the transfer of Certificated Securities,
such Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Series B Notes being
transferred.
The Depositary is a limited-purpose trust company that was created to
hold securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depositary's Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the Depositary's
Participants or the Depositary's Indirect Participants.
Ownership of the Notes evidenced by the Global Note will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that 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 Notes
evidenced by the Global Note will be limited to such extent. For certain other
restrictions on the transferability of the Notes, see "Notice to Investors."
So long as the Global Note Holder is the registered owner of any Notes,
the Global Note Holder will be considered the sole Holder under the Indenture
of any Notes evidenced by the Global Note. Beneficial owners of Notes
evidenced by the Global Note will not be considered the owners or Holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee thereunder.
Neither the Company nor the Trustee will have any responsibility or liability
for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes. The Company believes, however, that it is currently the
policy of the Depositary to immediately credit the accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer willing or able to act as
a depositary and the Company is unable to locate a qualified successor within
90 days or (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of Notes in the form of Certificated
Securities under the Indenture, then, upon surrender by the Global Note Holder
of its Global Note, Notes in such form will be issued to each person that the
Global Note Holder and the Depositary identify as being the beneficial owner
of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
Same-Day Settlement and Payment
The Indenture will require that payments in respect of the Notes
represented by the Global Note (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. If
requested by a Holder who holds $5.0 million or more in principal amount of
Certificated Notes, and with respect to all Global Notes, the Company will
make all payments of principal, premium, if any, interest and Liquidated
Damages, if any, by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. Secondary trading
in long-term notes and debentures of corporate Companies is generally settled
in clearing-house or next-day funds. In contrast, the Notes represented by the
Global Note are expected to be eligible to trade in the PORTAL Market and to
trade in the Depositary's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Notes will, therefore, be required
by the Depositary to be settled in immediately available funds. The Company
expects that secondary trading in the Certificated Securities will also be
settled in immediately available funds.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Registration
Rights Agreement on August 22, 1996. Pursuant to the Registration Rights
Agreement, the Company agreed to file with the SEC the Exchange Offer
Registration Statement on the appropriate form under the Securities Act with
respect to the Series B Notes. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company will offer to the Holders of Transfer
Restricted Securities pursuant to the Exchange Offer who are able to make
certain representations the opportunity to exchange their Transfer Restricted
Securities for Series B Notes. If (i) the Company is not required to file the
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any Holder of Transfer Restricted Securities
notifies the Company within the specified time period that (A) it is
prohibited by law or Commission policy from participating in the Exchange
Offer or (B) that it may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (C) that it is a broker-dealer
and owns Notes acquired directly from the Company or an affiliate of the
Company, the Company will file with the SEC a Shelf Registration Statement to
cover resales of the Notes by the Holders thereof who satisfy certain
conditions relating to the provision of information in connection with the
Shelf Registration Statement. The Company will use its best efforts to cause
the applicable registration statement to be declared effective as promptly as
possible by the SEC. For purposes of the foregoing, "Transfer Restricted
Securities" means each Note until (i) the date on which such Note has been
exchanged by a person other than a broker-dealer for a New Note in the
Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange
Offer of a Note for a New Note, the date on which such New Note is sold to a
purchaser who receives from such broker-dealer on or prior to 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 Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the SEC on or prior to 60 days
after the Closing Date, (ii) the Company will use its best efforts to have the
Exchange Offer Registration Statement declared effective by the SEC on or
prior to 100 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company
will commence the Exchange Offer and use its best efforts to issue on or prior
to 30 business days after the date on which the Exchange Offer Registration
Statement was declared effective by the SEC, Series B Notes in exchange for
all Notes tendered prior thereto in the Exchange Offer and (iv) if obligated
to file the Shelf Registration Statement, the Company will use its best
efforts to file the Shelf Registration Statement with the SEC on or prior to
30 days after such filing obligation arises (and in any event within 190 days
after the Closing Date) and to cause the Shelf Registration to be declared
effective by the SEC on or prior to 60 days after such obligation arises.
Although the Company has filed this registration statement to satisfy the
obligations described above, there can be no assurance that such registration
statement will become effective. If (a) the Company fails to file any of the
Registration Statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the SEC on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Company fails to Consummate the Exchange Offer 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 Agreement
(each such event referred to in clauses (a) through (d) above a "Registration
Default"), then the Company will pay Liquidated Damages to each Holder of
Notes, with respect to the first 90-day period immediately following the
occurrence of such Registration Default in an amount equal to $.05 per week
per $1,000 principal amount of Notes held by such Holder. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Notes with respect to each subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Notes. All
accrued Liquidated Damages will be paid by the Company on each Damages Payment
Date 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 Liquidated Damages will
cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer 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 set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" 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.
"Adjusted Consolidated Cash Flow" means, with respect to the Company for
any period, the Consolidated Cash Flow of the Company for such period plus an
amount equal to the aggregate Management Fees paid or accrued by the Company
for such period, to the extent such Management Fees were deducted in computing
Consolidated Net Income for purposes of computing such Consolidated Cash Flow.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"Asset Sale" means, for any person, (i) the sale, transfer, lease,
conveyance or other disposition (or series thereof) (including, without
limitation, by merger or consolidation or by exchange of assets whether by
operation of law or otherwise or by way of a sale and leaseback) of any assets
of such person, including, without limitation, assets consisting of Capital
Stock held by such person) other than a disposition of inventory in the
ordinary course of business; provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "-Repurchase at the Option of
Holders-Change of Control" and/or the provisions described above under the
caption "-Certain Covenants-Merger, Consolidation or Sale of Assets" and not
by the provisions of the Asset Sale covenant, (ii) the issue or sale by the
Company or any of its Subsidiaries of Equity Interests of any of the Company's
Subsidiaries, in the case of clauses (i) or (ii), for net proceeds of, or with
a fair market value in excess of $250,000 with respect to each disposition or
series of related dispositions and (iii) an Event of Loss with respect to any
assets of the Company or any of its Subsidiaries other than Note Collateral
existing on the date that Casino Magic-Bossier City becomes Operating.
Notwithstanding the foregoing, (i) a transfer of assets by the Company to a
Substantially Owned Subsidiary of the Company or by a Substantially Owned
Subsidiary of the Company to the Company or to another Substantially Owned
Subsidiary of the Company, (ii) an issuance of Equity Interests by a
Substantially Owned Subsidiary of the Company to the Company or to another
Substantially Owned Subsidiary of the Company, (iii) a Restricted Payment that
is permitted by the covenant described above under the caption "-Certain
Covenants-Restricted Payments," (iv) the sale of a Restricted Investment and
(v) any Event of Loss with respect to Note Collateral comprising Casino
Magic-Bossier City on the date that it becomes Operating, in each case, will
not be deemed to be an Asset Sale.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) 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).
"Bossier Riverboat" means that certain riverboat gaming vessel "Mary's
Prize" Official No. 1028011 purchased by the Company from Boyd Gaming
Corporation pursuant to that certain Buy-Sell Agreement dated August 2, 1996.
"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, participation, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership 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.
"Cash Collateral Accounts" means collectively, the Construction
Disbursement Account, the Completion Reserve Account, the Interest Reserve
Account, the Operating Reserve Account and the Escrow Account.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral
and Disbursement Agreement among the Company, the Trustee, and the
Disbursement Agent, in connection with Casino Magic-Bossier City.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Keefe 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) investment
funds investing solely in securities of the types described in clauses (ii),
(iii), (iv) or (v) above.
"Casino Magic" means Casino Magic Corp., a Minnesota corporation.
"Casino Magic-Bossier City" means the pending project to develop,
construct, equip and open the Casino Magic-Bossier City dockside riverboat
casino, substantially as described in this Prospectus, which will be located
on an approximately 23-acre site along the Red River in Bossier City,
Louisiana, and which will consist of, among other things, (i) a recently
constructed riverboat which measures 254 feet long and 78 feet wide, and
contains approximately 58,000 square feet of interior space, including 30,000
square feet of gaming space with approximately 984 slot machines and 50 table
games, (ii) a 37,000 square foot entertainment pavilion, and related amenities
(including a 350-seat buffet restaurant, a gift shop, a bar and lounge area
and a stage area designed to showcase live entertainment, including dance
productions, bands and individual performers with an open seating area that
will accommodate up to 300 people) and (iii) covered parking for 1,550 cars,
and any future developments or improvements in connection therewith. For
purposes of this definition, the phrase "substantially as described" with
respect to any of the numbers herein shall be deemed to have been satisfied if
the actual number is at least 85% of the respective number listed herein, in
each case, with the same overall qualities and amenities as provided in the
Construction Budget and Plans.
"Casino Magic-Bossier City Hotel" means the planned future hotel with at
least 325 rooms and related amenities adjacent to Casino Magic-Bossier City,
including without limitation, the real property on which such hotel is
located.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) under the Exchange Act) is or becomes the beneficial owner (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person will be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time) directly or indirectly of more than 30% of the
total combined voting power of the outstanding Voting Stock of Casino Magic,
if the Permitted Holders (i) beneficially own a lower percentage of the
combined voting power of the outstanding Voting Stock of Casino Magic than
such other person or group on such date and (ii) do not have the then
effective right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Casino Magic;
(b) Casino Magic consolidates with, or merges with or into, another person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of Casino Magic and its Subsidiaries taken as
a whole to any person, or any person consolidates with, or merges with or
into, Casino Magic, pursuant to a transaction in which the outstanding Voting
Stock of Casino Magic is converted into or exchanged for cash, securities
(other than Voting Stock of Casino Magic) or other property; (c) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Boards of Directors of Casino Magic and the Company (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the stockholders of Casino Magic or the Company, as
the case may be, was approved by a vote of 662/3% of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of Casino Magic or
the Company, as the case may be, then in office; (d) any order, judgment or
decree shall be entered against Casino Magic or the Company decreeing the
dissolution or split up of Casino Magic and such order shall remain
undischarged or unstayed for a period in excess of 60 days; (e) the sale,
assignment, conveyance, transfer, lease or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole to any person other than Casino Magic or a Wholly Owned
Subsidiary of Casino Magic; or (f) at any time the Company or Jefferson Corp.
ceases to be a Wholly Owned Subsidiary of Jefferson Corp. or Casino Magic,
respectively.
"Collateral Documents" means, collectively, that certain Mortgage by and
between the Company and the Trustee, that certain First Preferred Ship
Mortgage on the whole of the Bossier Riverboat by and between the Company and
the Trustee, that certain First Preferred Ship Mortgage on the whole of the
Crescent City Riverboat, that certain Security Agreement by and between the
Company and the Trustee, that certain Security Agreement by and between
Jefferson Corp. and the Trustee, that certain Stock Pledge and Security
Agreement by and between Jefferson Corp. and the Trustee, that certain
Accounts Pledge Agreement by and between the Company, the Disbursement Agent
and the Trustee, that certain Collateral Assignment by and between the Company
and the Trustee, the Cash Collateral and Disbursement Agreement, Uniform
Commercial Code financing statements, or any other agreements, instruments,
documents or filings that evidence, set forth or limit the Lien of the Trustee
in the Note Collateral (as such terms are defined in the Indenture).
"Company" means Casino Magic of Louisiana, Corp., a Louisiana
corporation.
"Completion Reserve Account" means that certain account to be maintained
by the Disbursement Agent pursuant to the terms of the Cash Collateral and
Disbursement Agreement, into which approximately $5.0 million of the proceeds
from the sale of the Notes was deposited.
"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 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 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, to the extent that any such
expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of such Person and its Subsidiaries for such period to the
extent that such depreciation or amortization was deducted in computing such
Consolidated Net Income, in each case, on a consolidated basis and determined
in accordance with GAAP, plus (v) preopening expenses, if any, related to
Casino Magic-Bossier City, to the extent that such preopening expenses were
included in computing such Consolidated Net Income. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization of, a Subsidiary of the referent Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only to the
extent (and in 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 governmental
approval (that has not been obtained), and without direct or indirect
restriction 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 Interest Expense" means, with respect to any person for any
period, without duplication, (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of 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) and (ii) the consolidated interest expense of
such Person and its Subsidiaries that was capitalized during such period, and
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries (whether or not such
Guarantee or Lien is called upon), and (iv) to the extent not included above,
Contingent Interest, whether paid or accrued, to the extent such expense was
deducted in computing Consolidated Net Income.
"Consolidated Net Income" means, with respect to any 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 (but not loss) of any Person that is not a
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 referent Person or a Wholly Owned Subsidiary thereof that
is a Guarantor, (ii) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions
by that 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 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, and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Construction Budget" means itemized schedules setting forth on line item
basis all of the costs (including financing costs) estimated to be incurred in
connection with the financing, design, development, construction, equipping
and opening of Casino Magic-Bossier City, as such schedules are delivered to
the Disbursement Agent on the Issue Date and as amended from time to time in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
"Construction Disbursement Account" means that certain account, to be
maintained by the Disbursement Agent pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $29.7 million
of the proceeds from the sale of the Series A Notes was deposited.
"Crescent City Riverboat" means the riverboat gaming vessel "Crescent
City Queen," Official Number 1028319, measuring approximately 430 feet by 100
feet with a total area of approximately 88,000 square feet spread across three
decks, owned by the Company on the date of the Indenture.
"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.
"Disbursement Agent" means First National Bank of Commerce.
"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), 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 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Escrow Account" means that certain account to be maintained by the
Disbursement Agent pursuant to the terms of the Cash Collateral and
Disbursement Agreement.
"Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal), any of the following: (i) any loss, destruction
or damage of such property or asset; (ii) any 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 (iii) any settlement in
lieu of clause (ii) above or with respect to the institution of any
proceedings for any such condemnation, seizure, taking, confiscation or
requisition.
"Excess Cash Flow" means, with respect to the Company for any Reference
Period, the Consolidated Cash Flow of the Company and its Subsidiaries for
such Reference Period, minus (i) provision for taxes based on income or
profits of the Company and its Subsidiaries for such Reference Period, to the
extent that such provision for taxes was included in computing such
Consolidated Cash Flow, minus (ii) consolidated interest expense of the
Company and its Subsidiaries for such Reference Period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of 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), to the
extent that any such expense was deducted in computing such Consolidated Cash
Flow, minus (iii) up to $1.5 million in combined capital expenditures of the
Company and its Subsidiaries that are actually made during such Reference
Period (excluding any capital expenditures made with the proceeds from the
sale of the Notes), minus (iv) principal payments on Indebtedness permitted to
be incurred pursuant to the covenant described under the caption "-Certain
Covenants-Incurrence of Indebtedness and Issuance of Preferred Stock," minus
(v) non-interest payments in respect of Capital Lease Obligations, in each
case, on a consolidated basis and determined in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues 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 or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable Reference Period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
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
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, and (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 referent Person or any of its Subsidiaries following
the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, without
duplication, the sum of (i) the Consolidated Interest Expense and (ii) the
product of (a) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Subsidiary) on any series of preferred stock or
Disqualified Stock 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.
"FF&E" means furniture, fixtures or equipment used in the ordinary course
of the business of the Company and its Subsidiaries.
"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 from time to time.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America 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, the Louisiana
Gaming Control Board and any other agency with authority to regulate any
gaming operation (or proposed gaming operation) owned, managed or operated by
the Company or any of its Subsidiaries.
"Gaming Facility" means any tangible vessel, building or other structure
used or expected to be used to enclose space in which gaming business is
conducted and (i) wholly or partially owned, directly or indirectly, by the
Company or any of its Subsidiaries or (ii) any portion or aspect of which is
managed or used, or expected to be managed or used, by the Company or any of
its Subsidiaries.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions
to which the Company, any of its Subsidiaries or any of Guarantors is, or may
at any time after the date of the Indenture, be subject.
"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct gaming activities of the
Company or any of its Subsidiaries, including without limitation, all such
licenses granted under the Louisiana Riverboat Economic Development and Gaming
Control Act and regulated under the Louisiana Gaming Control Law, the
regulations promulgated pursuant to each such law, and other applicable
federal, state, foreign or local laws.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money
(including accrued and unpaid Contingent Interest) or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Subsidiary Guarantee by such Person of any
indebtedness of any other Person.
"Independent Construction Consultant" means that certain independent
construction consultant to be retained in connection with the construction of
Casino Magic-Bossier City.
"Interest Reserve Account" means that certain account, to be maintained
by the Disbursement Agent pursuant to the terms of the Cash Collateral and
Disbursement Agreement, into which approximately $7.3 million of the proceeds
from the sale of the Notes were deposited and used to purchase the Pledged
Securities.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates), including, without limitation,
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; provided that an acquisition of
assets, Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company shall not be deemed to
be an Investment. If the Company or any Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
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.
"Issue Date" means the closing date for the sale and original issuance of
the Series A Notes.
"Jefferson Corp." means Jefferson Casino Corporation, a Louisiana
corporation.
"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).
"Louisiana Referendum" means the local option elections scheduled to be
held on November 5, 1996 on a parish-by-parish basis in the State of Louisiana
to determine whether to continue to permit existing forms of gaming authorized
by law to be conducted in each such parish.
"Management Agreement" means that certain Management Agreement dated as
of the date of the Indenture among Casino Magic, the Manager and the Company
relating to the license of the Casino Magic name and the management of Casino
Magic-Bossier City, as in effect on the date of the Indenture.
"Management Fees" means any management fees payable to a subsidiary of
Casino Magic for services rendered pursuant to the Management Agreement.
"Manager" means Casino Magic Management Services, Inc., a wholly owned
subsidiary of Casino Magic.
"Minimum Facilities" means, with respect to Casino Magic-Bossier City, a
riverboat casino with at least 810 operating slot machines and 40 operating
table games (but in no event less than 1,050 total gaming positions), a 35,000
square foot entertainment pavilion, related amenities (including a buffet
restaurant, a gift shop, a bar and lounge area, and a stage area with an open
seating area) and covered parking for at least 1,255 cars.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Event of Loss, including,
without limitation, insurance proceeds from condemnation awards or damages
awarded by any judgment, net of the direct costs in recovery of such Net Loss
Proceeds (including, without limitation, legal, accounting, appraisal and
insurance adjuster fees and any relocation expenses incurred as a result
thereof), amounts required to be applied to the repayment of Indebtedness (to
the extent, in the case of revolving credit Indebtedness, such Indebtedness is
permanently reduced) secured by a Lien on the asset or assets that were the
subject of such Event of Loss, and any taxes paid or payable as a result
thereof.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its 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 (after taking into account any available tax credits or deductions and
any tax sharing arrangements), amounts required to be applied to the repayment
of Indebtedness (to the extent, in the case of revolving credit Indebtedness,
such Indebtedness is permanently reduced) 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.
"Note Collateral" means all assets, now owned or hereafter acquired, of
the Company or any Guarantor pledged or assigned to the Trustee in the
Collateral Documents, which will initially include all real estate,
improvements and all personal property owned by the Company, all accounts held
by or for the benefit of the Company, in each case with certain exceptions,
and the Capital Stock of the Company.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Operating" means, with respect to Casino Magic-Bossier City, the time
that (i) all Gaming Licenses have been granted and have not been revoked or
suspended, (ii) all Liens (other than the Liens created by the Collateral
Documents or Permitted Liens) related to the construction of Casino
Magic-Bossier City have been paid or, if payment is not yet due or if such
payment is contested in good faith by the Company, sufficient funds remain in
the Construction Disbursement Account to discharge such Liens or such Liens
have been bonded with bonds in form and substance sufficient to satisfy such
Liens, (iii) the contractor, the project architect and the Independent
Construction Consultant of Casino Magic-Bossier City shall have delivered a
certificate to the Trustee certifying that Casino Magic-Bossier City is
complete in accordance with the Plans therefor and all applicable building
laws, ordinances and regulations, (iv) Casino Magic-Bossier City is in a
condition (including installation of furnishings, fixtures and equipment) to
receive guests in the ordinary course of business, (v) gaming and other
operations in accordance with applicable law are open to the general public
and are being conducted at Casino Magic-Bossier City, (vi) a permanent or
temporary certificate of occupancy has been issued for Casino Magic-Bossier
City by the parish in Louisiana in which Casino Magic-Bossier City will
operate, (vii) a notice of completion of Casino Magic-Bossier City has been
duly recorded, (viii) the Bossier Riverboat has been documented by the U.S.
Coast Guard in the name of the Company and the U.S. Coast Guard has issued a
final Certificate of Inspection for the Bossier Riverboat.
"Operating Deadline" means April 30, 1997.
"Operating Hotel" means, with respect to the Casino Magic-Bossier City
Hotel, the time that (i) all Liens (other than Permitted Liens) related to the
construction of the Casino Magic-Bossier City Hotel have been paid or, if
payment is not yet due or if such payment is contested in good faith,
sufficient funds have been escrowed to discharge such Liens or such Liens have
been bonded with bonds in form and substance sufficient to satisfy such Liens,
(ii) the project manager and the project architect shall have delivered a
certificate to the Trustee certifying that the Casino Magic-Bossier City Hotel
is complete in accordance with the plans therefor and all applicable building
laws, ordinances and regulations, (iii) the Casino Magic-Bossier City Hotel is
in a condition (including installation of furnishings, fixtures and equipment)
to receive guests in the ordinary course of business, and (iv) hotel
operations are open to the general public and are being conducted at the
Casino Magic-Bossier City Hotel.
"Operating Reserve Account" means that certain account, to be maintained
by the Disbursement Agent pursuant to the terms of the Cash Collateral and
Disbursement Agreement, into which approximately $3.2 million of the proceeds
from the sale of the Notes were deposited.
"Operating Year" means (i) the period beginning on the date that gaming
operations commence at the Casino Magic-Bossier City casino through December
31, 1997 and (ii) thereafter, each succeeding full fiscal year of the Company.
"Permitted Holders" means (i) Mr. Marlin F. Torguson, Mr. Allan J.
Kokesch and Mr. Wayne K. Lund, (ii) any lineal descendants of any person
described in the preceding clause (i), (iii) the spouse of any person
described in the preceding clauses (i) or (ii), (iv) any controlled Affiliate
of any person described in the preceding clauses (i), (ii) or (iii) and (v)
any trust solely for the benefit of any person described in clauses (i) , (ii)
or (iii) of this definition.
"Permitted Investments" means (a) any Investment in the Company or in any
Substantially Owned Subsidiary of the Company that is evidenced by Capital
Stock or Subsidiary Intercompany Notes that are pledged to the Trustee as
Collateral for the Notes; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Subsidiary of the Company in a Person that is
evidenced by Capital Stock or Subsidiary Intercompany Notes that are pledged
to the Trustee as Collateral for the Notes, if as a result of such Investment
(i) such Person becomes a Substantially Owned Subsidiary of the Company and a
Guarantor that is engaged in the same or a similar line of business as the
Company and its Subsidiaries were engaged in on the date of the Indenture or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Substantially Owned Subsidiary of the Company that is a
Guarantor and that is engaged in the same or a similar line of business as the
Company and its Subsidiaries were engaged in on the date of the Indenture; (d)
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 caption "-Repurchase at the Option of Holders-Asset
Sales"; and (e) deposits and accounts with, and certificates of deposit issued
by, domestic banks of recognized standing and having capital, surplus and
undivided profits of at least $25 million (which are not affiliated with the
Company) doing business in the jurisdictions in which the Company or any
Subsidiary does business.
"Permitted Liens" means (i) Liens in favor of the Company; provided, that
if such Liens are on any Note Collateral, that such Liens are either
collaterally assigned to the Trustee or subordinate to the Lien in favor of
the Trustee securing the Notes or any Guarantee; (ii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with
the Company or any Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do
not extend to any assets other than those of the Person merged into or
consolidated with the Company or such Subsidiary; (iii) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary
of the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any assets other than
those of the Subsidiary so acquired; (iv) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the date of the Indenture; (vi) Liens for taxes, assessments
or governmental charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings promptly instituted
and diligently concluded, provided that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor; (vii) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in
the ordinary course of business and with respect to amounts not yet delinquent
or being contested in good faith by an appropriate process of law, and for
which a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made, and, with respect to such Liens arising in
connection with Casino Magic-Bossier City, for which the Company has obtained
the title insurance endorsements required under the Cash Collateral and
Disbursement Agreement; (viii) Liens on FF&E to secure Indebtedness permitted
by clause (vi) of the second paragraph of the covenant described under the
caption "-Certain Covenants-Incurrence of Indebtedness and Issuance of
Preferred Stock"; (ix) Liens on assets comprising the Casino Magic-Bossier
City Hotel to secure secured Indebtedness permitted by clause (vii) of the
second paragraph of the covenant described under the caption "-Certain
Covenants-Incurrence of Indebtedness and Issuance of Preferred Stock";
provided, that the Holder of such Lien enters into a reciprocal easement
agreement in the form attached as an exhibit to the Indenture; (x) Liens
securing obligations in respect of the Indenture, the Notes or Guarantees;
(xi) pledges or deposits in the ordinary course of business to secure lease
obligations or nondelinquent obligations under workers' compensation,
unemployment insurance or similar legislation; (xii) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with the
business of the Company or any Subsidiary incurred in the ordinary course of
business; and (xiii) Liens arising from filing UCC financing statements for
precautionary purpose in connection with true leases of personal property that
are otherwise permitted under the Indenture and under which the Company or any
Subsidiary is lessee.
"Permitted Refinancing Debt" means any Indebtedness of the Company or any
of its 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 Company or any of its Subsidiaries; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of related prepayment
penalties, fees 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; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred by the Company.
"Permitted Securities" means, with respect to an Asset Sale of the
Crescent City Riverboat, (i) notes or other obligations issued by the
transferee to the Company that (A) mature no later than the date that the
Notes mature, (B) bear interest at a rate no lower than the rate per annum
equal to 350 basis points over the average rate for United States Treasury
Securities of comparable maturity, (C) are secured by a first priority ship
mortgage in favor of the Issuer and (D) are issued by an Company whose Fixed
Charge Coverage Ratio for its most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding
the date of such issuance is not less than 1.75 to 1.0 and (ii) voting equity
securities that are (A) issued by an Company that (1) has a class of equity
securities that is traded on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq Stock Market, (2) has equity market value as of the
date of the consummation of such Asset Sale of $100,000,000 or more, provided,
that such voting equity securities constitute no more than 3% of the total
outstanding voting equity securities of such Issuer, and (3) has senior
unsecured debt securities rated in a ratings category equal to or higher than
the Notes, as rated by both of Moody's Investors Service and Standard & Poor's
Ratings Group and (B) registered and freely tradeable by the Company under
applicable state and federal securities laws and listed for trading on a
national securities exchange or the Nasdaq Stock Market.
"Plans" means the plans and specifications for Casino Magic-Bossier City,
as delivered to the Company by the architect for the Casino Magic-Bossier City
on or before the date of the Indenture, including without limitation,
preliminary plans so delivered, and as finalized, amended, supplemented or
otherwise modified from time to time in accordance with the terms of the Cash
Collateral and Disbursement Agreement.
"Pledged Securities" means the securities purchased by the Company with a
portion of the proceeds from the sale of the Notes, which shall consist of
Government Securities, deposited or to be deposited in the Interest Reserve
Account.
"Project Costs" means, with respect to the development, construction and
opening of the Casino Magic-Bossier City Hotel, the aggregate costs required
to complete such development, construction and opening in accordance with the
budget and the plans therefor and applicable legal requirements, as set forth
in an Officers' Certificate submitted to the Trustee, setting forth in
reasonable detail all amounts theretofore expended in connection with such
development, construction and opening, including direct costs related thereto
such as construction management, architectural, engineering and interior
design fees, site work, utility installations and hook-up fees, construction
permits, certificates and bonds, land acquisition costs, costs of furniture,
fixtures, furnishings, machinery and equipment, non-construction supplies and
pre-opening payroll, but excluding principal or interest payments on any
Indebtedness (other than interest which is required to be capitalized in
accordance with GAAP, which shall be included in determining Project Costs).
"Reference Period" means, with respect to any Person, the four full
fiscal quarters (or, with respect to the Company, such lesser number of full
fiscal quarters as have ended after the commencement of gaming operations at
Casino Magic-Bossier City casino) ended immediately prior to any date upon
which any determination is to be made.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"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 Exchange Act, as such Regulation is in effect on
the date hereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Intercompany Notes" means the intercompany notes senior to
any subordinated debt of, and pari passu with, all existing Senior Debt of the
issuing Subsidiary, issued by Subsidiaries of the Company in favor of the
Company to evidence advances by the Company, in each case, in the form
attached as an exhibit to the Indenture.
"Substantially Owned Subsidiary" of any Person means a Subsidiary of such
Person at least 80% 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.
"Tax Sharing Agreement" means the Tax Allocation Agreement, dated as of
October 14, 1993, as in effect on the Issue Date except for the contemplated
addition of Subsidiaries, among Casino Magic Finance Corp., Casino Magic,
Biloxi Casino Corp., Mardi Gras Casino Corp. and each of the other existing or
future direct or indirect domestic Subsidiaries of Casino Magic.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the Holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors, managers
or trustees of any persons (irrespective of whether or not, at the time, stock
of any other class or classes will have, or might have, voting power by reason
of the happening of any contingency).
"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.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
consequences expected to result from the Exchange Offer. This summary is
based on current provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury Regulations, judicial authority, and current
administrative rulings and pronouncements of the Internal Revenue Service (
the "Service"). There can be no assurance that the Service will not take a
contrary view, and no ruling from the Service has been or will be sought.
Legislative, judicial, or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may or may not be
retroactive and could affect the tax consequences to Holders.
The tax treatment of a Holder of Notes may vary depending upon such
Holder's particular situation. Certain Holders (including, but not limited
to, certain financial institutions, insurance companies, broker-dealers,
tax-exempt organizations, foreign corporations, persons who are not citizens
or residents of the United States, and persons holding the Notes as part of a
"straddle," "hedge" or "conversion transaction") may be subject to special
rules not discussed below. This discussion is limited to Holders who will
hold the Notes as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Code.
EXCHANGE
The exchange of an Old Note for a New Note pursuant to the Exchange Offer
should be treated as a modification of the Series A Notes that does not
constitute a material change in its terms. In that event, (i) a New Note
would be treated as a continuation of the corresponding Old Note, (ii) an
exchanging Holder would not recognize any gain or loss on the exchange, (iii)
the holding period for the New Note would include the holding period for the
Old Note and (iv) the basis of the New Note would be the same as the basis of
the Old Note.
The Exchange Offer will result in no Federal income tax consequences to a
nonexchanging Holder.
INVESTORS CONSIDERING THE EXCHANGE OFFER SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE EXCHANGE OF THE
NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN
TAX LAWS.
RECOGNITION OF INTEREST INCOME
On June 11, 1996, the Service issued final Treasury Regulations (the
"Final Regulations") governing the treatment of debt instruments issued on or
after August 13, 1996 that provide for one or more contingent payments.
Because the Notes provide for one or more contingent payments of
interest, the Final Regulations will apply to the Notes. Pursuant to the Final
Regulations, the Company has constructed a projected payment schedule for the
Notes and Holders generally must recognize interest income on a constant yield
basis (similar to the method prescribed for including original issue discount
("OID") in income) based on the projected payment schedule, with certain
adjustments if actual payments differ from projected payments.
In particular, the projected payment schedule has been determined by
including all noncontingent payments and the "expected value" of all
contingent payments on the Notes. The projected payment schedule must produce
the "comparable yield," which is the yield at which the Company would issue a
fixed rate debt instrument with terms and conditions similar to those of the
Notes. The Company intends to take the position that the "comparable yield" is
14.5%. The amount of interest that accrues each accrual period is the product
of the "comparable yield" and the Note's "adjusted issue price" at the
beginning of each accrual period (generally, the six month period ending on
each interest payment date). The "adjusted issue price" of a Note is equal to
the price first paid for a substantial amount of the Notes, increased by
interest previously accrued on the Note (determined without adjustments), and
decreased by the amount of any noncontingent payments and the projected amount
of any contingent payments previously made on the Note. Except for adjustments
made for differences between actual and projected payments, the amount of
interest included in income by a Holder of a Note is the sum of the "daily
portions" of interest income with respect to the Note for each day during the
taxable year (or portion thereof) on which such Holder held such Note. The
"daily portions" of interest income are determined by allocating to each day
in any accrual period a ratable portion of the interest income allocable to
that accrual period. If actual payments differ from projected payments, then
Holders will generally be required in any given taxable year either to include
additional interest in gross income (in the case the actual payments exceed
projected payments in such taxable year) or to reduce the amount of interest
income otherwise accounted (in the case the actual payments are less than the
projected payments in such taxable year).
If the Notes are sold or otherwise disposed of when there are remaining
contingent payments under the projected payment schedule, then any gain
recognized upon such sale or other disposition will be ordinary interest
income. Any loss recognized will be ordinary loss to the extent the Holder's
total interest inclusions on a Note exceed the total amount of ordinary loss
the Holder took into account pursuant to the adjustments described in the
second preceding sentence.
Thus, under the rules described in the preceding paragraph, based upon
the "comparable yield" and "expected value" used to determine the projected
payment schedule, Holders of Notes may be required to include amounts in
income prior to the receipt of cash payments attributable to such income. The
Company will provide to Holders the projected payment schedule for the Notes.
Holders are strongly urged to consult their tax advisors with respect to the
application of the contingent payment rules described above to the Notes.
SALE, RETIREMENT OR OTHER TAXABLE DISPOSITION
Except as provided for above, a Holder in general will recognize gain or
loss upon the sale, redemption, retirement, or other taxable disposition of
such Note in an amount equal to the difference between (i) the amount of cash
and the fair market value of property received in exchange therefor (except to
the extent attributable to the payment of accrued interest or original issue
discount, which generally will be taxable to a Holder as ordinary income) and
(ii) the Holder's adjusted tax basis in such Note. A Holder's tax basis in a
Note generally will be equal to the price paid for such Note, increased by the
amount of original issue discount, if any, included in gross income prior to
the date of disposition, and decreased by the amount of any cash payments of
such original issue discount on such Note received prior to disposition. To
the extent not treated as ordinary income or loss as described above, any gain
or loss recognized on the sale, redemption, retirement, or other taxable
disposition of a Note generally will be capital gain or loss. Any such capital
gain or loss generally will be long-term capital gain or loss if the Note had
been held for more than one year.
LIQUIDATED DAMAGES
The Company intends to take the position that the Liquidated Damages, if
any, described above under "Description of Notes-Registration Rights;
Liquidated Damages" will be taxable to the Holder as ordinary income in
accordance with the Holder's method of accounting for federal income tax
purposes. The Service may take a different position, however, which could
affect the timing of both the Holder's income and the Company's deduction with
respect to the Liquidated Damages.
BACKUP WITHHOLDING
A Holder of Notes may be subject to backup withholding at the rate of 31%
with respect to interest paid on, original issue discount accrued on and gross
proceeds from a sale or other disposition of, the Notes unless (i) such Holder
is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (ii) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A Holder of Notes who does not provide the Company with his
or her correct taxpayer identification number may be subject to penalties
imposed by the Service.
The Company will report to the Holders of the Notes and the Service the
amount of any "reportable payments" (including any original issue discount
accrued on the Notes) and any amount withheld with respect to the Notes during
the calendar year.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Series B Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with any resale of Series B Notes
received in exchange for Series A Notes where such Series A Notes were
acquired as a result of market-making activities. The Company has agreed that
for a period of one year from 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. In addition, until ___________, 1997
(90 days from the date of this Prospectus), all dealers effecting transactions
in the Series B Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Series B Notes
by broker-dealers. Series B Notes received by broker-dealers for their own
account pursuant to the Exchange Offer 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 Series B Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing 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 Series B Notes. Any
broker-dealer that resells Series B Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Series B Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Series B 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 as required, 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 from the Expiration Date, the Company will send
a reasonable number of 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 Company will pay all the expenses
incident to the Exchange offer (which shall not include the expenses of any
Holder in connection with resales of the Series B Notes). The Company has
agreed to indemnify Holders of the Notes, including any broker-dealers
participating in the Exchange Offer, against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters regarding the Series B Notes and the Exchange Offer
will be passed upon for the Company by Akin, Gump, Strauss, Hauer & Feld,
L.L.P., San Antonio, Texas.
EXPERTS
The financial statements included in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CONTENTS PAGES
- ------------------------------------------------------------ -------
Report of Independent Public Accountants F-2
Financial Statements:
Consolidated Balance Sheet as of June 30, 1996 F-3
Consolidated Statement of Cash Flows for the period
May 13, 1996 (date of inception) through June 30, 1996 F-4
Notes to Consolidated Financial Statements F-5
Exhibit I-Consolidating Balance Sheet as of June 30, 1996 I-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jefferson Casino Corporation:
We have audited the accompanying consolidated balance sheet of Jefferson
Casino Corporation (a Louisiana corporation in the development stage and a
wholly owned subsidiary of Casino Magic Corp.) and subsidiary (see Note 1) as
of June 30, 1996 and the related consolidated statement of cash flows for the
six-month period then ended. These financial statements and the exhibit
referred to below are the responsibility of Jefferson's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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 audit provides 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 Jefferson Casino
Corporation and subsidiary as of June 30, 1996, and the results of their
development stage activities and their cash flows for the six-month period
then ended, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The consolidating balance sheet as of
June 30, 1996 (Exhibit I) is presented for purposes of additional analysis and
is not a required part of the basic financial statements. This information has
been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
July 30, 1996 (except with
respect to certain matters
discussed in Note 5,
as to which the date is
October 4, 1996)
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED BALANCE SHEET
JUNE 30,
1996
------------
ASSETS
--------
Current assets:
Cash and cash equivalents $ -
Prepaid expenses 125,070
-----------
Total current assets 125,070
-----------
Property and equipment:
Land and improvements 12,792,619
Crescent City Riverboat 30,650,575
Furniture and equipment 9,476,783
Construction in progress 892,416
-----------
53,812,393
Less accumulated depreciation and amortization -
-----------
Total property and equipment, net . 53,812,393
-----------
Other long-term assets:
Deferred gaming license cost 16,214,011
Debt issuance costs 15,381
Preopening costs 478,943
Deposits and other 362
-----------
Total other long-term assets . 16,708,697
-----------
$70,646,160
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt $ 2,277,254
Accounts payable 977,564
Accrued interest 648,823
Advances from affiliated companies 621,348
-----------
Total current liabilities 4,524,989
-----------
Long-term debt, net of current maturities 45,195,770
-----------
Commitments and contingencies
Common stock, no par value, 10,000 shares authorized,
1,000 shares issued and outstanding -
Additional paid-in capital 20,925,401
-----------
Total shareholder's equity 20,925,401
-----------
$70,646,160
===========
See notes to consolidated financial statements.
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996
Cash flows from development stage activities:
Net income $ -
(Increase) in prepaid expenses (107,150)
-----------
Net cash provided (used) by development
stage activities (107,150)
-----------
Cash flows from investing activities:
Payments for the acquisitions of property and equipment (624,572)
Payments for the acquisition of Crescent City Riverboat (70,944)
Payments for the acquisition of gaming license (15,000,000)
Expenditures for preopening costs (368,220)
Other (362)
-----------
Net cash used in investing activities (16,064,098)
-----------
Cash flows from financing activities:
Proceeds from advances from affiliated companies 621,348
Capital contributions received 15,550,000
Other (100)
-----------
Net cash provided by financing activities 16,171,248
-----------
Net increase (decrease) in cash and cash equivalents -
Cash and cash equivalents, beginning of period -
-----------
Cash and cash equivalents, end of period $ -
===========
SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental schedule of non-cash investing and financing activities:
Property and equipment financed with long-term
debt or capital contributions $21,551,757
Crescent City Riverboat financed with long-term debt 30,254,598
Construction in progress and preopening costs
included in accounts payable 977,564
Gaming license acquisition financed with long-term debt 1,042,070
See notes to consolidated financial statements.
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION:
On May 13, 1996 ("Inception"), Jefferson Casino Corporation, a Louisiana
corporation and a wholly owned subsidiary of Casino Magic Corp. ("Casino
Magic"), commenced development stage activities by acquiring all of the
outstanding capital stock of Crescent City Capital Development Corporation, a
Louisiana corporation. Immediately following the acquisition, the name of
Crescent City Capital Development Corporation ("Crescent City") was changed to
Casino Magic of Louisiana, Corp. ("Louisiana Corp."). The consolidated
financial statements include the accounts of Jefferson Casino Corporation
("Jefferson Corp.") and Louisiana Corp., its wholly owned subsidiary. All
significant intercompany accounts and transactions have been eliminated.
Jefferson Corp., together with its consolidated subsidiary, is referred to as
"Jefferson." Jefferson, through Louisiana Corp., is developing a new dockside
riverboat casino and entertainment complex in Bossier City, Louisiana ("Casino
Magic-Bossier City") which is anticipated to open in the fall of 1996. See
Note 5.
Prior to Inception, Jefferson had no business activities and Crescent
City was a wholly owned subsidiary of Capital Gaming International, Inc. with
which Jefferson Corp. had no affiliation. Crescent City obtained a gaming
license from the State of Louisiana and on April 4, 1995, began operations on
a riverboat casino, the Crescent City Queen (the "Crescent City Riverboat"),
docked on the Mississippi River at New Orleans, Louisiana. On June 9, 1995
Crescent City ceased gaming operations and subsequently converted an
involuntary bankruptcy proceeding to a voluntary petition under Chapter 11 of
the U.S. Bankruptcy Code in the United States Bankruptcy Court. A plan of
reorganization was developed, and was confirmed by the U.S. Bankruptcy Court
on April 29, 1996 (the "Plan of Reorganization"). Pursuant to the Plan of
Reorganization, Crescent City was discharged from substantially all of its
liabilities prior to the acquisition. The purchase of the outstanding capital
stock of Crescent City by Jefferson Corp. was effected as part of the Plan of
Reorganization. Although the substance of the transaction was an acquisition
of certain assets, the acquisition was structured as a stock purchase to
satisfy Louisiana gaming license requirements. Crescent City had discontinued
all gaming activities after only 65 days of operations in the New Orleans
market and its only significant assets consisted of the Crescent City
Riverboat, a Louisiana gaming license, and the furniture, fixtures and gaming
equipment located on the Crescent City Riverboat. As a result of the foregoing
factors, management believes that the financial position and operating results
of Crescent City prior to the acquisition are not meaningful and are therefore
not presented because Jefferson will be operating in a different market, with
a different vessel and facility, different management and a different name and
marketing theme.
The original agreement to acquire Crescent City was entered into by
Jefferson Corp. and C-M of Louisiana, Inc., the latter being another wholly
owned subsidiary of Casino Magic. C-M of Louisiana, Inc. was the fee owner of
approximately 20 acres of land with 900 feet of shoreline on the Red River in
Bossier City, Louisiana (the property that will be used as the gaming site for
Casino Magic-Bossier City). Another wholly owned subsidiary of Casino Magic,
Coastal Land of Florida, Inc., held a 99-year lease on the Casino
Magic-Bossier City property. Casino Magic had acquired C-M of Louisiana, Inc.
and Coastal Land of Florida, Inc. on October 26, 1995 in anticipation of
obtaining a gaming license and establishing gaming operations at the Bossier
City property. Immediately prior to or as part of the acquisition of Crescent
City, the lease was canceled and C-M of Louisiana, Inc. was merged into
Jefferson Corp. As a result, when the acquisition of Crescent City was
completed, Jefferson Corp. held all ownership interests in the Bossier City
property and all of the capital stock of Crescent City.
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
PREOPENING COSTS:
Preopening costs are initially capitalized and then expensed when the
related business commences operations. From Inception to date, the Company has
been developing the gaming and entertainment complex in Bossier City, and as
such, all normal operating costs have been capitalized as preopening costs.
INCOME TAXES:
Income taxes are accounted for in accordance with provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." Under the asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for future tax consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
RECENT PRONOUNCEMENTS:
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles to be held and used be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Additionally, long-lived assets and
certain identifiable intangible assets to be disposed of are required to be
reported at the lower of carrying amount or fair value, less selling costs.
SFAS No. 121 is effective for fiscal years beginning after December 15, 1995.
The adoption of this statement will not have a material impact on the
financial statements of Jefferson.
CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES:
Gaming regulation licensing. Jefferson's ability to conduct gaming
operations in the State of Louisiana depends on the continued licensability or
qualification of Casino Magic, Jefferson Corp. and Louisiana Corp. under
Louisiana Gaming Regulations. Such licensing and qualifications will be
reviewed periodically by the gaming authorities in Louisiana.
Competition. The gaming industry is extremely competitive and Jefferson
will face competition from developments in both the Bossier City/Shreveport
area and other jurisdictions.
Substantial leverage and ability to service debt. Following the
consummation of the anticipated debt offering of $115,000,000 aggregate
principal amount of first mortgage notes (see Note 5), Jefferson will be
highly leveraged, with substantial debt service in addition to construction
and operating expenses.
Construction risks. Any construction project entails significant
construction risks, including, but not limited to, cost overruns, delays in
receipt of governmental approvals, shortages of materials or skilled labor,
labor disputes, unforeseen
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
environmental or engineering problems, work stoppages, fire and other natural
disasters, construction scheduling problems and weather interferences, any of
which, if it occurred, could delay construction or result in a substantial
increases in costs to Jefferson. Such risks may be compounded by Jefferson's
decision to construct Casino Magic-Bossier City on an accelerated schedule.
Referendum regarding continuation of legalized gaming in Louisiana. The
State of Louisiana will hold a referendum on November 5, 1996. On a
parish-by-parish basis, the referendum will give the voters in each parish
where gaming, including riverboat gaming, is now authorized the option to
accept or reject, individually, each of the various forms of gaming, including
riverboat gaming, now authorized by law to be conducted in such parish. If the
voters in the parish where Jefferson intends to operate reject riverboat
gaming, Jefferson's Louisiana gaming license will remain in effect for
approximately four years and ten months, beginning on the first day of gaming
operations at Casino Magic-Bossier City.
Pervasiveness 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 disclosures 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.
2. PROPERTY AND EQUIPMENT AND OTHER ASSETS:
Property and equipment are stated at cost. Depreciation will be computed
using the straight-line method over the estimated useful lives of the property
and equipment. Normal repairs and maintenance will be charged to expense when
incurred. Expenditures which materially extend the useful life of property and
equipment will be capitalized.
The Crescent City Riverboat is stated at its estimated fair value.
Included under other assets is "Deferred gaming license cost." Deferred
gaming license costs represent the estimated fair value of the Louisiana
gaming license, an asset acquired in conjunction with the purchase of Crescent
City. This cost will be amortized on a straight-line basis over twenty five
years, commencing at the time gaming operations begin at Casino Magic-Bossier
City.
The balances associated with these costs are comprised of the cost to
acquire Crescent City, additional costs incurred to operate and maintain the
Crescent City Riverboat and capitalized interest. Jefferson Corp. acquired
Crescent City for $50.0 million, of which $15.0 million was paid in cash and
the remainder was financed through the issuance of $35.0 million in long-term
notes (discussed in Note 3 below). The acquisition of Crescent City by
Jefferson Corp. was accounted for as a purchase.
The Crescent City Riverboat is currently being used to store Louisiana
Corp.'s gaming equipment and is located in a shipyard in Morgan City,
Louisiana. Louisiana Corp. anticipates selling the Crescent City Riverboat,
although management has not announced an intention to do so.
The allocation of the fair value of the acquired assets are subject to
revisions within a one-year period from the date of acquisition based on
subsequent events in accordance with the principles of purchase accounting.
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
Interest is capitalized during construction at the Company's weighted
average interest rate. Interest is also capitalized on deferred gaming license
cost as the license is an integral part of the riverboat casino and
entertainment complex under development. For the period from Inception through
June 30, 1996, approximately $428,000 and $172,000 of interest cost was
capitalized related to property and equipment and deferred gaming license
cost, respectively. No cash interest was paid during the period from Inception
to June 30, 1996.
3. LONG-TERM DEBT:
Long-term debt consists of the following:
JUNE 30,
1996
-----------
Note payable, bank(a) $ 1,700,000
Equipment note(b) 3,973,024
Louisiana Land Note(c) 6,800,000
Louisiana Notes(d) 35,000,000
-----------
47,473,024
Less current maturities (2,277,254)
-----------
$45,195,770
===========
_____________
(a) Note collateralized by gaming equipment. The first payment is due 60
days following the opening of Jefferson's gaming facility. The note is payable
in thirty-six monthly payments of $53,463.49, including interest at prime plus
1/4% (8.5% at June 30, 1996).
(b) Note collateralized by gaming equipment. The first payment is due 60
days following the opening of Jefferson's gaming facility. The note is payable
in thirty-six monthly payments of $135,788.17, including interest at prime
plus 1% (9.25% at June 30, 1996).
(c) Note collateralized by land (the "Louisiana Land Note"). The first
payment of $800,000 principal amount plus accrued interest is due within 60
days following the opening of Jefferson's gaming facility. The remaining
$6,000,000 shall be paid in fifty-eight monthly installments of $118,873.04,
including interest, beginning thirty days after the initial payment. The
Louisiana Land Note bears interest at 5.8%.
(d) In effecting the purchase of Crescent City, Jefferson Corp. caused
Louisiana Corp. to issue $35,000,000 in 111/2% senior secured notes (the
"Louisiana Notes"). The Louisiana Notes were issued under an indenture dated
May 13, 1996 (the "Louisiana Indenture"), between Louisiana Corp. as the
Company, Jefferson Corp. as Jefferson Corp. and First Trust National
Association, St. Paul, Minnesota, as the trustee (the "Louisiana Indenture
Trustee"). The Louisiana Indenture Trustee also acts as the "Paying Agent" and
registrar for the Louisiana Notes. The Louisiana Notes accrue interest at the
rate of 111/2% per annum, compounded semi-annually, and are due three years
following the "Commencement Date" which is the earlier of November 9, 1996 or
the date that Jefferson's casino in Bossier City opens for gaming operations.
The Louisiana Notes will also come due as a result of an adverse State of
Louisiana action as defined in the Louisiana Indenture. Interest is payable
quarterly on the 15th day following each fiscal quarter of Jefferson.
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
The Louisiana Notes are collateralized by a first security interest in
the Crescent City Riverboat which is evidenced by a ship's mortgage, a first
security interest in substantially all other assets of Louisiana Corp., except
for furniture, fixtures and equipment on hand as of the date of the Louisiana
Indenture, and cash arising from operations. The Louisiana Notes are
guaranteed by Jefferson Corp., a first security interest in land evidenced by
a mortgage, the outstanding capital stock of Louisiana Corp. and substantially
all other assets of Jefferson Corp. So long as neither Louisiana Corp. nor
Jefferson Corp. is in default under the Louisiana Indenture, Louisiana Corp.
is permitted under the Louisiana Indenture to sell or lease the Crescent City
Riverboat, and utilize the proceeds thereof to acquire, lease or construct a
substitute boat which can be used by Casino Magic-Bossier City.
Until such time as the principal balance of the Louisiana Notes is
$17,500,000 or less, on a quarterly basis, along with each quarterly interest
payment, Jefferson must deliver to the Louisiana Indenture Trustee the Excess
Cash Flow (as defined in the Louisiana Indenture) of Jefferson generated
during the prior fiscal quarter.
The Louisiana Notes are redeemable by Louisiana Corp. in whole or in part
beginning at face value within one year following the Commencement Date.
Louisiana Notes redeemed during the second and third years following the
Commencement Date are redeemable at a premium over face value which increases
linearly over that two year period from 0% to 20%, prorated daily over the 730
day period. Louisiana Notes redeemed as the result of the failure of the
Holder thereof to obtain a finding of suitability will be redeemed at face
value.
The Louisiana Indenture contains certain covenants, including, among
others, a limitation on future indebtedness with certain exceptions.
Maturities of long-term debt, as of June 30, 1996, are as follows:
PERIOD ENDING JUNE 30,
----------------------
1997 $ 2,277,254
1998 3,061,953
1999 38,309,246
2000 1,998,526
2001 1,356,243
Thereafter 469,802
-----------
$ 47,473,024
Less: Current portion (2,277,254)
-----------
$ 45,195,770
===========
The fair value of Jefferson's long-term debt approximates its carrying
value at June 30, 1996.
4. RELATED PARTY TRANSACTIONS:
As Jefferson is in the development stage, no revenues have yet been
generated with which to pay preopening costs. Preopening costs to date have
been advanced by Casino Magic and affiliated companies and such advances are
<PAGE>
JEFFERSON CASINO CORPORATION
AND ITS SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
classified as advances from affiliated companies in the accompanying balance
sheet. These advances will be converted to a contribution of capital from
Casino Magic in connection with the Offering (see Note 5).
5. SUBSEQUENT EVENTS:
In August 1996, the Company entered into a management agreement (the
"Management Agreement") with Casino Magic and a wholly owned subsidiary of
Casino Magic (the "Manager") for a term of 10 years. In consideration for the
license of the "Casino Magic" name and the services provided under the
Management Agreement, Jefferson has agreed to pay a management fee equal to
10% of adjusted consolidated cash flow, as defined in the Management
Agreement. Payment of the management fee will be subject to the indenture with
respect to the First Mortgage Notes. Jefferson's obligation to pay the
management fee will terminate if the Louisiana referendum rejects gaming in
the parish that Jefferson will operate, although in such event the Manager
will continue to be obligated to provide management services.
In July 1996, Louisiana Corp. entered into a vessel purchase agreement
with an unrelated entity for the acquisition of a riverboat on which Casino
Magic-Bossier City's dockside gaming operations will be conducted. The
purchase price of $20.0 million was paid in cash in August 1996, upon the
receipt by Louisiana Corp. of the proceeds of the Offering. On July 30, 1996,
Jefferson Corp. acquired an additional three acres of land adjacent to the 20
acre site, all of which will be used as the gaming site. The purchase price of
$900,000 was paid in cash, with the proceeds from an advance from Casino Magic
of the same amount.
In August 1996, Louisiana Corp. completed an offering (the "Offering") of
$115.0 million aggregate principal amount of first mortgage notes due 2003
(the "First Mortgage Notes"). The First Mortgage Notes are guaranteed on a
senior secured basis by Jefferson Corp. The Louisiana Notes and the Louisiana
Land Note were repaid with a portion of the net proceeds from the Offering.
On August 22, 1996, Jefferson Corp. contributed 20 acres of land with 900
feet of shoreline on the Red River in Bossier City, Louisiana (the property
that Casino Magic-Bossier City is operating on) to Louisiana Corp. Jefferson
Corp. had costs associated with the land of approximately $12,800,000 which
has been treated as additional paid-in capital to Louisiana Corp. After the
completion of this transaction, Jefferson Corp.'s only remaining asset is its
investment in Louisiana Corp.
On October 4, 1996, Louisiana Corp. began gaming operations, using a
temporary facility in Bossier City, Louisiana.
<PAGE>
EXHIBIT I JEFFERSON CASINO CORPORATION
AND SUBSIDIARY
CASINO MAGIC OF LOUISIANA, CORP.
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1996
ASSETS
Jefferson Louisiana
Corp. Corp. Eliminations Consolidated
---------- ----------- ------------ ------------
Current assets:
Cash and cash equivalents $ - $ - $ - $ -
Prepaid expenses - 125,070 - 125,070
---------- ----------- ------------ ------------
Total current assets - 125,070 - 125,070
---------- ----------- ------------ ------------
Property and equipment:
Land and improvements 12,792,619 - - 12,792,619
Crescent City Riverboat - 30,650,575 - 30,650,575
Furniture and equipment - 9,476,783 - 9,476,783
Construction in progress - 892,416 - 892,416
---------- ----------- ------------ ------------
12,792,619 41,019,774 - 53,812,393
Less accumulated depreciation - - - -
---------- ----------- ------------ ------------
Total property and
equipment, net 12,792,619 41,019,774 - 53,812,393
---------- ----------- ------------ ------------
Other long-term assets:
Investment in subsidiary 15,070,945 - (15,070,945) -
Deferred gaming license cost - 16,214,011 - 16,214,011
Debt issuance costs - 15,381 - 15,381
Preopening costs - 478,943 - 478,943
Deposits and other - 362 - 362
----------- ------------ ------------ ------------
Total other long-
term assets 15,070,945 16,708,697 (15,070,945) 16,708,697
----------- ------------ ------------ ------------
$27,863,564 $ 57,853,541 $(15,070,945) $70,646,160
=========== ============ ============= ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities
long-term debt $ 1,345,796 $ 931,458 $ - $ 2,277,254
Accounts payable - 977,564 - 977,564
Accrued interest 63,268 585,555 - 648,823
Advances from affiliated
companies 74,895 546,453 - 621,348
----------- ------------ ------------ ------------
Total current
liabilities 1,483,959 3,041,030 - 4,524,989
Long-term debt, net of
current maturities 5,454,204 39,741,566 - 45,195,770
----------- ------------ ------------ ------------
Commitments and contingencies
Shareholder's equity:
Common stock $0.01 par,
10,000 shares
authorized, 1,000
shares issued and
outstanding - 1 (1) -
Additional paid-in
capital 20,925,401 15,070,944 (15,070,944) 20,925,401
----------- ------------ ------------ ------------
Total shareholder's
equity 20,925,401 15,070,945 (15,070,945) 20,925,401
----------- ------------ ------------ ------------
$27,863,564 $57,853,541 $(15,070,945) $70,646,160
=========== ============ ============= ===========
See notes to consolidated financial statements.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE NOTES OFFERED BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER WILL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
____________________________
TABLE OF CONTENTS
PAGE
Summary ................................... 1
Risk Factors............................... 9
The Exchange Offer......................... 19
Use of Proceeds............................ 20
Capitalization............................. 22
Selected Financial Data.................... 23
Management's Discussion and Analysis
of Financial Condition and Results of
Operations.............................. 24
Business................................... 27
Regulatory Matters......................... 36
Management................................. 41
Principal Shareholders..................... 49
Certain Relationships and Related
Transactions............................ 50
Description of Notes....................... 51
Certain Federal Income Tax
Considerations.......................... 95
Plan of Distribution....................... 97
Notice to Investors........................ 98
Legal Matters.............................. 100
Independent Public Accountants............. 100
Index to Financial Statements.............. F-1
___________________________
PROSPECTUS
___________________________
Offer to Exchange $1,000 principal amount of its 13% Series B First Mortgage
Notes due 2003 with Contingent Interest which have been registered under the
Securities Act for each $1,000 principal amount of its outstanding 13% Series
A First Mortgage Notes due 2003 with Contingent Interest
CASINO MAGIC OF LOUISIANA, CORP.
_________________________________, 1996
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 28. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 83 of the Louisiana Business Corporation Law ("LBCL") provides in part
that a corporation may indemnify any director, officer, employee or agent of
the corporation against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her
in connection with any action, suit or proceeding to which he or she is or was
a party or is threatened to be made a party (including andy action, suit or
proceeding to which he or she is or was party or is threatened to be made a
party (including any action by or in the right of the corporation), if such
action arises out of his or her acts o behalf of the corporation and he or she
acted in good faith and not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had not reasonable
cause to believe his or her conduct was unlawful.
The indemnification provisions of the LBCL are not excludsive; however, no
corporation may indemnify any person for willful or intentional misconduct. A
corporation has the power to obtain and maintain insurance, or to create a
form of self-insurnace on behalf of any person who is or was acting for the
corporation, regardless of whether the corporation has the legal authority to
indemnify the insured person against such liability.
The Registrant's Articles of Incorporatoin and By-laws provide for
indemnification for directors, officers, employees and agents or former
directors, officers, employees and agents of Corporation to the full extent
perrmitted by Louisiana law.
The Registrant's may obtain an insurance policy covering the liability of its
directors and officers for actions taken in their official capacity.
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 provision or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------
3.1 Amended and Restated Certificate of Incorporation of Casino Magic of
Louisiana, Corp.
3.2** By-laws of Casino Magic of Louisiana, Corp. (the "Company")
3.3 Certificate of Incorporation of Jefferson Casino Corporation.
3.4 By-laws of Jefferson Casino Corporation.
4.1 Form of the Company's 13% First Mortgage Notes due 2003 with
Contingent Interest in the aggregate principal amount of $115,000,000.
4.2 Form of Guarantee issued on August 22, 1996 by Jefferson Casino
Corporation.
4.3 Indenture dated as of August 22, 1996 by and among the Company, First
Union Bank of Connecticut, as Trustee, and the Guarantors named therein, for
the Company's $115,000,000 of 13% First Mortgage Notes due 2003 with
contingent interest.
4.4 Registration Rights Agreement dated as of August 22, 1996 by and among
the company, the Guarantors named therein and the Initial Purchasers named
therein.
4.5 Cash Collateral and Disbursement Agreement dated August 22, 1996 by
and among the Company, First Union Bank of Connecticut, as Trustee, and First
National Bank of Commerce, as disbursement agent.
4.6 Security Agreement dated as of August 22, 1996 by and between First
Union Bank of Connecticut, as Trustee, and the Company, as Guarantor.
4.7 Stock Pledge and Security Agreement dated as of August 22, 1996 by and
between First Union Bank of Connecticut, as Trustee, and Jefferson Casino
Corporation, as Pledgor.
4.8 Security Agreements dated as of August 22, 1996 by and between First
Union Bank of Connecticut, as Trustee, and Jefferson Casino Corporation.
4.9 First Preferred Ship Mortgages dated as of August 22, 1996 executed in
favor of First Union Bank of Connecticut, as Trustee, by the Company.
4.10 First Preferred Ship Mortgages dated as of August 22, 1996 executed
in favor of First Union Bank of Connecticut, as Trustee, by the Company.
4.11 Mortgage of the Company dated as of August 22, 1996 executed in favor
of First Union Bank of Connecticut, as Trustee.
4.12** Cash Collateral and Disbursement Agreement.
4.13** Form of Accounts Pledge Agreement.
4.14 Note Purchase Agreement dated August 16, 1996.
4.15 Collateral Assignment dated August 22, 1996.
5.1 Legal Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
10.1 Management Agreement
10.2 Tax-Sharing Agreement
21 List of Subsidiaries
23.1 Consent of Arthur Andersen, L.L.P
24** Powers of Attorney of certain directors
25.1 Statement of Eligibility and Qualification on Form T-1 under the
trust Indenture Act of 1939 of First Union Bank of Connecticut, as Trustee
under the Indenture relating to the 13% First Mortgage Notes due 2003 with
contingent interest.
27 Financial Data Schedule (filed electronically only)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
99.5 Guidelines of Certification of Taxpayer Identification Number on Form
W-9
** To be filed by admendment
<PAGE>
(b) Financial Statement Schedules
None.
All schedules are omitted because the required information is not present
in amounts sufficient to require submission of the schedule or because the
information required is included in the financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, 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 that:
(1) For purposes of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the securities
Act of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein and this offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) For the purpose of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized , in the City of Bay St. Louis, State of Mississippi on the 21st
day of October, 1996.
CASINO MAGIC OF LOUISIANA, CORP.
By : /s/ James E. Ernst
---------------------------------
James E. Ernst
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
SIGNATURE TITLE DATE
- ---------------------------- --------------------------- ----------------
/s/ Marlin F. Torguson Chairman of the Board October 21, 1996
- ----------------------------
/s/ James E. Ernst President and Chief October 21, 1996
- ---------------------------- Executive Office (principal
executive officer)
/s/ Jay S. Osman Chief Financial Officer, October 21, 1996
- ---------------------------- Executive Vice President
and Treasurer (principal
financial and accounting
officer)
Allen J. Kokesch Director October 21, 1996
- ----------------------------
/s/ Roger H. Frommelt Director October 21, 1996
- ----------------------------
/s/ E. Thomas Welch Director October 21, 1996
- ----------------------------
Wayne K. Lund Director October 21, 1996
- ----------------------------
AMENDMENT TO ARTICLES OF INCORPORATION
OF
CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION
STATE OF LOUISIANA :
:
PARISH OF ORLEANS :
BEFORE ME, the undersigned authority, personally came and appeared EDWARD
M. TRACY, President, and WILLIAM S. PAPAZIAN, Assistant Secretary of and
acting for CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION, a corporation
organized and existing under the laws of the State of Louisiana, who declare,
that pursuant to the Unanimous Written Consent by all shareholders of this
corporation held on the _______ day of _____________, 1996, a certified copy
of said Unanimous Consent being attached hereto, that they do now appear for
the purpose of effecting an amendment to the Articles of Incorporation, as
follows:
I.
The article entitled "FIRST" shall be amended to reflect the following:
FIRST: The name of the corporation shall be:
CASINO MAGIC OF LOUISIANA, CORP.
They further declare that the original date of incorporation was
June 9, 1993.
II.
That in lieu of a meeting and vote of shareholders, the sole shareholder
of the corporation has given written consent to said amendment in accordance
with the provisions of R.S. 12:76 La. Rev. Stats., 1950.
THUS DONE AND SIGNED in my office in the City of _______________, County
of _____________________, State of _________________, on this ______ day of
May, 1996, in the presence of the undersigned competent witnesses and me,
Notary Public, after due reading of the whole.
WITNESSES:
______________________________ ____________________________________
EDWARD M. TRACY, President
______________________________ ____________________________________
WILLIAM S. PAPAZIAN,
Asst. Secretary
__________________________________________
NOTARY PUBLIC
My commission expires: _______________________
<PAGE>
UNANIMOUS WRITTEN CONSENT
OF THE SOLE SHAREHOLDER
OF
CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION
***********
The undersigned, constituting all of the shareholders of the corporation
known as CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION, a Louisiana
corporation, do hereby consent to the adoption of the following resolution
effective immediately:
RESOLVED that Edward M. Tracy, President, and William S. Papazian, Asst.
Secretary, are hereby authorized to amend the Articles of Incorporation as
follows:
I.
The article entitled "FIRST" shall be amended to reflect the following:
FIRST: The name of the corporation shall be:
CASINO MAGIC OF LOUISIANA, CORP.
They further declare that the original date of incorporation was
June 9, 1993.
RESOLVED that Edward M. Tracy, President, and William S. Papazian, Asst.
Secretary, are authorized to execute any and all documents necessary or
incidental for the amendment to the Articles of Incorporation.
THUS DONE EFFECTIVE this ________ day of ________________, 1996.
CAPITAL GAMING INTERNATIONAL, INC.
BY: ______________________________________
Edward M. Tracy, President
ARTICLES OF INCORPORATION OF
JEFFERSON CASINO CORPORATION
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BE IT KNOWN, on this 26th day of February 1993, personally came and
appeared before me, the undersigned Notary Public, the subscriber hereto, of
the full age of majority, who declared to me, in the presence of the
undersigned competent witnesses, that, availing himself of the provisions of
the Louisiana Business Corporation Law (Title 12, Chapter 1, Louisiana Revised
Statutes of 1950 as may be codified and amended), he does hereby organize
himself, his successors and assigns, into a Corporation in pursuance of that
law, under and in accordance with the following articles of incorporation.
ARTICLE I.
NAME
The name of the Corporation is Jefferson Casino Corporation.
ARTICLE II.
OBJECT AND PURPOSE
The object and purpose for which this Corporation is organized is to
engage, either for its own account or the account of others, as either agent
or principal, in any lawful activity for which Corporations may be formed
under the provisions of the Louisiana Business Corporation Law (Title 12,
Chapter 1, Louisiana Revised Statutes of 1950 as may be codified and amended);
and to the extent prohibited thereby to enter upon and to engage in any kind
of business of any nature whatsoever in any other state of the United States
of America, any foreign nation, and any territory of any country to the extent
permitted by the laws of such other sate, nation or territory. It shall have
all such power as is not repugnant to law.
ARTICLE III.
AUTHORIZED CAPITAL
A. The total authorized capital stock of this Corporation is 10,000
shares, to be issued with No Par Value.
B. Without the necessity of action by the shareholder, shares of
stock may be issued by the Corporation from time to time by the Board of
Directors. Any and all shares so issued, if the consideration fixed for such
shares is paid, shall be deemed fully paid stock, and not liable to any
further call or assessment, and the holder of such shares shall not be liable
for any further payment thereon. All or any part of the authorized capital
stock may be issued or sold from time to time for not less than the par value,
in the case of par value stock, or for not less than the consideration fixed
by the Board of Directors, in the case of no par value stock. Stock may be
given in exchange for cash, services rendered to the Corporation, or in
exchange for property transferred to the Corporation. The capital stock of
this Corporation shall be fully paid and nonassessable and when issued shall
be represented by certificates signed by the president or by a vice president
together with the signature of a secretary or a secretary-treasurer.
C. Each holder of any of the shares of the capital stock of the
Corporation shall be entitled to a preemptive right to purchase or to
subscribe, in proportion to the number of shares he holds with respect to the
number of shares outstanding, any or all of the following: (a) any newly
authorized shares issued by reason of an increase in the authorized capital
stock of the Corporation, whether the stock shall be issued for cash,
property, or in exchange for any other lawful consideration; (b) treasury
stock which has been issued and then required by the Corporation, (c) stock
authorized by the Corporation but as yet unissued; and (d) stock offered for
sale to satisfy any option or conversion rights.
ARTICLE IV.
DIRECTORS
A. The Board of Directors shall be charged with the management of all
of the affairs of the Corporation and shall have authority to exercise, in
addition to the powers and authority expressly conferred upon it, all such
powers of the Corporation and all such other lawful acts and things which the
Corporation or its shareholders might do, unless such acts or things are
prohibited or directed or required to be exercised or done by the stockholders
or officers of the Corporation, by applicable statute, or by the articles of
incorporation, or by the bylaws, or by shareholders' agreement.
B. Any director absent from a meeting of the board or any committee
thereof, may be represented by any person who holds said absent director's
proxy and said person may cast the absent director's vote.
ARTICLE V.
INCORPORATORS
The names and post office address of the incorporator is as follows:
Paul S. West
9th Floor One American Place
Baton Rouge, Louisiana 70825
ARTICLE VI.
CAPITAL SURPLUS AND DIVIDENDS
The Board of Directors shall have such power and authority with respect
to capital, surplus and dividends, including allocation, increases, reduction,
utilization, distribution and payment as is permitted and provided in Sections
61, 62 and 63 of the Louisiana Business Corporation Law or other applicable
law.
ARTICLE VII.
PURCHASE AND REDEMPTION OF SHARES
The Corporation may purchase or redeem its own share in the manner and on
the conditions permitted and provided in Section 55 of the Business
Corporation Law or other applicable law, and as may be authorized by the Board
of Directors; and shares so purchased may be reissued and disposed of as
authorized by law, or may be cancelled and the capital stock reduced, as the
Board of Directors may, from time to time, determine, in accordance with law.
ARTICLE VIII.
REVERSION OF UNCLAIMED DIVIDENDS,
RECLASSIFIED STOCK OR REDEMPTION PRICE
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, which are not claimed by the shareholders entitled thereto
within ninety (90) days after the dividend or redemption price became payable
or the shares became issuable despite reasonable efforts by the Corporation to
pay the dividend or redemption price or to deliver the certificates for the
shares to such shareholders within such time, shall: at the expiration of such
time, revert in full ownership to the Corporation, and the Corporation's
obligation to pay such dividend or redemption price or issue such shares, as
the case may be, shall thereupon cease; provided that the Board of Directors
may, at any time, for any reason satisfactory to it, but need not, authorize
(a) payment of the amount of any cash or property dividend or redemption price
or (b) issuance of any shares, ownership of which has reverted to the
Corporation, to the entity who or which would be entitled thereto had such
reversion not occurred.
ARTICLE IX.
CONVERTIBLE SECURITIES AND STOCK PURCHASE RIGHTS
The Corporation may issue convertible securities and rights to convert
shares and obligations of the Corporation into shares of any authorized class
of stock, and the right or option to purchase shares of any authorized class
of stock, in the manner or on the conditions permitted and provided in Section
56 of the Business Corporation Law or other applicable law, and as may be
authorized by the Board of Directors.
ARTICLE X.
AMENDMENTS TO ARTICLES OF INCORPORATION
Any amendment for which a larger vote is not specifically made mandatory
by the Louisiana Business Corporation Law may be made by a majority of the
voting power present of the shareholders entitled to vote under these
articles, including an increase or reduction of capital stock. In addition,
if an amendment adversely affects the rights of any class or classes of
shareholders, a majority of the voting power present of that class or classes
shall be required, whether or not that class is entitled to vote.
ARTICLE XI.
VOTING OF SHAREHOLDERS AND BONDHOLDERS
Any corporate action requiring the vote of shareholders, or of
bondholders if bonds are issued having any voting rights, including
specifically, but not by way of limitation, adoption and approval of
amendments to the articles, approval of merger and consolidation agreements,
authorization of voluntary disposition of all or substantially all of the
corporate assets, and removal of a member of the Board of Directors, may be
authorized by consent in writing signed by the shareholders having that
proportion of the total voting power which would be required to authorize and
constitute such action at a meeting of such shareholders or bondholders.
ARTICLE XII.
SALE AND OTHER TRANSFERS OF STOCK
The stock of this Corporation may be transferred freely unless otherwise
restricted by a Shareholders Stock Restriction Agreement.
ARTICLE XIII.
LIMITATION OF LIABILITY
The incorporators, officers, and directors of this Corporation claim the
benefits of limitation of liability provided in the Louisiana Business
Corporation Law, including, but not limited to, the limitation of liability
provided in La. R.S. 12:24(c) to the fullest extent allowed by law as fully
and completely as though the provisions were set forth in these Articles.
THUS DONE AND SIGNED at my office in the parish and state aforesaid, on
the day, month and year set forth above, in the presence of the undersigned
competent witnesses and me. Notary, after due reading of the whole.
INCORPORATORS:
/s/ Paul S. West
AFFIDAVIT OF ACCEPTANCE OF APPOINTMENT
BY DESIGNATED REGISTERED AGENT
ACT 769 OF 1987
To the State Corporation Department
State of Louisiana
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
On this 26th day of February, 1993, before me, a Notary Public in and
for the State and Parish aforesaid, personally came and appeared Paul S. West,
who is to me known to be the person, and who, being duly sworn, acknowledged
that he does hereby accept appointment as the Registered Agent of Jefferson
Casino Corporation, which is a Corporation authorized to transact business in
the State of Louisiana pursuant to the provisions of the Title 12, Chapter 1,
2 and 3.
/s/ Paul S. West
Paul S. West, Registered Agent
<PAGE>
INITIAL REPORT
OF
JEFFERSON CASINO CORPORTATION
Secretary of State
State of Louisiana
Baton Rouge, Louisiana
Complying with Louisiana Revised Statues 12:101, this Corporation
hereby makes its initial corporate report as follows:
1. Registered Office:
c/o Paul S. West
9th Floor One American Place
Baton Rouge, LA 70825
2. Name and Address
of Registered Agent:
Paul West
9th Floor One American Place
Baton Rouge, LA 70825
3. Name and Address
of First Director:
Roger H. Frommelt
560 International Centre
900 Second Ave. So.
Minneapolis, Minnesota 55402
Dated at Baton Rouge, Louisiana, on the 26th day of February, 1993.
INCORPORTOR
/s/ Paul S. West
Paul S. West, Registered Agent
BYLAWS
OF
JEFFERSON CASINO CORPORATION
******************************************************************************
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE.
The principal office and the executive office of the corporation
shall be at 711 Casino Magic Drive in the City of Bay Saint Louis, County of
Hancock, State of Mississippi.
SECTION 2. OTHER OFFICES.
The corporation may also have offices in such other places, both
within and without the State of Louisiana, as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II.
SHAREHOLDERS
SECTION 1. ANNUAL MEETING.
An annual meeting of the shareholders, commencing with the year
1994, shall be held on the 1st day of March of each year, at 10:00 o'clock
a.m., for the purpose of electing Directors and transacting such other
business as may properly be brought before the meeting. If the election of
Directors is not held on the day designated herein for any annual meeting of
the shareholders or any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meet-ing of the shareholders as
soon thereafter as conveniently may be done.
SECTION 2. SPECIAL MEETING.
Special meeting of the shareholders for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the President or by
the Board of Directors, and shall be called by the President or by the Board
of Directors, and shall be called by the President at the written request of
the holders of a majority of all of the outstanding shares of the corporation,
entitled to vote at the meeting.
SECTION 3. PLACE OF MEETING.
The Board of Directors may designate any place, either within or
without the State of -Louisiana, as the place of meeting for the annual
meeting or for any special meeting called by the Board of Directors; provided,
however, that if the special meeting is called at the written request of
shareholders, the meeting shall be held at the registered office of the
corporation. A waiver of notice signed by all shareholders entitled to vote
at the meeting may designate any place, either within or without the State of
Louisiana, as the place for the holding of such meetings. If no designation
is made or if a special meeting be otherwise called, the place of meeting
shall be the registered office of the corporation in the State of Louisiana.
SECTION 4. NOTICE OF MEETINGS.
Written or printed notice stating the place, day and hour of the
meeting, and in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than 10 nor more than 50
days before the date of the meeting, either personal-ly or by mail, to each
shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
Mail, addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage prepaid. If the meeting is
called by written request of the shareholders, the date of the meeting shall
be not less than 15 nor more than 60 days after receipt of request.
SECTION 5. RECORD DATES.
For the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any ad-journment thereof, or for the
purpose of determining shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
corporate purpose, the Board of Directors may fix in advance a date as the
record date for any such determination, such date in any case to be not more
than 60 days, and in the case of a shareholders' meeting not less than 10
days, prior to the date on which the particular action requiring determination
is to be taken. If no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders, or
for the determination of shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed, or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for determination.
SECTION 6. LIST OF STOCKHOLDERS.
Prior to every election of Direc-tors, a complete list of
shareholders having voting power present or repre-sented by proxy shall decide
any question brought before the meeting unless the question is one which by
express provisions of the statutes of Louisiana or the Articles of
Incorporation of the corporation or by these By-Laws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 7. PROXY.
At all shareholders' meetings, each shareholder having the right to
vote shall be entitled to vote in person or by proxy appointed by a written
instrument subscribed by such shareholder and bearing a date not more than
three years prior to the meeting, unless the instrument specifically provided
for a longer period.
ARTICLE III.
DIRECTORS
SECTION 1. GENERAL.
The property and business of the corporation shall be managed by a
Board of Directors exercising all powers of the corporation and empowered to
do all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these By-Laws directed or required to be exercised or done
by the shareholders.
SECTION 2. NUMBER OF DIRECTORS.
The Board shall consist of not less than three (3) nor more than
seven (7) Directors; provided that if there are less than three shareholders
of the corporation, the number of Directors may be the same as the number of
shareholders. Except as hereinabove provided, the Directors shall be elected
at the annual meeting, or at a special meeting called for that purpose, and
each Director so elected shall hold office for a period of one year or until
his successor shall be entitled to vote at the election, arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the Secretary. Such list shall be open
for examination by any shareholder at the corporation's principal office
during the ten days immediately preceding the election and shall be produced
and kept at the time and place of election during the whole time thereof, and
subject to the inspection of any shareholder.
SECTION 3. BUSINESS.
Business transacted at all special meetings of shareholders shall be
confined to the objects stated in the call.
SECTION 4. QUORUM.
The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present or represented by proxy,
shall be requisite for and shall constitute a quorum at all shareholders'
meetings for the transaction of business, except as otherwise provided by
statute, by the Articles of Incorporation, or by these By-Laws. If less than
a majority of the outstanding shares are represented at a meeting, however, a
majority of the outstanding shares so represented may adjourn the meeting from
time to time without notice, other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting where a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally called.
SECTION 5. VOTE.
When a quorum is present at a meeting, the vote of the holders of a
majority of the stock elected and shall qualify. Directors need not own
stock.
SECTION 6. VACANCIES.
If any vacancies occur in the Board caused by death, resignation,
retirement, disqualification, or removal from office of any director, a
majority of the directors then in office, though less than a quorum, may
choose a successor or successors, and the directors so chosen shall hold
office until the next annual election and until their successor are duly
elected and shall qualify, unless sooner displaced. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy, the directors
then in office shall constitute less than a majority of the whole Board, the
proper court may, upon application of any shareholder or shareholders holding
at least ten percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill such vacancies, or to replace the directors chosen by the
direc-tors then in office.
MEETING OF THE BOARD
SECTION 7. PLACE.
The Directors of the corporation may hold their meetings, both
regular and special, either within or outside the State of Louisiana.
SECTION 8. FIRST MEETING.
The first meeting of each newly elected Board shall be held at such
time and place as shall be fixed by the vote of the stockholders at the annual
meeting and no notice of such meeting shall be necessary to the newly elected
Directors in order to legally constitute the meeting provided a quorum shall
be present; or, the Directors may meet in such place, and at such time, as
shall be fixed by the consent in writing of all the said Directors.
SECTION 9. REGULAR MEETINGS.
Regular meetings of the Board may be held without notice at such
time and place as shall be from time to time determined by the Board.
SECTION 10. SPECIAL MEETINGS.
Special meetings of the Board may be called by the President on 48
hours notice to each Director, either personally or by mail or telegram;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of any two Directors.
SECTION 11. QUORUM.
At all meetings of the Board, a majority of the Directors shall
constitute a quorum for transaction of business, except as otherwise provided
by statute or in the Articles of Incorporation of the corporation. If less
than such majority is present at a meeting, a majority of the Directors
present may adjourn the meeting from time to time without further notice
until a majority is present.
SECTION 12. VOTE.
The affirmative vote of a majority of the Directors shall be
required for any act of the Board of Directors.
SECTION 13. COMPENSATION.
By resolution of the Board of Directors, the Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a regular sum fixed by them for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 14. WRITTEN CONSENT.
Unless otherwise restricted by the Articles of Incorporation or
these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
COMMITTEES OF DIRECTORS
SECTION 15. DESIGNATION.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist
of two or more of the Directors of the corporation, which, to the extent
provided in said resolution, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
corporation, and may have power to authorize the seal of the corporation to be
fixed to all papers which may require it. Any such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
SECTION 16. MINUTES.
The committees shall keep regular minutes of their proceedings and
report the same to the Board when required.
ARTICLE IV.
NOTICE
SECTION 1. METHOD.
Whenever notice is required to be given by any Director or
shareholder under provisions of the laws of Louisiana or of the Articles of
Incorporation of the corporation or of these By-Laws, such notice shall not be
construed to mean personal notice, but may be given in writing, by mail,
addressed to such Director or shareholder in such address as appears on the
books of the corporation, and such notice shall be deemed to be given at the
time mailed.
SECTION 2. WAIVER OF NOTICE.
Whenever any notice is required to be given under the provisions of
the laws of Louisiana or of the Articles of Incorporation or these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto, and such waiver need not specify the purpose of or the
business to be transacted at the meeting.
ARTICLE V.
OFFICERS
SECTION 1. DESIGNATION.
The officers of the corporation shall be a Chairman of the Board, a
President, one or more Vice-Presidents, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. Any two offices may be held
by the same person except that no one may hold the offices of President and
Treasurer at the same time.
SECTION 2. ELECTION.
The Board of Directors at its first meeting after each annual
meeting of shareholders shall choose a President from among its members, and
shall choose one or more Vice-Presidents, a Secretary and a Treasurer, none of
whom need be a member of the Board.
SECTION 3. AGENTS.
The Board may appoint such agents on behalf of the corporation as it
shall deem necessary, for such terms and to exercise such powers and perform
such duties as shall be determined from time to time by the Board, and not
conflicting with these By-Laws or the Articles of Incorporation of the
corporation.
SECTION 4. SALARIES.
The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
SECTION 5. TERM.
The officers of the corporation shall hold office until their
successors are chosen and qualify, unless sooner removed or displaced. Any
officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the whole Board of Directors
whenever in their judgment the best interest of the corporation would be
served thereby.
SECTION 6. VACANCY.
Vacancy in any office because of death, resignation, removal,
disqualification or otherwise may be filled by the Board of Directors for the
unexpired portion of the terms.
CHAIRMAN OF THE BOARD
SECTION 7. DUTIES.
It shall be the duty of the Chairman of the Board of this
corporation, if present, to preside at all meetings of the Board of Directors
and the Executive Committee and exercise and perform such other powers and
duties as may from time to time be assigned to him by the Board of Directors
or prescribed by the By-Laws.
PRESIDENT
SECTION 8. DUTIES.
The President shall be the chief executive officer of the
corporation, and subject to the control of the Board of Directors, shall, in
general, supervise and control all of the business and affairs of the
corpora-tion. He shall, when present, preside at all shareholders' meetings
and shall be an ex-officio member of all standing committees. He shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the Board are carried into effect. The
president may sign certificates for shares of the corporation and any deeds,
mortgages, bonds, contracts or other instruments which the Board of Directors
has au-thorized to be executed, except in cases where the signing and
execution thereof may be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the corporation or shall be
required by law to be otherwise signed or executed.
VICE-PRESIDENT
SECTION 9. DUTIES.
The Vice-Presidents shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President, and
shall perform such other duties as the Board of Directors shall prescribe.
SECRETARY
SECTION 10. DUTIES.
The Secretary of the corporation shall attend all shareholders'
meetings and Board of Directors' meetings and keep the minutes in one or more
books provided for that purpose. He shall also: (1) see that all notices are
duly given in accordance with the provisions of these By-Laws as required by
law; (2) be custodian of the corporate records and of the seal of the
corporation and see that the seal of the corporation is affixed to all
documents the execution of which on behalf of the corporation under its seal
is duly authorized; (3) keep a register containing the post office address of
each stockholder which shall be furnished to the Secretary by such
stockholder; (4) sign, with the President, certificates for shares of stock in
the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (5) have general charge of the stock
transfer books of the corporation; and (6) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
TREASURER
SECTION 11. DUTIES.
The Treasurer of the corporation shall have the custody of corporate
funds and securities and shall keep belonging to the corporation and shall
deposit all monies and other valuable effects in the name of and to the credit
of the corporation in such depositories as may be designated by the Board of
Directors. He will also in general perform all the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by President or by the Board of Directors.
SECTION 12. ACCOUNTING.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and he shall render to the President and Directors, at the
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as Treasurer, and of the financial condition of the
corporation.
SECTION 13. BOND.
If required by the Board of Directors, the Treasurer shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of his
office and of the restoration to the corporation, in case of his death,
resig-nation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his con-trol belonging to the corporation.
ASSISTANTS
SECTION 14. DUTIES.
One or more Assistant Secretaries and/or Assistant Treasurers may be
designated and chosen by the Board of Directors and shall have such duties as
may be delegated to them by the Board of Directors.
ARTICLE VI.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Any and all directors and officers and former directors and officers
of the corporation and any person who may have served at the request of the
corporation as a director or officer of another corporation in which the
corporation owns shares of capital stock or of which the corporation is a
creditor (and the heirs, executors or administrators of any such director or
officers or former director or officer or person), shall be indemnified by the
corporation against all costs and legal or other expenses, including costs and
amounts paid in settlement, reasonably incurred by or imposed upon them, or
any of them, in connection with or resulting from any claim, action, suit or
proceeding, whether civil or criminal, in which they, or any of them, are made
parties, or a party, by reason of being or having been directors or officers
or a director or officer of the corporation or of such other corporation.
Such right of indemnification shall not apply, however, in relation to matters
as to which any such director or officer or former director or officer shall
be finally adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of his duty to the corporation or
such other corporation, unless the proper court shall determine that despite
such adjudication of liability, such officer or director is fairly and
reasonably entitled to indemnity for such expense as the court shall deem
proper. If any such claim, action, suit or proceeding is settled (whether by
agreement entry of judgment by consent, or otherwise), the determination in
good faith by the Board of Directors of the corporation that such claim,
action suit or proceeding did not arise out of negligence or misconduct in the
performance of duty by the director or officer or former director or officer
or person indem-nified and that such director or officer or former director or
officer or per-son would not be held liable for the claims, suit or proceeding
in question, shall be necessary and sufficient to justify indemnification.
The right of indemnification herein provided shall not be exclusive under any
statute, By-Law, agreement, vote of shareholders, or otherwise.
ARTICLE VII.
REIMBURSEMENT OF DISALLOWED DEDUCTIONS
Any payments made to an officer or director of the corporation
such as salary, commissions, bonus, interest, rent or expenses which shall be
disal-lowed in whole or in part as a deductible expense of the purpose of
corporate tax reporting by the Internal Revenue Service, shall be reimbursed
by such officer to the corporation to the full extent of such disallowance.
The Board of Directors shall take all necessary steps to enforce this
repayment. In lieu of repayment by the officer or directors the Board of
Directors may withhold appropriate amounts from the officer's or director's
future compensation until the payment has been recovered; provided that the
amount withheld is sufficient to extinguish the indebtedness within five (5)
years.
ARTICLE VIII.
CERTIFICATES OF STOCK
SECTION 1. FORM.
Certificates representing shares of stock in the name of the
corporation shall be in such form as determined by the Board of Directors.
All certificates shall be signed by, or in the name of the cor-poration, the
President or Vice-President, and by the Secretary or Treasurer. All
certificates for such shares shall be consecutively numbered, and the name and
address of the person to whom the shares represented thereby are issued,
together with the name of shares and date of issue shall be entered on the
stock transfer books of the corporation.
SECTION 2. TRANSFER AGENTS, REGISTRARS.
Where a certificate is coun-tersigned (1) by a transfer agent other
than the corporation or its employee, or, (2) by a registrar other than the
corporation or its employee, any other signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmative of that fact and shall give the
corporation a bond, in such sum as the Board of Directors may require to
indemnify the corporation against any claim that may be made against it on
account of the alleged loss of the certificate. The Board of Directors may
accept the affiant's personal bond if it should appear that he possesses
unencumbered property of sufficient value to assure indemnification. A new
certificate of the same tenor and for the same number of shares as the one
alleged to be lost or destroyed shall then be issued.
SECTION 4. TRANSFER OF STOCK.
Upon surrender to the corporation or the transfer agent of the
corporation of this certificate for share, duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, to cancel the old certificate and to record the transaction
on its books.
SECTION 5. HOLDER.
The corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and shall not be
bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Louisiana.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 1. DIVIDENDS.
Dividends upon the capital stock of the corporation, subject to any
provisions of the Articles of Incorporation may be declared by the Board of
Directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the Articles of Incorporation.
SECTION 2. RESERVE FOR CONTINGENCIES.
Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors may from time to time, in their discretion, deem proper as a reserve
fund to meet contingencies or for repairing or maintaining the property of the
corporation, or for such purposes as the Directors shall deem to be in the
best interest of the corporation. The Directors may modify or abolish any
such reserve in the manner in which it was created.
SECTION 3. FISCAL YEAR.
The fiscal year of the corporation shall begin on the first day of
January, and end on the 31st day of December of each year.
SECTION 4. CHECKS.
All checks or demands for money and notes of the corporation shall
be signed by such officer or officers or such other person or persons as the
Board of Directors from time to time designates.
SECTION 5. CORPORATE SEAL.
The corporation shall not adopt a corporate seal and no seal shall
be necessary to authenticate any action of the corporation.
ARTICLE X.
AMENDMENTS
These By-Laws may be altered, amended, or repealed and new
By-Laws adopted by two-thirds (2/3) affirmative vote of the shareholder voting
power or by the written consent of the shareholders possessing this power.
CERTIFICATE
I CERTIFY that the foregoing By-Laws were adopted by the sole
member of the Board of Directors of this corporation by written action on the
3rd day of May, 1994.
/s/ Roger H. Frommelt
Roger H. Frommelt, Secretary
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE 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. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY 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 COMPANY SO REQUESTS), (2) TO THE COMPANY 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 RESTRICTIONS SET FORTH IN (A) ABOVE.
<PAGE>
PURSUANT TO PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986 RELATING TO
ORIGINAL ISSUE DISCOUNT AND TREASURY REGULATIONS PUBLISHED THEREUNDER, THE
FOLLOWING INFORMATION IS PROVIDED: (1) THIS SECURITY IS BEING ISSUED WITH
ORIGINAL ISSUE DISCOUNT IN THE AMOUNT OF $1,018.76 PER $1,000 OF PRINCIPAL
AMOUNT DUE AT MATURITY; (2) THE ISSUE PRICE OF THIS SECURITY IS $1,000 PER
$1,000 OF PRINCIPAL AMOUNT DUE AT MATURITY; (3) THE ISSUE DATE OF THIS
SECURITY IS AUGUST 22, 1996; (4) THE "COMPARABLE YIELD" MATURITY OF THIS
SECURITY (WITHIN THE MEANING OF TREASURY REGULATION 1.1275-4) IS 14.51%; AND
(5) THE "PROJECTED PAYMENT SCHEDULE" (WITHIN THE MEANING OF TREASURY
REGULATION 1.1275-4) IS AS FOLLOWS:
DATE AMOUNT PER $1,000 DATE AMOUNT PER $1,000
2/15/97 $66.38 8/15/00 $73.26
8/15/97 $73.26 2/15/01 $73.26
2/15/98 $73.26 8/15/01 $73.26
8/15/98 $73.26 2/15/02 $73.26
2/15/99 $73.26 8/15/02 $73.26
8/15/99 $73.26 2/15/03 $73.26
2/15/00 $73.26 8/15/03 $73.26
HOLDERS SHOULD REFER TO THE DISCUSSION OF CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS SET FORTH IN THE OFFERING MEMORANDUM CONTACT THE COMPANY AT 711
CASINO MAGIC DR., ST. LOUIS, MISSISSIPPI 39520 (TELEPHONE NUMBER: (601)
466-8000), ATTENTION: CORPORATE SECRETARY FOR MORE DETAILED INFORMATION
CONCERNING THE COMPUTATION OF ORIGINAL ISSUE DISCOUNT SET FORTH HEREIN.
<PAGE>
13% Series A First Mortgage Note due 2003
With Contingent Interest
No. $__________
CASINO MAGIC OF LOUISIANA, CORP.
promises to pay to
or registered assigns,
the principal sum of___________________
Dollars on August 15, 2003.
Interest Payment Dates: February 15, and August 15
Record Dates: February 1, and August 1
Dated: August 22, 1996
CASINO MAGIC OF LOUISIANA CORP.
By:______________________________
Name:
Title:
This is one of the Global By:______________________________
Notes referred to in the Name:
within-mentioned Indenture: Title:
FIRST UNION BANK OF CONNECTICUT,
as Trustee
By:__________________________________
<PAGE>
13% Series A First Mortgage Notes due 2003
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest. Casino Magic of Louisiana, Corp., a Louisiana
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 13% per annum from August 22, 1996 until maturity ("Fixed
Interest") and shall pay the Liquidated Damages, if any, payable pursuant to
Section 5 of the Registration Rights Agreement referred to below. The Company
will pay interest and Liquidated Damages, if any, semi-annually in arrears on
February 1 and August 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").
Fixed Interest on the Notes will accrue from the most recent date to which
Fixed Interest has been paid or, if no Fixed Interest has been paid, from the
date of issuance. Fixed Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months. In addition, the Notes will bear
Contingent Interest, calculated as described below, from the Commencement Date
to the date of payment of the Notes. Installments of accrued or deferred
Contingent Interest will become due and payable semi-annually on each February
15 and August 15 after the Commencement Date to the Holders of record at the
close of business on the preceding February 1 or August 1; provided that all
or a portion of such installment of Contingent Interest is not permitted to be
deferred on such date; and provided, further, that no Contingent Interest is
payable with respect to any period prior to the Commencement
Date.Additionally, all installments of accrued or deferred Contingent Interest
will become due and payable (and may not be further deferred) with respect to
any principal amount of the Notes that matures (whether at stated maturity,
upon acceleration, upon redemption, upon maturity of repurchase obligation or
otherwise) upon such maturity of such principal amount of the Notes.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the
extent that, (a) the payment of such portion of Contingent Interest will cause
the Company's Adjusted Fixed Charge Coverage Ratio for the Company's most
recently completed Reference Period prior to such interest payment date to be
less than 1.5 to 1.0 on a pro forma basis after giving effect to the assumed
payment of such Contingent Interest (but may not defer such portion, which, if
paid, would not cause such Adjusted Fixed Charge Coverage Ratio to be less
than 1.5 to 1.0) and (b) the principal amount of the Notes corresponding to
such Contingent Interest has not then matured and become due and payable (at
stated maturity, upon acceleration, upon redemption, upon maturity of
repurchase obligation or otherwise). Contingent Interest that is deferred
shall become due and payable, in whole or in part, on the earlier of (i) the
next succeeding interest payment date on which all or a portion of such
Contingent Interest is not permitted to be deferred, and (ii) upon the
maturity of the corresponding principal amount of the Notes (whether at stated
maturity, upon acceleration, upon redemption, upon maturity of repurchase
obligation or otherwise). No interest will accrue on any Contingent Interest
deferred and which does not become due and payable. To the extent permitted
by law, interest will accrue on overdue Fixed Interest or Contingent Interest
at the same rate as the Fixed Interest plus one percent (1%) per annum.
Each installment of Contingent Interest is calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been provided for or which Contingent Interest had
been calculated and deferred (or from and including the Commencement Date if
no installment of Contingent Interest has been paid, provided for or deferred)
to, and including, either (a) in the case of Contingent Interest payable on
the first Interest Payment Date subsequent to the Commencement Date (i)
December 31, 1996 if the Commencement Date ends during the Semiannual Period
ending on December 31, 1996, and (ii) June 30, 1997 if the Commencement Date
occurs during the Semiannual Period ending on June 30, 1997 and (b) in all
other cases, (i) the last day of the next Semiannual Period if the
corresponding principal amount of the Notes has not become due and payable or
(ii) the date of payment if the corresponding principal amount of the Notes
has become due and payable (whether at stated maturity, upon acceleration,
upon redemption, upon maturity of repurchase obligation or otherwise). With
respect to each Accrual Period, interest will accrue daily on the principal
amount of each Note outstanding during such period as follows: (i) for any
portion of an Accrual Period which consists of all or part of a Semiannual
Period that ends during such Accrual Period, 1/180 of the Base Contingent
Interest with respect to such principal amount for such Semiannual Period
until fully accrued and (ii) for any other portion of an Accrual Period, 1/180
of the Base Contingent Interest with respect to such principal amount for the
most recently completed Semiannual Period that began after the Commencement
Date.
Any reference in this Offering Memorandum to "accrued and unpaid
interest" on the Notes includes the amount of Fixed Interest, unpaid
Contingent Interest and Liquidated Damages, if any, due and payable thereon.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Adjusted Consolidated Cash Flow of such
Person and its Subsidiaries for such period to the Fixed Charges of such
Person and its Subsidiaries for such period (calculated in the same manner as
the Fixed Charge Coverage Ratio is calculated); provided that the amount of
Contingent Interest on a pro forma basis shall equal the Contingent Interest
accrued and reflected in the financial statements for the last two Semiannual
Periods with respect to which Contingent Interest was accruable or payable or,
if two such Semiannual Periods have not occurred, then the amount accrued and
reflected in the financial statements with respect to the most recently
completed Reference Period beginning after the Commencement Date.
"Contingent Interest" means with respect to any principal amount of Notes
as of any date after the Commencement Date, an amount equal to the product of
(i) 5.0% of the Company's Adjusted Consolidated Cash Flow for the Accrual
Period last completed times (ii) a fraction, the numerator of which is the
amount of such principal and the denominator of which is $115.0 million.
"Commencement Date" means the first day on which Casino Magic-Bossier
City becomes Operating.
"Semiannual Period" means each period that begins on July 1 and ends on
the next succeeding December 31 or each period that begins on January 1 and
ends on the next succeeding June 30.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on theFebruary 1 or
August 1, next preceding the Interest Payment Date, even if such Notes are
cancelled 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 Notes will be payable as to principal, premium, if any,
interest and Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and Liquidated
Damages, if any, may be made by check mailed to the Holders of the Notes at
their respective addresses set forth in the register of Holders of the Notes;
provided that all payments with respect to (i) Global Notes and (ii) $5.0
million or more in principal amount of Certificated Notes the Holders of which
have given wire transfer instructions to the Company will be required to be
made by wire transfer of immediately available funds to the accounts specified
by the Holders thereof. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee or
its affiliate maintained for such purpose. 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 Bank of
Connecticut, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. Indenture and Collateral Documents. The Company issued the Notes
under an Indenture dated as of August 22, 1996 ("Indenture") among the
Company, Jefferson Casino Corporation (a "Guarantor") and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended
(15 U.S. Code 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes are secured obligations of the Company limited to $115
million in aggregate principal amount. The Notes are secured pursuant to the
Collateral Documents referred to in the Indenture by a first lien on the Note
Collateral owned by the Company or any Guarantor, respectively, whether now
owned or hereafter acquired, subject to Permitted Liens. The Note Collateral
securing the Notes includes, without limitation, and subject to Permitted
Liens (i) a pledge of the Pledged Securities and any funds deposited and held
in the Interest Reserve Account until such time as such funds are disbursed in
accordance with the terms of the Cash Collateral and Disbursement Agreement,
(ii) a pledge of the funds held in the Construction Disbursement Account,
including without limitation, approximately $31.7 million of the net proceeds
from the offering of the Notes, a pledge of the funds held in the Operating
Reserve Account, including without limitation, approximately $3.2 million of
the net proceeds from the offering of the Notes and a pledge of the funds held
in the Completion Reserve Account, including without limitation approximately
$5.0 million of the net proceeds from the offering of the Notes, which
proceeds will be held in such accounts until disbursed in accordance with the
terms of the Cash Collateral and Disbursement Agreement, (iii) the fee simple
interest in all of the real property comprising Casino Magic-Bossier City,
additions and improvements and component parts related thereto, issues and
profits therefrom, furniture, fixtures, machinery and equipment forming a part
thereof or used in connection therewith, (iv) the Bossier Riverboat, the
Crescent City Riverboat and all other vessels and related improvements and
personal property related thereto held by the Company, (v) all of the
Company's accounts receivable, general intangibles, inventory and other
personal property and (vi) certain construction contracts, operating
agreements, the Management Agreement, other agreements, licenses and permits
entered into by, or granted to the Company or any Guarantor in connection with
the development, construction, ownership and operation of Casino Magic-Bossier
City.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5,
the Company shall not have the option to redeem the Notes prior to August 15,
2000. Thereafter, the Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 15 of the
years indicated below:
YEAR PERCENTAGE
2000 106.500%
2001 104.332%
2002 102.166%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, if any Gaming Authority requires that a Holder or beneficial
owner of the Notes must be licensed, qualified or found suitable under any
applicable Gaming Laws in order to maintain any or obtain any applied-for
Gaming License or franchise of the Company or any of its Subsidiaries under
any applicable gaming laws, and such 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 Authority (or such lesser period that
may be required by such Gaming Authority or law) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable by such
Gaming Authority (a "Disqualified Holder"), the Company shall have the right,
at its option, (i) to require such Holder or beneficial owner to dispose of
such Holder's or beneficial owner's Notes within 30 days of notice of such
finding by the applicable Gaming Authority that such Holder or beneficial
owner will not be licensed, qualified or found suitable as directed by such
Gaming Authority (or such earlier date as may be required by the applicable
Gaming Authority or law) or (ii) to call for redemption of the Notes of such
Holder or beneficial owner at a redemption price equal to the lesser of 100%
of the principal amount thereof or the price at which such Holder or
beneficial owner acquired such Notes together with, in either case, accrued
and unpaid interest and Liquidated Damages, if any, thereon to the earlier of
the date of redemption or the date of the finding of unsuitability by such
Gaming Authority, which may be less than 30 days following the notice of
redemption if so ordered by such Gaming Authority. In connection with any
such redemption, and except as otherwise may be required by a Gaming
Authority, the Company shall comply with the procedures contained in Section
3.01 through 3.06 hereof for redemption of the Notes. Immediately upon a
determination of unsuitability, the Disqualified Holder shall have no further
rights whatsoever with respect to the Notes (i) to exercise, directly or
indirectly, through any trustee, nominee or any other Person or entity, any
right conferred by the Notes or (ii) to receive any interest or any other
distribution or payment with respect to the Notes, or any remuneration in any
form from the Company for services rendered or otherwise, except the
redemption price of the Notes. The Company shall not be required to pay or
reimburse any Holder or beneficial owner of Notes who is required to apply for
such license, qualification or finding of suitability for the costs of such
application including investigatory costs. Such expenses will, therefore, be
the obligation of such Holder or beneficial owner.
6. Mandatory Redemption. In the event that the voters in the
Louisiana Referendum disapprove the continuation of riverboat gaming in either
Bossier Parish or Caddo Parish, Louisiana, within 90 days after the end of
each Operating Year, the Company shall redeem (the "Excess Cash Flow
Redemption") the maximum principal amount of Notes that is an integral
multiple of $1,000, that may be redeemed with 100% of the Company's Excess
Cash Flow (the "Excess Cash Flow Redemption Amount") with respect to such
Operating Year, at a redemption price in cash equal to 100% of the principal
amount of Notes to be redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of redemption; provided,
however, that the Excess Cash Flow Redemption Amount shall be reduced by the
minimum amount necessary to allow the balance of Cash Equivalents held by the
Company to exceed $5.0 million; provided, further, however, that if (i) the
voters in the Louisiana Referendum disapprove the continuation of riverboat
gaming in one but not the other of Bossier Parish or Caddo Parish, Louisiana
and (ii) the Company, prior to the end of its first Operating Year, has
obtained a final, non-appealable determination or decision by (i) all Gaming
Authorities and other regulations having jurisdiction over the operations, of
the Company, or (ii) a court of competent jurisdiction considering such matter
or matters, that the outcome of the Louisiana Referendum does not limit the
Company's ability to conduct riverboat gaming operations at Casino
Magic-Bossier City, the Company's obligations to make Excess Cash Flow
Redemptions shall terminate.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall 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 Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of
purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company 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 Company or a Subsidiary consummates any Asset Sales or has
an Event of Loss, within five days of each date on which the aggregate amount
of Excess Proceeds or Excess Loss Proceeds exceeds $10.0 million, the Company
shall commence an offer to all Holders of Notes (an "Excess Proceeds Offer")
pursuant to Section 3.10 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 101% (or 100% in the case of an Event of
Loss or an Asset Sale of the Crescent City Riverboat) of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Excess Proceeds Offer is less than the
Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Excess
Proceeds Offer from the Company prior to any related purchase date and may
elect to have such Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase"on the reverse of the 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 Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange
or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, 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 enter into additional or supplemental Collateral Documents.
12. Defaults and Remedies. Events of Default include: (i)default
for 30 days in the payment when due of interest or Liquidated Damages, if any,
on the Notes; (ii) default in payment when due of principal of or premium, if
any, on the 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 Company to comply with Section 3.10, 4.07, 4.09, 4.10,
4.11, 4.16, 4.23 or 5.01 of the Indenture or Section 3.01, 3.05, 3.08, 3.11,
3.12 or 3.13 of the Bossier Riverboat Mortgage or the Crescent River Mortgage;
(iv) failure by the Company for 30 days after notice to the Company by the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding to comply with certain other agreements in the Indenture, the
Notes or the Collateral Documents; (v) default under certain other agreements
relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of 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 $5.0
million or more; (vi) certain final judgments for the payment of money that
remain undischarged for a period of 60 days; (vii) with respect to the
Collateral Documents certain (a) breaches of representations, warranties or
covenants, (b) repudiations, or (c) unenforceability; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; (ix) the Company or any of its Subsidiaries ceases or suspends
gaming operations for a period of more than 90 consecutive days at any Gaming
Facility as the result of any Gaming License being revoked, terminated,
suspended or otherwise ceasing to be effective; (x) Casino Magic-Bossier City
is not Operating by the Operating Deadline and does not remain Operating
thereafter, except as the hours of operation of Casino Magic-Bossier City may
be limited by any Gaming Authority or Gaming Law; and (xi) the breach of
certain covenants in any 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. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount
of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the 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 Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. 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).
18. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set
forth in the A/B Exchange Registration Rights Agreement dated as of August 22,
1996, between the Company and the parties named on the signature pages thereof
(the "Registration Rights Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Casino Magic of Louisiana Corp.
711 Casino Magic Drive
Bay St. Louis, Mississippi 39520
Attention: Corporate Secretary
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. 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.
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10, 4.11 or 4.16 of the Indenture, check the box below:
___SECTION 4.10 ___SECTION 4.11 ___SECTION 4.16
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THE NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.10, 4.11 OR SECTION 4.16 OF THE INDENTURE, STATE
THE AMOUNT YOU ELECT TO HAVE PURCHASED: $___________
DATE:
Your Signature:
(Sign exactly as your name appears on the Note)
Tax Identification No.:
Signature Guarantee.
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
Date of Exchange:
Amount of decrease in Principal Amount of this Global Note:
Amount of increase in Principal Amount of this Global Note:
Principal Amount of this Global Note following such decrease (or increase):
Signature of authorized officer of Trustee or Note Custodian:
<PAGE>
GUARANTEES
Jefferson Casino Corp., a Louisiana corporation, (a "Guarantor" and,
together with any successor or additional Guarantor under the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed, the
"Guarantors"), has jointly and severally and unconditionally guaranteed the
obligations of the Company under the Notes, the Indenture and the related
Collateral Documents, on a senior basis (each such guarantee being a "Note
Guarantee"), to each Holder of a Note authenticated and delivered by the
Trustee irrespective of the validity or enforceability of the Indenture, the
Notes or the obligations of the Company under the Indenture or the Notes,
that: (i) the principal of, premium, if any, interest and Liquidated Damages,
if any, on the Notes of every series issued hereunder shall be paid in full
when due, whether at the maturity or interest payment or mandatory redemption
date, by acceleration, call for redemption or otherwise, and interest on the
overdue principal and interest, if any, of the Notes and all other obligations
of the Company to the Holders of the Notes or the Trustee under the Indenture
or the Notes shall be promptly paid in full or performed, all in accordance
with the terms of the Indenture and the Notes; and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, they shall be paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Guarantor shall be obligated to pay the
same whether or not such failure to pay has become an Event of Default that
could cause acceleration pursuant to Section 6.02 of the Indenture. Each
Guarantor agreed that this is a guarantee of payment not a guarantee of
collection. Capitalized terms used herein have the meanings assigned to them
in the Indenture unless otherwise indicated, and the obligations of the
Guarantors pursuant to the Guarantees are subject to the terms of the
Indenture, to which reference is hereby made for the precise terms thereof.
Pursuant to Section 11.03 of the Indenture, the obligation of
each
Guarantor under its Guarantee is limited to the maximum amount as will, after
giving effect to such maximum amount and all other liabilities of such
Guarantor that are relevant for purposes of fraudulent transfer or conveyance
under the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law, and after giving
effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 11 of the Indenture, result
in
the obligations of such Guarantor in respect of such maximum amount not
constituting a fraudulent conveyance, all subject to the terms of the
Indenture, to which reference is hereby made for the precise terms thereof.
Under certain circumstances as set forth in the Indenture, the
obligation of each Guarantor under its Note Guarantee may be released under
certain circumstances, including the sale of the Guarantor or of all or
substantially all of the assets of a Guarantor or such Guarantor becoming an
Unrestricted Subsidiary of the Company, all subject to the terms of the
Indenture, to which reference is hereby made for the precise terms thereof.
The Guarantees shall be binding upon the Guarantors and their
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders of the Notes and, in the event of any
transfer or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms of the
Indenture.
The Guarantees shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note on which the Guarantees
are noted shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
By Jefferson Casino Corp., and any other Guarantor as may be added
or substituted from time to time, as Guarantors:
JEFFERSON CASINO CORP.
By:/s/ Jay S. Osman
==========================================================================
CASINO MAGIC OF LOUISIANA, CORP.
ISSUER
$115,000,000
13% FIRST MORTGAGE NOTES DUE 2003
WITH CONTINGENT INTEREST
JEFFERSON CASINO CORPORATION
GUARANTOR
_________________
INDENTURE
Dated as of August 22, 1996
_________________
FIRST UNION BANK OF CONNECTICUT
TRUSTEE
==========================================================================
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 11.03
(c) 11.03
313 (a) 7.06
(b)(1) 10.03
(b)(2) 7.07
(c) 7.06;11.02
(d) 7.06
314 (a) 4.03;11.02
(b) 10.02
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(d) 10.03,10.04,10.05
(e) 11.05
(f) N.A.
315 (a) 7.01
(b) 7.05,11.02
(c) 7.01
(d) 7.01
(e) 6.11
316 (a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.12
317 (a)(1) 6.08
(a)(2) 6.09
(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.
<PAGE>
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 22
ARTICLE 2
THE 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 Notes 32
Section 2.08. Outstanding Notes 32
Section 2.09. Treasury Notes 33
Section 2.10. Temporary Notes 33
Section 2.11. Cancellation 33
Section 2.12. Defaulted Interest 33
Section 2.13. Exchange Registration 34
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee 34
Section 3.02. Selection of Notes to Be Redeemed 34
Section 3.03. Notice of Redemption 35
Section 3.04. Effect of Notice of Redemption 35
Section 3.05. Deposit of Redemption Price 35
Section 3.06. Notes Redeemed in Part 36
Section 3.07. Optional Redemption 36
Section 3.08. Redemption Pursuant to Gaming Law 37
Section 3.09. Mandatory Redemption 37
Section 3.10. Offer to Purchase by Application of Excess
Proceeds 38
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes 40
Section 4.02. Maintenance of Office or Agency 41
Section 4.03. Reports 41
Section 4.04. Compliance Certificate 42
Section 4.05. Taxes 43
Section 4.06. Stay, Extension and Usury Laws 43
Section 4.07. Restricted Payments 44
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries 47
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock 47
Section 4.10. Asset Sales 49
Section 4.11 Event of Loss 51
Section 4.12. Transactions with Affiliates 52
Section 4.13. Liens 53
Section 4.14. Line of Business 53
Section 4.15. Corporate Existence 53
Section 4.16. Offer to Repurchase Upon Change of Control 53
Section 4.17. Limitation on Issuances and Sales of Capital
Stock of Wholly Owned Subsidiaries 55
Section 4.18. Subsidiary Guarantees. 55
Section 4.19. Maintenance of Insurance 55
Section 4.20. Limitation on Status as Investment Company 57
Section 4.21. Further Assurances 57
Section 4.22. Construction 57
Section 4.23. Limitations on Use of Proceeds 57
Section 4.24. Sale and Leaseback Transactions 58
Section 4.25. Restrictions on Preferred Stock of Subsidiaries 58
Section 4.26. Payments for Consent 58
Section 4.27. Advances to Subsidiaries 58
Section 4.28. Collateral Documents 59
Section 4.29. Restriction on Payment of Management Fees 59
Section 4.30. Limitation on Activities of Jefferson 60
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets 60
Section 5.02. Successor Corporation Substituted 61
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default 62
Section 6.02. Acceleration 65
Section 6.03. Other Remedies 66
Section 6.04. Waiver of Past Defaults 66
Section 6.05. Control by Majority 66
Section 6.06. Limitation on Suits 66
Section 6.07. Rights of Holders of Notes to Receive Payment 67
Section 6.08. Collection Suit by Trustee 67
Section 6.09. Trustee May File Proofs of Claim 67
Section 6.10. Priorities 68
Section 6.11. Undertaking for Costs 69
Section 6.12. Management of Casinos 69
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee 69
Section 7.02. Rights of Trustee 71
Section 7.03. Individual Rights of Trustee 71
Section 7.04. Trustee's Disclaimer 72
Section 7.05. Notice of Defaults 72
Section 7.06. Reports by Trustee to Holders of the Notes 72
Section 7.07. Compensation and Indemnity 73
Section 7.08. Replacement of Trustee 74
Section 7.09. Successor Trustee by Merger, etc 76
Section 7.10. Eligibility; Disqualification 76
Section 7.11. Preferential Collection of Claims Against
Company 76
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or
Covenant Defeasance 76
Section 8.02. Legal Defeasance and Discharge 76
Section 8.03. Covenant Defeasance 77
Section 8.04. Conditions to Legal or Covenant Defeasance 78
Section 8.05. Deposited Money and Government Securities to
be Held in Trust; Other Miscellaneous
Provisions 79
Section 8.06. Repayment to Company 80
Section 8.07. Reinstatement 80
Section 8.08. Note Collateral 81
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes 81
Section 9.02. With Consent of Holders of Notes 82
Section 9.03. Compliance with Trust Indenture Act 84
Section 9.04. Revocation and Effect of Consents 84
Section 9.05. Notation on or Exchange of Notes 84
Section 9.06. Trustee to Sign Amendments, etc 85
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Security 85
Section 10.02. Recording and Opinions 86
Section 10.03. Release of Note Collateral 88
Section 10.04. Protection of the Trust Estate 89
Section 10.05. Certificates of the Company 90
Section 10.06. Certificates of the Trustee 90
Section 10.07. Authorization of Actions to Be Taken by the
Trustee Under the Collateral Documents 90
Section 10.08. Authorization of Receipt of Funds by the
Trustee Under the Collateral Documents 91
Section 10.09. Termination of Security Interest 91
Section 10.10. Cooperation of Trustee 92
Section 10.11. Collateral Agent 92
ARTICLE 11
GUARANTEES
Section 11.01. Guarantees 92
Section 11.02. Execution and Delivery of Guarantees 94
Section 11.03. Limitation of Guarantors' Liability 95
Section 11.04. Guarantors May Consolidate, etc., on Certain
Terms 95
Section 11.05. Releases of Guarantees 96
Section 11.06. "Trustee" to Include Paying Agent 97
ARTICLE 12
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge 97
Section 12.02. Application of Trust Money 98
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls 98
Section 13.02. Notices 99
Section 13.03. Communication by Holders of Notes with Other
Holders of Notes 100
Section 13.04. Certificate and Opinion as to Conditions
Precedent 100
Section 13.05. Statements Required in Certificate or Opinion 100
Section 13.06. Rules by Trustee and Agents 101
Section 13.07. No Personal Liability of Directors,
Officers, Employees and Stockholders 101
Section 13.08. Governing Law 101
Section 13.09. No Adverse Interpretation of Other Agreements 102
Section 13.10. Successors 102
Section 13.11. Severability 102
Section 13.12. Counterpart Originals 102
Section 13.13. Acts of Holders 102
Section 13.14. Legal Holidays 104
Section 13.14. Table of Contents, Headings, etc 104
<PAGE>
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Guarantee
EXHIBIT C Certificate to be Delivered Upon Exchange or Registration of
Transfer of Notes
EXHIBIT D Form of Supplemental Indenture
EXHIBIT E Form of Subordinated Intercompany Note
EXHIBIT F Mortgage
EXHIBIT G Bossier Riverboat Mortgage
EXHIBIT H Crescent City Riverboat Mortgage
EXHIBIT I Cash Collateral and Disbursement Agreement
EXHIBIT J CM-Louisiana Security Agreement
EXHIBIT K Jefferson Security Agreement
EXHIBIT L Jefferson Stock Pledge and Security Agreement
EXHIBIT M Accounts Pledge Agreement
EXHIBIT N Collateral Assignment
EXHIBIT O Reciprocal Easement Agreement
<PAGE>
INDENTURE dated as of August 22, 1996 among Casino Magic of Louisiana,
Corp., a Louisiana corporation (the "Company"), Jefferson Casino Corporation,
a Louisiana corporation ("Jefferson Corp.") as a Guarantor (as defined below),
and First Union Bank of Connecticut, a Connecticut banking corporation as
trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 13% Series A First Mortgage Notes due 2003 With Contingent Interest (the
"Series A Notes") and the 13% Series B First Mortgage Notes due 2003 With
Contingent Interest (the "Series B Notes" and, together with the Series A
Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCOUNTS PLEDGE AGREEMENT" means that certain Accounts Pledge
Agreement dated as of August 22, 1996 by and among the Company, the
Disbursement Agent and the Trustee as amended or supplemented from time to
time in accordance with the terms of this Indenture and the Collateral.
"ACCRUAL PERIOD" shall have the meaning set forth in paragraph 1 of
the Notes.
"ACQUIRED DEBT" 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.
"ADJUSTED CONSOLIDATED CASH FLOW" means, with respect to the Company
for any period, the Consolidated Cash Flow of the Company for such period plus
an amount equal to the aggregate Management Fees paid or accrued by the
Company for such period, to the extent such Management Fees were deducted in
computing Consolidated Net Income for purposes of computing such Consolidated
Cash Flow.
"ADJUSTED FIXED CHARGE COVERAGE RATIO" means with respect to any
Person for any period, the ratio of the Adjusted Consolidated Cash Flow of
such Person and its Subsidiaries for such period to the Fixed Charges of such
Person and its Subsidiaries for such period (calculated in the same manner as
the Fixed Charge Coverage Ratio is calculated); PROVIDED that the amount of
Contingent Interest on a pro forma basis shall equal the Contingent Interest
accrued and reflected in the financial statements for the last two Semiannual
Periods with respect to which Contingent Interest was accruable or payable or,
if two such Semiannual Periods have not occurred, then the amount accrued and
reflected in the financial statements with respect to the most recently
completed Reference Period beginning after the Commencement Date.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
PROVIDED that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET SALE" means, for any Person, (i) the sale, transfer, lease,
conveyance or other disposition (or series thereof) (including, without
limitation, by merger or consolidation or by exchange of assets whether by
operation of law or otherwise or by way of a sale and leaseback) of any assets
of such Person, including, without limitation, assets consisting of Capital
Stock held by such Person) other than a disposition of inventory in the
ordinary course of business; PROVIDED that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by Section 4.16 and/or
Section 5.01 and not by Section 4.10, (ii) the issue or sale by the Company or
any of its Subsidiaries of Equity Interests of any of the Company's
Subsidiaries, in the case of clauses (i) or (ii), for net proceeds of, or with
a fair market value in excess of $250,000 with respect to each disposition or
series of related dispositions and (iii) an Event of Loss with respect to any
assets of the Company or any of its Subsidiaries other than Note Collateral
existing on the date that Casino Magic-Bossier City becomes Operating.
Notwithstanding the foregoing, (i) a transfer of assets by the Company to a
Substantially Owned Subsidiary of the Company or by a Substantially Owned
Subsidiary of the Company to the Company or to another Substantially Owned
Subsidiary of the Company, (ii) an issuance of Equity Interests by a
Substantially Owned Subsidiary of the Company to the Company or to another
Substantially Owned Subsidiary of the Company, (iii) a Restricted Payment that
is permitted by Section 4.07, (iv) the sale of a Restricted Investment and (v)
any Event of Loss with respect to Note Collateral comprising Casino
Magic-Bossier City on the date that it becomes Operating, in each case, will
not be deemed to be an Asset Sale.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP)
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).
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors
of such Person, or any authorized committee thereof or other equivalent
governing body of such Person.
"BOSSIER RIVERBOAT" means that certain riverboat gaming vessel
"Mary's Prize" Official No. 1028011 purchased by the Company pursuant to the
Vessel Purchase Agreement.
"BOSSIER RIVERBOAT MORTGAGE" means that certain First Preferred Ship
Mortgage on the Whole of the Mary's Prize (Bossier Riverboat), dated as of
August 22, 1996, executed by the Company in favor of the Trustee as amended or
supplemented from time to time in accordance with the terms of this Indenture
and the Collateral Documents.
"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,
partnership 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.
"CASH COLLATERAL ACCOUNTS" means, collectively, the Construction
Disbursement Account, the Completion Reserve Account, the Interest Reserve
Account, the Operating Reserve Account and the Escrow Account.
"CASH COLLATERAL AND DISBURSEMENT AGREEMENT" means the Cash
Collateral and Disbursement Agreement dated as of August 22, 1996 among the
Company, the Trustee and the Disbursement Agent, in connection with Casino
Magic-Bossier City in substantially the form attached hereto as Exhibit I as
amended or supplemented from time to time in accordance with the terms of this
Indenture and the Collateral Documents.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Keefe 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) investment
funds investing solely in securities of the types described in clauses (ii),
(iii), (iv) or (v) above.
"CASINO MAGIC" means Casino Magic Corp., a Minnesota corporation.
"CASINO MAGIC-BOSSIER CITY" means the pending project to develop,
construct, equip and open the Casino Magic-Bossier City dockside riverboat
casino, substantially as described in the Offering Memorandum of the Company
dated August 16, 1996, relating to the Series A Notes, which will be located
on an approximately 23-acre site along the Red River in Bossier City,
Louisiana, and which will consist of, among other things, (i) a recently
constructed riverboat which measures 254 feet long and 78 feet wide, and
contains approximately 58,000 square feet of interior space, including 30,000
square feet of gaming space with approximately 1,000 slot machines and 50
table games, (ii) a 37,000 square foot entertainment pavilion, and related
amenities (including a 350-seat buffet restaurant, a gift shop, a bar and
lounge area and a stage area designed to showcase live entertainment,
including dance productions, bands and individual performers with an open
seating area that will accommodate up to 300 people) and (iii) covered parking
for 1,550 cars, and any future developments or improvements in connection
therewith. For purposes of this definition, the phrase "substantially as
described" with respect to any of the numbers herein shall be deemed to have
been satisfied if the actual number is at least 85% of the respective number
listed herein, in each case, with the same overall qualities and amenities as
provided in the Construction Budget and Plans.
"CASINO MAGIC-BOSSIER CITY HOTEL" means the planned future hotel
with at least 325 rooms and related amenities adjacent to Casino Magic-Bossier
City, including without limitation, the real property on which such hotel is
located.
"CHANGE OF CONTROL" means the occurrence of any of the following
events: (a) any "Person" or "group" (as such terms are used in Sections 13(d)
and 14(d) under the Exchange Act) is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
will be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time) directly or indirectly of more than 30% of
the total combined voting power of the outstanding Voting Stock of Casino
Magic, if the Permitted Holders (i) beneficially own a lower percentage of the
combined voting power of the outstanding Voting Stock of Casino Magic than
such other Person or group on such date and (ii) do not have the then
effective right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Casino Magic;
(b) Casino Magic consolidates with, or merges with or into, another Person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of Casino Magic and its Subsidiaries taken as
a whole to any Person, or any Person consolidates with, or merges with or
into, Casino Magic, pursuant to a transaction in which the outstanding Voting
Stock of Casino Magic is converted into or exchanged for cash, securities
(other than Voting Stock of Casino Magic) or other property; (c) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Boards of Directors of Casino Magic and the Company (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the stockholders of Casino Magic or the Company, as
the case may be, was approved by a vote of 66K% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of Casino Magic or
the Company, as the case may be, then in office; (d) any order, judgment or
decree shall be entered against Casino Magic or the Company decreeing the
dissolution or split up of Casino Magic and such order shall remain
undischarged or unstayed for a period in excess of 60 days; (e) the sale,
assignment, conveyance, transfer, lease or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole to any Person other than Casino Magic or a Wholly Owned
Subsidiary of Casino Magic; or (f) at any time the Company or Jefferson Corp.
ceases to be a Wholly Owned Subsidiary of Jefferson Corp. or Casino Magic,
respectively.
"COLLATERAL ASSIGNMENT" means that certain Collateral Assignment by
and between the Company and the Trustee as amended or supplemented from time
to time in accordance with the terms of this Indenture and the Collateral
Documents.
"COLLATERAL DOCUMENTS" means, collectively, the Mortgage, Bossier
Riverboat Mortgage, the Crescent City Riverboat Mortgage, the Cash Collateral
and Disbursement Agreement, the CM-Louisiana Security Agreement, the Jefferson
Security Agreement, the Jefferson Stock Pledge and Security Agreement, the
Accounts Pledge Agreement, the Collateral Assignment (in each case in the form
attached hereto as Exhibits F, G, H, I, J, K, L, M and N, respectively and as
each may be amended or supplemented from time to time in accordance with the
provisions of this Indenture), Uniform Commercial Code financing statements,
or any other agreements, instruments, documents or filings that evidence, set
forth or limit the Lien of the Trustee in the Note Collateral.
"COMMENCEMENT DATE" means the first day on which Casino
Magic-Bossier City becomes Operating.
"COMPANY" means Casino Magic of Louisiana, Corp., a Louisiana
corporation or any successor to such corporation pursuant to the applicable
provisions of this Indenture.
"COMPLETION RESERVE ACCOUNT" means that certain account to be
maintained by the Disbursement Agent pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $5.0 million
of the proceeds from the sale of the Notes will be deposited.
"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 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 income or profits of such Person 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 for such period, to
the extent that any such expense was deducted in computing such Consolidated
Net Income, plus (iv) depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) of such Person for such period to
the extent that such depreciation or amortization was deducted in computing
such Consolidated Net Income, in each case, on a consolidated basis and
determined in accordance with GAAP, plus (v) preopening expenses, if any,
related to Casino Magic-Bossier City, to the extent that such preopening
expenses were included in computing such Consolidated Net Income.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
referent 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 governmental approval (that has not been obtained),
and without direct or indirect restriction 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 INTEREST EXPENSE" means, with respect to any Person
for any period, without duplication, (i) the consolidated interest expense of
such Person and its Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of 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) and (ii) the consolidated interest expense of
such Person and its Subsidiaries that was capitalized during such period, and
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries (whether or not such
Guarantee or Lien is called upon), and (iv) to the extent not included above,
Contingent Interest, whether paid or accrued, to the extent such expense was
deducted in computing Consolidated Net Income.
"CONSOLIDATED NET INCOME" means, with respect to any 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 (but not loss) of any Person that is not a
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 referent Person or a Wholly Owned Subsidiary thereof that
is a Guarantor, (ii) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions
by that 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 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, and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of this
Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"CONSTRUCTION BUDGET" means itemized schedules setting forth on line
item basis all of the costs (including financing costs) estimated to be
incurred in connection with the financing, design, development, construction,
equipping and opening of Casino Magic-Bossier City, as such schedules are
delivered to the Disbursement Agent on the Issue Date and as amended from time
to time in accordance with the terms of the Cash Collateral and Disbursement
Agreement.
"CONSTRUCTION DISBURSEMENT ACCOUNT" means that certain account, to
be maintained by the Disbursement Agent pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $31.7 million
of the proceeds from the sale of the Notes will be deposited.
"CONTINGENT INTEREST" means with respect to any principal amount of
Notes as of any date after the Commencement Date, an amount equal to the
product of (i) 5% of the Company's Adjusted Consolidated Cash Flow for the
Accrual Period last completed times (ii) a fraction, the numerator of which is
the amount of such principal and the denominator of which is $115.0 million.
"CONTINGENT INTEREST ACCRUAL AMOUNT" means, at any time, the total
amount of Contingent Interest accrued and unpaid through and as of such time.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 13.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"CRESCENT CITY RIVERBOAT" means the riverboat gaming vessel
"Crescent City Queen," Official Number 1028319, measuring approximately 430
feet by 100 feet with a total area of approximately 88,000 square feet spread
across three decks, owned by the Company on the Issue Date.
"CRESCENT CITY RIVERBOAT MORTGAGE" means that certain First
Preferred Ship Mortgage on the Whole of the Crescent City Queen (Crescent City
Riverboat), dated as of August 22, 1996, executed by the Company in favor of
the Trustee as amended or supplemented from time to time in accordance with
the terms of this Indenture and the Collateral Documents.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"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.
"DEFINITIVE NOTES" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for
by footnote 1 thereof.
"DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof
as the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DISBURSEMENT AGENT" means First National Bank of Commerce.
"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), 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 91 days after the date on which the Notes mature.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ESCROW ACCOUNT" means that certain account to be maintained by the
Disbursement Agent pursuant to the terms of the Cash Collateral and
Disbursement Agreement into which the proceeds of a sale of the Crescent City
Riverboat, if any, will be deposited if required by the terms of the Cash
Collateral and Disbursement Agreement.
"EVENT OF LOSS" means, with respect to any property or asset
(tangible or intangible, real or personal), any of the following: (i) any
loss, destruction or damage of such property or asset; (ii) any 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 (iii) any
settlement in lieu of clause (ii) above or with respect to the institution of
any proceedings for any such condemnation, seizure, taking, confiscation or
requisition.
"EXCESS CASH FLOW" means, with respect to the Company for any
Reference Period, the Consolidated Cash Flow of the Company and its
Subsidiaries for such Reference Period, minus (i) provision for taxes based on
income or profits of the Company and its Subsidiaries for such Reference
Period, to the extent that such provision for taxes was included in computing
such Consolidated Cash Flow, minus (ii) consolidated interest expense of the
Company and its Subsidiaries for such Reference Period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of 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), to the
extent that any such expense was deducted in computing such Consolidated Cash
Flow, minus (iii) up to $1.5 million in combined capital expenditures of the
Company and its Subsidiaries that are actually made during such Reference
Period (excluding any capital expenditures made with the proceeds from the
sale of the Notes), minus (iv) principal payments on Indebtedness permitted to
be incurred pursuant to Section 4.09, minus (v) non-interest payments in
respect of Capital Lease Obligations, in each case, on a consolidated basis
and determined in accordance with GAAP.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues 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 or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable Reference Period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
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
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, and (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 referent Person or any of its Subsidiaries following
the Calculation Date.
"FIXED CHARGES" means, with respect to any Person for any period,
without duplication, the sum of (i) the Consolidated Interest Expense of such
Person and (ii) the product of (a) all cash dividend payments (and non-cash
dividend payments in the case of a Person that is a Subsidiary) on any series
of preferred stock or Disqualified Stock 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 INTEREST" shall have the meaning provided in paragraph 1 of
the Notes.
"FF&E" means furniture, fixtures or equipment used in the ordinary
course of the business of the Company and its Subsidiaries.
"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 from time to time.
"GAMING AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America 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, the Louisiana
Gaming Control Board and any other agency with authority to regulate any
gaming operation (or proposed gaming operation) owned, managed or operated by
the Company or any of its Subsidiaries.
"GAMING FACILITY" means any tangible vessel, building or other
structure used or expected to be used to enclose space in which gaming
business is conducted and (i) wholly or partially owned, directly or
indirectly, by the Company or any of its Subsidiaries or (ii) any portion or
aspect of which is managed or used, or expected to be managed or used, by the
Company or any of its Subsidiaries.
"GAMING LAW" means the gaming laws of any jurisdiction or
jurisdictions to which the Company, any of its Subsidiaries or any of the
Guarantors is, or may at any time after the date of this Indenture, be
subject.
"GAMING LICENSE" means every license, franchise or other
authorization required to own, lease, operate or otherwise conduct gaming
activities of the Company or any of its Subsidiaries, including without
limitation, all such licenses granted under the Louisiana Riverboat Economic
Development and Gaming Control Act and regulated under the Louisiana Gaming
Control Law, the regulations promulgated pursuant to each such law, and other
applicable federal, state, foreign or local laws.
"GENERAL CONTRACTOR" means W.S. Bellows Corporation.
"GLOBAL NOTE" means a Note that contains the paragraph referred to
in footnote 1 and the additional schedule referred to in footnote 3 to the
form of the Note attached hereto as Exhibit A.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"GUARANTEES" means any guarantee given by any Guarantor pursuant to
the terms of this Indenture.
"GUARANTORS" means Jefferson Corp. and any Subsidiary of the Company
which has executed or hereafter executes a Guaranty in accordance with Section
4.18 hereof, and their successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"HOLDER" means a Person in whose name a Note is registered.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money
(including accrued and unpaid Contingent Interest) or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the guarantee by such Person of any indebtedness of any
other Person.
"INDENTURE" means this Indenture, as amended or supplemented from
time to time.
"INDEPENDENT CONSTRUCTION CONSULTANT" means the independent
construction consultant to be retained by the Company pursuant to the Cash
Collateral and Disbursement Agreement in connection with the construction of
Casino Magic-Bossier City.
"INTEREST" when used with respect to any Note includes Fixed
Interest and Contingent Interest.
"INTEREST RESERVE ACCOUNT" means that certain account, to be
maintained by the Disbursement Agent pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $7.3 million
of the proceeds from the sale of the Notes will be deposited and used to
purchase the Pledged Securities.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates), including, without
limitation, in the forms of direct or indirect loans (including guarantees of
Indebtedness or other obligations), advances or capital contributions (other
than advances to vendors and customers in the ordinary course of business that
are recorded as accounts receivable in accordance with GAAP and excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business and prepaid expenses and deposits 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; PROVIDED that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common
equity securities of the Company shall not be deemed to be an Investment. If
the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company 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.
"ISSUE DATE" means August 23, 1996, the closing date for the sale
and delivery of the Notes.
"JEFFERSON CORP." means Jefferson Casino Corporation, a Louisiana
corporation.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, New York or the City of Hartford,
Connecticut or at a place of payment are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holi-day 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 for the interven-ing
period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"LOUISIANA REFERENDUM" means the local option elections scheduled to
be held on November 5, 1996 on a parish-by-parish basis in the State of
Louisiana to determine whether to continue to permit existing forms of gaming
authorized by law to be conducted in each such parish.
"MANAGEMENT AGREEMENT" means that certain Management Agreement among
Casino Magic, the Manager and the Company relating to the license of the
Casino Magic name and the management of Casino Magic-Bossier City, as in
effect on the date of this Indenture or as may be amended in accordance with
Section 4.29 hereof.
"MANAGEMENT FEES" means any management fees payable to a subsidiary
of Casino Magic for services rendered pursuant to the Management Agreement.
"MANAGER" means Casino Magic Management Services, Inc., a wholly
owned subsidiary of Casino Magic.
"MINIMUM FACILITIES" means, with respect to Casino Magic-Bossier
City, a riverboat casino with at least 810 operating slot machines and 40
operating table games (but in no event less than 1,050 total gaming
positions), a 35,000 square foot entertainment pavilion, related amenities
(including a buffet restaurant, a gift shop, a bar and lounge area, and a
stage area with an open seating area) and covered parking for at least 1,255
cars.
"MORTGAGE" means that certain mortgage on the real property and
improvements constituting Casino Magic-Bossier City as amended or supplemented
from time to time in accordance with the terms of this Indenture and the
Collateral Documents.
"NET INCOME" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such
gain (but not loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or any
of its Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"NET LOSS PROCEEDS" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Event of Loss,
including, without limitation, insurance proceeds from condemnation awards or
damages awarded by any judgment, net of the direct costs in recovery of such
Net Loss Proceeds (including, without limitation, legal, accounting, appraisal
and insurance adjuster fees and any relocation expenses incurred as a result
thereof), amounts required to be applied to the repayment of Indebtedness (to
the extent, in the case of revolving credit Indebtedness, such Indebtedness is
permanently reduced) secured by a Lien on the asset or assets that were the
subject of such Event of Loss, and any taxes paid or payable as a result
thereof.
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its 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 (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied
to the repayment of Indebtedness (to the extent, in the case of revolving
credit Indebtedness, such Indebtedness is permanently reduced) 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.
"NOTE COLLATERAL" means all assets, now owned or hereafter acquired,
of the Company or any Guarantor pledged, collaterally assigned or with respect
to which a security interest has been granted to the Trustee in the Collateral
Documents, which will initially include all real estate, improvements and all
personal property owned by the Company, all accounts held by or for the
benefit of the Company, in each case with certain exceptions, and the Capital
Stock of the Company.
"NOTE CUSTODIAN" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"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.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company or a Guarantor, as the case may be, by two Officers of the Company or
a Guarantor, as the case may be, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company or a Guarantor, as the case may be, that
meets the requirements set forth in Section 13.05 hereof.
"OPERATING" means, with respect to Casino Magic-Bossier City, the
time that (i) all Gaming Licenses have been granted and have not been revoked
or suspended, (ii) all Liens (other than the Liens created by the Collateral
Documents or Permitted Liens) related to the construction of Casino
Magic-Bossier City have been paid or, if payment is not yet due or if such
payment is contested in good faith by the Company, sufficient funds remain in
the Construction Disbursement Account to discharge such Liens or such Liens
have been bonded with bonds in form and substance sufficient to satisfy such
Liens, (iii) the General Contractor, the project architect and the Independent
Construction Consultant of Casino Magic-Bossier City shall have delivered a
certificate to the Trustee certifying that Casino Magic-Bossier City is
complete in accordance with the Plans therefor and all applicable building
laws, ordinances and regulations, (iv) Casino Magic-Bossier City is in a
condition (including installation of furnishings, fixtures and equipment) to
receive guests in the ordinary course of business, (v) gaming and other
operations in accordance with applicable law are open to the general public
and are being conducted at Casino Magic-Bossier City, (vi) a permanent or
temporary certificate of occupancy has been issued for Casino Magic-Bossier
City by the parish in Louisiana in which Casino Magic-Bossier City will
operate, (vii) a notice of completion of Casino Magic-Bossier City has been
duly recorded and (viii) the Bossier Riverboat has been documented by the U.S.
Coast Guard in the name of the Company and the U.S. Coast Guard has issued a
final Certificate of Inspection for the Bossier Riverboat.
"OPERATING DEADLINE" means April 30, 1997.
"OPERATING HOTEL" means with respect to the Casino Magic-Bossier
City Hotel, the time that (i) all Liens (other than Permitted Liens) related
to the construction of the Casino Magic-Bossier City Hotel have been paid or,
if payment is not yet due or if such payment is contested in good faith,
sufficient funds have been escrowed to discharge such Liens or such Liens have
been bonded with bonds in form and substance sufficient to satisfy such Liens,
(ii) the project manager and the project architect shall have delivered a
certificate to the Trustee certifying that the Casino Magic-Bossier City Hotel
is complete in accordance with the plans therefor and applicable buildings
laws, ordinances and regulations, (iii) the Casino Magic-Bossier City Hotel is
in a condition (including installation of furnishings, fixtures and equipment)
to receive guests in the ordinary course of business and (iv) hotel operations
are open to the general public and are being conducted at the Casino
Magic-Bossier City Hotel.
"OPERATING RESERVE ACCOUNT" means that certain account, to be
maintained by the Disbursement Agent pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $3.2 million
of the proceeds from the sale of the Notes will be deposited.
"OPERATING YEAR" means (i) the period beginning on the date that
gaming operations commence at the Casino Magic-Bossier City casino through
December 31, 1997 and (ii) thereafter, each succeeding full fiscal year of the
Company.
"OPINION OF COUNSEL" means an opinion (which may contain customary
assumptions, qualifications and exceptions) from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof, which legal counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company, any Guarantor or the Trustee.
"PERMITTED HOLDERS" means (i) Mr. Marlin F. Torguson, Mr. Allan J.
Kokesch and Mr. Wayne K. Lund, (ii) any lineal descendants of any Person
described in the preceding clause (i), (iii) the spouse of any Person
described in the preceding clauses (i) or (ii), (iv) any controlled Affiliate
of any Person described in the preceding clauses (i), (ii) or (iii) and (v)
any trust solely for the benefit of any Person described in clauses (i) , (ii)
or (iii) of this definition.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or
in any Substantially Owned Subsidiary of the Company that is evidenced by
Capital Stock or Subsidiary Intercompany Notes that are pledged to the Trustee
as Note Collateral; (b) any Investment in Cash Equivalents; (c) any Investment
by the Company or any Subsidiary of the Company in a Person that is evidenced
by Capital Stock or Subsidiary Intercompany Notes that are pledged to the
Trustee as Note Collateral, if as a result of such Investment (i) such Person
becomes a Substantially Owned Subsidiary of the Company and a Guarantor that
is engaged in the same or a similar line of business as the Company and its
Subsidiaries were engaged in on the date of this Indenture or (ii) such Person
is merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Substantially Owned Subsidiary of the Company that is a Guarantor and that is
engaged in the same or a similar line of business as the Company and its
Subsidiaries were engaged in on the date of this Indenture; (d) 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 4.10 hereof; and (e)
deposits and accounts with, and certificates of deposit issued by, domestic
banks of recognized standing and having capital, surplus and undivided profits
of at least $25 million (which are not affiliated with the Company) doing
business in the jurisdictions in which the Company or any Subsidiary does
business.
"PERMITTED LIENS" means (i) Liens in favor of the Company; PROVIDED,
that if such Liens are on any Note Collateral, such Liens are either
collaterally assigned to the Trustee or subordinate to the Lien in favor of
the Trustee securing the Notes or any Guarantee; (ii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with
the Company or any Subsidiary of the Company; PROVIDED that such Liens were in
existence prior to the contemplation of such merger or consolidation and do
not extend to any assets other than those of the Person merged into or
consolidated with the Company or such Subsidiary; (iii) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary
of the Company, PROVIDED that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any assets other than
those of the Subsidiary so acquired; (iv) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the Issue Date; (vi) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, PROVIDED that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(vii) statutory Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like Liens arising in the ordinary
course of business and with respect to amounts not yet delinquent or being
contested in good faith by an appropriate process of law, and for which a
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made, and, with respect to such Liens arising in connection
with Casino Magic-Bossier City, for which the Company has obtained the title
insurance endorsements required under the Cash Collateral and Disbursement
Agreement; (viii) Liens on FF&E to secure Indebtedness permitted by clause
(vi) of the second paragraph of Section 4.09; (ix) Liens on assets comprising
the Casino Magic-Bossier City Hotel to secure secured Indebtedness permitted
by clause (vii) of the second paragraph of Section 4.09; PROVIDED, that the
holder of such lien enters into a Reciprocal Easement Agreement in the form
attached as Exhibit O to this Indenture; (x) Liens securing obligations in
respect of this Indenture, the Notes or Guarantees; (xi) pledges or deposits
in the ordinary course of business to secure lease obligations or
nondelinquent obligations under workers' compensation, unemployment insurance
or similar legislation; (xii) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
not interfering in any material respect with the business of the Company or
any Subsidiary incurred in the ordinary course of business; (xiii) Liens
arising from filing UCC financing statements for precautionary purpose in
connection with true leases of personal property that are otherwise permitted
under this Indenture and under which the Company or any Subsidiary is lessee;
(xiv) Liens in favor of the Trustee, for the benefit of the Holders, granted
pursuant to this Indenture and the Collateral Documents; and (xv) any
replacement, renewals or extensions of those Liens permitted under subsections
(viii) and (ix) hereof.
"PERMITTED REFINANCING DEBT" means any Indebtedness of the Company
or any of its 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 Company or any of its Subsidiaries; PROVIDED that: (i)
the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of related prepayment
penalties, fees 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; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred by the Company.
"PERMITTED SECURITIES" means, with respect to an Asset Sale of the
Crescent City Riverboat, (i) notes or other obligations issued by the
transferee to the Company that (A) mature no later than the date that the
Notes mature, (B) bear interest at a rate no lower than the rate per annum
equal to 350 basis points over the average rate for United States Treasury
Securities of comparable maturity, (C) are secured by a first priority ship
mortgage in favor of the Company and (D) are issued by an issuer whose Fixed
Charge Coverage Ratio for its most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding
the date of such issuance is not less than 1.75 to 1.0 and (ii) voting equity
securities that are (A) issued by an issuer that (1) has a class of equity
securities that is traded on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq Stock Market, (2) has equity market value as of the
date of the consummation of such Asset Sale of $100,000,000 or more, PROVIDED,
that such voting equity securities constitute no more than 3% of the total
outstanding voting equity securities of such issuer, and (3) has senior
unsecured debt securities rated in a ratings category equal to or higher than
the Notes, as rated by both of Moody's Investors Service and Standard & Poor's
Ratings Group and (B) registered and freely tradeable by the Company under
applicable state and federal securities laws and listed for trading on a
national securities exchange or the Nasdaq Stock Market.
"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 and specifications for Casino Magic-Bossier
City, as delivered to the Company by the architect for the Casino
Magic-Bossier City on or before the Issue Date, including without limitation,
preliminary plans so delivered, and as finalized, amended, supplemented or
otherwise modified from time to time as approved by the independent
construction consultant in accordance with the terms of the Cash Collateral
and Disbursement Agreement.
"PLEDGED SECURITIES" means the securities purchased by the Company
with a portion of the proceeds from the sale of the Notes, which shall consist
of Government Securities, to be deposited in the Interest Reserve Account.
"PROJECT COSTS" means, with respect to the development, construction
and opening of the Casino Magic-Bossier City Hotel, the aggregate costs
required to complete such development, construction and opening in accordance
with the budget and the plans therefor and applicable legal requirements, as
set forth in an Officers' Certificate submitted to the Trustee, setting forth
in reasonable detail all amounts theretofore expended in connection with such
development, construction and opening, including direct costs related thereto
such as construction management, architectural, engineering and interior
design fees, site work, utility installations and hook-up fees, construction
permits, certificates and bonds, land acquisition costs, costs of furniture,
fixtures, furnishings, machinery and equipment, non-construction supplies and
pre-opening payroll, but excluding principal or interest payments on any
Indebtedness (other than interest which is required to be capitalized in
accordance with GAAP, which shall be included in determining Project Costs).
"REFERENCE PERIOD" means, with respect to any Person, the four full
fiscal quarters (or, with respect to the Company, such lesser number of full
fiscal quarters as have ended after the commencement of gaming operations at
Casino Magic-Bossier City) ended immediately prior to any date upon which any
determination is to be made.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company
and the other parties named on the signature pages thereof, as such agreement
may be amended, modified or supplemented from time to time.
"RESPONSIBLE OFFICER" means with respect to the Trustee, any officer
within the Corporate Trust Administration of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEMIANNUAL PERIOD" means each period that begins on July 1 and ends
on the next succeeding December 31 or each period that begins on January 1 and
ends on the next succeeding June 30.
"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.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination
thereof).
"SUBSIDIARY INTERCOMPANY NOTES" means the intercompany notes senior
to any subordinated indebtedness of, and pari passu with, all existing
unsubordinated indebtedness of the issuing Subsidiary, issued by Subsidiaries
of the Company in favor of the Company to evidence advances by the Company, in
each case, in the form attached as Exhibit E to this Indenture.
"SUBSTANTIALLY OWNED SUBSIDIARY" of any Person means a Subsidiary of
such Person at least 80% 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.
"TAX SHARING AGREEMENT" means the Tax Allocation Agreement, dated as
of October 14, 1993, as in effect on the Issue Date except for the
contemplated addition of Subsidiaries, among Casino Magic Finance Corp.,
Casino Magic, Biloxi Casino Corp., Mardi Gras Casino Corp. and each of the
other existing or future direct or indirect domestic Subsidiaries of Casino
Magic.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TRANSFER RESTRICTED SECURITIES" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"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.
"VESSEL PURCHASE AGREEMENT" means that certain Buy-Sell Agreement
dated August 2, 1996 between the Company and Boyd Gaming Corporation, pursuant
to which the Company agreed to purchase the Bossier Riverboat.
"VOTING STOCK" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock
of any other class or classes will have, or might have, voting power by reason
of the happening of any contingency).
"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.
SECTION 1.02. OTHER DEFINITIONS.
Term Defined in Section
"Affiliate Transaction" 4.12
"Asset Sale" 4.10
"Asset Sale Offer" 3.10
"Change of Control Offer" 4.16
"Change of Control Payment" 4.16
"Change of Control Payment Date" 4.16
"Covenant Defeasance" 8.03
"Disqualified Holder" 3.08
"DTC" 2.03
"Event of Default" 6.01
"Event of Loss Offer" 3.10
"Excess Cash Flow Redemption" 3.09
"Excess Cash Flow Redemption Amount" 3.09
"Excess Proceeds" 4.10
"Excess Proceeds Offer" 3.10
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.10
"Offer Period" 3.10
"Paying Agent" 2.03
"Purchase Date" 3.10
"Registrar" 2.03
"Restricted Payments" 4.07
"Series A Notes" Recitals
"Series B Notes" Recitals
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Notes and the Guarantees;
"INDENTURE SECURITY HOLDER" means a Holder of a Note-;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company, the Guarantors and any
successor obligor upon the Notes or any Guarantee, as the case may be.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the mean-ings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) 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 NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Guarantee shall be
substantially in the form of Exhibit B. The Notes may have notations, legends
or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto). Notes issued in definitive form shall be substantially in the form
of Exhibit A attached hereto (but without including the text referred to in
footnote 1 thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Notes from time to time endorsed
thereon and that the aggregate amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Notes may be presented for payment ("PAYING AGENT").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company 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 Company may
change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global
Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit
of Holders or the Trustee all money held by the Paying Agent for the payment
of principal, premium or Liquidated Damages, if any, or interest on the Notes,
and shall notify the Trustee of any default by the Company or any Guarantor 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
Company 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 Company or a Subsidiary) shall have no further liability for the
money. If the Company or a 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 Company or any Guarantor, the Trustee shall serve
as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA 312(a). If the Trustee is
not the Registrar, the Company or the Guarantors shall furnish to the Trustee
at least seven Business Days before each interest payment date and at such
other times as the Trustee may request in writing, a list in such form and as
of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company and the Guarantors shall otherwise
comply with TIA 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Notes presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a
Transfer Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification to that effect from such Holder (in
substantially the form of Exhibit C hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in accordance with Rule 144
or Rule 904 under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect from such
Holder (in substantially the form of Exhibit C hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect from such
Holder (in substantially the form of Exhibit C hereto) and an Opinion of
Counsel from such Holder or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that such transfer is in compliance
with the Securities Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Note, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to
the Trustee, together with:
(i) if such Definitive Note is a Transfer Restricted Security,
and
(A) such Definitive Note is being exchanged for a
beneficial interest in the name of such Holder, without transfer, a
certification to that effect from such Holder (in substantially the form of
Exhibit C hereto);
(B) such Definitive Note is being transferred by such
Holder to a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 or Rule
904 under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification from the Holder thereof
(in substantially the form of Exhibit C hereto) to that effect; or
(C) such Definitive Security is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect from such Holder (in
substantially the form of Exhibit C hereto) and an Opinion of Counsel from
such Holder or the transferee reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in compliance with the
Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the Holder thereof directing
the Trustee to make, or to direct the Note Custodian to make, an endorsement
on the Global Note to reflect an increase in the aggregate principal amount of
the Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global
Notes are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.11 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Definitive Note. Upon
receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global Note,
and, in the case of a Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the form of
Exhibit C hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in accordance with Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the transferor (in
substantially the form of Exhibit C hereto); or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferor (in
substantially the form of Exhibit C hereto) and an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in compliance with the
Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly and, following such
reduction, the Company shall execute and, the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the appropriate principal
amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(d) shall be registered
in such names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Note
may not be transferred as a whole except by the 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.
(f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF DEPOSITARY. If
at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Global
Notes and a successor Depositary for the Global Notes is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Notes under this
Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global Notes and Definitive Notes
(and all Notes issued in exchange therefor or substitution thereof) shall bear
legends in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE 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. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY 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 COMPANY SO REQUESTS), (2) TO THE COMPANY 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 RESTRICTIONS SET FORTH IN (A) ABOVE."
PURSUANT TO PROVISIONS OF THE INTERNAL REVENUE CODE OF
1986 RELATING TO ORIGINAL ISSUE DISCOUNT AND TREASURY REGULATIONS PUBLISHED
THEREUNDER, THE FOLLOWING INFORMATION IS PROVIDED: (1) THIS SECURITY IS BEING
ISSUED WITH ORIGINAL ISSUE DISCOUNT IN THE AMOUNT OF $1018.76 PER $1000 OF
PRINCIPAL AMOUNT DUE AT MATURITY; (2) THE ISSUE PRICE OF THIS SECURITY IS
$1000 PER $1000 OF PRINCIPAL AMOUNT DUE AT MATURITY; (3) THE ISSUE DATE OF
THIS SECURITY IS AUGUST 22, 1996; (4) THE "COMPARABLE YIELD" TO MATURITY OF
THIS SECURITY (WITHIN THE MEANING OF TREASURY REGULATION 1.1275-4) IS 14.51%,
AND (5) THE "PROJECTED PAYMENT SCHEDULE" (WITHIN THE MEANING OF TREASURY
REGULATION SECTION 1.1275-4) IS AS FOLLOWS:
DATE AMOUNT PER $1000
2/15/97 $66.38
8/15/97 $73.26
2/15/98 $73.26
8/15/98 $73.26
2/15/99 $73.26
8/15/99 $73.26
2/15/00 $73.26
8/15/00 $73.26
2/15/01 $73.26
8/15/01 $73.26
2/15/02 $73.26
8/15/02 $73.26
2/15/03 $73.26
8/15/03 $73.26
HOLDERS SHOULD REFER TO THE DISCUSSION OF CERTAIN FEDERAL
INCOME TAX CONSIDERATIONS SET FORTH IN THE OFFERING MATERIALS RELATING TO THE
NOTES. CONTACT THE COMPANY AT 1701 OLD MINDEN ROAD, BOSSIER CITY, LOUISIANA
71111, ATTENTION: CORPORATE SECRETARY FOR MORE DETAILED INFORMATION CONCERNING
THE COMPUTATION OF ORIGINAL ISSUE DISCOUNT SET FORTH HEREIN.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Note) pursuant to Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Note that does not
bear the first legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall not be
required to bear the first legend set forth in (i) above, but shall continue
to be subject to the provisions of Section 2.06(c) hereof; PROVIDED, HOWEVER,
that with respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a Definitive Note that does
not bear the legend set forth in (i) above, which request is made in reliance
upon Rule 144, the Holder thereof shall certify in writing to the Registrar
that such request is being made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit C hereto).
(iii) Notwithstanding the foregoing, upon consummation of
the Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate Series B Notes in exchange for Series A Notes accepted for
exchange in the Exchange Offer, which Series B Notes shall not bear the first
legend set forth in (i) above, and the Registrar shall rescind any restriction
on the transfer of such Notes, in each case unless the Holder of such Series A
Notes is either (A) a broker-dealer, (B) a Person participating in the
distribution of the Series A Notes or (C) a Person who is an affiliate (as
defined in Rule 144A) of the Company.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall
be returned to or retained and cancelled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for Definitive Notes,
redeemed, repurchased or cancelled, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note, by the Trustee or the Note Custodian, at the
direction of the Trustee, to reflect such reduction.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company 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
3.07, 3.09, 3.10, 4.10, 4.11, 4.16 and 9.05 hereto).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes or Global Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Definitive Notes or
Global Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of business 15 days
before the day of any selection of Notes for redemption under Section 3.02
hereof and ending at the close of business on the day of selection; or
(B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest payment date.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of and interest on
such Notes, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes in accordance with the provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the
written order of the Company signed by two Officers of the Company, shall
authenticate a replacement Note if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company
to protect the Company, the Trustee, any Agent and any authenticating agent
from any loss that any of them may suffer if a Note is replaced. The Company
may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global 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 Note does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by
the Company, any Guarantor or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company
or any Guarantor, shall be considered as though not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that a Trustee
knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written
order of the Company signed by two Officers of the Company. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes
shall be delivered to the Company. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the 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 Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each
Note and the date of the proposed payment. The Company 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 Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) 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. EXCHANGE REGISTRATION.
In the event that the Company delivers to the Trustee a copy of an
order of effectiveness or a certification of the Company with respect to such
effectiveness with respect to the Exchange Offer, the Trustee shall, at the
Company's expense, notify the Holders of the receipt of such order of
effectiveness or certification and upon the request of any Holder shall
exchange such Holder's Series A Notes for Series B Notes upon the terms set
forth in the Exchange Offer.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursu-ant to the optional
redemption provisions of Section 3.07 hereof or is otherwise required to
redeem Notes pursuant to any other provision of this Indenture, it shall
furnish to the Trustee at least 30 days but not more than 60 days before a
redemption date (or such lesser period as may be acceptable to the Trustee),
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 Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes- to be redeemed among the Holders of the Notes
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a PRO RATA basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate (and in such manner as complies with
applicable legal requirements). In the event of partial redemption by lot,
the particular 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 Notes not previously
called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes- of a Holder are to be redeemed, the
entire outstanding amount of 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 Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Sections 3.08 and 3.10 hereof, at least
30 days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed, by first class mail, a notice of redemption to
each Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemp-tion price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemp-tion ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such lesser period as may be acceptable 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, Notes called for redemption become irrevocably due and payable on the
redemp-tion date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to 10:00 a.m. on the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company
any money deposited with the Trustee or the Paying Agent by the Company in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a 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 Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company 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 Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authen-ticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Company shall not have the option to redeem the Notes
pursuant to this Section 3.07 prior to August 15, 2000. Thereafter, the
Company shall have the option to redeem the Notes, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the applicable redemption date, if redeemed during the twelve-month period
beginning on August 15 of the years indicated below:
YEAR PERCENTAGE
2000 106.500%
2001 104.332%
2002 102.166%
(b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. REDEMPTION PURSUANT TO GAMING LAW.
(a) Notwithstanding any other provision of this Indenture, if
any Gaming Authority requires that a Holder or beneficial owner of the Notes
must be licensed, qualified or found suitable under any applicable Gaming Law
in order to maintain any or obtain any applied-for Gaming License or franchise
of the Company or any of its Subsidiaries under any applicable Gaming Law, and
such 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 Authority (or such lesser period that may be required by such Gaming
Authority or Gaming Law) or if such Holder or beneficial owner is not so
licensed, qualified or found suitable by such Gaming Authority (a
"Disqualified Holder"), the Company shall have the right, at its option, (i)
to require such Disqualified Holder or beneficial owner to dispose of such
Disqualified Holder's or beneficial owner's Notes within 30 days of notice of
such finding by the applicable Gaming Authority that such Holder or beneficial
owner will not be licensed, qualified or found suitable as directed by such
Gaming Authority (or such earlier date as may be required by the applicable
Gaming Authority or Gaming Law) or (ii) to call for redemption of the Notes of
such Disqualified Holder or beneficial owner at a redemption price equal to
the lesser of 100% of the principal amount thereof or the price at which such
Holder or beneficial owner acquired such Notes together with, in either case,
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
earlier of the date of redemption or the date of the finding of unsuitability
by such Gaming Authority, which may be less than 30 days following the notice
of redemption if so ordered by such Gaming Authority. Immediately upon a
determination of unsuitability, the Disqualified Holder shall have no further
rights whatsoever with respect to the Notes (i) to exercise, directly or
indirectly, through any trustee, nominee or any other Person or entity, any
right conferred by the Notes or (ii) to receive any interest or any other
distribution or payment with respect to the Notes, or any remuneration in any
form from the Company for services rendered or otherwise, except the
redemption price of the Notes. The Company shall not be required to pay or
reimburse any Holder or beneficial owner of Notes who is required to apply for
such license, qualification or finding of suitability for the costs of such
application including investigatory costs.
(b) Any redemption pursuant to this Section 3.08 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof (except to the
extent otherwise required by a Gaming Authority or Gaming Law).
SECTION 3.09. MANDATORY REDEMPTION.
(a) In addition to any payments required by Sections 3.08, 4.10,
4.11 or 4.16 hereof, in the event that the voters in the Louisiana Referendum
disapprove the continuation of riverboat gaming in either Bossier Parish or
Caddo Parish, Louisiana, then within 90 days after the end of each Operating
Year, the Company shall redeem (the "Excess Cash Flow Redemption") the maximum
principal amount of Notes that is an integral multiple of $1,000, that may be
redeemed with 100% of the Company's Excess Cash Flow (the "Excess Cash Flow
Redemption Amount") with respect to such Operating Year, at a redemption price
in cash equal to 100% of the principal amount of Notes to be redeemed, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of redemption; PROVIDED, HOWEVER, that the Excess Cash Flow Redemption
Amount shall be reduced by the minimum amount necessary to allow the balance
of Cash Equivalents held by the Company to exceed $5.0 million; PROVIDED,
FURTHER, HOWEVER, that if (i) the voters in the Louisiana Referendum
disapprove the continuation of riverboat gaming in one but not the other of
Bossier Parish or Caddo Parish, Louisiana and (ii) the Company, prior to the
end of its first Operating Year, has obtained a final, non-appealable
determination or decision by (i) all Gaming Authorities and other applicable
governmental regulatory authorities having jurisdiction over the operations of
the Company including without limitation, gaming operations of the Company, or
(ii) a court of competent jurisdiction considering such matter or matters, in
each case the effect of which is that the Company is permitted to conduct
riverboat gaming operations at Casino Magic-Bossier City, the Company's
obligations to make Excess Cash Flow Redemptions shall terminate.
(b) Any redemption pursuant to this Section 3.09 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof (except to the
extent otherwise required by a Gaming Authority).
SECTION 3.10. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 or 4.11 hereof, the
Company shall be required to commence an offer to all Holders to purchase
Notes (an "ASSET SALE OFFER" or an "EVENT OF LOSS OFFER," respectively, and
either one an "EXCESS PROCEEDS OFFER"), it shall follow the procedures
specified below.
The Excess Proceeds 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 Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 or 4.11 hereof, as the case
may be (the "OFFER AMOUNT"), or, if less than the Offer Amount has been
tendered, all Notes tendered in response to the Excess Proceeds Offer.
Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Excess Proceeds Offer.
Upon the commencement of an Excess Proceeds Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders,
with a copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Excess Proceeds Offer. The Excess Proceeds Offer shall be made to all
Holders. The notice, which shall govern the terms of the Excess Proceeds
Offer, shall state:
(a) that the Excess Proceeds Offer is being made pursuant
to this Section 3.10 and Section 4.10 or 4.11 hereof, as the case may be, and
the length of time the Excess Proceeds Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment
shall continue to accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Excess Proceeds Offer
shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant
to an Excess Proceeds Offer may only elect to have all of such Note purchased
and may not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant
to any Excess Proceeds Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a depositary,
if appointed by the Company, or a Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day preceding the
Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Company, the depositary or the Paying Agent, as the case may
be, receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Trustee shall select the
Notes- to be redeemed among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, on a PRO RATA basis,
by lot or in accordance with any other method the Trustee considers fair and
appropriate (and in such manner as complies with applicable legal
requirements) (with such adjustments as may be deemed appropriate by the
Trustee so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a PRO RATA basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Excess
Proceeds Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company
in accordance with the terms of this Section 3.10. The Company, the
depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered
by such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company shall publicly announce the
results of the Excess Proceeds Offer on the Purchase Date. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent that such laws
and regulations are applicable in connection with any Excess Proceeds Offer.
Other than as specifically provided in this Sec-tion 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 NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes. Principal, premium, if any, and interest shall be considered paid
on the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited
by the Company in immediately available funds and desig-nated for and
sufficient to pay all principal, premium, if any, and interest then due as set
forth in an Officers' Certificate delivered to the Trustee, which Officers'
Certificate shall set forth, in reasonable detail, a calculation of the
amounts then due and the amount of any deferral of Contingent Interest in
accordance with the terms of the Notes. The Company shall pay all Liquidated
Damages, if any, in the same manner on the dates and in the amounts set forth
in the Registration Rights Agreement.
The Company shall pay interest (including post--petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments
of interest and Liquidated Damages (without regard to any applicable grace
period) at the same increased rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company or the Guarantors in respect of the Notes and
this Indenture may be served. The Company 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 Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
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.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
SEC, (and within 15 days of the date that is or would be prescribed thereby),
so long as any Notes are outstanding, the Company shall furnish to the Trustee
and to all Holders (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 (without exhibits) if the Company 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 Company and its Subsidiaries and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such reports.
In addition, whether or not required by the rules and regulations of the SEC,
the Company shall file a copy of all such information and reports with the SEC
for public availability (unless the SEC will not accept such a filing) and
shall make such information available to securities analysts and prospective
investors upon request. The Company and the Guarantors shall at all times
comply with TIA 314(a).
(b) The Company shall also include in all such reports provided
pursuant to paragraph (a) hereof: (i) in all such reports issued prior to the
Operating Deadline the anticipated Commencement Date, (ii) in the case of all
other quarterly reports, the Contingent Interest paid, the Contingent Interest
Accrual Amount and the Company's Adjusted Consolidated Cash Flow with respect
to the most recently ended fiscal quarter of the Company, (iii) in the case of
annual reports, the audited Contingent Interest paid, the Contingent Interest
Accrual Amount and the audited Company's Adjusted Consolidated Cash Flow for
the most recently ended fiscal year and for each of the Semiannual Periods
ending in such fiscal year.
(c) The Company shall also provide to the Trustee on February 1 and
August 1 of each year an Officers' Certificate signed by the Chief Financial
Officer of the Company setting forth (i) whether the Company is electing to
defer Contingent Interest for the next succeeding Interest Payment Date, and
if so, providing a calculation in reasonable detail of the basis for such
deferral as provided in paragraph 1 of the Notes including a calculation of
the Company's Adjusted Fixed Charge Coverage Ratio for the most recently
completed Reference Period, (ii) a calculation of the Contingent Interest
Accrual Amount and the Company's Adjusted Consolidated Cash Flow for the most
recently completed Semiannual Period (and with respect to such Officers'
Certificate delivered on February 1, 1997 for the period ended December 31,
1996).
(d) For so long as any Series A Notes remain outstanding, the
Company and the Guarantors shall 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.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company 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 Company and its Subsidiaries during the
preceding fiscal year has been made under the supervi-sion of the signing
Officers with a view to determining whether the Company and each obligor on
the Notes and this Indenture has kept, observed, performed and fulfilled its
obligations under this Indenture and each Collateral Document, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company and each such obligor has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture
and each Collateral Document and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture or
any Collateral Document (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company or such obligor, as the case
may be, is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if any,
on the Notes is prohibited or if such event has occurred, a description of the
event and what action the Company or such obligor, as the case may be, 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 Company'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 Company 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 Company shall, so long as any of the Note-s 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 Company is taking or proposes
to take with respect thereto.
SECTION 4.05. TAXES.
(a) The Company shall pay, and shall cause each of its Subsidiaries
to pay, prior to delinquency, all material taxes, assess-ments, 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 Notes.
(b) Within 60 days of the date of the Indenture, the Guarantor and
the Company shall provide the Trustee with evidence of the tax good standing
of each of the Guarantor and the Company in the state of Louisiana.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors 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 Company and each of the Guarantors (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.
From and after the Issue Date, the Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's
Equity Interests in any capacity (other than payments in respect of the Notes
or dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or dividends or distributions payable by a
Wholly Owned Subsidiary or Substantially Owned Subsidiary of the Company to
the Company, any Wholly Owned Subsidiary or Substantially Owned Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any direct or indirect parent of the Company or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Wholly Owned Subsidiary or Substantially Owned Subsidiary
of the Company that is a Guarantor); (iii) make any principal payment on, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is PARI PASSU with or subordinated in right of payment to
the Notes (other than Notes), in each case except at final stated maturity
and, in the case of PARI PASSU Indebtedness, except in accordance with any
sinking fund or mandatory repurchase or redemption provisions thereof; or (iv)
make any Restricted Investment (all such payments and other actions set forth
in clauses (i) through (iv) above being 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; and
(b) the voters in the Louisiana Referendum have approved the
continuation of riverboat gaming in Bossier Parish and Caddo Parish, Louisiana
or voters in the Louisiana Referendum have disapproved the continuation of
riverboat gaming in one but not the other of Bossier Parish or Caddo Parish,
Louisiana and the Company has obtained a final, non-appealable determination
or decision by (i) all Gaming Authorities and other applicable governmental
regulatory authorities having jurisdiction over the operations of the Company,
including, without limitation, gaming operations of the Company or (ii) a
court of competent jurisdiction considering such matter or matters, in each
case the effect of which is that the Company is permitted to conduct riverboat
gaming operations at Casino Magic-Bossier City; and
(c) all Contingent Interest due and payable on the Interest
Payment Date immediately preceding the date of such Restricted Payment has
been paid; and
(d) the Company 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 Reference Period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof; and
(e) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Company and its Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses A(1), A(2), A(3), A(5) and (B) of the next succeeding paragraph), is
less than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing prior to the date of this Indenture to the end of
the Company'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 received by the
Company from the issue or sale since the date of this Indenture of Equity
Interests of the Company or of debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted Investment
that was made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment.
(A) If (i) no Default or Event of Default has occurred and is
continuing, or would occur as a consequence thereof, and (ii) the voters in
the Louisiana Referendum have approved the continuation of riverboat gaming in
both Bossier Parish and Caddo Parish, Louisiana, or if the voters in the
Louisiana Referendum have disapproved the continuation of riverboat gaming in
one but not the other of both Bossier Parish or Caddo Parish, Louisiana and
the Company has obtained a final, non-appealable determination or decision by
(i) all Gaming Authorities and other applicable governmental regulatory
authorities having jurisdiction over the operations of the Company, including,
without limitation, gaming operations of the Company or (ii) a court of
competent jurisdiction considering such matter or matters, in each case the
effect of which is that the Company is permitted to conduct riverboat gaming
operations at Casino Magic-Bossier City, and (iii) the Company has paid all
Contingent Interest accrued through the Semiannual Period immediately
preceding the Interest Payment Date occurring immediately preceding the date
of such proposed Restricted Payment, the foregoing provisions of the preceding
paragraph shall not prohibit (1) the payment of any dividend within 60 days
after the date of declaration thereof, if at such date of declaration such
payment would have complied with the provisions of this Indenture; (2) the
redemption, repurchase, retirement or other acquisition of any Equity
Interests of the Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock);
PROVIDED that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (e) (ii) of the preceding paragraph; (3) the defeasance,
redemption or repurchase of Indebtedness that is PARI PASSU with or
subordinated in right of payment to the Notes with the net cash proceeds from
an incurrence of applicable Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Equity Interests of the Company (other than Disqualified Stock); PROVIDED that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (e) (ii) of the preceding paragraph; (4) the payment of Restricted
Payments not otherwise permitted in an aggregate amount not to exceed $10.0
million; PROVIDED that the Fixed Charge Coverage Ratio for the Company's most
recently ended Reference Period preceding the date on which such Restricted
Payment is made would have been at least 2.5 to 1.0, determined on a pro forma
basis, as if the Restricted Payment had been made at the beginning of such
Reference Period; (5) the payment on a monthly basis of Management Fees to the
Manager pursuant to Section 4.29 in an amount not to exceed 10% of the
Adjusted Consolidated Cash Flow of the Company for the Company's most recently
ended Reference Period; and (6) repurchases by the Company of its outstanding
Capital Stock which are required to be made under applicable Gaming Law;
PROVIDED, HOWEVER, that the declaration of each dividend paid in accordance
with clause (1) above and each payment, redemption or repurchase made under
clauses (4) or (6) shall each be counted for purposes of computing amounts
expended pursuant to clause (e) in the immediately preceding paragraph and (B)
if no Default or Event of Default has occurred and is continuing, or would
occur as a consequence thereof, the forgoing provisions of the preceding
paragraph will not prohibit payments to Casino Magic pursuant to the Tax
Sharing Agreement.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (in the case of any individual Restricted Payment or series
of related Restricted Payments in an amount greater than $100,000), evidenced
by a resolution of the Board of Directors of the Company set forth in an
Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. Not less
than once each fiscal quarter, the Company shall deliver to the Trustee an
Officers' Certificate stating that each Restricted Payment made during the
prior fiscal quarter was permitted and setting forth the basis upon which the
calculations required by this Section were computed, which calculations may be
based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Subsidiary to (a)(i) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (A) on its Capital Stock or (B) with
respect to any other interest or participation in, or measured by, its profits
or (ii) pay any Indebtedness owed to the Company or any of its Subsidiaries,
(b) make loans or advances to the Company or any of its Subsidiaries or (c)
transfer any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or
by reason of (i) this Indenture, the Notes or the Collateral Documents, (ii)
applicable law or (iii) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
From and after the Issue Date, the Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, "incur"), with respect to any
Indebtedness (including Acquired Debt) and the Company shall not issue any
Disqualified Stock and shall not permit any of its Subsidiaries to issue any
shares of preferred stock or other Disqualified Stock; PROVIDED, HOWEVER, that
so long as no Default or Event of Default has occurred or is continuing the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if:
(i) the Fixed Charge Coverage Ratio of the Company for the
Company's most recently ended Reference Period immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock
is issued would have been at least 2.5 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such Reference Period; and
(ii) the final maturity of such Indebtedness is beyond the
maturity date of the Notes and the Weighted Average Life to Maturity of such
Indebtedness is greater than the remaining Weighted Average Life to Maturity,
of the Notes.
So long as no Default or Event of Default has occurred and is
continuing, the foregoing provisions shall not apply to:
(i) the incurrence by the Company and its Subsidiaries of
Indebtedness represented by the Notes or a Guarantee or obligations arising
under the Collateral Documents, to the extent that such obligations would
constitute Indebtedness;
(ii) the incurrence by the Company of Permitted Refinancing
Debt in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund, Indebtedness that was permitted
by this Indenture to be incurred;
(iii) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Substantially Owned Subsidiaries; PROVIDED, HOWEVER, that (A) such
Indebtedness is expressly subordinate to the payment in full of all
Obligations with respect to the Notes, or the Guarantees, as the case may be,
(B)(1) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Substantially Owned Subsidiary and (2) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Substantially
Owned Subsidiary shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Subsidiary, as the case may be, and
(C) if any Subsidiary is the obligor on such Indebtedness, such Indebtedness
is represented by a Subsidiary Intercompany Note that is pledged to the
Trustee as security for the Notes;
(iv) the incurrence by the Company 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;
(v) the incurrence by the Company of Indebtedness (in
addition to Indebtedness permitted by any other clause of this paragraph) in
an aggregate principal amount (or accreted value, as applicable) at any time
outstanding not to exceed $5.0 million;
(vi) the incurrence by the Company of Indebtedness, the
proceeds of which are utilized solely to purchase FF&E; PROVIDED, HOWEVER,
that (A) the principal amount of such Indebtedness does not exceed the cost
(including sales and excise taxes, installation and delivery charges and other
direct costs of, and other direct expenses paid or charged in connection with,
such purchase) of the FF&E purchased with the proceeds thereof and (B) the
aggregate principal amount of such Indebtedness does not exceed $7.5 million
outstanding at any time prior to the opening of the Casino Magic-Bossier City
Hotel and $10.0 million thereafter; and
(vii) the incurrence by the Company of secured Indebtedness
to finance the Project Costs of the Casino Magic-Bossier City Hotel in an
aggregate principal amount at any time outstanding not to exceed 50% of the
aggregate Project Costs of such Casino Magic-Bossier City Hotel if the Fixed
Charge Coverage Ratio of the Company for the Company's most recently ended
Reference Period immediately preceding the date on which such additional
Indebtedness is incurred would have been at least 2.5 to 1.0, 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 Reference Period.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries
to engage in any Asset Sale, unless (i) the Company, or the Subsidiary, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value (evidenced by a resolution of the Board of
Directors of the Company set forth in an Officers' Certificate delivered to
the Trustee) of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) (a) with respect to an Asset Sale of the Crescent City
Riverboat, at least 25% of the consideration received by the Company therefor
is in the form of Cash Equivalents and the remaining consideration is in the
form of Permitted Securities or (b) with respect to an Asset Sale of any other
asset, at least 85% of the consideration received therefor by the Company, or
such Subsidiary is in the form of Cash Equivalents; PROVIDED, HOWEVER, that
the amount of (A) any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet or in the notes thereto), of the
Company or any Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated in right of payment to the Notes or any
Guarantee thereof) that are assumed by the transferee of any such assets
pursuant to an agreement that releases and indemnifies the Company or such
Subsidiary from further liability with respect thereto and (B) any notes or
other obligations received by the Company or any such Subsidiary from such
transferee that are within 30 days converted by the Company or such Subsidiary
into cash or as to which the Company or such Subsidiary has received at or
prior to the consummation of the Asset Sale a commitment from a nationally
recognized investment, merchant or commercial bank to convert into cash within
90 days of the consummation of such Asset Sale unless not actually converted
into cash within such 90-day period (to the extent of the cash received),
shall be deemed to be Cash Equivalents for purposes of this provision.
Notwithstanding the foregoing, the Company shall not engage in any transfer,
lease, conveyance or disposition, other than a sale, of the Crescent City
Riverboat.
Within 180 days after the receipt by the Company or any of its
Subsidiaries of any Net Proceeds from an Asset Sale, the Company or such
Subsidiary, as the case may be, may (a) apply such Net Proceeds to the making
of a capital expenditure or the acquisition of non-current assets, in either
case, which shall be owned by the Company or such Subsidiary and be used by or
useful to the Company or such Subsidiary in any line of business in which the
Company or such Subsidiary is permitted to be engaged pursuant to Section 4.14
hereof or (b) contractually commit to apply such Net Proceeds to the payment
of the costs of construction of real property improvements, including, without
limitation, to commit to apply Net Proceeds from the sale of the Crescent City
Riverboat to the construction of the Casino Magic-Bossier City Hotel which
improvements shall be owned by the Company or such Subsidiary and be used by
or useful to the Company or such Subsidiary in any line of business in which
the Company or such Subsidiary is permitted to be engaged pursuant to Section
4.14 hereof; PROVIDED HOWEVER, that the Net Proceeds from an Asset Sale of the
Crescent City Riverboat may be applied only to the making of a capital
expenditure or the acquisition of non-current assets or the payment of the
costs of construction of real property improvements, in any case, to be used
by the Company at Casino Magic-Bossier City or the Casino Magic-Bossier City
Hotel; PROVIDED FURTHER, that, in any case, the Company or such Subsidiary, as
the case may be, grants to the Trustee, on behalf of the Holders, a first
priority perfected security interest subject to Permitted Liens on any such
properties or assets acquired or constructed with the Net Proceeds of any such
Asset Sale on the terms set forth in this Indenture and the Collateral
Documents. Pending the final application of any such Net Proceeds, the
Company or such Subsidiary shall invest such Net Proceeds in Cash Equivalents
which shall be pledged to the Trustee as security for the Notes. Any Net
Proceeds from an Asset Sale (other than Net Proceeds from an Asset Sale of the
Crescent City Riverboat) that are not applied or invested as provided in the
first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an Asset Sale Offer to all Holders of Notes to
purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds at an offer price in cash in an amount equal to 101% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, which date shall be no less
than 30 or more than 60 days from the date of such Asset Sale Offer, in
accordance with the procedures set forth in Section 3.10 hereof.
Notwithstanding the foregoing, any Net Proceeds of an Asset Sale of the
Crescent City Riverboat (including without limitation, any cash received upon
the conversion or sale of any Permitted Securities or other notes or
obligations received in consideration of such Asset Sale) received prior to
the determination of the outcome of the Louisiana Referendum shall immediately
be deposited in the Escrow Account in which the Trustee shall have a first
priority perfected security interest. If the voters in the Louisiana
Referendum approve the continuation of riverboat gaming in both Bossier Parish
and Caddo Parish, Louisiana, such Net Proceeds shall be released from the
Escrow Account and may be applied by the Company in accordance with the
provisions of the first sentence of this paragraph. If the voters in the
Louisiana Referendum disapprove the continuation of riverboat gaming in
Bossier Parish or Caddo Parish, Louisiana, the Company shall make an Asset
Sale Offer to all Holders of Notes within 90 days after the end of the first
Operating Year to purchase the maximum principal amount of Notes that may be
purchased out of such Net Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase,
which date shall be no less than 30 or more than 60 days from the date of such
Asset Sale Offer, in accordance with the procedures set forth in Section 3.10
hereof.
To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may,
subject to the provisions in this Indenture and the Collateral Documents, use
any remaining Excess Proceeds for any general corporate purpose. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased
in the manner set forth in Section 3.10. Upon completion of an Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11 EVENT OF LOSS.
Within 360 days after any Event of Loss with respect to any Note
Collateral comprising Casino Magic-Bossier City on the date that it becomes
Operating with a fair market value (or replacement cost, if greater) in excess
of $1.0 million, the Company or the affected Subsidiary of the Company, as the
case may be, may apply the Net Loss Proceeds from such Event of Loss to the
rebuilding, repair, replacement or construction of improvements to Casino
Magic-Bossier City, with no concurrent obligation to make any purchase of any
Notes; PROVIDED that (a) the Company delivers to the Trustee within 90 days of
such Event of Loss a written opinion from a reputable architect that Casino
Magic-Bossier City with at least the Minimum Facilities can be rebuilt,
repaired, replaced, or constructed and Operating within 180 days of such Event
of Loss, (b) an Officers' Certificate certifying that the Company has
available from Net Loss Proceeds or other sources sufficient funds to complete
such rebuilding, repair, replacement or construction, and (c) the Net Loss
Proceeds are less than $25.0 million. If the Net Loss Proceeds to be used for
such rebuilding, repair, replacement or construction exceeds $12.0 million,
then such Net Loss Proceeds shall be deposited in the Construction
Disbursement Account and disbursed in accordance with the Cash Collateral and
Disbursement Agreement. Any Net Loss Proceeds from an Event of Loss with
respect to any Note Collateral comprising Casino Magic-Bossier City on the
date that it becomes Operating that are not reinvested or are not permitted to
be reinvested as provided in the first sentence of this paragraph shall be
deemed "Excess Loss Proceeds." When the aggregate amount of Excess Loss
Proceeds exceeds $10.0 million, the Company shall make an Event of Loss Offer
to all Holders to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Loss Proceeds, at a purchase price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase,
which date shall not be less than 30 or more than 60 days from the date of
such Event of Loss Offer, in accordance with the procedures set forth in
Section 3.10 hereof. If the aggregate principal amount of Notes tendered
pursuant to an Event of Loss Offer exceeds the Excess Loss Proceeds, the
Trustee shall select the Notes to be purchased in the manner set forth in
Section 3.10 hereof. To the extent that the aggregate amount of Notes
tendered pursuant to any Event of Loss Offer is less than the Excess Loss
Proceeds, the Company may, subject to the other provisions of this Indenture
and the Collateral Documents, use any remaining Excess Loss Proceeds for
general corporate purposes. Upon completion of any such Event of Loss Offer,
the amount of Excess Loss Proceeds shall be reset at zero. Pending any
permitted rebuilding, repair, replacement or construction or the completion of
any Event of Loss Offer, the Company or the affected Subsidiary, as the case
may be, shall pledge to the Trustee as additional Note Collateral any Net Loss
Proceeds or other cash on hand required for such permitted rebuilding, repair,
replacement or construction pursuant to the terms of the Collateral Documents
relating to Casino Magic-Bossier City. Such pledged funds shall be released
to the Company to pay for or reimburse the Company for the actual cost of such
permitted rebuilding, repair, replacement or construction, or such Event of
Loss Offer, pursuant to the terms of the Collateral Documents relating to
Casino Magic-Bossier City. Pending the final application of the Net Loss
Proceeds, such proceeds shall be invested in Cash Equivalents which shall be
pledged to the Trustee as security for the Notes. The Company or such
Subsidiary shall grant to the Trustee, on behalf of the Holders, a first
priority lien, subject to Permitted Liens, on any properties or assets
rebuilt, repaired, replaced or constructed with such Net Loss Proceeds on the
terms set forth in Section 10.01 hereof and the Collateral Documents.
With respect to any Event of Loss pursuant to clause (iii) of the
definition of "Event of Loss" that has a fair market value (or replacement
cost, if greater) in excess of $5.0 million, the Company (or the affected
Subsidiary, as the case may be), shall be required to receive consideration at
least (i) equal to the fair market value (evidenced by a resolution of the
Board of Directors of the Company set forth in an Officers' Certificate
delivered to the Trustee) of the assets subject to an Event of Loss and (ii)
90% of which is in the form of Cash Equivalents.
SECTION 4.12. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its 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 contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "AFFILIATE TRANSACTION"), unless (a) such Affiliate Transaction
is on terms that are no less favorable to the Company or the relevant
Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (b)
the Company delivers to the Trustee (i) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $1.0 million, a resolution of the Board of
Directors of the Company set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (a) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors of the Company and (ii) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; PROVIDED, HOWEVER, that (i) payments made pursuant to the
Tax Sharing Agreement or the Management Agreement, (ii) any employment or
indemnification agreement entered into by the Company or any of its
Subsidiaries in the ordinary course of business on terms customary in the
gaming industry, (iii) transactions between or among the Company and/or its
Subsidiaries, and (iv) Restricted Payments and Investments permitted under
Section 4.07 hereof shall not be deemed Affiliate Transactions.
SECTION 4.13. LIENS.
From and after the Issue Date, the Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly create, incur,
assume or suffer to exist any Lien on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
SECTION 4.14. LINE OF BUSINESS.
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in any business or investment activities other than the gaming
business and such business activities as are incidental or related thereto
including, without limitation, related hotel, sports and entertainment
activities and food services, PROVIDED, that such incidental or related
business activities are engaged only at or in conjunction with any Gaming
Facility owned and operated by the Company or any Substantially Owned
Subsidiary of the Company. Notwithstanding any other provision of this
Indenture, the Company shall not, and shall not permit any of its Subsidiaries
to, engage in any business, development or investment activity other than at
or in conjunction with Casino Magic-Bossier city until Casino Magic-Bossier
City is Operating and the Casino Magic-Bossier City Hotel is an Operating
Hotel.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 and Article 11 hereof, as the case may be, the
Company and each of the Guarantors shall do or cause to be done all things
necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organ-izational documents (as
the same may be amended from time to time) of the Company, any such Guarantor
or any such Subsidiary and (ii) the rights (char-ter and statutory), licenses
and franchises of the Company, the Guarantors and their respective
Subsidiaries; PROVIDED, HOWEVER, that the Company and the Guarantors shall not
be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of their respective
Subsidiaries, if the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company, the Guarantors and their respective Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company
shall make an offer (a "CHANGE OF CONTROL OFFER") to each Holder to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of each
Holder's Notes at a purchase price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase (the "CHANGE OF CONTROL
PAYMENT"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder and the Trustee stating: (1) that the Change of
Control Offer is being made pursuant to this Section 4.16 and that all Notes
tendered shall be accepted for payment; (2) the purchase price and the
purchase date, which shall be no later than 30 Business Days from the date
such notice is mailed (the "CHANGE OF CONTROL PAYMENT DATE") unless a later
date is required by applicable law; (3) that any Note not tendered or accepted
for payment will continue to accrue interest; (4) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (5) that Holders electing
to have any Notes purchased pursuant to a Change of Control Offer shall be
required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, or transfer by
book-entry transfer, to the Company, a depositary, if appointed by the Company
or a Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; (6) that Holders shall be entitled to withdraw their election if the
Paying Agent receives, not later than the expiration of the Change of Control
Offer, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes delivered for purchase, and
a statement that such Holder is withdrawing his election to have the Notes
purchased; (7) that Holders whose Notes are being purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof; and (8) the circumstances
and relevant facts regarding such Change of Control (including, but not
limited to, information with respect to PRO FORMA historical financial
information after giving effect to such Change of Control, information
regarding the Person or Persons acquiring control and such Person's or
Persons' business plans going forward) and any other information that would be
material to a decision as to whether to tender a Note pursuant to the Change
of Control Offer. The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Notes in connection with a Change of
Control.
(b) On or before the Change of Control Payment Date, the Company
shall, to the extent lawful, (1) accept for payment all 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 Notes or portions thereof so tendered and (3) deliver or cause
to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Notes so tendered payment in an amount equal
to the purchase price for such Notes, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered by such Holder, if any; PROVIDED, that each such new Note
shall be in a principal amount of $1,000 or an integral multiple thereof. The
Company shall publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
(c) The Company 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 set forth in this Section 4.6 and repurchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED SUBSIDIARIES.
Except with respect to transactions in which a Wholly Owned
Subsidiary becomes a Substantially Owned Subsidiary, the Company (i) shall
not, and shall not permit any Wholly Owned Subsidiary of the Company to,
transfer, convey, sell, lease or otherwise dispose of any Capital Stock of any
Wholly Owned Subsidiary of the Company to any Person (other than the Company
or a Wholly Owned Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of
such Wholly Owned Subsidiary and (b) the Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof, and (ii) shall not permit any Wholly Owned Subsidiary of
the Company 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 Company or a Wholly Owned Subsidiary of the Company.
SECTION 4.18. SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall, after the date of
this Indenture, acquire or create another Subsidiary, then such newly acquired
or created Subsidiary shall execute a Guarantee, providing for the guarantee
of the obligations under the Notes, this Indenture and the Collateral
Documents on the terms set forth therein, and deliver to the Trustee an
Opinion of Counsel, in form reasonably satisfactory to the Trustee, that such
Guarantee, has been duly executed and delivered and is the valid, binding and
enforceable Obligation of such Subsidiary.
SECTION 4.19. MAINTENANCE OF INSURANCE.
On the Issue Date, and at all times hereafter, the Company shall,
and shall cause each of its Subsidiaries to, maintain insurance with
responsible carriers against such risks and in such amounts as is customarily
carried by similar businesses with such deductibles, retentions, self insured
amounts and coinsurance provisions as are customarily carried by similar
businesses of similar size, including, without limitation, property and
casualty, and, with respect to insurance on the Note Collateral, shall have
provided insurance certificates evidencing such insurance to the Trustee prior
to the Issue Date and shall thereafter provide such certificates prior to the
anniversary or renewal date of each such policy, which certificate shall
expressly state the expiration date for each policy listed. Customary
insurance coverage shall be deemed to include, in addition to any other
specific coverage set forth in the Collateral Documents, 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 $1.0 million;
(c) umbrella or excess liability insurance providing excess
liability coverages over and above the foregoing underlying insurance policies
up to a minimum limit of $25.0 million;
(d) business interruption insurance (which, with respect to the
Bossier Riverboat, covers reasonable continuing expenses for loss attributable
to the loss or damage to the Bossier Riverboat); and
(e) property insurance protecting the property (including
vessels) against loss or damage by fire, lightning, windstorm, tornado, water
damage, vandalism, riot, earthquake, civil commotion, malicious mischief,
hurricane, and such other risks and hazards as are from time to time covered
by an "all-risk" policy or a property policy covering "special" causes of
loss. Such insurance shall provide coverage in not less than the lesser of
120% of the outstanding principal amount of the Notes plus accrued and unpaid
interest and 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 customarily insured consistent with industry standards and
with a deductible no greater than 2% of the insured value of Casino
Magic-Bossier City or such greater amount as is available on commercially
reasonable terms (other than earthquake or flood insurance, for which the
deductible may be up to 10% of such replacement value).
All insurance with respect to the Note Collateral herein required
(except worker's compensation) shall name the Company and the Trustee as
additional insureds or loss payees, as the case may be, with losses in excess
of $10.0 million payable jointly to the Company and the Trustee (unless a
Default or Event of Default has occurred and is then continuing, in which case
all losses are payable solely to the Trustee), with no recourse against the
Trustee for the payment of premiums, deductibles, commissions or club calls,
and for at least 30 days notice of cancellation. All such insurance policies
shall be issued by carriers having an A.M. Best & Company, Inc. rating of A or
higher and a financial size category of not less than X, or if such carrier is
not rated by A.M. Best & Company, Inc., having the financial stability and
size deemed appropriate by an opinion from a reputable insurance broker. The
Company shall deliver to the Trustee on the Issuance Date and each anniversary
thereafter a certificate of an insurance agent stating that the insurance
policies obtained by the Company and its Subsidiaries comply with this Section
4.19 and the related applicable provisions of the Collateral Documents.
SECTION 4.20. LIMITATION ON STATUS AS INVESTMENT COMPANY.
None of the Company or any of the Guarantors shall become subject to
registration as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act of 1940.
SECTION 4.21. FURTHER ASSURANCES.
The Company shall (and shall cause each of its Subsidiaries to) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments as may
be required from time to time in order (i) to carry out more effectively the
purposes of the Collateral Documents, (ii) to subject to the Liens created by
any of the Collateral Documents any of the properties, rights or interests
required to be encumbered thereby, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Trustee any of the
rights granted or nor or hereafter intended by the parties thereto to be
granted to the Trustee or under any other instrument executed in connection
therewith or granted to the Company under the Collateral Documents or under
any other instrument executed in connection therewith.
SECTION 4.22. CONSTRUCTION.
The Company shall cause construction of Casino Magic-Bossier City,
including the furnishing, fixturing and equipping thereof, to be prosecuted
with diligence and continuity in a good and workmanlike manner substantially
in accordance with the Plans and within the Construction Budget. The Company
shall cause Casino Magic-Bossier City to be Operating by the Operating
Deadline.
SECTION 4.23. LIMITATIONS ON USE OF PROCEEDS.
The Company shall cause $20 million of the net proceeds from the
sale of the Notes to be used to purchase the Bossier Riverboat pursuant to the
Vessel Purchase Agreement, free and clear of any Liens, and to grant to the
Trustee for the benefit of the Notes a first priority perfected security
interest in the Bossier Riverboat subject to Permitted Liens. Of the
remaining net proceeds from the sale of the Notes, the Company shall cause
approximately $47.2 million to be deposited in the Cash Collateral Accounts,
including $7.3 million in the Interest Reserve Account, $3.2 million in the
Operating Reserve Account, $31.7 million in the Construction Disbursement
Account, and $5.0 million in the Completion Reserve Account, in each case, to
be disbursed only in accordance with the Cash Collateral and Disbursement
Agreement.
SECTION 4.24. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any sale and leaseback transaction; PROVIDED that the Company
may enter into a sale and leaseback transaction if (a) the Company could have
(i) 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 the first paragraph of Section 4.09 and (ii) incurred
a Lien to secure such Indebtedness pursuant to Section 4.13, (b) 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 Board of Directors of
the Company and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (c) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, Section 4.10 hereof.
SECTION 4.25. RESTRICTIONS ON PREFERRED STOCK OF SUBSIDIARIES.
The Company shall not permit any of its Subsidiaries to issue any
preferred stock, or permit any Person to own or hold an interest in any
preferred stock of any such Subsidiary, except for preferred stock issued to
the Company or a Wholly Owned Subsidiary of the Company.
SECTION 4.26. PAYMENTS FOR CONSENT.
Neither the Company nor any of its 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 Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the 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 4.27. ADVANCES TO SUBSIDIARIES.
All advances (other than equity contributions of not more than
$1,000) to Subsidiaries made by the Company from time to time after the date
of this Indenture shall be evidenced by unsecured Subsidiary Intercompany
Notes in favor of the Company that shall be pledged to the Trustee as Note
Collateral to secure the Notes. Each Subsidiary Intercompany Note shall be
payable upon demand, and shall bear interest at the same rate as the Notes. A
form of Subsidiary Intercompany Note is attached as Exhibit D to this
Indenture. Repayments of principal with respect to any Subsidiary
Intercompany Note may be used by the Company, subject to the other provisions
of this Indenture and the Collateral Documents for any general corporate
purpose.
SECTION 4.28. COLLATERAL DOCUMENTS.
Neither the Company nor any of its Subsidiaries shall amend, waive
or modify, or take or refrain from taking any action that has the effect of
amending, waiving or modifying any provision of the Collateral Documents, to
the extent that such amendment, waiver, modification or action could have an
adverse effect on the rights of the Trustee or the Holders of the Notes;
PROVIDED, that: (i) the Note Collateral may be released or modified as
expressly provided in this Indenture and in the Collateral Documents; (ii) any
Guarantee and pledges may be released as expressly provided in this Indenture
and in the Collateral Documents; and (iii) this Indenture and any of the
Collateral Documents may be otherwise amended, waived or modified as set forth
in Article 9 hereof.
SECTION 4.29. RESTRICTION ON PAYMENT OF MANAGEMENT FEES.
The Company shall not, directly or indirectly, pay to Casino Magic
or any of its Affiliates any Management Fee except pursuant to the Management
Agreement and in accordance with this Indenture, and in the event that the
voters in the Louisiana Referendum do not approve the continuation of
riverboat gaming in Bossier Parish and Caddo Parish, Louisiana, (or, if the
voters in the Louisiana Referendum disapprove the continuation of riverboat
gaming in one but not the other of Bossier Parish or Caddo Parish, Louisiana
until the Company has obtained a final, non-appealable determination or
decision by (i) all Gaming Authorities and other applicable governmental
regulatory authorities having jurisdiction over the operations of the Company,
including, without limitation, gaming operations of the Company, or (ii) a
court of competent jurisdiction considering such matter or matters, in each
case the effect of which is that the Company is permitted to conduct riverboat
gaming operations at Casino Magic-Bossier City), the Company shall not,
directly or indirectly, pay any Management Fee to Casino Magic or any of its
Affiliates. No payment of Management Fees, either current or accrued, shall
be made if at the time of payment of such Management Fees, (i) a Default or an
Event of Default shall have occurred and be continuing or shall occur as a
result thereof or (ii) the Company's Fixed Charge Coverage Ratio for the
Reference Period immediately preceding the date of such payment would have
been less than 1.5 to 1.0 (calculated on a pro forma cash basis after only
deducting such fees to the extent paid in cash and not deferred for such
period including any fees deferred from a prior period to be paid in cash
during such period and not deducting any such fees to the extent deferred and
not paid in cash during such period). Any Management Fees not permitted to be
paid pursuant to this Section 4.29 shall be deferred and shall accrue and may
be paid only at such time that they would otherwise be permitted to be paid
hereunder. The right to receive payment of the Management Fee shall be
subordinate in right of payment to the right of the Holders of the Notes to
receive payment pursuant to the Notes. The terms of the Management Agreement
shall not be amended to increase amounts to be paid thereunder, or in any
other manner which would be adverse to the Company or the Holders of the
Notes, including without limitation, to amend the requirement that the
Management Fee payable thereunder be based on the Company's Adjusted
Consolidated Cash Flow; PROVIDED, HOWEVER, that the foregoing shall not
prohibit any amendment required under any Gaming Law or by any Gaming
Authority.
SECTION 4.30. LIMITATION ON ACTIVITIES OF JEFFERSON.
So long as any of the Notes are outstanding, Jefferson Corp. shall
not conduct any business or investment activities whatsoever (including
without limitation, issuing any Equity Interests, making any Investments,
incurring any Indebtedness or making payments or taking any actions) other
than: (a) to hold its Investment in the Company, (b) to be a Guarantor under
the Indenture and to do all things necessary or incident thereto, including
without limitation, to comply with its obligations under this Indenture and
the Collateral Documents, (c) to make payments, dividends, or distributions to
Casino Magic from funds or property received by Jefferson Corp. from the
Company in accordance with the terms of the Indenture, and (c) otherwise exist
as a subsidiary of Casino Magic acting as a holding company of the Company,
including all activities incidental or related to any the foregoing, including
without limitation, (i) performing its obligations under the Tax Sharing
Agreement, (ii) receiving funds from Casino Magic in the form of capital
contributions which such funds may be contributed as a capital contribution to
the Company, (iii) owning and voting the capital stock of the Company, and
(iv) preparing financial statements and other reports.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation) or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia, (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes, this Indenture and the Collateral
Documents pursuant to a supplemental indenture or other documents or
instruments in a form reasonably satisfactory to the Trustee, (iii)
immediately after such transaction, no Default or Event of Default exists,
(iv) such transaction would not result in the loss or suspension or material
impairment of any Gaming License unless a comparable replacement Gaming
License is effective prior to or simultaneous with such loss, suspension or
material impairment; (v) except in the case of a merger of the Company with or
into a Wholly Owned Subsidiary of the Company, the Company or the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made (A) shall have Consolidated Net
Worth (immediately after the transaction) equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction,
(B) shall, upon the consummation of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of
the applicable Reference Period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof and (C) shall have a Fixed
Charge Coverage Ratio for the Reference Period immediately preceding the date
on which such transaction occurred, determined on a pro forma basis (including
a pro forma application of the proceeds therefrom) as if such transaction had
occurred at the beginning of such Reference Period, that is no less than 85%
of the Company's or such Person's Fixed Charge Coverage Ratio for such period
prior to giving effect to such transaction; and (vi) such transaction would
not require any Holder or beneficial owner of Notes to obtain a Gaming License
or be qualified or found suitable under the law of any applicable gaming
jurisdiction; PROVIDED, that such Holder or beneficial owner would not have
been required to obtain a Gaming License or be qualified or found suitable
under the laws of any applicable gaming jurisdiction in the absence of such
transaction.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substan-tially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
PROVIDED, HOWEVER, that (i) the Company has delivered to the Trustee an
Officers' Certificate and Opinion of Counsel, subject to customary assumptions
and exclusions, stating that the proposed transaction complies with this
Indenture and (ii) the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the
case of a sale of all of the Company's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company or any Guarantor defaults in the payment
when due of interest, including Contingent Interest on, or Liquidated Damages,
if any, with respect to, the Notes or any Guarantee and such default continues
for a period of 30 days PROVIDED, that payments of Contingent Interest that
are permitted to be deferred as provided in the Notes will not become due for
this purpose until such payment is required to be made pursuant to the terms
of the Notes;
(b) the Company defaults in the payment when due of
principal of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(c) the Company fails to comply with any of the provisions
of Sections 3.09, 4.07, 4.09, 4.10, 4.11, 4.16, 4.23 or 5.01 hereof or
Sections 3.01, 3.05, 3.08, 3.11, 3.12 or 3.13 of the Bossier Riverboat
Mortgage or the Crescent City Riverboat Mortgage;
(d) the Company or a Guarantor fails to comply with any of
its other covenants or agreements in, or provisions of, this Indenture or the
Notes for the period and after the notice specified below;
(e) a default occurs 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 Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Subsidiaries), whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which 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
$5.0 million or more;
(f) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries and such judgment or judgments remain
unpaid, and undischarged or unstayed for a period of 60 days, PROVIDED that
the aggregate of all such unpaid and undischarged judgments exceeds $5.0
million;
(g) (i) the Company or any Guarantor (w) breaches any
material representation or warranty set forth in the Collateral Documents, (x)
fails to comply with any covenant set forth in the Collateral Documents
requiring the payment of money for three Business Days after notice to comply,
(y) fails to comply with any other covenant set forth in the Collateral
Documents for 30 days after notice to comply, or (z) repudiates its
obligations under the Collateral Documents or (ii) the Collateral Documents
become unenforceable against the Company or any Guarantor for any reason;
(h) the Company, any Guarantor, any Significant Subsidiary
of the Company or any group of Subsidiaries of the Company 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;
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company, any Guarantor,
any Significant Subsidiary of the Company or any group of Subsidiaries of the
Company that, taken as a whole, would constitute a Significant Subsidiary in
an involuntary case;
(ii) appoints a Custodian of the Company, any
Guarantor, any Significant Subsidiary of the Company or any group of
Subsidiaries of the Company that, taken as a whole, would constitute a
Significant Subsidiary or for all or substantially all of the property of the
Company, any Guarantor, or any Significant Subsidiary of the Company or any
group of Subsidiaries of the Company that, taken as a whole, would constitute
a Significant Subsidiary; or
(iii) orders the liquidation of the Company, any
Guarantor, any Significant Subsidiary of the Company or any group of
Subsidiaries of the Company that, taken as a whole, would constitute a
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(j) the Company or any of its Subsidiaries ceases or
suspends gaming operations for a period of more than 90 consecutive days at
any Gaming Facility as the result of any Gaming License being revoked,
terminated, suspended or otherwise ceasing to be effective;
(k) Casino Magic-Bossier City is not Operating by the
Operating Deadline;
(l) Casino Magic-Bossier City does not remain Operating
after becoming Operating, except as the hours of operation of Casino
Magic-Bossier City may be limited by any Gaming Authority or Gaming Law, or
due to the occurrence of an Event of Loss (so long as the Company is in
compliance with Section 4.11 hereof), or due to the occurrence of a force
majeure event which is not cured within 10 days; or
(m) any Guarantee is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor,
denies or disaffirms its obligations under its Guarantee (except as permitted
by the Indenture).
A Default under clause (d) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 25% in principal amount of
the then outstanding Notes notify the Company and the Trustee, of the Default
and the Company does not cure the Default within 30 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01) hereof occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately
by a notice in writing to the Company and the Guarantors (and to the Trustee
if given by the Holders). Upon any such declaration, the Notes shall become
due and payable immediately. Notwithstanding the foregoing, if an Event of
Default specified in clause (h) or (i) of Section 6.01 hereof occurs, all
outstanding Notes shall be due and payable immediately without further action
or notice. The Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all
of the Holders rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default (except nonpayment of principal, interest or premium that has become
due solely because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after August 15, 2000 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of
the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to August 15,
2000, by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on August 15 of the
years set forth below, as set forth below (expressed as a percentage of the
principal amount that would otherwise be due but for the provisions of this
sentence):
YEAR PERCENTAGE
1996 113.000%
1997 111.375%
1998 109.750%
1999 108.125%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision
of the Notes, this Indenture, the Guarantees or any Collateral Document.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquies-cence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(PROVIDED, HOWEVER, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture, the Notes and the Collateral Documents; but
no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or
power con-ferred 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 Notes
or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of
a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction incon-sistent with the request; PROVIDED, HOWEVER, that the
foregoing provision does not affect the right of a Holder to sue for
enforcement of any overdue payment on the Notes.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due
dates expressed in the 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 Company or any Guarantor
for the whole amount of principal of, premium and Liquidated Damages, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disburse-ments and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes, including the Guarantors-),
its creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the
event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
THIRD: to the Company, the Guarantors or to such party as a court
of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as a Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reason-able 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 Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
SECTION 6.12. MANAGEMENT OF CASINOS.
Notwithstanding any provision of this Article 6 to the contrary,
following an Event of Default that permits the taking of possession of any
casino that constitutes Note Collateral by the Trustee or the appointment of a
receiver of either such Note Collateral or any part thereof, or after such
taking of possession or such appointment, the Trustee or any such receiver
shall be authorized, in addition to the rights and powers of the Trustee and
such receiver set forth elsewhere in this Indenture and the Collateral
Documents, to retain one or more experienced operators of casinos to manage
such casino on behalf of the Holders of Notes; PROVIDED, HOWEVER, that any
such operator shall have all necessary legal qualifications, including all
Gaming Licenses to manage such casino.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and the Collateral Documents, and use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circum-stances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Collateral Documents and the
Trustee need perform only those duties that are specifically set forth in this
Indenture and the Collateral Documents and no others, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture and the
Collateral Documents. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture and the Collateral Documents.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph 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 Inden-ture 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 in the performance of its
duties hereunder, under any Collateral Document, in the exercise of any right
or power hereunder or under any Collateral Document if it shall have
reasonable grounds for believing that repayment of funds or adequate indemnity
against such risk or liability is not reasonably assured to it. 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 Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee shall not be personally liable for debts
contracted or liabilities or damages incurred in the management or operation
of the Note Collateral in case of entry upon the premises or otherwise unless
due to the Trustee's negligence, willful misconduct or bad faith.
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 Company or any Guarantor
shall be sufficient if signed by an Officer of the Company or such Guarantor.
(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 Notes and may other-wise deal with the Company or any
Affiliate of the Company 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 Notes or any
Collateral Document or Guarantee, it shall not be accountable for the
Company's use of the proceeds from the Notes or any money paid to the Company
or upon the Company'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 Notes or any other
document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer of the Trustee, the Trustee shall mail to
Holders of 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
pay-ment of principal of, premium, if any, or interest on any 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 Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
(a) Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA 313(a) (but if no
event described in TIA 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA 313(c).
(b) A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and
each stock exchange on which the Notes are listed in accordance with TIA
313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
(c) At the expense of the Company, the Trustee or, if the
Trustee is not the Registrar, the Registrar, shall report the names of record
holders of the Notes to any Gaming Authority when requested to do so by the
Company.
(d) At the express direction of the Company and at the Company's
expense, the Trustee shall provide any Gaming Authority with:
(i) copies of all notices, reports and other written
communications which the Trustee gives to Holders;
(ii) a list of all of the Holders promptly after the
original issuance of the Notes and periodically thereafter if the Company 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 or the Guarantees known to the Trustee within five Business
Days thereof; and
(vi) a copy of any amendment to the Notes or this Indenture
within five Business Days of the effectiveness thereof.
(e) To the extent requested by the Company and at the Company's
expense, the Trustee shall cooperate with any Gaming Authority in order to
provide such Gaming Authority with the information and documentation requested
and as otherwise required by applicable law.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensa-tion shall not be limited by any law on compensation of a
trustee of an express trust. The Company 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, except to the extent attributable to the
Trustee's negligence, willful misconduct or bad faith.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with
the acceptance or administration of its duties under this Indenture or any
Collateral Document, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) or enforcing any
Collateral Document or Guarantee and defending itself against any claim
(whether asserted by the Company 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, willful misconduct or bad faith. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a Lien prior to the Notes on the Note Collateral and on
all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) 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 administra-tion
under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appoint-ment of a
successor Trustee shall become effective only upon compliance with applicable
Gaming Laws, if any, and upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of
a majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
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 Company 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 Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If any Gaming 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 Company unless the Trustee declines to do so, or, if the
Trustee's relationship with either the Company or the Guarantors may, in the
Company'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 Company, or
the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Hold-er of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appoint-ment of a
successor Trustee.
A successor Trustee shall deliver a written accept-ance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, PROVIDED
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee, provided such corporation shall be otherwise eligible and
qualified under this Article 7.
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 310(a)(1), (2) and (5). The Trustee is subject to TIA
310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 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 Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate delivered to the
Trustee, at any time, elect to have either Section 8.02 or 8.03 hereof be
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to all
outstanding Notes and the Collateral Documents on the date the conditions set
forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this
purpose, Legal Defeasance means that the Company shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding 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
Notes and this Indenture (and the Trustee, on demand of and at the expense of
the Company, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to
receive 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 and Liquidated Damages, if any, on such Notes
when such payments are due, (b) the Company's and any Guarantor's obligations
with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith, including, without limitation,
its obligations under Section 7.07 hereof, and (d) this Article 8. Subject to
compliance with this Article 8, the Company 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 Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections
4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18,
4.19, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25, 4.26, 4.27, 4.28, 4.29, and 5.01 and
Articles 10 and 11 hereof with respect to the outstanding Notes on and after
the date the conditions set forth below are satisfied (hereinafter, "COVENANT
DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for
the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other
purposes hereunder (it being understood that such Notes shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the outstanding Notes, the Company and the
Guarantors 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 Notes
shall be unaffected thereby. In addition, upon the Company'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(g) and 6.01(j) 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 Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company 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, if any, and
interest and Liquidated Damages, if any, on the outstanding Notes on the
stated date for payment thereof or on the applicable redemption date, as the
case may be, and the Company must specify whether the Notes are being defeased
to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company 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 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 Company 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 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 Notes pursuant to this Article 8
concurrently with such incurrence) or insofar as Sections 6.01(h) or 6.01(i)
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
Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel 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 and that the Trustee has a perfected security interest in the
trust for the ratable benefit of the Holders of the Notes;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders over any other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Company; and
(h) the Company 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 Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest and Liquidated Damages, if any, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company 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 COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium or
Liquidated Damages, if any, or interest on any Note and remaining unclaimed
for two years after such principal, and premium or Liquidated Damages, if any,
or interest has become due and payable shall be paid to the Company on its
request or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company 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 Company cause to be published once, in
The New York Times or 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 shall be
repaid to the Company.
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 Company's and the Guarantors'
obligations under this Indenture, the Notes and the Guarantees 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 Company or any
Guarantor makes any payment of principal of, premium or Liquidated Damages, if
any, or interest on any Note following the reinstatement of its obligations,
the Company or such Guarantor, as the case may be, shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money
held by the Trustee or Paying Agent.
SECTION 8.08. NOTE COLLATERAL.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to either Section 8.02 or 8.03, the Note Collateral, except the
funds in the trust fund described in Section 8.04 hereof, shall be released
pursuant to Section 10.03 hereof.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Notes,
the Guarantees or the Collateral Documents without the consent of any Holder
of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's or any
Guarantor's obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes (including providing for
additional Guarantees pursuant to this Indenture) or that does not, with
respect to an amendment or supplement to the Indenture, adversely affect the
legal rights hereunder of any such Holder of Notes or, with respect to an
amendment or supplement to any Collateral Document, adversely affect the legal
rights thereunder of any such Holder of Notes;
(e) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;
(f) to provide for a successor Trustee in accordance with
the terms of the Indenture; or
(g) to enter into additional or supplemental Collateral
Documents.
Upon the request of the Company and the Guarantors accompanied by a
resolution of the Company's Board of Directors authorizing the execution of
any such amended or supple-mental Indenture, Notes, Guarantees or Collateral
Documents and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company and the
Guarantors in the execution of any amended or supple-mental Indenture, Notes,
Guarantees or Collateral Documents authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supple-mental Indenture, Notes,
Guarantees or Collateral Documents that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture (including
Section 3.10, 4.10, 4.11 and 4.16 hereof), the Notes, the Guarantees or the
Collateral Documents with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for the Notes), 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 or Liquidated Damages, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture, the Notes, the Guarantees or
the Collateral Documents may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Without consent of at least 66 2/3% in aggregate principal amount of the Notes
then outstanding (including consents obtained in connection with a tender
offer or exchange offer for such Notes), no waiver or amendment to this
Indenture may make any change in the provisions of Section 4.10 or 4.16
hereof. Without the consent of the Holders of at least 85% in aggregate
principal amount of the Notes then outstanding, an amendment or waiver may not
affect the Liens in favor of the Trustee and the Holders of the Notes created
under the Collateral Documents in a manner adverse to the Holders (other than
pursuant to the release of Note Collateral in accordance with the provisions
of the Indenture and of the applicable Collateral Documents) or release all or
substantially all of the Note Collateral.
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company and the Guarantors authorizing the execution
of any such amended or supple-mental Indenture, Notes, Guarantees or
Collateral Documents and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company and the
Guarantors in the execution of such amended or supplemental Indenture, Notes,
Guarantees or Collateral Documents unless such amended or supplemental
Indenture, Notes, Guarantees or Collateral Documents affects the Trustee's
own rights, duties or immunities under this Indenture, Notes, Guarantees or
Collateral Documents or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture, Notes, Guarantees or Collateral Documents.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture, Notes, Guarantees or Collateral Documents or waiver. Subject to
Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate
principal amount of the Notes then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture, the
Notes, the Guarantees or the Collateral Documents. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect
to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter or waive any of the provisions with respect to the redemption of
the Notes except as provided above with respect to Sections 4.10 and 4.16
hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium or Liquidated Damages, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the then outstanding Notes
and a waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated
in the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium or Liquidated Damages, if any, or
interest on the Notes; or
(g) waive a redemption payment with respect to any Note
(other than payments required by Sections 4.10, 4.11 or 4.16 hereof);
(h) make any change in Section 6.04 or 6.07 hereof or in
the foregoing amendment and waiver provisions.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of this Indenture (and the obligations of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirements that such Holder shall have been the Holder of
record of any Notes with respect to which such consent is required to be
sought as of a date identified by the Trustee in a notice furnished to Holders
in accordance with the terms of this Indenture.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Notes, the
Guarantees or the Collateral Documents- shall be set forth in a amended or
supplemental Indenture, Note, Guaranty or Collateral Document that complies
with the TIA as then in effect. This Indenture shall be construed to comply
in every respect with the TIA.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Guarantees duly endorsed by the Guarantors)
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture, Note,
Guarantee, or Collateral Document, if necessary, authorized pursuant to this
Article Nine if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. The Company or any
Guarantor may not sign an amendment or supplemental Indenture, Note,
Guarantee, or Collateral Document until its Board of Directors approves it.
In executing any amended or supplemental Indenture, Note, Guarantee, or
Collateral Document, the Trustee shall be entitled to receive and (subject to
Section 7.01) shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such
amended or supplemental indenture, Note, Guarantee, or Collateral Document is
authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY.
(a) The due and punctual payment of the principal of, premium
and Liquidated Damages, if any, and interest on all of the Notes when and as
the same shall be due and payable, whether on an Interest Payment Date, at
maturity, by acceleration, repurchase, redemption or otherwise, and (to the
extent permitted by law) interest on the overdue principal of, premium and
Liquidated Damages, if any, and performance of all other obligations of the
Company and the Guarantors to the Holders of Notes or the Trustee under this
Indenture and the Notes and the Guarantees, according to the terms hereunder
or thereunder, shall be ratably secured by a Lien on the Note Collateral owned
by the Company and each Guarantee similarly shall be secured as provided in
the Collateral Documents that the Company and the Guarantors have entered into
on or prior to the Issue Date for the benefit of the Holders of Notes.
(b) Each Holder of Notes, by its acceptance thereof, consents
and agrees to the terms of the Collateral Documents (including, without
limitation, the provisions providing for foreclosure and release of Note
Collateral) as the same may be in effect or may be amended from time to time
in accordance with its terms and authorizes and directs the Trustee to enter
into the Collateral Documents and to perform its obligations and exercise its
rights thereunder in accordance therewith. The Company and the Guarantors
shall deliver to the Trustee copies of all documents executed pursuant to this
Indenture and the Collateral Documents and shall do or cause to be done all
such acts and things as may be necessary or proper, or as may be required by
the provisions of the Collateral Documents to assure and confirm to the
Trustee the security interest in the Note Collateral and contemplated hereby,
by the Collateral Documents or any part thereof, as from time to time
constituted, so as to render the same available for the security and benefit
of this Indenture and of the Notes and the Guarantees secured hereby,
according to the intent and purposes herein expressed.
(c) The Company shall take, or shall cause its Subsidiaries to
take any and all actions reasonably required to create and maintain, as
security for the Obligations of the Company or the respective Guarantors
hereunder, valid and enforceable perfected first priority Liens in and on all
the Note Collateral in favor of the Trustee for the benefit of the Holders,
superior to and prior to the rights of all third Persons and subject to no
Liens other than Permitted Liens. Notwithstanding the foregoing or anything
to the contrary in the Collateral Documents, nothing in this Indenture or the
Collateral Documents shall require the Company or any Guarantor to do (or
cause to be done) any of the following: (i) create or perfect Liens in any
assets otherwise excluded from the Note Collateral pursuant to the terms of
the Collateral Documents, or (ii) perfect Liens in any of the following: (A)
any personal property a security interest in which must be perfected by
delivery thereof to the Trustee, if delivery thereof is not required by the
Collateral Documents, (B) any automobiles or other assets (other than vessels)
subject to a certificate of title or registration, except as required by the
Collateral Documents, and (C) any deposit accounts other than the Cash
Collateral Accounts.
(d) The Net Proceeds of all Asset Sales and the Net Loss
Proceeds from Events of Loss of assets constituting Note Collateral, as well
as Excess Proceeds and Excess Loss Proceeds, shall be promptly and without any
commingling deposited with the Trustee subject to a Lien in favor of the
Trustee for the benefit of the Holders of the Notes unless and until applied
as permitted under Section 4.10 or 4.11 hereof. The Trustee shall release to
the Company any Excess Proceeds and Excess Loss Proceeds that remain after
making an offer to purchase the Notes in compliance with Section 3.10 hereof.
Amounts so paid to the Trustee shall be invested or released in accordance
with the provisions of this Indenture.
(e) The Trustee may appoint one or more collateral agents, who
may be delegated any one or more of the duties or rights of the Trustee under
the Collateral Documents or that are specified in any of the Collateral
Documents.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company and the Guarantors shall cause the applicable
Collateral Documents including the Mortgage, the Bossier Riverboat Mortgage
and the Crescent City Mortgage and any financing statements, all amendments or
supplements to each of the foregoing and any other similar security documents
as necessary, to be registered, recorded and filed and/or re-recorded,
re-filed and renewed in such manner and in such place or places, if any, as
may be required by law or reasonably requested by the Trustee in order fully
to preserve and protect (i) the Liens securing the obligations under the Notes
and the Guarantees pursuant to the Collateral Documents and (ii) the Lien of
the Guarantors securing (for the benefit of the Holders of Notes) the Notes
and the Guarantees and to effectuate and preserve the security of the Holders
of Notes and all rights of the Trustee.
(b) The Company, the Guarantors and any other obligor shall
furnish to the Trustee:
(i) promptly after the execution and delivery of this
Indenture, and promptly after the execution and delivery of any supplemental
indenture or other amendment to any Collateral Document, an Opinion of Counsel
in the United States either (i) stating that in the opinion of such counsel,
this Indenture, the Collateral Documents and all other instruments of further
assurance or amendment have been properly recorded, registered and filed to
the extent necessary to make effective the Lien intended to be created by such
Collateral Documents and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, and stating that,
as to such Collateral Documents and such other instruments such recording,
registering and filing are the only recordings, registerings and filings
necessary to give notice thereof and that no re-recordings, re-registerings or
re-filings are necessary to maintain such notice, and further stating that all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the rights of the Holders of
Notes and the Trustee hereunder and under the Collateral Documents or (ii)
stating that, in the opinion of such counsel, no such action is necessary to
make any other Lien created under any of the Collateral Documents effective as
intended by such Collateral Documents; and
(ii) On August 22, in each year beginning with the year
1996, an Opinion of Counsel, dated as of such date, either (A) stating that,
in the opinion of such counsel, such action has been taken with respect to the
recording, registering, filing, re-recording, re-registering and re-filing of
this Indenture and all supplemental indentures, financing statements,
continuation statements or other instruments of further assurance as is
necessary to maintain the Liens of this Indenture and the Collateral Documents
until the next Opinion of Counsel is required to be rendered pursuant to this
paragraph and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given, and stating that all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the rights of the Holders and
the Trustee hereunder and under the Collateral Documents or (B) stating that
in the opinion of such counsel, no such action is necessary to maintain such
Liens, until the next Opinion of Counsel is required to be rendered pursuant
to this paragraph.
(c) The Company shall furnish to the Trustee the certificates or
opinions, as the case may be, required by TIA Section 314(d). Such
certificates or opinions shall be subject to the terms of TIA Section 314(e).
SECTION 10.03. RELEASE OF NOTE COLLATERAL.
(a) Subject to paragraphs (b), (c) and (d) of this Section
10.03, Note Collateral may be released from the Lien and security interest
created by this Indenture and the Collateral Documents at any time or from
time to time, and except with respect to clause (viii) of the immediately
following sentence, upon the request of the Company pursuant to an Officers'
Certificate certifying that all terms for release and conditions precedent
hereunder and under any applicable Collateral Document have been met and
specifying (i) the identity of the Note Collateral to be released and (ii) the
provision of this Indenture that authorizes such release. The Trustee shall
release (at the sole cost and expense of the Company) (i) the Casino
Magic-Bossier City Hotel, including the real property on which it is to be
built, in the event that the Company elects to effect such a release in
connection with the incurrence of additional Indebtedness secured by such
property in accordance with the provisions of Section 4.09; including, without
limitation, the requirement that the proceeds from incurring such Indebtedness
be used to finance the construction of the Casino Magic-Bossier City Hotel,
that no Default or Event of Default has occurred and is continuing or would
occur immediately following such release and that the Reciprocal Easement
Agreement substantially in the form attached hereto as Exhibit U has been
fully executed, including, without limitation all consents from mortgages
required by such reciprocal Easement Agreement; (ii) the Crescent City
Riverboat shall be released in the event that the Company elects to effect
such a release in connection with the sale of the Crescent City Riverboat in
accordance with the provisions of Section 4.10; including, without limitation,
the requirement that the net proceeds from such transaction, are or will be
applied in accordance with this Indenture and that no Default or Event of
Default has occurred and is continuing or would occur immediately following
such release; (iii) Note Collateral that is to be sold pursuant to Section
4.10 herein in an Asset Sale; PROVIDED that the Net Proceeds, from such Asset
Sale are or will be applied in accordance with Section 4.10 hereof and that no
Default or Event of Default has occurred and is continuing or would occur
immediately following such release; (iv) Note Collateral that is condemned,
seized or taken by the power of eminent domain or otherwise confiscated
pursuant to an Event of Loss; PROVIDED that the Net Loss Proceeds, if any,
from such Event of Loss are or will be applied in accordance with Section 4.11
hereof and that no Default or Event of Default has occurred and is continuing
or would occur immediately following such release; (v) Note Collateral that
may be released with the consent of Holders pursuant to Article 9 hereof; (vi)
all Note Collateral (except as provided in Article 8 hereof and, in
particular, the funds in the trust fund described in Section 8.04 hereof) upon
discharge or defeasance of this Indenture in accordance with Article 8 hereof;
(vi) all Note Collateral upon the payment in full of all obligations of the
Company with respect to the Notes; (vii) capital stock and Note Collateral of
a Guarantor (other than Note Collateral of Jefferson Corp.) whose Note
Guarantee is released pursuant to Section 11.05 hereof and (viii) inventory
sold or otherwise disposed of in the ordinary course of business (provided
that all proceeds thereof shall be subject to the Lien) and Restricted
Payments permitted under Section 4.07. Upon receipt of such Officers'
Certificate the Trustee shall execute, deliver or acknowledge any necessary or
proper instruments of termination, satisfaction or release to evidence the
release of any Note Collateral permitted to be released pursuant to this
Indenture or the Collateral Documents.
(b) No Note Collateral shall be released from the Lien and
security interest created by the Collateral Documents pursuant to the
provisions of the Collateral Documents unless there shall have been delivered
to the Trustee the certificate required by this Section 10.03.
(c) The Trustee may release Note Collateral from the Lien and
security interest created by this Indenture and the Collateral Documents upon
the sale or disposition of Note Collateral pursuant to the Trustee's powers,
rights and duties with respect to remedies provided under any of the
Collateral Documents.
(d) The release of any Note Collateral from the terms of this
Indenture and the Collateral Documents shall not be deemed to impair the
security under this Indenture in contravention of the provisions hereof if and
to the extent the Note Collateral is released pursuant to the terms hereof.
To the extent applicable, the Company shall cause TIA 313(b), relating to
reports, and TIA 314(d), relating to the release of property or securities
from the Lien and security interest of the Collateral Documents and relating
to the substitution therefor of any property or securities to be subjected to
the Lien and security interest of the Collateral Documents to be complied
with. Any certificate or opinion required by TIA 314(d) may be made by an
Officer of the Company except in cases where TIA 314(d) requires that such
certificate or opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected or approved by the
Trustee in the exercise of reasonable care.
SECTION 10.04. PROTECTION OF THE TRUST ESTATE.
Upon prior written notice to the Company and the Guarantors, the
Trustee shall have the power (i) to institute and maintain such suits and
proceedings as it may deem expedient, to prevent any impairment of the Note
Collateral under any of the Collateral Documents; and (ii) to enforce the
obligations of the Company, the Guarantors or any Subsidiary under this
Indenture or the Collateral Documents, to institute and maintain such suits
and proceedings as may be expedient to prevent any impairment of the Note
Collateral under the Collateral Documents and in the profits, rents, revenues
and other income arising therefrom, including the power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that may
be unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair any Note Collateral or be
prejudicial to the interests of the Holders of Notes or the Trustee, to the
extent permitted thereunder. Upon receipt of notice that a Subsidiary or a
Guarantor is not in compliance with any of the requirements of the Mortgage,
the Trustee may, but shall have no obligation to purchase, at the Company's
expense, such insurance coverage necessary to comply with the appropriate
section of the mortgage.
SECTION 10.05. CERTIFICATES OF THE COMPANY.
The Company shall furnish to the Trustee, prior to each proposed
release of Note Collateral pursuant to this Indenture or any of the Collateral
Documents (i) all documents required by TIA 314(d) and (ii) an Opinion of
Counsel in the United States to the effect that, such accompanying documents
constitute all documents required by TIA 314(d). The Trustee may accept as
conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such documents and such Opinion of
Counsel.
SECTION 10.06. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Note Collateral in
accordance with the Collateral Documents and has delivered the certificates
and documents required by the Collateral Documents and Sections 10.03 and
10.05 hereof, the Trustee shall determine whether it has received all
documentation required by TIA 314(d) in connection with such release and,
based on such determination and the Opinion of Counsel delivered pursuant to
clause (ii) of Section 10.05 hereof if required, shall deliver a certificate
to the Company setting forth such determination.
SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER
THE COLLATERAL DOCUMENTS.
Subject to the provisions of Sections 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, direct, on behalf of the Holders of Notes, the Collateral Agent to,
take all actions it deems necessary or appropriate in order to (i) enforce any
of the terms of the Collateral Documents and (ii) collect and receive any and
all amounts payable in respect of the Obligations of the Company hereunder.
The Trustee shall have power to institute and maintain such suits and
proceedings as it may deem expedient to prevent any impair-ment of the Note
Collateral by any acts that may be unlawful or in violation of the Collateral
Documents or this Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders of Notes in the Note Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that may
be unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security interest
hereunder or be prejudicial to the interests of the Holders of Notes or of the
Trustee).
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
(a) Upon an Event of Default and so long as such Event of
Default continues, the Trustee may exercise in respect of the Note Collateral,
in addition to the other rights and remedies provided for herein, in the
Collateral Documents or otherwise available to it, all of the rights and
remedies of a secured party under the Uniform Commercial Code of New York or
Louisiana, as applicable, or other applicable law, and the Trustee may also
upon obtaining possession of the Note Collateral as set forth herein, without
notice to the Company, except as specified below, sell the Note Collateral or
any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Trustee's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Trustee may deem commercially reasonable. The Company acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
to the seller than if such a sale were a public sale. The Company agrees
that, to the extent notice of sale shall be required by law, at least 10 days'
notice to the Company of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Trustee shall not be obligated to make any sale regardless
of notice of sale having been given. The Trustee may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) Subject to the provisions of Section 6.10 hereof, any cash
that is Note Collateral held by the Trustee and all cash proceeds received by
the Trustee in respect of any sale of, collection from, or other realization
upon all or any part of the Note Collateral shall be held for the benefit of
the holders (unless otherwise provided for in the Collateral Documents and
after payment of any and all amounts payable to the Trustee pursuant to this
Indenture), until such time as the Holders of the Notes shall direct the
Trustee pursuant to Section 6.05 hereof to apply such cash proceeds: (i)
against the obligations for the ratable benefit of the Holders of the Notes,
(ii) to maintain, repair or otherwise protect the Note Collateral or (iii) to
take such other action to protect the other rights of the Holders of the Notes
or to take any other appropriate action or remedy for the benefit of the
Holders of the Notes. Any surplus of such cash or cash proceeds held by the
Trustee and remaining after payment in full of all the obligations shall be
paid over to the Company or to whomsoever may be lawfully entitled to receive
such surplus or as a court of competent jurisdiction may direct.
SECTION 10.09. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under
this Indenture and the Notes, or upon Legal Defeasance or Covenant Defeasance,
the Trustee shall, at the request of the Company, deliver a certificate to the
Trustee stating that such Obligations have been paid in full, and instruct the
Trustee to release the Liens pursuant to this Indenture and the Collateral
Documents.
SECTION 10.10. COOPERATION OF TRUSTEE.
In the event the Company or any Guarantor pledges or grants a
security interest in additional Note Collateral, the Trustee shall cooperate
with the Company or such Guarantor in reasonably and promptly agreeing to the
form of, and executing as required, any instruments or documents necessary to
make effective the security interest in the Note Collateral to be so
substituted or pledged. To the extent practicable, the terms of any security
agreement or other instrument or document necessitated by any such
substitution or pledge shall be comparable to the provisions of the existing
Collateral Documents. Subject to, and in accordance with the requirements of
this Article 10 and the terms of the Collateral Documents, in the event that
the Company or any Guarantor engages in any transaction pursuant to Section
10.03 hereof, the Trustee shall cooperate with the Company or such Guarantor
in order to facilitate such transaction in accordance with any reasonable time
schedule proposed by the Company, including by delivering and releasing the
Note Collateral in a prompt and reasonable manner.
SECTION 10.11. COLLATERAL AGENT.
The Trustee may, from time to time, appoint one or more Collateral
Agents hereunder. Each of such Collateral Agents may be delegated any one or
more of the duties or rights of the Trustee hereunder or under the Collateral
Documents or that are specified in any Collateral Documents, including without
limitation, the right to hold any Note Collateral in the name of, registered
to, or in the physical possession of, such Collateral Agent, for the rateable
benefit of the Holders of the Notes. Each such Collateral Agent shall have
such rights and duties as may be specified in an agreement between the Trustee
and such Collateral Agent.
ARTICLE 11
GUARANTEES
SECTION 11.01. GUARANTEES.
(a) Each of the Guarantors, jointly and severally, hereby
unconditionally guarantees, on a senior secured basis (each such guarantee
being a "GUARANTEE"), to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity or enforceability of this Indenture, the Notes or the Obligations
of the Company under this Indenture or the Notes, that: (i) the principal of,
premium, if any, Liquidated Damages, if any, and interest on the Notes shall
be paid in full when due, whether at the maturity or interest payment or
mandatory redemption date, by acceleration, call for redemption or otherwise,
and (to the extent permitted by law) interest on the overdue principal,
premium, Liquidated Damages, if any, and interest on the Notes and all other
Obligations of the Company to the Holders or the Trustee under this Indenture
or the Notes shall be promptly paid in full or performed, all in accordance
with the terms of this Indenture and the Notes; and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, they shall be paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at maturity, by
acceleration, redemption or otherwise. Failing payment when due of any amount
so guaranteed or failing performance of any other Obligation of the Company to
the Holders or the Trustee, for whatever reason, each Guarantor shall be
jointly and severally obligated to pay, or to perform or to cause the
performance of, the same immediately, whether or not such failure to pay or
perform has become an Event of Default that could cause acceleration pursuant
to Section 6.02 hereof. An Event of Default under this Indenture or the Notes
shall constitute an event of default under this Guarantee, and shall entitle
the Holders of Notes to accelerate the Obligations of each Guarantor hereunder
in the same manner and to the same extent as the Obligations of the Company.
(b) Each Guarantor hereby agrees that its obligations with
regard to each Guarantee shall be joint and several and unconditional,
irrespective of the validity or enforceability of the Notes or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of Notes with respect to any provision hereof or thereof, the recovery
of any judgment against the Company or any other obligor with respect to this
Indenture, the Notes or the Obligations of the Company under this Indenture or
the Notes, any action to enforce the same or any other circumstances that
might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor, to the extent permitted by law, hereby waives and
relinquishes all claims, rights and remedies accorded by applicable law to
guarantors and agrees not to assert or take advantage of any such claims,
rights or remedies, including but not limited to: (i) any right to require
the Trustee, the Holders or the Company (each, a "BENEFITTED PARTY") to
proceed against the Company or any other Person or to proceed against or
exhaust any security held by a Benefitted Party at any time or to pursue any
other remedy in any Benefitted Party's power before proceeding against such
Guarantor; (ii) the defense of the statute of limitations in any action
hereunder or in any action for the collection of any Indebtedness or the
performance of any obligation hereby guaranteed; (iii) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of
any other Person or the failure of a Benefitted Party to file or enforce a
claim against the estate (in administration, bankruptcy or any other
proceeding) of any other Person; (iv) diligence, presentment, demand, protest
and notice of any kind including but not limited to notice of the existence,
creation or incurring of any new or additional Indebtedness or obligation or
of any action or non-action on the part of such Guarantor, the Company, any
Benefitted Party, any creditor of such Guarantor, the Company or on the part
of any other Person whomsoever in connection with any Indebtedness or
Obligations hereby guaranteed; (v) any defense based upon an election of
remedies by a Benefitted Party, including but not limited to an election to
proceed against such Guarantor for reimbursement; (vi) any defense based upon
any statute or rule of law that provides that the obligation of a surety must
be neither larger in amount nor in other respects more burdensome than that of
the principal; (vii) any defense arising because of a Benefitted Party's
election, in any proceeding instituted under the Federal Bankruptcy Code, of
the application of Section 1111(b)(2) of the Federal Bankruptcy Code; or
(viii) any defense based on any borrowing or grant of a security interest
under Section 364 of the Federal Bankruptcy Code. Each Guarantor hereby
covenants that its Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any custodian,
trustee, or similar official acting in relation to either the Company or such
Guarantor, any amount paid by the Company or such Guarantor to the Trustee or
such Holder, the applicable Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it
will not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(d) Each Guarantor further agrees that, as between such
Guarantor, 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 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company or any other obligor on the Notes of the
obligations guaranteed hereby and (ii) in the event of any declaration of
acceleration of those obligations as provided in Article 6 hereof, those
obligations (whether or not due and payable) shall forthwith become due and
payable by such Guarantor for the purpose of this Guarantee.
SECTION 11.02. EXECUTION AND DELIVERY OF GUARANTEES.
To evidence the Guarantees set forth in Section 0 hereof, each of
the Guarantors agrees that a notation of the Guarantees substantially in the
form of Exhibit B shall be endorsed on each Note authenticated and delivered
by the Trustee and that this Indenture shall be executed on behalf of each of
the Guarantors by the Chairman of the Board, any Vice Chairman, the President
or one of the Vice Presidents of each of the Guarantors, under a facsimile of
its seal reproduced on this Indenture and attested to by an Officer other than
the Officer executing this Indenture.
Each of the Guarantors agree that the Guarantees set forth in this
Article 0 shall remain in full force and effect and apply to all the Notes
notwithstanding any failure to endorse on each Note a notation of the
Guarantees.
If an Officer whose facsimile signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note on which the
Guarantees are endorsed, the Guarantees shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantees set forth
in this Indenture on behalf of the Guarantors.
SECTION 11.03. LIMITATION OF GUARANTORS' LIABILITY.
Each Guarantor, and by its acceptance hereof, each Holder, hereby
confirms that it is its intention that the Guarantee by such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar federal or state law to the extent applicable to any of the
Guarantees. To effectuate the foregoing intention, each such Person hereby
irrevocably agrees that the obligation of such Guarantor under its Guarantee
under this Article 0 shall be limited to the maximum amount as will, after
giving effect to such maximum amount and all other liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 0, result in the obligations of such Guarantor in
respect of such maximum amount not constituting a fraudulent conveyance. Each
beneficiary under the Guarantees, by accepting the benefits hereof, confirms
its intention that, in the event of a bankruptcy, reorganization or other
similar proceeding of the Company or any Guarantor in which concurrent claims
are made upon such Guarantor hereunder, to the extent such claims will not be
fully satisfied, each such claimant with a valid claim against the Company
shall be entitled to a ratable share of all payments by such Guarantor in
respect of such concurrent claims.
SECTION 11.04. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) No Guarantor shall consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another Person whether
or not affiliated with such Guarantor unless (i) subject to the provisions of
Section 11.05 hereof the Person formed by or surviving any such consolidation
or merger (if other than such Guarantor) assumes, pursuant to a supplemental
indenture and appropriate Collateral Documents in form and substance
reasonably satisfactory to the Trustee, all the Obligations of such Guarantor
under the Notes, this Indenture and the Collateral Documents; (ii) immediately
after giving effect to such transaction, no Default or Event of Default
exists; (iii) such Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth (immediately after
giving effect to such transaction) equal to or greater than the Consolidated
Net Worth of such Guarantor immediately preceding the transaction; (iv) the
Company would be permitted by virtue of the Company's pro forma Fixed Charge
Coverage Ratio, immediately after giving effect to such transaction, to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09; (v) the Fixed Charge Coverage
Ratio of such Guarantor, or any Person formed by or surviving any such
consolidation or merger, for the Reference Period immediately preceding the
date on which such consolidation or merger occurred, determined on a pro forma
basis (including a pro forma application of the proceeds therefrom) as if such
consolidation or merger had occurred at the beginning of such Reference
Period, would be no less than 85% of such Guarantor's or such Person's Fixed
Charge Coverage Ratio for such Reference Period prior to giving effect to such
consolidation or merger; (vi) such transaction would not result in the loss or
suspension or material impairment of any Gaming License (unless a comparable
replacement Gaming License is effective prior to or simultaneously with such
loss, suspension or material impairment); and (vii) such transaction would not
require any Holder or beneficial owner of Notes to obtain a Gaming License or
be qualified under the laws of any applicable gaming jurisdiction; PROVIDED,
that such Holder or beneficial owner would not have been required to obtain a
Gaming License or be qualified under the laws of any applicable gaming
jurisdiction in the absence of such transaction; PROVIDED, FURTHER, HOWEVER,
that the requirements set forth in the preceding clauses (iii), (iv) and (v)
will not prohibit any merger or consolidation among the Company and one or
more Wholly Owned Subsidiaries of the Company.
(b) The Trustee, subject to the provisions of Section 11.05
hereof, shall be entitled to receive an Officers' Certificate and an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale or
conveyance, and any such assumption of Obligations, comply with the provisions
of this Section 11.04. Such certificate and opinion shall comply with
the
provisions of Section 13.05.
SECTION 11.05. RELEASES OF GUARANTEES.
In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor (other than Jefferson Corp.), by way of
merger, consolidation or otherwise, or a sale or other disposition of all of
the Capital Stock of any Guarantor (other than Jefferson Corp.), then such
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 such
Guarantor) or the corporation acquiring the property (in the event of a sale
or other disposition of all or substantially all of the assets of such
Guarantor) shall be released and relieved of any Obligations under its
Guarantee and the Collateral Documents; PROVIDED that (i) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof and (ii)
the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of this Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and Opinion of Counsel, to
the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without limitation
Section 4.10 hereof, the Trustee shall execute any documents reasonably
required in order to evidence the release of any such Guarantor from its
obligations under its Guarantee and the Collateral Documents. Any Guarantor
not released from its obligations under its Guarantee and the Collateral
Documents shall remain liable for the full amount of principal of, premium and
Liquidated Damages, if any, and interest on the Notes and for the other
Obligations of any Guarantor under this Indenture as provided in this Article
0. Nothing herein shall relieve the Company from its obligations to apply the
proceeds of an Asset Sale as provided in Section 4.10 hereof.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"TRUSTEE" as used in this Article 0 shall in such case (unless the context
shall otherwise require) be construed as extending to and includ-ing such
Paying Agent within its meaning as fully and for all intents and purposes as
if such Paying Agent were named in this Article 0 in place of the Trustee.
ARTICLE 12
SATISFACTION AND DISCHARGE
SECTION 12.01. SATISFACTION AND DISCHARGE.
This Indenture shall, upon the request of the Company, cease to be
of further effect (except as to surviving rights of registration of transfer
or exchange of Notes herein expressly provided for) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture and releasing all Liens and
security interests in the Collateral when
(a) either
(i) all Notes theretofore authenticated and delivered
(other than (A) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07 and (B) Notes for whose
payment money has been deposited in trust with the Trustee or any Paying Agent
and thereafter paid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the
Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their stated
maturity within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of clause (A), (B) or (C) above, has
irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest to the date of
such deposit (in the case of Notes which have become due and payable) or to
the stated maturity or redemption date, as the case may be;
(b) the Company has paid or caused to be paid all other sums
then due and payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 7.08 and, if money
shall have been deposited with the Trustee pursuant to subclause (i) of clause
(a) of this Section 12.01, the obligations of the Trustee under Section 12.02
shall survive.
SECTION 12.02. APPLICATION OF TRUST MONEY.
All money deposited with the Trustee pursuant to Section 12.01 shall
be held in trust and, at the written direction of the Company, be invested
prior to maturity in U.S. Government Obligations, and applied by the Trustee
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for the
payment of which money has been deposited with the Trustee; but such money
need not be segregated from other funds except to the extent required by law.
Any funds remaining following payment of all Notes and all other obligations
of the Company hereunder shall be the property of the Company.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, any 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 Company or the Guarantors:
Casino Magic of Louisiana, Corp.
1701 Old Minden Road
Bossier City, Louisiana 71111
Telecopier No.: (318) 746-0853
Attention: Corporate Secretary
With a copy to:
Akin Gump Strauss Hauer & Feld
1500 Nationsbank Plaza
300 Convent Street
San Antonio, Texas 78205
Telecopier No.: (210) 224-2035
Attention: J. Patrick Ryan, Esq.
If to the Trustee:
First Union Bank of Connecticut
10 State Street Square
Hartford, Connecticut 06103-3698
Telecopier No.: (860) 247-1356
Attention: Corporate Trust Administration
The Company 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 over-night 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 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 Company or a Guarantor mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES.
Holders may communicate pursuant to TIA 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Guarantors, the Trustee, the Registrar and anyone else shall have the
protection of TIA 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Guarantor to
the Trustee to take any action under this Indenture, the Company or such
Guarantor, as the case may be, 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 Sec-tion 13.05 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
Sec-tion 13.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 13.05. 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 314(a)(4)) shall comply with the provisions of TIA
314(e) and shall include:
(a) a statement that the Person mak-ing such certi-ficate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investi-gation 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 condi-tion or covenant has been satisfied; provided,
however, that with respect to matters of fact, an Opinion of Counsel may rely
on an Officers' Certificate or certificates of public officials.
SECTION 13.06. 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 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or the Guarantors under the
Notes, this Indenture, any Guarantee or the Collateral Documents, as
applicable, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this Indenture
and the Notes and the Guarantees, as applicable, shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture, in the Notes or in the
Guarantee 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 13.12. 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 13.13. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by the Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agents duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company and the Guarantors. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee, the Company and the
Guarantors, if made in the manner provided in this Section 13.13.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgements of deeds, certifying that the individual
signing such instrument or writing acknowledged to such witness, notary or
officer the execution thereof. Where such execution is by a signer acting in
a capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Holder, and the date of holding the same, shall be proved by the register of
the Notes maintained by the Registrar as provided in Section 2.03.
(d) If the Company shall solicit from the Holders of the Notes
any request, demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by or pursuant to a resolution of
the Company's Board of Directors, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. Notwithstanding TIA 316(c), such record date shall be
the record date specified in or pursuant to such resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith or the date of the most recent list
of Holders forwarded to the Trustee prior to such solicitation pursuant to
Section 2.05 and not later than the date such solicitation is completed. If
such a record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on such record
date shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite proportion of the then outstanding Notes have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the then
outstanding Notes shall be computed as of such record date; provided, that no
such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than eleven months after the record
date.
(e) Any request, demand, authorization,direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Note.
(f) Without limiting the foregoing, a Holder entitled hereunder
to take any action hereunder with regard to any particular Note may do so
itself with regard to all or any part of the principal amount of such Note or
by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
SECTION 13.14. LEGAL HOLIDAYS.
If any date specified in this Indenture, the Notes or the Collateral
Documents for the occurrence of any event (including the giving of notice and
the making of a payment) shall not be a Business Day, then such event shall
occur on the next succeeding date that is a Business Day with the same force
and effect as if such event had occurred on the date originally specified and,
if such event is a payment day in respect of the Notes, no interest shall
accrue for the intervening period.
SECTION 13.14. 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]
<PAGE>
SIGNATURES
Dated as of August 22, 1996 CASINO MAGIC OF LOUISIANA, CORP.
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President, General Council
Attest: Jay S. Osman
Dated as of August 22, 1996 JEFFERSON CASINO CORPORATION
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President, General Council
Attest: Jay S. Osman
Dated as of August 22, 1996 FIRST UNION BANK OF CONNECTICUT
Trustee
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title: Vice President
Attest:
(SEAL)
A-1
C-3
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 13% First Mortgage Notes due 2003 With Contingent Interest of Casino
Magic of Louisiana, Corp.
This Certificate relates to $___________ principal amount of Notes
held in * ________ book-entry or *_______ definitive form by
____________________________________ (the "Transferor").
The Transferor*:
___ has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Note held by the Depositary a Note
or Notes in definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global
Note (or the portion thereof indicated above); or
___ has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such Note,
the Transferor does hereby certify that it is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
___ Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A), Section
2.06(b)(i)(A) or Section 2.06(d)(i)(A) of the Indenture).
___ Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i)(B) or Section 2.06(d)(i) (B) of the
Indenture) or pursuant to an exemption from registration in accordance with
Rule 904 under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B),
Section 2.06(b)(i)(B) or Section 2.06(d)(i)(B) of the Indenture.)
_______________
*Check applicable box.
<PAGE>
___ Such Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B), Section
2.06(b)(i)(B) or Section 2.06(d)(i)(B) of the Indenture).
___ Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, Rule 144 or Rule 904 under the Securities Act. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(C), Section 2.06(b)(i)(C) or Section
2.06(d)(i)(C) of the Indenture).
[INSERT NAME OF TRANSFEROR]
By:
Date:
_______________
*Check applicable box.
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
__________________, between ________________________ (the "Guarantor"), a
subsidiary of Casino Magic of Louisiana, Corp. (or its successor), a Louisiana
corporation (the "Company"), and First Union Bank of Connecticut, as trustee
under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of August 22, 1996, providing
for the issuance of an aggregate principal amount of $115,000,000 of 13% First
Mortgage Notes due 2003 with Contingent Interest (the "Notes");
WHEREAS, Section 4.18 of the Indenture provides that under certain
circumstances the Company is required to cause the Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the
Guarantor shall guarantee all of the Company's obligations under of the Notes
pursuant to a Guarantee on the terms and conditions set forth herein; 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
Guarantor and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE.
(a) The Guarantor, jointly and severally, hereby
unconditionally guarantees, on a senior secured basis (each such guarantee
being a "Guarantee"), to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity or enforceability of the Indenture, the Notes or the Obligations
of the Company under the Indenture or the Notes, that: (i) the principal of,
premium, if any, and Liquidated Damages, if any and interest on the Notes
shall be paid in full when due, whether at the maturity or interest payment or
mandatory redemption date, by acceleration, call for redemption or otherwise,
and (to the extent permitted by law) interest on the overdue principal,
premium, Liquidated Damages, if any, and interest, if any, of the Notes, and
all other Obligations of the Company to the Holders or the Trustee under the
Indenture or the Notes shall be promptly paid in full or performed, all in
accordance with the terms of the Indenture and the Notes; and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, they shall be paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at maturity, by
acceleration, redemption or otherwise. Failing payment when due of any amount
so guaranteed or failing performance of any other Obligation of the Company to
the Holders, for whatever reason, each Guarantor shall be jointly and
severally obligated to pay, or to perform or to cause the performance of, the
same immediately, whether or not such failure to pay or perform has become an
Event of Default that could cause acceleration pursuant to Section 6.02 of the
Indenture. An Event of Default under the Indenture or the Notes shall
constitute an event of default under this Guarantee, and shall entitle the
Holders of Notes to accelerate the Obligations of each Guarantor hereunder in
the same manner and to the same extent as the Obligations of the Company.
(b) Each Guarantor hereby agrees that its obligations with
regard to each Guarantee shall be joint and several and unconditional,
irrespective of the validity or enforceability of the Notes or the Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of Notes with respect to any provision hereof or thereof, the recovery
of any judgment against the Company or any other obligor with respect to the
Indenture, the Notes or the Obligations of the Company under the Indenture or
the Notes, any action to enforce the same or any other circumstances that
might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor, to the extent permitted by law, hereby waives and
relinquishes all claims, rights and remedies accorded by applicable law to
guarantors and agrees not to assert or take advantage of any such claims,
rights or remedies, including but not limited to: (i) any right to require the
Trustee, the Holders or the Company (each, a "BENEFITTED PARTY") to proceed
against the Company or any other Person or to proceed against or exhaust any
security held by a Benefitted Party at any time or to pursue any other remedy
in any Benefitted Party's power before proceeding against such Guarantor; (ii)
the defense of the statute of limitations in any action hereunder or in any
action for the collection of any Indebtedness or the performance of any
obligation hereby guaranteed; (iii) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of any other Person or
the failure of a Benefitted Party to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding) of any other
Person; (iv) diligence, presentment, demand, protest and notice of any kind
including but not limited to notice of the existence, creation or incurring of
any new or additional Indebtedness or obligation or of any action or
non-action on the part of such Guarantor, the Company, any Benefitted Party,
any creditor of such Guarantor, the Company or on the part of any other Person
whomsoever in connection with any Indebtedness or Obligations hereby
guaranteed; (v) any defense based upon an election of remedies by a Benefitted
Party, including but not limited to an election to proceed against such
Guarantor for reimbursement; (vi) any defense based upon any statute or rule
of law that provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (vii)
any defense arising because of a Benefitted Party's election, in any
proceeding instituted under the Federal Bankruptcy Code, of the application of
Section 1111(b)(2) of the Federal Bankruptcy Code; or (viii) any defense based
on any borrowing or grant of a security interest under Section 364 of the
Federal Bankruptcy Code. Each Guarantor hereby covenants that its Guarantee
will not be discharged except by complete performance of the obligations
contained in the Notes and the Indenture or as otherwise expressly provided
herein.
If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or any Guarantor, or any custodian, trustee,
or similar official acting in relation to either the Company or such
Guarantor, any amount paid by the Company or such Guarantor to the Trustee or
such Holder, the applicable Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it
will not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
Each Guarantor further agrees that, as between such Guarantor, 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 this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company or any other obligor on the Notes of the
obligations guaranteed hereby and (ii) in the event of any declaration of
acceleration of those obligations as provided in Article 6 of the Indenture,
those obligations (whether or not due and payable) shall forthwith become due
and payable by such Guarantor for the purpose of this Guarantee.
3. EXECUTION AND DELIVERY OF GUARANTEES. To evidence the
Guarantees set forth in Section 0 of the Indenture, each of the Guarantors
agrees that a notation of the Guarantees substantially in the form included in
Exhibit B of the Indenture shall be endorsed on each Note authenticated and
delivered by the Trustee and that the Indenture shall be executed on behalf of
each of the Guarantors by the Chairman of the Board, any Vice Chairman, the
President or one of the Vice Presidents of each of the Guarantors, under a
facsimile of its seal reproduced on the Indenture and attested to by an
Officer other than the Officer executing the Indenture.
Each of the Guarantors agree that the Guarantees set forth in
Article 0 of the Indenture shall remain in full force and effect and apply to
all the Notes notwithstanding any failure to endorse on each Note a notation
of the Guarantees.
If an Officer whose facsimile signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note on which the
Guarantees are endorsed, the Guarantees shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantees set forth
in the Indenture on behalf of the Guarantors.
4. LIMITATION OF GUARANTORS' LIABILITY. Each Guarantor, and by
its acceptance hereof, each Holder, hereby confirms that it is its intention
that the Guarantee by such Guarantor not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any of the Guarantees. To effectuate
the foregoing intention, each such Holder hereby irrevocably agrees that the
obligation of such Guarantor under its Guarantee under Article 0 of the
Indenture shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under
Article 0 of the Indenture, result in the obligations of such Guarantor in
respect of such maximum amount not constituting a fraudulent conveyance. Each
beneficiary under the Guarantees, by accepting the benefits hereof, confirms
its intention that, in the event of a bankruptcy, reorganization or other
similar proceeding of the Company or any Guarantor in which concurrent claims
are made upon such Guarantor hereunder, to the extent such claims will not be
fully satisfied, each such claimant with a valid claim against the Company
shall be entitled to a ratable share of all payments by such Guarantor in
respect of such concurrent claims.
5. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor shall consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person) another Person whether or not
affiliated with such Guarantor unless (i) subject to the provisions of Section
11.05 of the Indenture, the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes, pursuant to a
supplemental indenture and appropriate Collateral Documents in form and
substance reasonably satisfactory to the Trustee, all the Obligations of such
Guarantor under the Notes, the Indenture and the Collateral Documents; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists; (iii) such Guarantor, or any Person formed by or surviving any
such consolidation or merger, would have Consolidated Net Worth (immediately
after giving effect to such transaction) equal to or greater than the
Consolidated Net Worth of such Guarantor immediately preceding the
transaction; (iv) the Company would be permitted by virtue of the Company's
pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 4.09 of the
Indenture; (v) the Fixed Charge Coverage Ratio of such Guarantor, or any
Person formed by or surviving any such consolidation or merger, for the
Reference Period immediately preceding the date on which such consolidation or
merger occurred, determined on a pro forma basis (including a pro forma
application of the proceeds therefrom) as if such consolidation or merger had
occurred at the beginning of such Reference Period, would be no less than 85%
of such Guarantor's or such Person's Fixed Charge Coverage Ratio for such
Reference Period prior to giving effect to such consolidation or merger; (vi)
such transaction would not result in the loss or suspension or material
impairment of any Gaming License (unless a comparable replacement Gaming
License is effective prior to or simultaneously with such loss, suspension or
material impairment); and (vii) such transaction would not require any Holder
or beneficial owner of Notes to obtain a Gaming License or be qualified under
the laws of any applicable gaming jurisdiction; PROVIDED, that such Holder or
beneficial owner would not have been required to obtain a Gaming License or be
qualified under the laws of any applicable gaming jurisdiction in the absence
of such transaction; PROVIDED, FURTHER, HOWEVER, that the requirements set
forth in the preceding clauses (iii), (iv) and (v) will not prohibit any
merger or consolidation among the Company and one or more Wholly Owned
Subsidiaries of the Company.
The Trustee, subject to the provisions of Section 11.05 of the
Indenture, shall be entitled to receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale or conveyance, and any such assumption of Obligations, comply with the
provisions of Section 0 of the Indenture. Such certificate and opinion shall
comply with the provisions of Section 13.05 of the Indenture.
6. RELEASES OF GUARANTEES. In the event of a sale or other
disposition of all or substantially all of the assets of any Guarantor, by way
of merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Guarantor (other than Jefferson Corp.), then such
Guarantor on (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 such
Guarantor) or the corporation acquiring the property (in the event of a sale
or other disposition of all or substantially all of the assets of such
Guarantor) shall be released and relieved of any Obligations under its
Guarantee and the Collateral Documents; PROVIDED that (i) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof and (ii)
the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of the Indenture. Upon delivery by the Company
to the Trustee of an Officers' Certificate and Opinion of Counsel, to the
effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without limitation
Section 4.10 of the Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of any such Guarantor
from its obligations under its Guarantee and the Collateral Documents. Any
Guarantor not released from its obligations under its Guarantee and Collateral
Documents shall remain liable for the full amount of principal of, premium and
Liquidated Damages, if any, and interest on the Notes and for the other
Obligations of any Guarantor under the Indenture as provided in Article 0 of
the Indenture. Nothing herein shall relieve the Company from its obligations
to apply the proceeds of an Asset Sale as provided in Section 4.10 of the
Indenture.
7. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting under the Indenture, the term "TRUSTEE" as used in Article
0 of the Indenture shall in such case (unless the context shall otherwise
require) be construed as extending to and includ-ing such Paying Agent within
its meaning as fully and for all intents and purposes as if such Paying Agent
were named in Article 0 of the Indenture in place of the Trustee.
8. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, incorporator or stockholder of the Company or the
Guarantor, as such, shall have any liability for any obligations of the
Company or the Guarantor under the Notes, the Indenture or this Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
9. NEW YORK LAW TO GOVERN. The internal law of the State of New
York shall govern and be used to construe this Supplemental Indenture.
10. 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.
11. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto caused this Supplemental Indenture to
be duly executed and attested, all as of the date first above written.
Dated: August 22, 1996
[Guarantor]
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President and General Council
First Union Bank of Connecticut,
as Trustee
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title: Vice President
REGISTRATION RIGHTS AGREEMENT
Dated as of August 22, 1996
by and among
CASINO MAGIC OF LOUISIANA, CORP.
THE GUARANTOR NAMED HEREIN,
AND
THE PURCHASERS NAMED HEREIN
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of August 22, 1996 by and among Casino Magic of Louisiana, Corp., a
Louisiana corporation (the "Company"), Jefferson Casino Corporation, a
Louisiana corporation ( "Jefferson Corp. "), and Wasserstein Perella
Securities, Inc., Jefferies & Company, Inc. and Deutsche Morgan Grenfell/C.
J. Lawrence Inc. (each, a " Purchaser " and, collectively, the " Purchasers
"), each of whom has agreed to purchase the Company's 13 % Series A First
Mortgage Notes due 2003 With Contingent Interest (the "Series A Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated August
16, 1996 (the "Purchase Agreement"), by and among the Company, the Guarantor
and the Purchasers. In order to induce the Purchasers to purchase the Series
A Notes, the Company 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 Purchasers under the Purchase Agreement.
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.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture of Series B Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the Series
B Notes pursuant to a Registration Statement pursuant to which the Company
offers the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities held by such Holders for Series B Notes in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such
Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchasers propose to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain institutional
"accredited investors," as such term is defined in Rule 501 (a)(1), (2), (3)
and (7) of Regulation D under the Act ("Accredited Institutions").
Guarantor: Jefferson Corp. and any future Guarantor (as defined in
the Indenture, collectively).
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of August 22, 1996, among the
Company, First Union National Bank, as trustee (the "Trustee"), and the
Guarantor, pursuant to which the Notes are to be issued, as such Indenture is
amended or supplemented from time to time in accordance with the terms
thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
Jefferson Corp.: As defined in the Preamble.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, 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.
Purchaser: As defined in the preamble hereto.
Record Holder: With respect to any Damages Payment Date relating to Notes,
each Person who is a Holder of Notes on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Series B Notes: The Company's 13 % Series B First Mortgage Notes due
2003 With Contingent Interest to be issued pursuant to the Indenture in the
Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with a Shelf Registration Statement and (c) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act or by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. 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 permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company and the Guarantor shall (i) cause to be
filed with the Commission as soon as practicable after the Closing Date, but
in no event later than 60 days after the Closing Date, a Registration
Statement under the Act relating to the Series B Notes and the Exchange Offer,
(ii) use their best efforts to cause such Registration Statement to become
effective at the earliest possible time, but in no event later than 100 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings in connection
with the registration and qualification of the Series B 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
Registration Statement, continence the Exchange Offer. The Exchange Offer
shall be on the appropriate form permitting registration of the Series B Notes
to be offered in exchange for the Transfer Restricted Securities and to permit
resales of Notes held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall 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 Company
shall cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Notes shall be included in the
Exchange Offer Registration Statement. The Company 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.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result
of market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, 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 any resales of the Series B Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales
by Broker-Dealers that the Commission may require in order to permit such
resales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Company and the Guarantor shall use their best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities
or other trading activities, and to ensure that it conforms 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 date on which the Exchange Offer Registration Statement is
declared effective.
The Company shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company and the Guarantor are
not required to file an Exchange Offer Registration Statement or to consummate
the Exchange Offer because the Exchange Offer is not permitted by applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with) or (ii) if any Holder of Transfer Restricted
Securities shall notify the Company within 20 business days of the
Consummation of the Exchange Offer (A) that such Holder is prohibited by
applicable law or Commission policy from participating in the Exchange Offer,
or (B) that such Holder may not resell the Series B Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder, or (C) that such
Holder is a Broker-Dealer and holds Series A Notes acquired directly from the
Company or one of its affiliates, then the Company and the Guarantor shall
(x)cause to be filed a shelf registration statement pursuant to Rule 415 under
the Act, which may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration Statement") on or prior
to the earliest to occur of (1) the 30th day after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement, (2) the 30th day after the date on which the Company
receives notice from a Holder of Transfer Restricted Securities as
contemplated by clause (ii) above, and (3) the 190th day after the Closing
Date (such earliest date being the "Shelf Filing Deadline"), which Shelf
Registration Statement shall provide for resales of all Transfer Restricted
Securities the Holders of which shall have provided the information required
pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf Registration Statement to
be declared effective by the Commission on or before the 60th day after the
Shelf Filing Deadline.
The Company and the Guarantor shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Notes by the Holders
of Transfer Restricted Securities entitled to the benefit of this Section
4(a), and to ensure that it conforms 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 three years following the Closing
Date.
(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 Company in writing, within 20 business days after receipt of
a request therefor, such information as the Company may reasonably request 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 Liquidated Damages pursuant to Section 5
hereof unless and until such Holder shall have used its best efforts to
provide all such reasonably requested information. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly
to the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified
for such effectiveness in this Agreement (the "Effectiveness Target Date"),
(iii) the Exchange Offer has not been Consummated within 30 business days
after the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement or (iv) the Shelf Registration Statement or the
Exchange Offer Registration Statement 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 immediately by a
post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the
Company and the Guarantor hereby jointly and severally agree to pay liquidated
damages to each Holder of Transfer Restricted Securities with respect to the
first 90-day period immediately following the occurrence of such Registration
Default, in an amount equal to $.05 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder for each week or portion
thereof that the Registration Default continues. The amount of the liquidated
damages shall increase by an additional $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages of $.50 per week per $1,000 principal amount of
Transfer Restricted Securities. All accrued liquidated damages shall be paid
to Record Holders by the Company by wire transfer of immediately available
funds or by federal funds check on each Damages Payment Date, as provided in
the Indenture. Following the cure of all Registration Defaults relating to
any particular Transfer Restricted Securities, the accrual of liquidated
damages with respect to such Transfer Restricted Securities will cease.
All obligations of the Company and the Guarantor set forth in the
preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantor shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i)If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law, the
Company and the Guarantor hereby agree to seek a no-action letter or other
favorable decision from the Commission allowing the Company and the Guarantor
to Consummate an Exchange Offer for such Series A Notes. The Company and the
Guarantor each hereby agrees to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The Company and
the Guarantor each hereby agrees, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases, if
any, upon which such counsel has concluded that such an Exchange Offer should
be permitted and (C) diligently pursue a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (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
Company, (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 Series B Notes to be issued in the Exchange Offer and (C)
it is acquiring the Series B Notes in its ordinary course of business. In
addition, all such Holders of Transfer Restricted Securities shall otherwise
cooperate in the Company's preparations for the Exchange Offer. Each Holder
hereby acknowledges and agrees that any Broker-Dealer and any such Holder
using the Exchange Offer to participate in a distribution of the securities to
be acquired in the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including 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 should 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 if
the resales are of Series B Notes obtained by such Holder in exchange for
Series A Notes acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantor shall provide a supplemental letter
to the Commission (A) stating that the Company and the Guarantor are
registering the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988),
Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable,
any no-action letter obtained pursuant to clause (i) above and (B) including a
representation that neither the Company nor the Guarantor has entered into any
arrangement or understanding with any Person to distribute the Series B Notes
to be received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantor shall comply with all
the provisions of Section 6(c) below and shall use their 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, and pursuant thereto the Company will as expeditiously
as possible 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.
(c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales
of Notes by Broker-Dealers), each of the Company and the Guarantor shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of the Guarantor) 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 a material misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period required
by this Agreement, the Company shall file promptly an appropriate amendment to
such Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set forth
in Section 3 or 4 hereof, as applicable, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold; 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 the applicable provisions of
Rules 424 and 430A 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 the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, to 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 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 or the Prospectus in order to make the statements
therein 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 Company and
the Guarantor shall use their best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), 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 of such
Holders and underwriter(s), if any, for a period of at least five business
days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration Statement
or Prospectus (including all such documents incorporated by reference) to
which a selling Holder of Transfer Restricted Securities covered by such
Registration Statement or the underwriter(s), if any, shall reasonably object
within five business days after the receipt thereof. A selling Holder or
underwriter, if any, shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or
omission;
(v) 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 the selling Holders and to the underwriter(s), if
any, make the Company's representatives available (and representatives of the
Guarantor) 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 selling Holders or underwriter(s), if any, reasonably may
request;
(vi) make available at reasonable times for inspection by the selling
Holders, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other records,
pertinent corporate documents and properties of the Company and the Guarantor
and cause the Company's and the Guarantor's officers, directors and employees
to supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with such Registration
Statement subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s), if any,
promptly incorporate in any Registration Statement or Prospectus, pursuant to
a supplement or post-effective amendment if necessary, such information as
such selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information relating to
the "Plan of Distribution" of the Transfer Restricted Securities, information
with respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after the Company is
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of Notes
covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s), if
any, 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 but excluding all exhibits and
exhibits incorporated therein by reference;
(x) deliver to each selling Holder and each of the underwriter(s), if
any, 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 Company and the Guarantor hereby consent
to the use of the Prospectus and any amendment or supplement thereto by each
of the selling Holders and each of the underwriter(s), if any, in connection
with the offering and the sale of the Transfer Restricted Securities covered
by the Prospectus or any amendment or supplement thereto;
(xi) enter into, and cause the Guarantor to enter into, such agreements
(including an underwriting agreement), and make, and cause the Guarantor to
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 Registration Statement
contemplated by this Agreement, all to such extent as may be requested by any
Purchaser or by any Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration Statement
contemplated by this Agreement; and whether or not an underwriting agreement
is entered into and whether or not the registration is an Underwritten
Registration, the Company and the Guarantor shall:
(A) furnish to each Purchaser, each selling Holder and each underwriter,
if any, in such substance and scope as they may request and as are customarily
made by issuers to underwriters in primary underwritten offerings, upon the
date of the Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement, as the
case may be, signed by (y) the Chief Executive Officer and (z) a principal
financial or accounting officer of each of the Company and the Guarantor,
confirming, as of the date thereof, the matters set forth in paragraph d of
Section 7 of the Purchase Agreement and such other matters as such parties 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 Company and the Guarantor, covering the matters set
forth in Exhibits C and D to the Purchase Agreement and such other matter as
such parties may reasonably request, and in any event including a statement to
the effect that such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent
public accountants for the Company, the Purchasers' representatives and the
Purchasers' counsel in connection with the preparation of such Registration
Statement and the related Prospectus and have considered the matters required
to be stated therein and the statements contained therein, although such
counsel has not independently verified the accuracy, completeness or fairness
of such statements; and that such counsel states that, on the basis of the
foregoing (relying as to materiality to a large extent upon facts provided to
such counsel by officers and other representatives of the Company and without
independent check or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any post-effective
amendment thereto became effective, and, in the case of the Exchange Offer
Registration Statement, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus contained in such Registration Statement as of its date
and, in the case of the opinion dated the date of Consummation of the Exchange
Offer, as of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Without limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated as of the date of Consummation
of the Exchange Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Company's independent accountants, in
the customary form and covering matters of the type customarily covered in
comfort letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort letters
delivered pursuant to Section 7(e) of the Purchase Agreement, without
exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, the indemnification provisions and procedures of Section 8
hereof with respect to all parties to be indemnified pursuant to said Section;
and
(C) deliver such other documents and certificates as may be reasonably
requested by such parties to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company and the
Guarantor contemplated in clause (A)(1) above cease to be true and correct,
the Company or the Guarantor shall so advise the Purchasers and the
underwriter(s), if any, and each selling Holder promptly and, if requested by
such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with, and cause the Guarantor to cooperate with, the selling
Holders, the underwriter(s), if any, and their respective 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 or underwriter(s) 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 Shelf Registration
Statement; provided, however, that neither the Company nor the Guarantor shall
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) shall issue, upon the request of any Holder of Series A Notes
covered by the Shelf Registration Statement, Series B Notes, having an
aggregate principal amount equal to the aggregate principal amount of Series A
Notes surrendered to the Company by such Holder being sold by such Holder to
be registered in the name of the purchaser(s) of such Notes, as the case may
be; in return, the Series A Notes held by such Holder shall be surrendered to
the Company for cancellation;
(xiv) cooperate with, and cause the Guarantor to cooperate with, the
selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and registered in
such names as the Holders or the underwriter(s), if any, may request at least
two business days prior to any sale of Transfer Restricted Securities made by
such underwriter(s);
(xv) use its best efforts to cause 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 or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (xii) above;
(xvi) if any fact or event contemplated by clause (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 not
misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of the Registration Statement and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration Statement
to become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities;
(xix) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to its
security holders, as soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be audited) for the
twelve-month period (A) commencing at the end of any fiscal quarter in which
Transfer Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement;
(xx) cause the 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, and cause the Guarantor to cooperate,
with the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute, and cause the Guarantor to
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 Indenture to
be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be' listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by the
Holders of a majority in aggregate principal amount of Series A Notes or the
managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each document filed
with the Commission pursuant to the requirements of Section 13 and Section 15
of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the
kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof, or until it is advised in writing (the "Advice") by the Company 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. If so directed by the Company, each Holder will deliver to the
Company (at the Company'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 such
notice. In the event the Company shall give any such 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 the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 6(c)(iii)(D) hereof to and including the date when each
selling Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or the Guarantor's performance
of or compliance with this Agreement will be borne by the Company or the
Guarantor, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and
expenses (including filings made by any Purchaser or Holder with the NASD
(and, if applicable, the fees (excluding underwriting discounts and
commissions) and expenses of any "qualified independent underwriter" and its
counsel that may be required by the rules and regulations of the NASD)); (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 Series B 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 Company, the Guarantor and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing 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 Company and the Guarantor (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantor's 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 Company.
(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 Company will reimburse
the Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for
the reasonable fees and disbursements of not more than one counsel, who shall
be Latham & Watkins or such other 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.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantor, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and
agents of any Holder or any controlling person (any person referred to in
clause (i), (ii) or (iii) may hereinafter be referred to as an ".Indemnified
Holder"), to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, and expenses whatsoever incurred (including
without limitation attorneys' fees and all expenses whatsoever incurred in
investigating, preparing, or defending any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (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 any Registration
Statement or Prospectus (or any amendment or supplement thereto), or 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 and
will reimburse the Indemnified Holder for any legal and other expenses as such
expenses are reasonably incurred by the Indemnified Holder in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
Company shall not be liable in any such case to the extent but only to the
extent that any such loss, claim, damage, liability or expense are caused by
an untrue statement or omission or alleged untrue statement or omission that
is made in reliance upon and in conformity with information relating to any of
the Holders furnished in writing to the Company by any of the Holders
expressly for use therein. This indemnity will be in addition to any
liability which the Company and the Guarantor may otherwise have, including
under this Agreement.
In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or the Guarantor, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company and
the Guarantor in writing (provided, that the failure to give such notice shall
not relieve the Company or the Guarantor of its obligations under this Section
8 except to the extent that it has been prejudiced in any material respect by
such failure). In case any such action is brought against an Indemnified
Holder and it notifies the Company and the Guarantor of the commencement
thereof, the Company and the Guarantor will be entitled to participate
therein, and to the extent they may elect by written notice delivered to the
Indemnified Holder, promptly after receiving the aforesaid notice from the
Indemnified Holder, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Holder. Notwithstanding the foregoing, the
Indemnified Holder shall have the right to employ their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Holder unless (i) the employment of such counsel shall
have been authorized in writing by the Company or the Guarantor in connection
with the defense of such action, (ii) the Company and the Guarantor shall not
have employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
Indemnified Holder shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to the Company or the Guarantor (in which case the Company and the
Guarantor shall not have the right to direct the defense of such action on
behalf of the Indemnified Holder) in any of which events such fees and
expenses shall be born by the Company and the Guarantor; provided, however,
that the Company and the Guarantor shall only be liable for the legal expenses
of one counsel (and any local counsel) for all indemnified parties and that
all such fees and expenses of counsel shall be reimbursed as they are
incurred. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or
action effected without its written consent; provided, however, that such
consent was not unreasonably withheld.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantor, and
their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Company or the Guarantor, and the respective officers, directors, partners,
employees, representatives and agents of each such person, to the same extent
as the foregoing indemnity from the Company and the Guarantor to each of the
Indemnified Holders, but only to the extent that any such loss, liability,
claim, damage or expense arises out of or is based upon information relating
to such Holder furnished in writing by such Holder expressly for use in any
Registration Statement. In case any action or proceeding shall be brought
against the Company, the Guarantor or its directors or officers or any such
controlling person in respect of which indemnity may be sought against a
Holder of Transfer Restricted Securities, such Holder shall have the rights
and duties given the Company and the Guarantor and the Company and the
Guarantor or its directors or officers or such controlling person shall have
the rights and duties given to each Holder by the preceding paragraph. In no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sale
of the Transfer Restricted Securities giving rise to such indemnification
obligation. This indemnity will be in addition to any liability which the
Holder may otherwise have, including under this Agreement.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable 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 expenses in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantor on the one hand and the Holders on the other
hand from their sale of Transfer Restricted Securities or if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 8 hereof, then in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of
the Company and the Guarantor on the one hand and of the Holders on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantor
on the one hand and of the Holders on the other 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 Company or the Guarantor
or by the Holders 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 expenses 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 Company, the Guarantor and each Holder of Transfer Restricted Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 8(c) 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 expenses
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 such action or claim. Notwithstanding the provisions of this
Section 8, none of the Holders (and its related Indemnified Holders) 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 Series A Notes
exceeds the sum of (A) the amount paid by such Holder for such Series A Notes
plus (B) 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 II (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, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Holder, and each person, if any, who controls the Company or a Guarantor
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, each officer and each manager of the Company and of the Guarantor shall
have the same rights to contribution as the Company and the Guarantor, subject
in each case to the provisions in this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its consent; provided, however,
that such consent was not unreasonably withheld. The Holders' obligations to
contribute pursuant to this Section 8(c) are several in proportion to the
respective principal amount of Series A Notes held by each of the Holders
hereunder and not joint.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from 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.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of
such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering,
the investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and the Guarantor agree that monetary damages
(including the liquidated damages contemplated hereby) would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, and will cause
the Guarantor not to, 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. Neither the Company nor the Guarantor has previously
entered into any agreement granting any registration rights with respect to
its securities to any Person. 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 Company's securities under any agreement in effect on
the date hereof.
(c) Adjustments Affecting the Notes. The Company will not take any
action, or permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) 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 the Company has obtained
the written consent of Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities. Notwithstanding the foregoing, a
waiver or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose 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 being
tendered or registered.
(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 Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Casino Magic of Louisiana, Corp.
711 Casino Magic Drive
Bay St. Louis, Mississippi 39520
Telecopier No.: (601) 467-7998
Attention: Chief Financial Officer
With a copy to:
Akin Gump Strauss Hauer & Feld LLP
1500 Nations Bank Plaza
300 Convent St.
San Antonio, Texas 78205
Telecopier No.: (210) 224-2035
Attention: J. Patrick Ryan, 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 answered
back, if telexed; 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 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 of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless and to the extent such successor or
assign acquired Transfer Restricted Securities from such Holder.
(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 LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
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 together with the other
Transaction Documents (as defined in the Purchase 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 by
the Company with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CASINO MAGIC OF LOUISIANA, CORP.
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President and General
Council
JEFFERSON CASINO CORPORATION
BY: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President and General
Council
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ Ashish Bhotani
Name: Ashish Bhotani
Title: President
JEFFERIES & COMPANY, INC.
By: /s/ Steven D. Croxton
Name: Steven D. Croxton
Title: Vice President
Attested by: Jay S. Osman
DEUTSCHE MORGAN GRENFELL/C. J. LAWRENCE INC.
By: /s/ Jonathan P. Wendall
Name: Jonathan P. Wendall
Title: Managing Director
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
Among
FIRST NATIONAL BANK OF COMMERCE, as Disbursement Agent
FIRST UNION BANK OF CONNECTICUT, as Trustee
and
CASINO MAGIC OF LOUISIANA, CORP.
dated as of
August 22, 1996
TABLE OF CONTENTS
Page
1. DEFINITIONS 2
1.1 DEFINED TERMS 2
1.2 INDEX OF ADDITIONAL DEFINED TERMS 9
2. ESTABLISHMENT OF ACCOUNTS 9
2.1 APPOINTMENT OF DISBURSEMENT AGENT 9
2.2 ESTABLISHMENT OF ACCOUNTS 9
2.3 PLEDGE AGREEMENT 10
2.4 INVESTMENT OF FUNDS IN ACCOUNTS 10
2.5 AGENCY 11
2.6 WAIVER OF SETOFF RIGHTS 11
3. DISBURSEMENT FROM ACCOUNTS 11
3.1 CONDITIONS To DISBURSEMENT 11
3.2 METHOD OF DISBURSEMENT 11
3.3 DISBURSEMENT OF COMPENSATION 12
3.4 TRANSFER OF FUNDS TO THE TRUSTEE 12
4. DUTIES OF DISBURSEMENT AGENT 12
4.1 DISBURSEMENT REQUESTS AND DISBURSEMENTS 12
4.2 PERIODIC REVIEW OF BOSSIER CITY PROJECT 14
4.3 LETTER OF AGREEMENT WITH INDEPENDENT CONSTRUCTION CONSULTANT 15
5. INTEREST RESERVE 15
5.1 INTEREST DISBURSEMENTS 15
5.2 INTEREST RESERVE ACCOUNT AMOUNTS 15
6. OPERATING RESERVE 15
6.1 CONDITIONS PRECEDENT TO OPERATING RESERVE DISBURSEMENTS 15
6.2 FINAL DISBURSEMENT OF FUNDS 16
7. COMPLETION RESERVE 16
7.1 CONDITIONS PRECEDENT TO COMPLETION RESERVE DISBURSEMENTS 16
7.2 FINAL DISBURSEMENT OF FUNDS 16
8. CONDITIONS PRECEDENT TO DISBURSEMENT FROM CONSTRUCTION DISBURSEMENT
ACCOUNT...................................................................
17
8.1 INITIAL DISBURSEMENTS 17
8.2 CONDITIONS To DISBURSEMENTS 17
8.3 ADVANCE DISBURSEMENTS 18
8.4 DISBURSEMENTS AFTER EVENT OF DEFAULT 18
8.5 FINAL DISBURSEMENT OF FUNDS FOLLOWING OPERATING DATE 19
9. AMENDMENTS TO CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT TO
CONTRACTS .................................................................
19
9.1 CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
PROCESS............................. 19
9.2 CONTRACT AMENDMENT PROCESS................................................
. 20
9.3 PROJECT COST SCHEDULE AND COST
OVERRUNS........................................
20
10. ESCROW ACCOUNT 21
10.1 DEPOSIT OF PROCEEDS INTO ESCROW ACCOUNT 21
10.2 CONDITIONS PRECEDENT To ESCROW ACCOUNT DISBURSEMENT 21
10.3 DISBURSEMENT IN THE EVENT RIVERBOAT GAMING is DISCONTINUED 21
11. EVENTS OF DEFAULT 21
12. DISBURSED FUNDS ACCOUNTS 22
12.1 RIGHTS OF THE COMPANY To DISBURSED FUNDS ACCOUNTS 22
12.2 RIGHT TO SUBSTITUTE DISBURSED FUNDS ACCOUNT 22
13. LIMITATION OF LIABILITY 22
13.1 DISBUSEMENT AGENT'S LIMITATION OF LIABILITY 22
13.2 DISBURSEMENT AGENTS LIMITATION OF LIABILITY 23
14. INDEMNITY AND INSURANCE 23
14.1 INDEMNITY OF DISBURSEMENT AGENT 23
14.2 INSURANCE 24
15. TERMINATION 24
16. SUBSTITUTION OF DISBURSEMENT AGENT OR RESIGNATION 24
17. ACCOUNT STATEMENT 25
18. NOTICE 25
19. MISCELLANEOUS 25
19.1 WAIVER 25
19.2 INVALIDITY 25
19.3 No AUTHORITY 26
19.4 ASSIGNMENT 26
19.5 BENEFIT 26
19.6 TIME 26
19.7 CHOICE OF LAW 26
19.8 ENTIRE AGREEMENT: AMENDMENTS 26
19.9 NOTICES 26
19.10 COUNTERPARTS 27
19.11 CAPTIONS 27
19.12 ARBITRATION 27
ii
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
THIS CASH COLLATERAL AND DISBURSEMENT AGREEMENT (the "AGREEMENT") is
dated as of August 22, 1996, by and among FIRST NATIONAL BANK OF COMMERCE, a
national banking association, as Disbursement Agent (the "DISBURSEMENT
AGENT"), FIRST UNION BANK OF CONNECTICUT, a Connecticut banking corporation,
as trustee under the Indenture (as defined below) (the "TRUSTEE") and CASINO
MAGIC OF LOUISIANA, CORP., a Louisiana corporation ("COMPANY").
RECITALS
A. NOTES. The Company has issued One-Hundred Fifteen Million
Dollars ($115,000,000) in aggregate principal amount of its First Mortgage
Notes due 2003 With Contingent Interest (the "SERIES A NOTES" and, together
with any Series B Notes issued in exchange therefore, the "NOTES")
concurrently herewith. The Company's obligations under the Notes will be
unconditionally guaranteed by Jefferson Casino Corporation (the "GUARANTOR")
pursuant to a guarantee (the "GUARANTEE"). The Notes will be issued pursuant
to the provisions of an indenture (the "INDENTURE") dated as of August 22,
1996, among the Company, the Guarantor and the Trustee. Proceeds from the
issuance of Notes in the amount of Twenty-Nine Million Six Hundred Seventy
Eight Thousand Three Hundred Ninety Six Dollars and Fourteen Cents
($29,678,396.14) (the "CONSTRUCTION PROCEEDS") will be deposited
contemporaneously with the execution of this Agreement into account #1 101787,
held at First National Bank of Commerce (said account, or any substitute
account selected in accordance with the terms of this Agreement is sometimes
referred to herein as the "CONSTRUCTION DISBURSEMENT ACCOUNT") to be
maintained by the Disbursement Agent pursuant to Section 2 of this Agreement.
Proceeds from the issuance of Notes in the amount of Seven Million Two-Hundred
Eighty-Eight Thousand One Hundred Twenty Five Dollars ($7,288,125) (the
"INTEREST RESERVE PROCEEDS") will be deposited contemporaneously with the
execution of this Agreement into account #1101787-1, held at First National
Bank of Commerce (said account, or any substitute account selected in
accordance with the terms of this Agreement is sometimes referred to herein as
the "INTEREST RESERVE ACCOUNT") to be maintained by the Disbursement Agent
pursuant to Section 2 of this Agreement. Proceeds from the issuance of Notes
in the amount of Five Million Dollars ($5,000,000) (the "COMPLETION RESERVE
PROCEEDS") will be deposited contemporaneously with the execution of this
Agreement into account #1 101787-2, held at First National Bank of Commerce
(said account, or any substitute account selected in accordance with the terms
of this Agreement is sometimes referred to herein as the "COMPLETION RESERVE
ACCOUNT") to be maintained by the Disbursement Agent pursuant to SECTION 2
of this Agreement. Proceeds from the issuance of Notes in the amount of Three
Million Two-Hundred Eleven Thousand Fifty Dollars and Eighteen Cents
($3,211,050.18) (the "OPERATING RESERVE PROCEEDS") (the Construction Proceeds,
the Completion Reserve, the Interest Reserve Proceeds and the Operating
Reserve Proceeds are collectively referred to herein as the "PROCEEDS") will
be deposited contemporaneously with the execution of this Agreement into
account #1101787-3, held at First National Bank of Commerce (said account, or
any substitute account selected in accordance with the terms of this Agreement
is sometimes referred to herein as the "OPERATING RESERVE ACCOUNT") to be
maintained by the Disbursement Agent pursuant to SECTION 2 of this
Agreement.
B. COLLATERAL AND COLLATERAL ASSIGNMENT.As security for its
obligations under the Notes and the Indenture, the Company has granted
security interests to the Trustee, on behalf of the holders of Notes, in
certain assets and has collaterally assigned certain contracts to the Trustee.
As further security for its obligations under the Notes and the Indenture,
the Company also has granted a security interest to the Trustee, on behalf of
the holders of the Notes, in all of its right, title and interest in the
Construction Disbursement Account, the Disbursed Funds Accounts (as defined
herein), the Completion Reserve Account, the Interest Reserve Account, the
Operating Reserve Account and any Proceeds or other amounts held in any such
account.
C. PURPOSE.The parties intend that portions of the Proceeds be used
to construct the Bossier City Project (as defined herein). The parties have
entered into this Agreement in order to set forth the conditions upon which,
and the manner in which, funds will be disbursed from the Construction
Disbursement Account in order to permit the Company to construct the Bossier
City Project, including the furnishing, fixturing and equipping thereof, the
purchasing of gaming equipment necessary to operate the casino located in the
Bossier City Project and the payment of Pre-Opening Expenses in accordance
with this Agreement.
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, 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, the Operating Reserve Account,
the Completion Reserve Account, the Construction Disbursement Account, the
Disbursed Funds Account and the Escrow Account.
"ADDITIONAL REVENUE" means revenue (including without limitation
investment income accruing on the Construction Disbursement Account or the
Disbursed Funds Account) generated by the Company, other than from disposition
of their respective assets, but only to the extent that such revenue is held
by the Company, free and clear of any claims of any other parties whatsoever,
other than the Trustee and holders of the Notes; provided, however, that as of
any date of measurement, Additional Revenue also shall include investment
income which the Company reasonably determines will accrue on funds in the
Construction Disbursement Account through the date that the Bossier City
Project becomes Operating.
"ADVANCE DISBURSEMENTS" means a disbursement from the Construction
Disbursement Account to the Company as an advance against payments for Soft
Costs, including and for the payment of deposits for the purchase of equipment
for the Bossier City Project which the Company anticipates making in
accordance with the Construction Disbursement Budget; provided that Advance
Disbursements shall not be outstanding in an amount greater than $250,000 at
anytime.
"AVAILABLE FUNDS" means, at any given time, (a) the Proceeds deposited in
the
2
Construction Disbursement Account, less disbursements theretofore made from
the Construction Disbursement Account, (b) Additional Revenue, and (c)
Realized Savings theretofore achieved.
"BELLOWS" means W.S. Bellows Construction Corporation and its successors
identified by notice to the Disbursement Agent.
"BELLOWS CONSTRUCTION CONTRACT" means the contract for the construction
of the Bossier City Project executed by Bellows and the Company, dated June
12, 1996; provided that the Company shall use its best efforts to amend such
contract to provide that the Bossier City Project shall be Operating by a date
certain and constructed for a guaranteed maximum price.
"BORROWERS CLOSING CERTIFICATION" means an Officer's Certificate in the
form attached hereto as EXHIBIT B-1.
"BOSSIER CITY PROJECT" means the pending project to develop, construct,
equip and open the Casino Magic-Bossier City dockside riverboat casino, which
will be located on (or in the case of the riverboat, adjacent to) the
Property, and which will consist of, among other things, (i) a recently
constructed riverboat which measures 254 feet long and 78 feet wide, and
contains approximately fifty-eight thousand (58,000) square feet of interior
space, including thirty-thousand (30,000) square feet of gaming space with
approximately one-thousand (1,000) slot machines and 50 table games; provided
that funds disbursed under this Agreement shall not be used to purchase or
improve such riverboat, except such improvements as are set forth in the
Initial Construction Disbursement Budget, (ii) a thirty-seven thousand
(37,000) square foot entertainment pavilion, and related amenities (including
a 350-seat buffet restaurant, a gift shop, a bar and lounge area and a stage
area designed to showcase live entertainment, including dance productions,
bands and individual performers with an open seating area that will
accommodate up to 300 people) and (iii) covered parking for one-thousand
five-hundred fifty thousand (1,550) cars, and any future developments or
improvements in connection therewith.
"BELLOWS HARD COSTS" means all Hard Costs related to the Bossier City
Project other than costs relating to the supplying of goods, materials and
labor pursuant to the terms of the Max Foote Construction Contract.
"BOSSIER RIVERBOAT" means that certain riverboat gaming vessel "Mary's
Prize" Official No. 1028011 purchased by the Company from Boyd Gaming
Corporation pursuant to that certain Buy-Sell Agreement dated August 2, 1996.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Keefe 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) investment funds investing solely in
securities of the types described in clauses (ii), (iii), (iv) or (v) above.
"COMPLETION" means, with respect to the Bossier City Project, completion
of all construction pursuant to the Plans in a manner which permits the
Bossier City Project to be Operating.
"C.F.R." means Code of Federal Regulations.
"CONSOLIDATED CASH FLOW" has the meaning set forth in the Indenture.
"CONSTRUCTION DISBURSEMENT BUDGET" means the Initial Construction
Disbursement
Budget, as the same may be amended from time to time pursuant to this
Agreement.
"CONSTRUCTION CONTRACT" means the Bellows Construction Contract and the
Max Foote Construction Contract.
"CONSTRUCTION EXPENSES" means expenses incurred in connection with the
construction of the Bossier City Project in accordance with the Construction
Disbursement Budget, excluding, however, (a) any such Construction Expenses
paid prior to the Issue Date, (b) any Debt Financing Costs and (c) any
Issuance Fees and Expenses.
"CONSTRUCTION SCHEDULES" mean, collectively, schedules describing the
sequencing of the components of work to be undertaken in connection with the
Bossier City Project, which schedules (as the same may be amended) demonstrate
that the Bossier City Project will be Operating on or before its Operating
Deadline.
"CONTRACT" means a contract pertaining to the construction of the Bossier
City Project to which the Company is a party, including without limitation any
contract, license and performance and payment bond or guarantee, if any.
"CONTRACTOR" means a contractor which is a party to a Contract.
"CRESCENT CITY RIVERBOAT" means the riverboat gaming vessel "Crescent
City Queen," Official Number 1028319, measuring approximately 430 feet by 100
feet with a total area of approximately 88,000 square feet spread across three
decks, owned by the Company on the Issue Date.
"DEBT FINANCING COSTS" means all principal, repayments, interest and
other amounts payable or accrued from time to time under the 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 (as such term is defined
in the Indenture).
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by,
4
the United States of America for the payment of which guarantee or obligations
the full faith and credit of the United States is pledged.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
maintained with a bank, savings and loan association, credit union, or like
organization, including an account evidenced by a writing (other than an
account evidenced by a certificate of deposit as defined in Louisiana Revised
Statutes 10:3-104).
"DISBURSED FUNDS ACCOUNT" means the Disbursed Funds Account, account
number 110649060 at First National Bank of Commerce, New Orleans, Louisiana,
in the name of the Company or any substitute account selected in accordance
with this Agreement, which account shall be funded from disbursements from the
Construction Disbursement Account and/or the Operating Revenue Account.
"DISBURSEMENT REQUEST" means any Initial Disbursement Request,
Construction Disbursement Request, Operating Disbursement Request, Completion
Reserve Disbursement Request, Interest Disbursement Request, Escrow
Disbursement Request and any other request for disbursement from the Accounts
made pursuant to this Agreement.
"ESCROW ACCOUNT" means that certain account to be held at First National
Bank of Commerce into which any proceeds from the sale of the Crescent City
Riverboat, if any, will be deposited, if required pursuant to SECTION 10.
"FEDERAL BOOK-ENTRY SECURITY" means any of the following: a Book-Entry
Federal Home Loan Mortgage Corporation Security as such term is defined in I
C.F.R. 462.1(c), a Book-Entry FmHA Security as such term is defined in 7
C.F.R. 1901.503(b)(4), a Book-Entry Farm Credit Security as such term is
defined in 12 C.F.R. 615.5460(e), a Book-Entry Financial Assistance Security
as referenced in 12 C.F.R. 615.5560(c), a Book-Entry Federal Housing Finance
Security as such term is defined in 12 C.F.R. 912.1(d), a Book-Entry
Financing Corporation Security as referenced in 12 C.F.R. 950.5(b), a
Book-Entry Funding Corporation Security as such term is defined in 12 C.F.R.
151 1. 1, a Book-Entry TVA Power Security as such term is defined in 18 C.F.R.
1314.2(f), a Book-Entry FNMA Security as such term is defined in 24 C.F.R.
81.41(d), a Book-Entry Treasury Security as such ten-n is defined in 31 C.F.R.
306.115(d), a Book-Entry Sallie Mae Security as such term is defined in 31
C.F.R. 354.1(e) or a Book-entry Postal Service Security as such term is
defined in 39 C.F.R. 761.2(d).
"FEDERAL RESERVE BANK" means a "Reserve Bank" as such ten-n is defined in
the C.F.R. Title 1, Section 462.1(a), Title 7, Section 1901.503(b)(1), Title
12, Sections 615.5460(a), 912.1(a), and 1511.1, title 18, section 1314.2(b),
Title 24, Section 81.41(a), Title 31, Sections 306.115(a) and 354.1(a) and
Title 39, Section 761.1(a), located within Louisiana.
"FINAL PLANS" with respect to any particular work or improvement means
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.
"GENERAL CONTRACTOR" means Bellows and/or Max Foote.
"HARD COSTS" means the costs and expenses in respect of supplying goods,
materials and labor for the construction of improvements relating to the
Bossier City Project.
"INDEPENDENT CONSTRUCTION CONSULTANT" means 2nd Opinion, Inc., a
Louisiana corporation, (provided that 2nd Opinion, Inc. has agreed to perform
the duties of the Independent Construction Consultant hereunder for the
benefit of the Company, the Trustee and the holders of the Notes pursuant to
that certain side letter dated as of the date hereof in favor of the Company
and the Trustee) and its successors or any substitute Independent Construction
Consultant appointed by the Company in accordance with the terms of this
Agreement.
"INITIAL CONSTRUCTION DISBURSEMENT BUDGET" means, collectively, the
itemized schedule setting forth on a line item basis all of the costs which
the Company anticipates to expend in connection with the development,
construction, equipping and opening of the Bossier City Project attached as
EXHIBIT 1to the Borrowers' Closing Certification which costs in the
aggregate, to the extent they are anticipated to be funded from the Accounts,
shall not exceed the Construction Proceeds.
"INITIAL DISBURSEMENTS CERTIFICATE" means an Officers' Certificate from
the Company in the form attached hereto as EXHIBIT A.
"ISSUE DATE" means the date of the closing of the offering of the Notes.
"ISSUANCE FEES AND EXPENSES" means fees and expenses (a) incurred by the
Company
in connection with the offering of the Notes and (b) incurred on or before the
Issue Date.
"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).
"LOUISIANA REFERENDUM" means the local option elections scheduled to be
held on November 5, 1996 on a parish-by-parish basis in the State of Louisiana
to determine whether to continue to permit existing forms of gaming authorized
by law to be conducted in each such parish.
"MARQUIS FUND" means the Treasury Securities Money Market Fund maintained
by
Marquis Funds, a Massachusetts business trust.
"MAX FOOTE" means Max Foote Construction Company and its successors
identified
by notice to the Disbursement Agent.
"MAX FOOTE CONSTRUCTION CONTRACT" means the Contract for Fill and
Compaction
Work executed by Max Foote and the Company dated June 12, 1996; provided that
the
6
Company shall use its best efforts to amend such contract to provide that the
Bossier City Project shall be Operating by a date certain and constructed for
a guaranteed maximum price
"MAX FOOTE HARD COSTS" means all Hard Costs in connection with the Bossier
City Project relating to the supplying of goods, materials and labor pursuant
to the Max Foote Construction Contract.
"MORTGAGE" means the Mortgage and Assignment of Leases and Rents executed by
the Company to encumber its interests in the Property in favor of the Trustee,
on behalf of the holders of Notes.
"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.
"OPERATING" means, with respect to the Bossier City Project, the time
that (i) all Gaming Licenses (as such term is defined in the Indenture) have
been granted and have not been revoked or suspended, (ii) all Liens (other
than the Liens created by the Collateral Documents (as such ten-n is defined
in the Indenture) or Permitted Liens (as such term is defined in the
Indenture) related to the construction of the Bossier City Project have been
paid or, if payment is not yet due or if such payment is contested in good
faith by the Company, sufficient fiends remain in the Construction
Disbursement Account to discharge such Liens or such Liens have been bonded
with bonds in form and substance sufficient to satisfy such Liens, (iii)
Bellows, Max Foote, the Project Architect and the Independent Construction
Consultant of the Bossier City Project shall have delivered a certificate to
the Trustee certifying that the Bossier City Project is complete in accordance
with the plans therefor and all applicable building laws, ordinances and
regulations, (iv) the Bossier City Project is in a condition (including
installation of furnishings, fixtures and equipment) to receive guests in the
ordinary course of business, (v) gaming and other operations in accordance
with applicable law are open to the general public and are being conducted at
the Bossier City Project, (vi) a permanent or temporary certificate of
occupancy has been issued for the Bossier City Project by the parish in
Louisiana in which the Bossier City Project will operate, (vii) a notice of
completion of the Bossier City Project has been duly recorded, and (viii) the
Bossier Riverboat has been documented by the U.S. Coast Guard in the name of
the Company and the U.S. Coast Guard has issued a final Certificate of
Inspection for the Bossier Riverboat.
"OPERATING DEADLINE" means April 30, 1997.
"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.
"OFFICERS' CERTIFICATE" means a certificate signed by two officers of the
company on whose behalf or for whose benefit the certificate is being executed
or delivered, in either case including one of the following officers of such
company: the Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer, Vice President Finance, Treasurer or Assistant Treasurer.
"PLANS" means the plans, specifications, working drawings, change orders,
correspondence and related items, which may be amended by the Company, as the
case may be, as necessary or appropriate, that collectively: (a) provide for
and detail the manner of construction of improvements for the Bossier City
Project; (b) call for construction which will permit the Bossier City Project
to be Operating on or prior to its Operating Deadlines; (c) call for
construction which will cause the Bossier City Project to be Operating for a
total cost consistent with its Construction Disbursement Budget and the line
items set forth therein; and (d) to the extent such Plans are amended such
Plans continue to represent a logical evolution consistent with previous Plans
and are consistent with the description of the Bossier City Project contained
herein, and are consistent with all governmental approvals and requirements,
including without limitation, the Bossier City Building Department.
"PLEDGE AGREEMENT" means that certain Accounts Pledge Agreement between
the Company and the Trustee relating to the Trustee's security interest in the
Accounts and the proceeds thereof.
"PROJECT ARCHITECT" means Kuhlmann design Group, Inc. and its successors
identified by notice to the Disbursement Agent.
"PROJECT COST SCHEDULE" means an itemized schedule in the form of
SCHEDULE 1 to the Disbursement Request.
"PROPERTY" means an approximately 23-acre site along the Red River in
Bossier City, Louisiana on which the Company will construct the Bossier City
Project.
"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; provided,
however, that: (a) Realized Savings for any line item shall be deemed to be
zero if such savings are obtained in a manner that materially detracts from
the overall quality and amenities of the Bossier City Project and (b) Realized
Savings for each line item shall in all cases be deemed to be zero until (i)
the Company has completed all work and improvements covered by the line item,
or (ii) the Company has satisfied or provided in all material respects for the
obligations arising out of the completion of that line item.
"REMAINING COSTS" means, at any given time, the amount necessary to pay,
through the time the Bossier City Project is Operating, all theretofore unpaid
costs (including Retainage Amounts) to be incurred or payable in connection
with the Bossier City Project through the date on which the Bossier City
Project is Operating.
"RETAINAGE AMOUNTS" means at any given time amounts which have accrued
and are owing under the terms of a Contract for work or services already
provided but which at such time (and in accordance with the terms of the
Contract) are being withheld from payment to the Contractor until certain
subsequent events (e.g., completion benchmarks) have been achieved under the
Contract.
"SOFT COSTS" means all costs set forth in the Construction Disbursement
Budget other than Hard Costs, including, without limitation, pre-opening
costs.
"TITLE INSURER" means Louisiana Title Company.
"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, as the case may be, together with all endorsements thereto in the
form attached as EXHIBIT M.
1.2 Index of Additional Defined Terms. In addition, the terms
listed in the left column below shall have the respective meanings assigned to
such terms in the Section of this Agreement listed opposite such terms in the
right column below:
Defined Term Section
AGREEMENT Introduction
COMPANY Introduction
COMPLETION RESERVE ACCOUNT A of Recitals
COMPLETION RESERVE DISBURSEMENT REQUEST 4.1
COMPLETION RESERVE PROCEEDS A of Recitals
CONSTRUCTION DISBURSEMENT ACCOUNT A of Recitals
CONSTRUCTION DISBURSEMENT REQUEST 4.1
CONSTRUCTION PROCEEDS A of Recitals
DISBURSEMENT AGENT Introduction
ESCROW DISBURSEMENT REQUEST 4.1
EVENT OF DEFAULT 10
FINAL DISBURSEMENT 8.1
GUARANTOR A of Recitals
INDENTURE A of Recitals
INITIAL DISBURSEMENTS 8.1
INITIAL DISBURSEMENTS CERTIFICATE 4.1
INTEREST DISBURSEMENT REQUEST 4.1
INTEREST RESERVE ACCOUNT A of Recitals
INTEREST RESERVE PROCEEDS A of Recitals
OPERATING RESERVE PROCEEDS A of Recitals
PLEDGED SECURITIES 2.2
PROCEEDS A of Recitals
TRUSTEE Introduction
2. Establishment of Accounts.
2.1 Appointment of Disbursement Agent. Trustee and the Company
hereby appoint Disbursement Agent, and Disbursement Agent hereby accepts
appointment, as disbursement agent under the terms and conditions of this
Agreement.
2.2 Establishment of Accounts. Concurrently with the execution and
delivery hereof, Disbursement Agent shall establish the Accounts at
Disbursement Agent and credit thereto, in
9
accordance with the provisions of RECITALA hereof, the Proceeds. All funds
in the Accounts shall be held in trust and not commingled with any ordinary
deposit or commercial bank account. The Disbursement Agent hereby waives any
and all liens, claims, encumbrances and rights of set off which it may have in
the Accounts including all rights of offset, deductions and liens, whether
statutory or otherwise afforded by law, agreement or otherwise set forth
herein. All funds accepted by Disbursement Agent pursuant to this Agreement
shall be held in the appropriate Account for the benefit of the Company
subject to the terms and conditions of this Agreement and the Pledge Agreement
(including without limitation the rights of the Trustee hereunder and
thereunder). Disbursement Agent may, upon the request of Company, establish
sub-accounts for accounting purposes within the Accounts, it being understood
and agreed that the creation of such sub-accounts shall in no way affect the
pledge of the Trustee in the accounts hereunder.
2.3 Pledge Agreement. Pursuant to the Pledge Agreement, the
Company has granted to the Trustee, for the benefit of the Noteholders, a
first priority security interest in the Accounts 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 that all funds and other assets
in the Accounts 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 of the Accounts and the
funds and assets therein solely for the benefit of the Trustee, as secured
party, and for no other parties or Persons (it being understood that the
foregoing shall not be construed as limiting the rights of the Company to
obtain disbursements in accordance with the terms hereof). Accordingly, it is
the intention of the parties that all such funds and assets shall not be
within the bankruptcy "estate" (as such term is used in II U.S.C. 54 1) of
the Disbursement Agent. All such funds and all earnings accruing from time to
time thereon shall be held in the applicable Account until disbursed in
accordance with the terms hereof or until transferred to such other Account as
Trustee and the Company may direct Disbursement Agent to establish.
2.4 Investment of Funds in Accounts. All funds from time to time
credited to the Accounts shall be invested as follows:
2.4.1 Construction Disbursement Account, Completion Reserve
Account, Operating Reserve Account and Escrow Account. All funds contained
in the Construction Disbursement Account, the Completion Reserve Account, the
Operating Reserve Account and the Escrow Account shall be invested in only the
following (in such amounts as may be directed by the Company from time to time
by written instructions delivered to the Disbursement Agent) pending
disbursement from such Accounts pursuant to this Agreement:
(a) Federal Book-Entry Securities (i) which have been transferred to
the Disbursement Agent and identified as within a book-entry account
maintained by the Disbursement Agent with a Federal Reserve Bank, and (ii)
with respect to which, other than the interests of the Company as owner and
the Trustee as secured party, the Disbursement Agent is not aware of and does
not have any notice of any other interest or adverse claim.
(b) Deposit Accounts maintained in the name of the Company with the
Disbursement Agent, provided that from and after the third business day
following the initial issuance of the Notes, the maximum amount of funds
maintained in such deposit accounts at any given time shall not exceed
Two-Hundred Thousand Dollars ($200,000).
10
(c) The Marquis Fund, but only to the extent that, with respect to
such investment, (i) the Company has executed a letter substantially in the
form of EXHIBIT L attached hereto addressed in the manner set forth therein,
the Disbursement Agent has delivered such letter to the addressee thereof and
each party listed as receiving a copy thereof, and the Disbursement Agent has
received from the addressee thereof a copy of said letter counter-signed by
said addressee, and (ii) other than the interests of the Company as owner and
the Trustee as secured party, the Disbursement Agent is not aware of and does
not have any notice of any other interest or adverse claim.
(d) Any other Cash Equivalents, but only to the extent that the
Disbursement Agent shall have concluded that appropriate steps shall have been
taken with respect to 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 Company or the Disbursement Agent (the expense of which shall be paid by
the Company) specifying (A) that the counsel is familiar with the laws
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 instructions are received by the Disbursement Agent after
request, such funds shall be invested in securities selected by the
Disbursement Agent of the type described in CLAUSE (A)above having
maturities of not more than six months from the date of acquisition.
2.4.2 Interest Reserve Account. All funds in the Interest Reserve
Account shall be invested only in securities selected by the Company of the
type described in SECTION 2.4.1(A)above having maturities of not more than
six months from the date of acquisition. If the Company at any time fails to
provide appropriate instructions to the Disbursement Agent as to the
particular securities to be acquired, then the particular securities to be
acquired shall be selected by the Disbursement Agent.
2.5 Agency. The Disbursement Agent shall act solely as the
Trustee's agent in connection with its duties under this SECTION
2,notwithstanding any other provision contained in this Agreement, without
any authority to obligate the Trustee or to compromise or pledge its security
interest hereunder. The Company acknowledges and agrees that in no event
shall the Trustee or the holders of the Notes, be liable for, nor shall the
obligations of the Company under the Indenture and the Notes be affected or
diminished as a consequence of, any action or inaction of the Disbursement
Agent with respect to the Accounts or any funds or other assets credited
thereto or deposited herein.
2.6 Waiver of Setoff Rights. The Disbursement Agent hereby
acknowledges the Trustee's security interest as set forth above and waives any
security interest or other lien in the Accounts or any funds or other assets
credited thereto or deposited herein and further waives any right to set off
said funds, assets or investments now or in the future against any
indebtedness of the Company to the Disbursement Agent. The waivers set forth
in this SECTION 2.6 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 2.6 shall be
construed as waiving, limiting or diminishing any rights of the Trustee
vis-a-vis the Company.
11
3. Disbursements from Accounts.
3.1 Conditions to Disbursement. The Disbursement Agent shall disburse
funds from the Accounts only upon satisfaction of the applicable conditions to
disbursement set forth in this Section and SECTIONS 4 through 8and
SECTION 10.
3.2 Method of Disbursement. Upon satisfaction of the applicable
conditions to disbursement set forth herein, the Disbursement Agent shall
disburse funds from the applicable Account as specified in the Disbursement
Request. Such disbursement shall be effected within one (1) business day of
satisfaction of the applicable conditions to disbursement of such funds.
3.3 Disbursement of Compensation.
3.3.1 Disbursement Agent's Compensation. The Disbursement Agent shall
be paid an initial acceptance fee of Five-Thousand Dollars ($5,000). For each
calendar month during the term of this Agreement, the Disbursement Agent shall
disburse from the Construction Disbursement Account One-Thousand Five-Hundred
Dollars ($1,500) to Disbursement Agent, as compensation for services to be
performed under this Agreement and such additional amounts as required to
compensate Disbursement Agent for any reasonable additional fees and expenses
including, without limitation, the fees and expenses of Disbursement Agent's
counsel, unless Disbursement Agent has received written notice from the
Company or the Trustee that the Disbursement Agent is in default under this
Agreement. The Disbursement Agent shall receive such payments without the
requirement of obtaining any further consent or action on the part of the
Company with respect to the payment. The initial payment pursuant to this
SECTION 3.3.1 shall be made as promptly as practicable following the deposit
of the Construction Proceeds into the Construction Disbursement Account but
shall be prorated if for a partial month. Disbursements for each subsequent
calendar month shall be made on the first day of each such subsequent calendar
month. The final payment pursuant to this SECTION 3.3.1 shall also be
prorated if for a partial month.
3.3.2 Independent Construction Consultant's Compensation. For each
calendar month during the term of this Agreement, the Disbursement Agent shall
disburse from the Construction Disbursement Account Twelve-Thousand Dollars
($12,000), plus reasonable expenses, to Independent Construction Consultant,
as compensation for services to be performed under this Agreement, unless
Independent Construction Consultant has received written notice from the
Company or the Trustee that it is in default under this Agreement.
Independent Construction Consultant may from time to time provide written
notice to the Disbursement Agent as to the place to which such disbursement
should be made. The Independent Construction Consultant shall receive such
payments without the requirement of obtaining any further consent or action on
the part of the Company or the Disbursement Agent with respect to the payment.
The initial payment pursuant to this SECTION 3.3.2 shall be made as
promptly as practicable following the deposit of the Construction Proceeds
into the Construction Disbursement Account but shall be prorated if for a
partial month. Disbursements for each subsequent calendar month shall be made
on the first day of each such subsequent calendar month. The final payment
pursuant to this SECTION 3.3.2 shall also be prorated if for a partial
month.
3.4 Transfer of Funds to the Trustee. Upon the receipt
of written notice
12
executed by the Trustee, which certifies that an Event of Default has occurred
and is continuing and that the Trustee is entitled to the funds in the
Accounts, the Disbursement Agent shall deliver to the Trustee all funds in the
Accounts, other than amounts then permitted to be disbursed under clauses (i),
(ii) and (iii) of SECTION 8.3 hereof. The Disbursement Agent may rely on
the veracity of such certificate unless it has actual knowledge to the
contrary.
4. Agreements of the Company, the Independent Construction Consultant
and the
Disbursement Agent. The Company, the Independent Construction Consultant
and the Disbursement Agent severally agree, for the benefit of Trustee and the
holders of the Notes, as follows:
4.1 Disbursement Requests and Disbursements.
(a) The Company shall concurrently with the execution and delivery of
this Agreement submit to the Disbursement Agent, with a copy to the
Independent Construction Contractor, a request for the disbursement of funds
from the Construction Disbursement Account to pay certain Issuance Fees and
Expenses in the form of EXHIBIT A(the "INITIAL DISBURSEMENTS CERTIFICATE"),
together with the Borrowers Closing Certification executed by the Company in
the form of EXHIBIT B,and all exhibits attached thereto.
(b) The Company or, as set forth in ARTICLE 5,the Trustee, shall
have the right to submit to Disbursement Agent, with a copy to Trustee, a
request for the disbursement of funds from the Interest Reserve Account to pay
the interest due on the Notes, in the form of EXHIBIT C attached hereto (the
"INTEREST DISBURSEMENT REQUEST").
(c) The Company shall have the right from and after the commencement
of gaming operations at the Bossier City Project to submit to the Disbursement
Agent from time to time (but no more often than semi-monthly, unless otherwise
permitted by the Disbursement Agent), with a copy to Trustee, a request for
the disbursement of funds from the Operating Reserve Account to pay certain
operating expenses related to the operation of the Bossier City Project, each
in the form of EXHIBIT Dattached hereto (an "OPERATING DISBURSEMENT
REQUEST"), together with the exhibits attached thereto.
(d) The Company shall have the right from time to time during the
course of this Agreement (but no more often than semi-monthly, unless
otherwise permitted by the Disbursement Agent), to submit to the Disbursement
Agent, with a copy to Trustee and the Independent Construction Consultant, a
request for the disbursement of funds from the Completion Reserve Account to
the Construction Disbursement Account, each in the form of EXHIBIT E
attached hereto (a "COMPLETION RESERVE DISBURSEMENT REQUEST"), together with
the exhibits attached thereto.
(e) The Company shall have the right from time to time during the
course of this Agreement (but no more often than semi-monthly (other than
disbursements related to the Initial Disbursement Certificate), unless
otherwise permitted by the Disbursement Agent), to submit to the Disbursement
Agent, with a copy to Trustee and the Independent Construction Consultant, a
request for the disbursement of funds from the Construction Disbursement
Account to the Disbursed Funds Account in the form of EXHIBIT F attached
hereto (a "CONSTRUCTION DISBURSEMENT REQUEST"), together with the exhibits
attached thereto.
13
(f) Provided that the Company has provided the Disbursement Agent
with a letter from its counsel specifying that the voters in both Bossier
Parish and Caddo Parish have approved the continuation of riverboat gaming
pursuant to the Louisiana Referendum, the Company shall have the right from
time to time during the course of this Agreement (but no more often than
semi-monthly, unless otherwise permitted by the Disbursement Agent) to submit
to the Disbursement Agent with a copy to the Trustee a request for the
disbursement of funds from the Escrow Account, each in the form of EXHIBIT G
attached hereto (the "ESCROW DISBURSEMENT REQUEST") together with the exhibits
attached thereto.
(g) The Disbursement Agent shall review each Disbursement
Request submitted pursuant to SECTIONS 4.1(A) through 4.1(F) above to
determine that they conform in form to the requirements of Exhibits A through
F and Exhibit 1, respectively and that, to the best of Disbursement Agent's
actual knowledge, all other the conditions applicable to such Disbursement
Request have been satisfied. The Disbursement Agent shall notify the Company
as soon as reasonably possible (and in any event within three (3) business
days after the Disbursement Agent receives the required documents) if any
Disbursement Request, or any portion thereof, is disapproved and the reason(s)
therefor.
(h) Provided that a Disbursement Request submitted pursuant to
SECTIONS 4.1(A) through 4.1(F)above is not disapproved by the Disbursement
Agent, within three (3) business days following submission of such
Disbursement Request, the Disbursement Agent shall disburse the funds
requested in such Disbursement Request, or such portion thereof as is approved
by Disbursement Agent.
4.2 Periodic Review of Bossier City Project.
(a) The Disbursement Agent shall exercise commercially reasonable
efforts and utilize commercially prudent practices in the performance of its
duties hereunder consistent with those of similar institutions disbursing
disbursement control funds. Commencing upon execution and delivery hereof,
the Disbursement Agent shall have the right, but shall have no obligation, to
meet periodically at reasonable times with representatives of the Company, the
Independent Construction Consultant and such other employees, consultants or
agents as the Disbursement Agent shall reasonably request to be present for
such meetings. In addition, the Disbursement Agent shall have the right, but
shall have no obligation, at reasonable times upon prior notice to review, to
the extent it deems necessary or appropriate, all information (including
Contracts) supporting the Disbursement Requests and any certificates in
support of any of the foregoing. The Disbursement Agent shall be entitled to
examine, copy and make extracts of the books, records, accounting data and
other documents of the Company, including without limitation bills of sale,
statements, receipts, contracts or agreements, which relate to any materials,
fixtures or articles incorporated into the Bossier City Project. The rights
of the Disbursement Agent under this SECTION 4.2 shall not be construed as
an obligation, it being understood that the Disbursement Agent's duty is
limited to act upon certificates and draw requests submitted by the Company
and the Trustee hereunder.
(b) The Independent Construction Consultant shall exercise
commercially reasonable efforts and utilize commercially prudent practices in
the performance of its duties hereunder consistent with those of similar
institutions disbursing disbursement control funds and reviewing construction
progress. Commencing upon execution and delivery hereof, the Independent
Construction
14
Consultant shall have the right to meet periodically at reasonable times,
however no less frequently than monthly, with representatives of the Company,
the Project Architect, the General Contractors and such other employees,
consultants or agents as the Independent Construction Consultant shall
reasonably request to be present for such meetings; provided that the
Independent Construction Consultant shall attempt to meet with the Company,
the Project Architect and the General Contractors during its regularly
scheduled meetings, if reasonably possible. The Independent Construction
Consultant may perform such inspections of the Property then owned by the
Company and the Bossier City Project as it deems reasonably appropriate in the
performance of its duties hereunder, however no less frequently than
semi-monthly. In addition, the Independent Construction Consultant shall have
the right at reasonable times upon prior notice to review, to the extent it
deems necessary or appropriate, all information (including Contracts)
supporting the amendments to the Construction Disbursement Budget, amendments
to any Contracts, the Disbursement Requests and any certificates in support of
any of the foregoing, to inspect materials stored on the Property then owned
by the Company, to review the insurance required pursuant to the terms of the
Indenture, to confirm receipt of endorsements from Title Insurer insuring the
continuing priority of the lien of the Deed of Trust as security for each
advance of funds from the Construction Disbursement Account hereunder, and to
examine the Plans and all shop drawings relating to the Bossier City Project.
The Independent Construction Consultant is authorized to contact any payee for
purposes of confirming receipt of progress payments. The Independent
Construction Consultant shall be entitled to examine, copy and make extracts
of the books, records, accounting data and other documents of the Company,
including without limitation bills of sale, statements, receipts, conditional
and unconditional lien releases, contracts or agreements, which relate to any
materials, fixtures or articles incorporated into the Bossier City Project.
From time to time, at the request of the Independent Construction Consultant,
the Company shall make available to the Independent Construction Consultant a
Project Cost Schedule and/or a Construction Schedule for the Bossier City
Project. The Company agrees to cooperate with the Independent Construction
Consultant in assisting the Independent Construction Consultant to perform its
duties hereunder and to take such further steps as the Independent
Construction Consultant reasonably may request in order to facilitate the
Independent Construction Consultant's performance of its obligations
hereunder.
4.3 Letter of Agreement with Independent Construction Consultant.
The Trustee and the Company shall enter into that certain side letter with 2nd
Opinion, Inc. set forth as EXHIBIT 3 to EXHIBIT B-1.
5. Interest Reserve.
5.1 Interest Disbursements. Ten (10) days prior to February 15,
1997 (the "PAYMENT DATE"), the Company shall deliver to the Disbursement Agent
an Interest Disbursement Request describing the amount required to be paid,
the paying agent appointed pursuant to the Indenture (the "PAYING AGENT") to
which the Disbursement Agent should transfer funds in order to effect the
payment, and the Payment Date upon which such payment is due and payable. On
the Payment Date, the Disbursement Agent shall liquidate all of the Government
Securities (to the extent required) held in the Interest Reserve Account, and
disburse to the Paying Agent the amounts described in the Interest
Disbursement Request as due and payable on that date; provided, however, that
the Trustee may direct the Disbursement Agent to liquidate the Government
Securities (to the extent required), and disburse to the Paying Agent the
amounts necessary to pay the amounts required to be paid on the Notes in the
event that the Company fails to deliver the Interest Disbursement Request.
The Company acknowledges that the failure of the notice referenced in this
Section to be delivered to Disbursement Agent shall not
15
in any way exonerate or diminish the Company's obligation to make all payments
under the Notes as and when due.
5.2 Interest Reserve Account Amounts. Upon receipt of an Officer's
Certificate from the Chief Financial Officer of the Company certifying that
the funds and Government Securities held in the Interest Reserve Account
exceeds the amount required to provide for payment in full of the interest
payments due on the Notes through February 15, 1997, the Disbursement Agent
shall transfer such excess amount to the Construction Disbursement Account.
Upon payment in full of all interest payments due on the Notes through
February 15, 1997, the Disbursement Agent shall transfer such excess amounts
to the Construction Disbursement Account.
6. Operating Reserve.
6.1 Conditions Precedent to Operating Reserve Disbursements. The
Disbursement Agent shall not make any disbursements from the Operating Reserve
Account unless the following conditions have been satisfied:
(a) Disbursement Agent has no actual knowledge that an Event of
Default exists and is continuing (it being understood that the Disbursement
Agent may rely upon the certificates delivered pursuant to this Agreement,
without further inquiry).
(b) The Operating Disbursement Request on its face has been completed
in the form set forth in EXHIBIT Dand the Disbursement Agent has no actual
knowledge that the certifications contained therein contain any material
errors, inaccuracies, misstatements or omissions of fact.
(c) No more than One Million Dollars ($1,000,000) of funds have
been disbursed from the Operating Reserve Account, unless the Disbursement
Agent has received an Officer's Certificate from the Company certifying that
the funds disbursed pursuant to the previous Operating Disbursement Request(s)
were utilized in substantially the manner as specified in such previous
Operating Disbursement Request(s).
6.2 Final Disbursement of Funds. If (a) the Bossier City Project
is Operating, as stated in the certificate of the Company provided below, and
(b) any funds remain in the Operating Reserve Account, then the Company shall
have the right to request that the Disbursement Agent disburse all remaining
funds in the Operating Reserve Account. Upon receipt by the Disbursement
Agent of a written certification from the Company certifying that (a) the
Bossier City Project commenced Operating and continues to be Operating as of
the date of the certification and (b) no Event of Default has occurred and is
continuing and no facts or circumstances exist which would constitute an Event
of Default with the passage of time, the Disbursement Agent shall, upon the
direction of the Company, disburse all remaining funds in the Operating
Reserve Account, if any, as directed by the Company; provided, that the
Company agrees that all funds disbursed to the Company pursuant to this
SECTION 6.2shall be used as required pursuant to SECTION 4.10of the
Indenture.
16
7. Completion Reserve.
7.1 Conditions Precedent to Completion Reserve Disbursements. The
Disbursement
Agent shall disburse funds from the Completion Reserve Account to the
Construction Disbursement Account in an amount equal to that specified on the
applicable Completion Reserve Disbursement Request upon satisfaction of the
following conditions:
(a) The Completion Reserve Disbursement Request on its face has been
completed as to the information required therein and the required attachments,
if any, are attached and the Disbursement Agent shall have no actual knowledge
of any material errors, inaccuracies, misstatements or omissions of fact in
such Completion Reserve Disbursement Request or any exhibit or attachment
thereto.
(b) The Disbursement Agent shall have no actual knowledge that an
Event of Default exists and is continuing (it being understood that the
Disbursement Agent may rely upon the certificates delivered pursuant to this
Agreement, without further inquiry).
(c) A cost overrun has occurred and no previously unallocated
Available Funds exist to cover such cost overrun.
7.2 Final Disbursement of Funds. If (a) the Bossier City Project
is Operating, as stated in the certificate of the Company referred to below,
and (b) any funds remain in the Completion Reserve Account, then the Company
shall have the right to request that the Disbursement Agent disburse all
remaining funds in the Operating Reserve Account. Upon receipt by the
Disbursement Agent of (a) a written certification from the Company certifying
that (i) the Bossier City Project commenced Operating and continues to be
Operating as of the date of the certification and (ii) no Event of Default has
occurred and is continuing and no facts or circumstances exist which would
constitute an Event of Default with the passage of time and (b) a written
certification from the Independent Construction Consultant concurring with the
certifications set forth in subsection (a)(i) hereof, the Disbursement Agent
shall, upon the written direction of the Company, disburse all remaining funds
in the Operating Reserve Account, if any, to the Construction Disbursement
Account.
8. Conditions Precedent to Disbursement From Construction Disbursement
Account.
8.1 Initial Disbursements. Upon satisfaction of the conditions
described below in this SECTION 8.1, the Disbursement Agent shall make the
disbursements described in the Initial Disbursements Certificate (the "INITIAL
DISBURSEMENTS"). The conditions to the Initial Disbursement shall consist of
the following:
(a) Disbursement Agent shall have received the Proceeds;
(b) Disbursement Agent shall have received the Initial Disbursements
Certificate, and Disbursement Agent shall have received confirmation from the
Trustee that it has received the Initial Disbursements Certificate; and
(c) Disbursement Agent shall have received the Closing Certifications from
the Company, in the form of EXHIBIT B-1 attached hereto, and the Trustee, in
the form of EXHIBIT B-2
17
attached hereto.
8.2 Conditions to Disbursements. Upon satisfaction of the
conditions described below in this SECTION 8.2, the Disbursement Agent shall
make the disbursements described in the corresponding Construction
Disbursement Request (provided that the conditions set forth in SECTION 8.1
above shall have previously been satisfied):
(a) The Company shall have submitted to the Disbursement Agent and
the Independent Construction Consultant, with a copy to the Trustee, a
Construction Disbursement Request as provided for herein pertaining to the
amounts requested for disbursement, together with a completed SCHEDULE 1 in
the form contemplated thereby and the certifications of the Independent
Construction Consultant in the form of EXHIBIT 1 attached to the
Construction Disbursement Request and in the event that the requested
Disbursement includes the certifications of Bellows, as relates to Bellows
Hard Costs, and Max Foote, as relates to Max Foote Hard Costs, each in the
form of EXHIBIT 2 attached to the Construction Disbursement Request and in
the event that the requested Disbursement includes Max Foote Hard Costs, Max
Foote, in the form of EXHIBIT 2,and in the event that the requested
Disbursement includes Hard Costs, the Project Architect, in the form of
EXHIBIT 3 attached to the Construction Disbursement Request.
(b) The Construction Disbursement Request on its face has been
completed as to the information required therein, and the required
attachments, if any, are attached, and the Disbursement Agent shall have no
actual knowledge of any material error, inaccuracy, misstatement or omission
of fact in a Construction Disbursement Request or an exhibit or attachment
thereto or information provided by the Company upon the request of the
Disbursement Agent.
(c) The Disbursement Agent has no actual knowledge (from the facts
set forth in any Disbursement Request or any certificate attached thereto or
any notice from the Trustee or the Company) that an Event of Default exists
and is continuing.
(d) In connection with all Disbursements for Hard Costs, the
Disbursement Agent shall have received an endorsement or a commitment from
Title Insurer evidencing the Title Insurer's unconditional commitment to issue
an endorsement to the Title Policy in the form attached as EXHIBIT K.
(e) The Company certifies that the respective amounts deposited into
the Disbursed Funds Account pursuant to any previous Construction Disbursement
Requests shall have been paid to the respective parties identified on
SCHEDULE 1 of each such previous Disbursement Requests, save and except for
such limited payments as Independent Construction Consultant determines to
have been withheld for good cause.
(f) No more than Five Hundred Thousand Dollars ($500,000) of
Disbursements for Soft Costs shall have been made, unless the Disbursement
Agent has received an Officer's Certificate from the company certifying that
the funds disbursed pursuant to the previous Construction Disbursement
Request(s) were utilized in substantially the manner as specified in such
previous Construction Disbursement Request.
8.3 Advance Disbursements. The Company shall have the right
from time to time
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(but no more frequently than twice per month, unless otherwise permitted by
the Disbursement Agent) to deliver to the Disbursement Agent an Advance
Disbursement Request in the form of Exhibit F-2, which Disbursement Request
shall not be required to include the supporting documentation required for all
other Disbursements; provided, however that (i) within 15 days after any
Advance Disbursement is made, the Company shall, with respect to such Advance
Disbursement, provide the same supporting documentation as is required under
this Agreement with respect to other Construction Disbursement Requests (which
documentation may be included in a subsequent Construction Disbursement
Request ) and (ii) in no event shall the outstanding balance of undocumented
Advance Disbursements from the Construction Disbursement Account at any one
time exceed the sum of $250,000. The Disbursement Agent shall approve such
Advance Disbursement Request so long as (a) the Advance Disbursement Request
on its face has been completed as to the information required therein and the
Disbursement Agent shall have no actual knowledge of any material error,
inaccuracy, misstatement or omission of fact in an Advance Disbursement
Request or information provided by the Company upon the request of the
Disbursement Agent and (b) the Disbursement Agent has no actual knowledge
(from the facts set forth in any Disbursement Request or any certificate
attached thereto or any notice from the Trustee or the Company) that an Event
of Default exists and is continuing.
8.4 Disbursements After Event of Default. In the event that, based
solely on the Disbursement Agent's actual knowledge, the Disbursement Agent
determines that an Event of Default exists and is continuing for any month,
the Disbursement Agent shall not approve any disbursement of funds from the
Construction Disbursement Account pursuant to a Construction Disbursement
Request for the Bossier City Project other than the following:
(i) if all other conditions in SECTION 8.2(including those
stated in SECTION 8.1 hereof) are met, the Disbursement Agent shall disburse
funds from the Construction Disbursement Account, as instructed by the
Independent Construction Consultant in writing for work completed or materials
purchased on or prior to the date that the Disbursement Agent, based solely on
the Disbursement Agent's actual knowledge, determined that an Event of Default
exists and is continuing ;
(ii) payments not to exceed four million dollars ($4,000,000) in
the aggregate to prevent the condition of the Bossier City Project from
deteriorating or to preserve any work completed on the Bossier City Project,
certified to the Disbursement Agent in writing by the Independent Construction
Consultant to be reasonably necessary or advisable; provided, however, that
the foregoing limitation may be increased or decreased by the Trustee by
written notice to the Disbursement Agent; and
(iii) if such condition continues for a period of three (3)
consecutive months or more, at the written request of the Company, Retainage
Amounts for work completed; provided that the Company and the Project
Architect certify to the Disbursement Agent in writing the amount required to
be paid for such Retainage Amounts and that the conditions for paying such
amounts (other than that the Bossier City Project will be Operating) are met.
8.5 Final Disbursement of Funds Following Operating
Date. If (a) the
19
Bossier City Project is Operating and (b) any funds remain in the Construction
Disbursement Account, then the Company shall have the right to request that
the Disbursement Agent disburse all remaining funds in the Construction
Disbursement Account. Upon receipt by the Disbursement Agent of (a) a written
certification from the Company that (i) the Bossier City Project commenced
Operating, and the Bossier City Project continues to be Operating as of the
date of the certification, (ii) no Event of Default has occurred and is
continuing and no facts or circumstances exist which, with the passage of
time, would constitute an Event of Default and (iii) the Company has generated
Consolidated Cash Flow in an amount equal to or greater than the amount
remaining in the Construction Disbursement Account, and (b) a written
certification, from the Independent Construction Consultant concurring with
the certifications set forth in subsection (a)(i) hereof, then the
Disbursement Agent shall disburse all remaining funds in the Construction
Disbursement Account, if any, as directed by the Company (the "FINAL
DISBURSEMENT"); provided, however, that the Disbursement Agent shall first
disburse funds to the Disbursed Funds Account in amounts certified in writing
by the Independent Construction Consultant as sufficient to pay any then
unpaid Retainage Amounts and upon receipt of a certificate from the
Independent Construction Consultant certifying that it has received
unconditional lien waivers from all contractors, subcontractors, materialmen
or suppliers relating to construction of the Bossier City Project; provided,
further, that all finds disbursed to the Company pursuant to this SECTION
8.4 shall be used by the Company as required pursuant to SECTION 4.10 of
the Indenture.
9. Amendments to Construction Disbursement Budget, Amendments to
Contracts.
9.1 Construction Disbursement Budget Amendment Process. The
Construction Disbursement Budget may be amended from time to time in the
manner set forth herein. Subject to SECTION 9.2 below, the Company shall
have the right from time to time to amend the Construction Disbursement Budget
to increase the amounts allocated for specific line item components of the
work required to complete the Bossier City Project. Any such amendment shall
be in writing and be submitted to the Disbursement Agent and the Independent
Construction Consultant by an Officer's Certificate in the form of EXHIBIT G
hereto, together with the Independent Construction Consultant's certification,
as provided in EXHIBIT 1 to the Construction Disbursement Budget Amendment
Certificate, the General Contractor's certification from both Bellows and Max
Foote, as provided in EXHIBIT 2 to the Construction Disbursement Budget
Amendment Certificate and the Project Architect's certification, as provided
in EXHIBIT 3 to the Construction Disbursement Budget Amendment Certificate.
Upon receipt by the Disbursement Agent of an Officer's Certificate in the form
of EXHIBIT G and the attachments, all of which must be completed as to the
information required therein, such amendment shall become effective hereunder
and the Construction Disbursement Budget shall thereafter be as so amended.
9.2 Contract Amendment Process. The Company shall have the right
from time to time to amend any Contract to which it is a party to change the
scope of the work and the Company's payment obligations thereunder. Any such
amendment that (i) results in a cost increase in excess of Twenty-Five
Thousand ($25,000) in a Contract, the value of which is at least One-Hundred
Thousand ($100,000) or (ii) results in a lessening of the scope or quality of
the work constituting the construction of the Bossier City Project, the value
of which is in excess of Twenty-Five Thousand Dollars ($25,000) in a Contract
the value of which is at least One-Hundred Thousand Dollars ($100,000), shall
be in writing and shall identify with particularity all changes being made.
The Company shall deliver to the Disbursement Agent (a) an executed copy of
the Contract amendment (with the effectiveness thereof subject only to
satisfaction of the conditions in this SECTION 9.2);and (b) an Officer's
Certificate in the
20
form attached hereto as EXHIBIT H,together with the Independent Construction
Consultant's certification as provided in EXHIBIT 1 to the Contract
Amendment Certificate, in the event that such Contract relates to Hard Costs,
the General Contractor's certification as provided in EXHIBIT 2 to the
Contract Amendment Certificate, executed by Max Foote if such Contract relates
to Max Foote Hard Costs and Bellows if the Contract relates to Bellows Hard
Costs and the Project Architect's certification as provided in EXHIBIT 3 to
the Contract Amendment Certificate, completed as to the information required
therein. The Contract Amendment shall be deemed approved upon receipt by the
Company of Disbursement Agent's acknowledgment of receipt of items required
under this SECTION 9.2.
9.3 Project Cost Schedule and Cost Overruns.
(a) The Company covenants to promptly cure any cost overrun for any
line item by (i) providing sufficient funds to cover in full such cost
over-run from (A) previously unallocated Available Funds as permitted in this
Agreement (but in each case only to the extent that the same have not
previously been expended or dedicated (including Retainage Amounts) to the
payment of items contained in the Construction Disbursement Budget) or (B) if
the conditions precedent to a disbursement from the Completion Reserve Account
are satisfied, from funds in the Completion Reserve Account; and (ii)
effecting a Construction Disbursement Budget Amendment to dedicate such funds
to the line item in question.
(b) Each Project Cost Schedule shall set forth (i) the actual
investment income earned on the Completion Reserve Account and the
Construction Disbursement Account through the date of such Project Cost
Schedule, and (ii) the additional amount of investment income which the
Company reasonably anticipates will accrue on the Completion Reserve Account
and the Construction Disbursement Account from such date through the
anticipated date on which the Bossier City Project first will be Operating.
If at any time the Company submits a Project Cost Schedule pursuant to this
paragraph and can no longer reasonably anticipate that the Additional Revenue
earned (and anticipated to be earned through the anticipated date on which the
Bossier City Project first will be Operating) from investments of funds in the
Completion Reserve Account and the Construction Disbursement Account will
equal the amount of such Additional Revenue anticipated as of the date of the
Initial Disbursement (as set forth in the Initial Construction Disbursement
Budget), then, so long as the Disbursement Agent has no actual knowledge that
an Event of Default exists and is continuing:
(i) if the total amount of such Additional Revenue at such date
earned or anticipated to be earned is less than the total amount of such
Additional Revenue anticipated as of the date of the Initial Disbursement,
then the Available Funds shall be deemed reduced by the amount of such
deficiency and the Company (as a condition to the next Construction
Disbursement Request) shall provide or allocate additional Available Funds or,
if necessary disburse funds from the Completion Reserve Account so long as the
conditions precedent are satisfied, and/or otherwise amend the Construction
Disbursement Budget if necessary so that the total Project Costs do not exceed
total Available Funds; or
(ii) if the total amount of such Additional Revenue at such date
earned or anticipated to be earned is greater than the total amount of such
Additional Revenue anticipated as of the date of the Initial Disbursement,
then the Available Funds shall be deemed increased by the amount of such
excess but only as and when such excess is actually earned and deposited in
the Construction Disbursement Account.
21
10. Escrow Account.
10.1 Deposit of Proceeds into Escrow Account. In the event that
the Crescent City Riverboat is sold prior to the date on which the voters in
the Bossier Parish and the Caddo Parish approve riverboat gaming pursuant to
the Louisiana Referendum, the Company shall immediately deposit all proceeds
from such sale into the Escrow Account.
10.2 Conditions Precedent to Escrow Account Disbursement. The
Disbursement Agent's approval of any disbursements from the Escrow Account
shall be subject to the following conditions:
(a) Disbursement Agent has no actual knowledge that an Event of
Default exists and is continuing (it being understood that the Disbursement
Agent may rely upon the certificates delivered pursuant to this Agreement,
without further inquiry).
(b) The Escrow Disbursement Request on its face has been completed in
the form of EXHIBIT I and the Disbursement Agent shall have no actual
knowledge of any material errors, inaccuracies, mistakes or omissions of fact
contained in the Escrow Disbursement Request.
(c) The Company has delivered to the Disbursement Agent a letter from
its counsel stating that the voters in the Bossier Parish and the Caddo Parish
have approved the continuation of riverboat gaining pursuant to the Louisiana
Referendum.
10.3 Disbursement in the Event Riverboat Gaming is Discontinued.
In the event that the Company is unable to deliver the letter required
pursuant to SECTION 10.2(C)hereof, all proceeds in the Escrow Account shall
be deemed Excess Proceeds and shall be utilized to make an offer to purchase
Notes pursuant to SECTION 3.10 of the Indenture.
11. Events of Default. The occurrence of any of the following
specified events shall be an "EVENT OF DEFAULT" hereunder.
11.1 Continuance of an Event of Default under the Indenture.
11.2 The Disbursement Agent is unable to approve a Disbursement Request
due to
the failure of the Company to satisfy the conditions precedent to such
Disbursement Request set forth herein, including without limitation the
condition precedent that the Independent Construction Consultant deliver the
certificates required under this Agreement.
11.3 The Independent Construction Consultant reports to the
Disbursement Agent and the Company an exception to a prior disbursement
relating to the Bossier City Project which is not remedied within 10 days.
11.4 Any representation, warranty, certification or statement by the
Company in this Agreement, or any certificate, request, budget or statement
delivered pursuant to this Agreement, shall be untrue in any material respect
on the date given or made and such untruthfulness continues for a period of
five (5) business days after notice hereof.
22
11.5 Any time that the amount remaining in the Construction
Disbursement Account and the Completion Reserve Account is less than the
amount required in the Construction Disbursement Budget to cause the Bossier
City Project to become Operating on or before its Operating Deadlines and such
deficiency continues for a period of thirty (30) days.
11.6 The failure of the Company to deliver any documents required by
the Pledge Agreement and such failure continues for a period of ten (10) days.
12. Disbursed Funds Accounts.
12.1 Rights of the Company to Disbursed Funds Accounts. The
Disbursed Funds Account shall be maintained in the name of the Company and all
funds deposited or held in such account shall belong to the Company. All
funds deposited and held in the Disbursed Funds Account shall, pending
disbursement in accordance with this Agreement, be invested in cash or Cash
Equivalents. Pursuant to the Pledge Agreement, the Company has granted to the
Trustee (for the benefit of the holders of the Notes) a first priority
security interest in its Disbursed Funds Account. Funds in the Disbursed
Funds Account shall be disbursed solely in accordance with the terms and
conditions of this Agreement. Further, the Company shall note in its records
that all funds and other assets in the Disbursed Funds Account have been
pledged to the Trustee.
12.2 Right to Substitute Disbursed Funds Account. The Company,
from time to time shall have the right to designate a substitute account to
serve as the Disbursed Funds Account, provided that no such substitute account
shall become the "Disbursed Funds Account" until (a) the depository financial
institution at which the substitute account is located shall have acknowledged
in a manner satisfactory to the Trustee that such institution has waived its
right of set off in such account or any liens thereto, statutory or otherwise,
and (b) the Trustee shall have received notice of the location and account
number of such new substitute account.
13. Limitation of Liability.
13.1 Disbursement Agent's Limitation of Liability. Disbursement
Agent's responsibility and liability under this Agreement shall be limited as
follows: (a) Disbursement Agent does not represent, warrant or guaranty to the
Trustee or the holders of the Notes the performance of the Company, the
Independent Construction Consultant, the Project Architect, the General
Contractors, any contractor, subcontractor or provider of materials or
services in connection with construction of the Bossier City Project; (b)
Disbursement Agent shall have no responsibility to the Company, the Trustee or
the holders of the Notes as a consequence of performance by Disbursement Agent
hereunder except for any gross negligence or willful misconduct of
Disbursement Agent; (c) the Company shall remain solely responsible for all
aspects of its business and conduct in connection with its Property and the
Bossier City Project, the accuracy of all applications for payment, and the
proper application of all disbursements; (d) Disbursement Agent is not
obligated to supervise, inspect or inform the Company, the Trustee or any
third party of any aspect of the construction of the Bossier City Project or
any other matter referred to above; (e) Disbursement Agent owes no duty of
care to the Company, to protect against, or to inform the Company of, any
negligent, faulty, inadequate or defective design or construction of the
Bossier City Project; and (f) the Disbursement Agent shall have no
responsibility or liability for the perfection or continuation of perfection
of any lien or security interest; provided, however, that the foregoing
provision shall not release Disbursement Agent from liability resulting from
23
a failure to comply with SECTION 2 hereof or from its gross negligence or
willful misconduct. Disbursement 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 or willful
misconduct.
13.2 Independent Construction Consultant's Limitation of Liability.
Independent Construction Consultant's responsibility and liability under this
Agreement shall be limited as follows: (a) Independent Construction Consultant
does not represent, warrant or guaranty to the Trustee or the holders of the
Notes the performance of the Company, the Disbursement Agent, the Project
Architect, the General Contractors, any contractor, subcontractor or provider
of materials or services in connection with construction of the Bossier City
Project and (b) the Company shall remain solely responsible for all aspects of
its business and conduct in connection with its Property and the Bossier City
Project, the accuracy of all applications for payment, and the proper
application of all disbursements. The Independent Construction Consultant
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 or willful misconduct. The
Independent Construction Consultant shall have the right to rely (so long as
such reliance is reasonable and in good faith) on certificates received from
the Company, the General Contractors and the Project Architect; provided that
nothing contained in this sentence shall require the Independent Construction
Consultant to obtain certificates from the General Contractors and the Project
Architect in connection with Disbursements for Soft Costs.
14. Indemnity and Insurance.
14.1 Indemnity of Disbursement Agent. The Company, indemnifies,
protects, holds harmless and agrees to defend Disbursement 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 Disbursement 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 Disbursement Agent.
14.2. Insurance. The Disbursement Agent, at its sole cost and expense,
shall purchase and maintain throughout the ten-n of this Agreement, the
following insurance policies:
14.2.1 Comprehensive general liability insurance, with minimum limits of
Two Million Dollars ($2,000,000) combined single limit per occurrence,
covering all bodily injury and property damage arising out of its operation
under this Agreement. This policy shall name Trustee, and the Company, and
its officers, agents and employees as additional insureds, and shall
constitute primary insurance as to Trustee so that any other policies held by
Trustee shall not contribute to any loss under said insurance.
24
14.2.2 Workers' compensation insurance covering all of its
employees and volunteers.
Said policies shall provide for thirty (30) days' prior written notice to the
Trustee, and the Company of cancellation or material change. If any of such
insurance is written on a claims made form, following termination of this
Agreement, coverage shall survive for the maximum reporting period available
at each anniversary date of such insurance, or not less than five (5) years,
whichever is greater. The limits of coverage required under subparagraph (a)
above shall not in any way limit the liability of the Company under SECTIONS
9.1 or 9.2 hereof.
15. Termination. This Agreement shall terminate automatically
thirty (30) days following disbursement of all funds remaining in the
Accounts, unless sooner terminated pursuant to SECTION 10 hereof, provided,
however, that (a) the obligations of the Company under SECTION 14 of this
Agreement shall survive termination of this Agreement and (b) if, following an
Event of Loss, there exist Net Loss Proceeds that (in accordance with Section
4.11 of the Indenture) are deliverable to the Trustee and are eligible for
distribution to the Company for rebuilding, repair, replacement, or
construction, then, the Company, the Disbursement Agent and the Independent
Construction Consultant shall execute and deliver to the Trustee such
documentation as the Trustee reasonably deems appropriate in order to cause
(i) the Trustee to possess a first priority perfected security interest in
said funds, and (ii) the Disbursement Agent and the Independent Construction
Contractor to administer the disbursement of said funds for such rebuilding,
repair, replacement or construction pursuant to disbursement control
procedures substantially akin to those set forth herein. In the event that
the Net Loss Proceeds are so distributed, the Disbursement Agent shall be paid
the sum of One-Thousand Five-Hundred Dollars ($1,500) per month during the
period of such engagement and the Independent Construction Consultant shall be
paid the sum of Twelve Thousand Dollars ($12,000) per month during the period
of such engagement.
16. Substitution or Resignation.
16.2.1 The Trustee shall have the right, upon the expiration of
thirty (30) days following delivery of written notice of substitution to
Disbursement Agent, the Independent Construction Consultant, and the Company
to cause Disbursement Agent to be relieved of its duties hereunder and to
select a substitute disbursement agent to serve hereunder. Disbursement Agent
may resign at any time upon thirty (30) days' written notice to all parties
hereto. Such resignation shall take effect upon receipt by Disbursement Agent
of an instrument of acceptance executed by a successor disbursement agent and
consented to by the other parties hereto. Upon selection of such substitute
disbursement agent, the Trustee, the Company and the substitute disbursement
agent shall enter into an agreement substantially identical to this Agreement
and, thereafter, Disbursement Agent shall be relieved of its duties and
obligations to perform hereunder, except that Disbursement Agent shall
transfer to the substitute disbursement agent upon request therefor originals
of all books, records, and other documents in Disbursement Agent's possession
relating to this Agreement. The substitute disbursement agent selected by the
Trustee shall be a national bank capable of maintaining book entry accounts
with the federal reserve bank.
16.2.2 The Company shall have the right, upon the expiration of
thirty(30)days
25
following delivery of written notice of substitution to the Disbursement
Agent, the Independent Construction Consultant, and the Trustee to cause the
Independent Construction Consultant to be relieved of its duties hereunder and
to select a substitute independent construction consultant to serve hereunder.
The Independent Construction Consultant may resign at any time upon thirty
(30) days' written notice to all parties hereto. Such resignation shall take
effect upon receipt by Independent Construction Consultant of an instrument of
acceptance executed by a successor independent construction consultant and
consented to by the other parties hereto. Upon selection of such substitute
independent construction consultant, the Trustee, the Company and the
substitute independent construction consultant shall enter into a side letter
wherein the substitute independent construction consultant agrees to perform
the duties of the independent construction consultant pursuant to the terms
hereof and for the benefit of the Trustee and the holders of the Notes and,
thereafter, Independent Construction Consultant shall be relieved of its
duties and obligations to perform hereunder, except that Independent
Construction Consultant shall transfer to the substitute independent
construction consultant upon request therefor originals of all books, records,
and other documents in Independent Construction Consultant's possession
relating to this Agreement. The substitute independent construction
consultant selected by the Company shall be recognized nationally or in
Louisiana as an expert in connection with the oversight of construction
practices and construction disbursement procedures for construction projects
of similar size and scope.
17. Account Statement. Upon the request of the Trustee, the
Company or the Independent Construction Consultant, the Disbursement Agent
shall deliver to the Company, the Independent Construction Consultant and
Trustee a statement prepared by the Disbursement Agent in a form satisfactory
to the Independent Construction Consultant, the Trustee and the Company,
setting forth with reasonable particularity the balance of funds then in the
Interest Reserve Account, Operating Reserve Account, Completion Reserve
Account, Construction Disbursement Account, and/or the Disbursed Funds
Accounts and the manner in which such funds are invested; provided, however,
that the Disbursement Agent shall not be required to provide such statements
more often than weekly.
18. Notice. The parties hereto irrevocably instruct the
Disbursement Agent that on the first date upon which the balance in any of the
Operating Reserve Account, the Completion Reserve Account and/or the
Construction Disbursement Account is reduced to zero, the Disbursement Agent
shall deliver to the Trustee, the Independent Construction Consultant, and the
Company a notice that the balance in such account(s) has been reduced to zero
(0).
19. Miscellaneous.
19.1 Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designates the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
19.2 Invalidity. If, for any reason whatsoever, anyone 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.
26
19.3 No Authority. The Disbursement Agent shall not have any authority
to, and the Disbursement Agent shall not make any warranty or representation
or incur any obligation on behalf of, or in the name of, the Trustee.
19.4 Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable
except with the prior written consent of the other parties. In any event,
this Agreement shall inure to and be binding upon the parties and their
successors and permitted assigns.
19.5 Benefit. The parties hereto, the holders from time to time of
the Notes, and their respective successors and assigns, but no others, shall
be bound hereby and entitled to the benefits hereof.
19.6 Time. Time is of the essence of each provision of this Agreement.
19.7 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 Louisiana, without giving effect to its conflicts of law
principles.
19.8 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.
19.9 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; (b) on the date of
confirmation of receipt of electronic facsimile transmission; or (c) on the
day sent, when sent by United States certified mail, postage and certification
fee prepaid, return receipt requested, addressed as follows:
To Disbursement Agent:
First National Bank of Commerce
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Attn: Denis Milliner
Tel: (504) 623-1640
FAX: (504) 623-1432
27
To the Trustee:
First Union Bank of Connecticut
10 State House Square, 2nd Floor CT 5845
765 Broad Street
Hartford, Connecticut 06103-3690
Attn: Corporate Trust Administration
Tel: (203) 247-1353
FAX: (800) 247-1356
To the Company:
Casino Magic of Louisiana, Corp.
1701 Old Minden Road
Bossier City, Mississippi 71111
Tel: (318) 746-0711
FAX: (318) 746-0853
or at such other address as the specified entity most recently may have
designated in writing in accordance with this paragraph to the others.
19.10 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.
19.11 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.
19.12 Arbitration. (a) Any disagreement with respect to the release
of funds from the Operating Reserve Account, the Completion Reserve Account,
the Construction Disbursement Account or the Escrow Account, or any related
disagreement with respect to the construction, meaning or effect of this
Agreement, arising out of this Agreement or concerning the rights or
obligations of the parties hereunder shall be submitted to arbitration, one
arbitrator to be chosen by the Company, one by the Trustee, and a third to be
chosen by the first two arbitrators before they enter into arbitration. The
arbitrators shall be impartial and shall be active or retired persons with
experience in construction, development and/or construction lending.
(b) In the event that either party should fail to choose an
arbitrator within fifteen (15) days following a written request by the other
party to enter into arbitration, the requesting party may choose two
arbitrators who shall, in turn, choose the third arbitrator. If the first two
arbitrators have not chosen a third arbitrator at the end of fifteen (I 5)
days following the last day of the selection of the first two arbitrators,
each of the first two arbitrators shall name three candidates, of whom the
other arbitrator shall eliminate two, and the determination of the third
arbitrator shall be made from the remaining two candidates by drawing lots.
Each party shall present its case to the arbitrators within fifteen (15) days
following the date of the appointment of the third arbitrator. The decision
of a majority of the three arbitrators shall be final and binding upon both
parties. Judgment may be
28
entered upon the arbitration award in any court having jurisdiction. Any such
arbitration shall take place in Louisiana unless some other location is
mutually agreed upon by the parties. The arbitrators shall resolve any
dispute arising hereunder in a manner consistent with the intent of the
parties as expressed in this Agreement. The arbitrators shall not award any
punitive, consequential or exemplary damages or any amount in excess of the
amount to be released from the relevant Account.
(c) The parties shall use their best efforts to resolve the dispute
as soon as practicable and to comply, if available, with the fast track
procedures specified in the American Arbitration Association's Construction
Industry Arbitration Rules. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
(d) Notwithstanding any provisions contained herein to the contrary,
the provisions contained in this SECTION 19.12 shall not prohibit Trustee
from exercising any of its rights or remedies set forth in the Indenture or
Collateral Documents.
29
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of
the day first above written.
DISBURSEMENT AGENT: FIRST NATIONAL BANK OF COMMERCE,
a national banking association corporation
By: /s/ Dennis Milliner
Name: Dennis Milliner
Title: Vice President & Trust Officier
TRUSTEE: FIRST UNION OF CONNECTICUT BANK, a
Connecticut state banking corporation
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title: Vice President
COMPANY: CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Vice President and General Council
30
EXHIBIT A TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
INITIAL DISBURSEMENTS CERTIFICATE
August 23, 1996
First National Bank of Commerce,
as Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Casino Magic of Louisiana, Corp.
Cash Collateral and Disbursement Agreement
Initial Disbursements
Ladies and Gentlemen:
This Initial Disbursements Certificate is delivered to you pursuant to
that certain Cash Collateral and Disbursement Agreement dated August 22, 1996,
by and among First National Bank of Commerce, as Disbursement Agent, First
Union Bank of Connecticut, as Trustee, and Casino Magic of Louisiana, Corp.
(the "COMPANY") (the "DISBURSEMENT AGREEMENT"). Capitalized terms used herein
shall have the meanings assigned to such terms in the Disbursement and Loan
Agreement.
The Company hereby irrevocably instructs the Disbursement Agent to
disburse the following
sums from the Construction Disbursement Account to the following parties:
(a) Five-Thousand Dollars ($5,000) to the Disbursement Agent, as the
compensation payable
to the Disbursement Agent as an acceptance fee;
(b) Ten Thousand Dollars ($10,000) to the Independent Construction
Consultant for work through August 31, 1996 in connection with its initial
review of the Plans and Construction Disbursement Budget; and
(c) Seven Thousand Five Hundred Dollars ($7,500) to Disbursement
Agent's counsel, as
payment for fees and expenses relating to its review of the Disbursement
Agreement.
A-1
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
A-2
EXHIBIT B-1 TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
FORM OF BORROWERS CLOSING CERTIFICATION
August 23, 1996
First Union Bank of Connecticut, as Trustee
10 State House Square, 2nd Floor CT 5845
765 Broad Street
Hartford, Connecticut 06103-3690
First National Bank of Commerce,
as Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Cash Collateral and Disbursement Agreement
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August 22, 1996 by and
among First National Bank of Commerce, as Disbursement Agent, First Union Bank
of Connecticut, as Trustee, and Casino Magic of Louisiana, Corp. (the
"COMPANY") (the "DISBURSEMENT AGREEMENT"). Capitalized terms used herein
shall have the meanings assigned to such terms in the Disbursement Agreement.
The Company, hereby certifies to each of you as follows:
1. As of the date hereof, there is no reason to believe that the
date on which the Bossier City Project will become Operating will not occur on
or prior to its Operating Deadline.
2. The Initial Construction Disbursement Budget attached hereto as
Exhibit 1 constitutes the Construction Disbursement Budget presently in
effect for the Bossier City Project.
3. Said Initial Construction Disbursement Budget accurately sets
forth the anticipated Construction Expenses through the date that the Bossier
City Project is Operating and the various components of the Bossier City
Project identified thereon as line items, all within the respective line item
amounts listed.
4. As of the date hereof, there are sufficient Available Funds to pay
for the anticipated costs described in paragraph 3 above in accordance with
the Disbursement Agreement, and, after giving effect to the Initial
Disbursements, any other expenses that the Company believes will need to be
incurred in order to cause the Bossier City Project to be Operating on or
before its Operating Deadline.
5. There is no Event of Default under the Indenture or the
Disbursement Agreement or any
B-1
event, omission or failure of a condition which would constitute an Event of
Default under the Indenture or the Disbursement Agreement after notice or
lapse of time or both.
6. Attached hereto as Exhibit 2 is a list of all contractors,
subcontractors, suppliers and materialmen that have provided work, supplies
and/or labor in connection with the Bossier City Project to date. Attached
hereto are lien releases (unconditional if such contractors, subcontractors,
suppliers and materialmen have been paid to date and conditional if such
contractors, subcontractors, suppliers and materialmen have not been paid to
date) from such contractors, subcontractors, suppliers and materialmen.
7. Attached hereto as Exhibit 3 is an executed copy of that certain
side letter from the Independent Construction Consultant dated as of August
22, 1996, pursuant to which the Independent Construction Consultant agrees to
perform the obligations and the duties of the Independent Construction
Consultant set forth herein.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Initial Disbursement.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
B-2
EXHIBIT 1 TO EXHIBIT B-1
INITIAL CONSTRUCTION DISBURSEMENT BUDGET FOR
BOSSIER CITY PROJECT
CONSTRUCTION DISBURSEMENT BUDGET
Bossier Riverboat improvements $2,000,000
Pavilion 8,500,000
Parking garage 6,700,000
Gaming equipment 2,900,000
Furniture, fixtures and equipment 1,100,000
Site development 6,300,000
Temporary facilities 1,000,000
Preopening costs 3,800,000
Opening bankroll 1,700,000
$34,000,000
B-3
EXHIBIT 2 TO EXHIBIT B-1
MECHANIC'S LIENS FOR
BOSSIER CITY PROJECT
Arcadia Rebar
Baker Concrete
Berkel Company
Bird & Son
Kuhlmann Design Group, Inc.
Max Foote Construction Company
McInnis Brothers
Service Marine Industries, Inc.
W.S. Bellows Construction Company, Inc.
B-4
EXHIBIT 3 TO EXHIBIT B-1
INDEPENDENT CONSTRUCTION CONSULTANT'S SIDE LETTER FOR
BOSSIER CITY PROJECT
B-5
EXHIBIT B-2 TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
FORM OF DISBURSEMENT AGENT'S CLOSING CERTIFICATION
August 23, 1996
First Union Bank of Connecticut
10 State House Square, 2nd Floor CT 5845
765 Broad Street
Hartford, Connecticut 06103-3690
Attn: Corporate Trust Administration
Re: Casino Magic of Louisiana, Corp. (the "Company")
Cash Collateral and Disbursement Agreement
Disbursement Agent's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August 22, 1996, by and
among First National Bank of Commerce, as Disbursement Agent, First Union Bank
of Connecticut, as Trustee, and Casino Magic of Louisiana, Corp. (the
"COMPANY") the "DISBURSEMENT AGREEMENT"). Capitalized terms used herein shall
have the meanings assigned to such terms in the Disbursement Agreement.
Disbursement Agent hereby certifies to each of you as follows as
contemplated by SECTION
8.1(C) of the above-referenced Disbursement Agreement:
1 . The Accounts have been established as contemplated by the
Disbursement Agreement.
2. Disbursement Agent has received (a) from the Company, an executed
Initial Disbursements Certificate and (b) from the Company, an executed
Closing Certificate in the form attached to the Disbursement Agreement as
EXHIBIT B-1.
B-6
The foregoing representations, warranties and certifications are true and
correct and you each are entitled to rely on the foregoing in connection with
the Initial Disbursements. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Disbursement
Agreement.
FIRST NATIONAL BANK OF COMMERCE,
as Disbursement Agent
By:
Name:
Title:
B-7
EXHIBIT B-3 TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
FORM OF TRUSTEE'S CLOSING CERTIFICATION
August 23, 1996
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Casino Magic of Louisiana, Corp. (the "Company")
Cash Collateral and Disbursement Agreement
Trustee's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August, 22, 1996, by
and among First National Bank of Commerce, as Disbursement Agent, First Union
Bank of Connecticut, as Trustee, and Casino Magic of Louisiana, Corp. (the
"COMPANY") (the "DISBURSEMENT AGREEMENT"). Capitalized terms used herein
shall have the meanings assigned to such terms in the Disbursement Agreement.
First Union Bank of Connecticut (the "TRUSTEE") hereby certifies to each
of you as follows as contemplated by SECTION 8.1of the above-referenced
Disbursement Agreement:
1 . The Trustee has received (a) from the Company, an executed Initial
Disbursements Certificate and (b) from the Company, an executed Closing
Certification in the form attached to the Disbursement Agreement as EXHIBIT
B-1.
2. The Trustee has received from the Title Insurer the Title Policy,
or a pro pro forma of the Title Policy with a letter agreement from the Title
Insurer agreeing to issue title in the form of such pro forma.
B-8
The foregoing representations, warranties and certifications are true and
correct and you each are entitled to rely on the foregoing in connection with
the Initial Disbursements. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Disbursement
Agreement.
FIRST UNION BANK OF CONNECTICUT,
as Trustee
By:
Name:
Title:
B-9
EXHIBIT C TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
FORM OF INTEREST DISBURSEMENT REQUEST
First National Bank of Commerce, Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Attn: Denis Milliner
Date: [Draw Date], 1997
This Interest Disbursement Request is delivered to you pursuant to that
certain Cash Collateral and Disbursement Agreement dated August 22, 1996,
between First National Bank of Commerce, as Disbursement Agent, First Union
Bank of Connecticut, as Trustee, and Casino Magic of Louisiana, Corp. (the
"Company") (the "DISBURSEMENT AGREEMENT"). Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the
Disbursement Agreement. Pursuant to SECTION 5.1 of the Disbursement
Agreement, you are hereby directed to liquidate all of the Pledged Securities
(to the extent required) and pay to (the "PAYING AGENT") on February 15, 1997
(the "PAYMENT DATE") $ funds from the Interest Reserve Account maintained by
you in the name of Casino Magic of Louisiana, Corp. The undersigned hereby
certifies that payments in an amount equal to such sums will be due and
payable on the Notes on the Payment Date.
Please confirm the transfer described above by returning a notice of
confirmation to the undersigned at the address set forth above.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
C-1
EXHIBIT D TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
OPERATING DISBURSEMENT REQUEST AND CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Operating Disbursement Request No. under Cash Collateral and
Disbursement Agreement Amount Requested: $
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp., a Louisiana corporation (the "COMPANY")
hereby submits this Operating Disbursement Request and Certificate (the
"DISBURSEMENT REQUEST") pursuant to that certain Cash Collateral and
Disbursement Agreement dated August 22, 1996, to which you are a party (the
"DISBURSEMENT AGREEMENT"). Capitalized terms used herein without definition
shall have the meanings assigned in the Disbursement Agreement.
The Company hereby requests that you, in your capacity as
disbursement agent under the Disbursement Agreement disburse $
(the "DISBURSEMENT") from the Operating Reserve account to Account No.
at , (the "DISBURSED FUNDS
ACCOUNT") so that the Company may distribute checks drawn on the Disbursed
Funds Account to pay for certain operating costs.
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
1 . The funds disbursed pursuant to this Disbursement Requested shall be
used [FOR PAYROLL OBLIGATIONS] [TO SATISFY GAMING LOSSES AT CASINO MAGIC -
BOSSIER CITY] [SPECIFY OTHER OPERATING EXPENSES] and for no other purpose.
The funds disbursed pursuant to this Disbursement Request shall in no event be
used to pay for any construction related expenses.
2. There is no Event of Default under the Indenture or the
Disbursement Agreement or any event, omission or a failure of a condition
which would constitute on Event of Default under the Indenture or the
Disbursement Agreement or lapse of time or both.
3. Gaming operations have commenced at the Bossier City Project.
4. All Disbursements previously requested by the Company from
the Operating
D-1
Reserve Account and made by Disbursement Agent, if any, into the Disbursed
Funds Account have been fully disbursed by the Company for such purposes as
certified by the Company in the applicable disbursement request.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
D-2
EXHIBIT E TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
COMPLETION RESERVE DISBURSEMENT REQUEST AND CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Completion Reserve Disbursement Request No. under Cash
Collateral and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp., a Louisiana corporation (the "COMPANY")
hereby submits this Completion Reserve Disbursement Request and Certificate
(the "DISBURSEMENT REQUEST") pursuant to that certain Cash Collateral and
Disbursement Agreement dated August 22, 1996, to which you are a party (the
"DISBURSEMENT AGREEMENT"). Capitalized terms used herein without definition
shall have the meanings assigned in the Disbursement Agreement.
The Company hereby requests that you, in your capacity under the Disbursement
Agreement, authorize disbursement of $ (the
"DISBURSEMENT") from the Completion Reserve Account to the Construction
Disbursement Account so that the Company may use the funds disbursed to
construct the Bossier City Project.
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
1. The funds disbursed pursuant to this requested Disbursement will
not be used in violation of the terms of the Indenture.
2. The funds disbursed pursuant to this Disbursement Request shall be
used, upon disbursement from the Construction Disbursement Account, solely for
the completion of construction of the Bossier City Project and such funds are
reasonably necessary to permit completion of construction of the Bossier City
Project in accordance with the Plans.
E-1
3. The following circumstances resulted in the cost to complete the
Bossier City Project to exceed the Initial Construction Disbursement Budget:
4. The circumstances described in paragraph 3 above were not reasonably
anticipated by the Company in preparing the Initial Construction Disbursement
Budget for the following reasons:
5. After giving effect to the above requested Disbursement, the funds
in the Construction Disbursement Account are sufficient to pay for the
anticipated costs to complete the Bossier City Project in accordance with the
Construction Disbursement Budget, as amended pursuant to the attached
Construction Disbursement Budget Certificate, and the Company does not believe
that any other expenses will need to be incurred by the Company in order to
cause the Bossier City Project to be Operating on or before its Operating
Deadline.
6. There is no Event of Default under the Indenture or the
Disbursement Agreement or any event, omission or failure of a condition which
would constitute an Event of Default under the Indenture or the Disbursement
Agreement after notice or lapse of time or both.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
Attached to this Disbursement Request is a certificate from the
Independent Construction Consultant and certificates from the Bellows, Max
Foote and the Project Architect and a Construction Disbursement Budget
Amendment Certificate.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
E-2
Received and Reviewed:
2ND OPINION, INC.
a Louisiana corporation
By:
Name:
Title:
E-3
EXHIBIT 1 TO EXHIBIT E
CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
COMPLETION RESERVE DISBURSEMENT REQUEST
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Completion Reserve Disbursement Request No. Under
the Cash
Collateral and Disbursement Agreement of Casino Magic of Louisiana, Corp.
(the "COMPANY")
Ladies and Gentlemen:
The undersigned (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby certifies
as
follows:
1. The Independent Construction Consultant has reviewed the above
referenced Disbursement Request and the Cash Collateral and Disbursement
Agreement dated August 22, 1996, to which the Company is a party. Capitalized
terms used herein and not otherwise defined shall have the same meanings as
those set forth in the Cash Collateral and Disbursement Agreement.
2. The Independent Construction Consultant represents, warrants and
certifies that
(a) the funds requested under the Completion Reserve Disbursement Request
are reasonably necessary to permit completion of construction of the Bossier
City Project in accordance with the Plans, (b) after giving effect to the
requested Disbursement, the funds in the Construction Disbursement Account are
sufficient to pay for the anticipated costs to complete the Bossier City
Project in accordance with the Construction Disbursement Budget, as amended,
and the Independent Construction Consultant is not aware at this time of any
other expenses that the Company will need to incur in order to cause the
Bossier City Project to be Operating on or before its Operating Deadline and
(c) the Independent Construction Consultant has no actual knowledge of an
Event of Default under the Indenture or the Disbursement Agreement or any
event, omission or failure of a condition which would constitute an Event of
Default under the Indenture or the Disbursement Agreement after notice or
lapse of time or both.
3. Pursuant to its duties under the Disbursement Agreement and that
certain side letter between the Independent Construction Consultant, the
Company and the Trustee dated as of August 22, 1996, the Independent
Constructor Consultant has inspected the Bossier City Project within the
previous four weeks of the date of this certificate.
E-4
The foregoing representations, warranties and certifications are true and
correct and dsbursement Agent entitled to rely on the foregoing in authorizing
and making the Disbursement.
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
Title:
E-5
EXHIBIT 2 TO EXHIBIT E
CERTIFICATE OF GENERAL CONTRACTOR
COMPLETION RESERVE DISBURSEMENT REQUEST
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Completion Reserve Disbursement Request No. Under
the Cash
Collateral and Disbursement Agreement of Casino Magic of Louisiana, Corp.
(the "COMPANY")
Ladies and Gentlemen:
The undersigned (the "GENERAL CONTRACTOR") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced
Disbursement Request and the Cash Collateral and Disbursement Agreement dated
August 22, 1996, to which the Company is a party, to the extent necessary to
understand the defined terms contained herein and in the Completion
Disbursement Request that are incorporated by reference from the Cash
Collateral and Disbursement Agreement and to provide the certification
contained herein.
2. The General Contractor hereby represents, warrants and certifies
that (a) the funds requested under the Completion Reserve Disbursement Request
are reasonably necessary to permit completion of construction of the Bossier
City Project in accordance with the Plans and (b) after giving effect to the
requested Disbursement, the funds in the Construction Disbursement Account are
sufficient to pay for the anticipated costs to complete the Bossier City
Project in accordance with the Construction Disbursement Budget, as amended,
and the General Contractor is not aware at this time of any other expenses
that the Company will need to incur in order to cause the Bossier City Project
to be Operating on or before its Operating Deadline.
The foregoing representations, warranties and certifications are true and
correct and Independent Construction Consultant is entitled to rely on the
foregoing in authorizing and making the Disbursement.
E-6
Capitalized terms used herein and not otherwise defined shall have the
meanings scribed to them in the Cash Collateral and Disbursement Agreement
[W.S. BELLOWS CONSTRUCTION CORPORATION] [MAX FOOTE CONSTRUCTION
COMPANY]
By:
Name:
Title:
E-7
EXHIBIT 3 TO EXHIBIT E
CERTIFICATE OF PROJECT ARCHITECT
COMPLETION RESERVE DISBURSEMENT REQUEST
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building, 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Completion Reserve Disbursement Request No. Under
the Cash
Collateral and Disbursement Agreement of Casino Magic of Louisiana, Corp.
(the "COMPANY")
Ladies and Gentlemen:
Kuhlmann design Group, Inc. (the "PROJECT ARCHITECT") hereby certifies as
follows:
1 . The Project Architect has reviewed the above referenced Completion
Disbursement Request and the Cash Collateral and Disbursement Agreement dated
August 22, 1996, to which the Company IS a party, to the extent necessary to
understand the defined terms contained herein and in the Completion
Disbursement Request that are incorporated by reference from the Cash
Collateral and Disbursement Agreement and to provide the certification
contained herein.
2. The Project Architect hereby represents, warrants and certifies
that (a) the funds requested under the Completion Reserve Disbursement Request
are reasonably necessary to permit completion of construction of the Bossier
City Project in accordance with the Plans and (b) after giving effect to the
requested Disbursement, the funds in the Construction Disbursement Account are
sufficient to pay for the anticipated costs to complete the Bossier City
Project in accordance with the Construction Disbursement Budget, as amended,
and the Project Architect is not aware at this time of any other expenses that
the Company will need to incur in order to cause the Bossier City Project to
be Operating on or before its Operating Deadline.
The foregoing representations, warranties and certifications are true and
correct and Independent Construction Consultant is entitled to rely on the
foregoing in authorizing and making the Disbursement.
E-8
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Cash Collateral and Disbursement Agreement
KUHLMANN DESIGN GROUP, INC., a
Missouri Corporation
By:
Name:
Title:
E-9
EXHIBIT F TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
CONSTRUCTION DISBURSEMENT REQUEST AND CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building, 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Construction Disbursement Request No. - under Cash
Collateral and Disbursement Agreement Amount Requested: $
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp., a Louisiana corporation (the "COMPANY")
hereby submits this Construction Disbursement Request and Certificate (the
"DISBURSEMENT REQUEST") pursuant to that certain Cash Collateral and
Disbursement Agreement dated August 22, 1996, to which you are a party (the
"DISBURSEMENT AGREEMENT"). Capitalized terms used herein without definition
shall have the meanings assigned in the Disbursement Agreement.
The Company hereby requests that you, in your capacity under the Disbursement
Agreement,
authorize the Disbursement Agent to make a disbursement of $ for Max Foote
Hard
Costs, $ for Bellows Hard Costs and $ for Soft Costs (the
"DISBURSEMENT") from the Construction Disbursement Account to Account No.
at (the "DISBURSED FUNDS ACCOUNT"), so that the
Company may distribute checks drawn
on the Disbursed Funds Account to the parties identified on SCHEDULE 1
attached hereto and in the
respective amounts listed for such parties on SCHEDULE 1.
In connection with the requested Disbursement, the Company represents,
warrants and CERTIFIES
1 . Schedule 1 accurately lists each party for whom payment is requested
and a description of the purpose of such payment, specifying the line item
relating to each such payment. In the event that any Advance Disbursements
have been made and have not otherwise been documented as required hereunder,
Schedule I also includes each party to whom payment was made from such Advance
Disbursement and a description of the purpose of such payments specifying the
line item relating to each such payment. The information set forth in
Schedule I is true, correct and complete.
F-1
2. [FOR HARD COST DISBURSEMENTS ONLY] The Company has delivered to
the Independent Construction Consultant (a) duly executed conditional lien
releases from all contractors, subcontractors, suppliers and materialmen
having provided work, materials and/or services constituting completed
construction or stored materials relating to the Bossier City Project (except
as to Retainage Amounts and such amounts as the Independent Construction
Consultant determines to have been reasonably withheld) for all Disbursements
identified on this Disbursement Request and (b) duly executed acknowledgments
of payment and unconditional (except as to Retainage Amounts) lien releases,
in form and substance satisfactory to Independent Construction Consultant,
from all payees identified on the previous Disbursement Request for payment of
Hard Costs and acknowledging the receipt by such payee of all sums payable to
such Contractor from previous Disbursement Requests (except as to Retainage
Amounts and such amounts as Disbursement Agent determines to have been
reasonably withheld).
3. The Construction Disbursement Budget presently in effect for the
Bossier City Project is dated and includes all
amendments through Construction Disbursement Budget Amendment No. .
Said Construction Disbursement Budget accurately sets forth the anticipated
Construction through the date that the Bossier City Project is Operating.
4. After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, and, in the event any Advance
Disbursements have been made and have not otherwise been documented as
required, such Advance Disbursement from the Construction Disbursement
Account, there are sufficient Available Funds to pay for the anticipated costs
described in paragraph 3 above (and the component parts thereof) in accordance
with the aggregate amounts (and line items) set forth in the Construction
Disbursement Budget, and the Company does not believe that any other expenses
will need to be paid or incurred by the Company in order to cause the Bossier
City Project to be Operating on or before its Operating Deadline.
5. There is no Event of Default under the Indenture or the
Disbursement Agreement or any event, omission or failure of a condition which
would constitute an Event of Default under the Indenture or the Disbursement
Agreement after notice or lapse of time or both.
6. [FOR HARD COST DISBURSEMENTS ONLY] As of the date hereof, the
Company has submitted to the Independent Construction Consultant all Plans
applicable to the Disbursement requested herein which, as of the date hereof,
constitute Final Plans. The construction performed as of the date hereof is
in accordance with the Plans for the Bossier City Project and the disbursement
is appropriate in light of the percentage of construction completed and the
amount of stored materials. Further, all disbursements requested under this
Disbursement Request are for the Payment of Construction Expenses incurred for
work consistent with Plans which the Company reasonably believes ultimately
will become Final Plans and which will permit the Company to complete
construction of the Bossier City Project on or before the Operating Deadline.
7. All Disbursements previously requested by Company and made by
Disbursement Agent into the Disbursed Funds Account have been disbursed by the
Company in substantially the manner certified by the Company in the applicable
Construction Disbursement Request .
8. The Company has delivered to the Independent Construction
Consultant copies of all Contracts for the Bossier City Project with payment
obligations of at least Fifty Thousand ($50,000)
F-2
and, with respect to each such Contract: (i) a consent to collateral
assignments in the form attached hereto as EXHIBIT Jsigned by the
third-party Contractor under each such Contract; and (ii) copies of such
performance and payment bonds (naming the Company and Trustee as additional
insureds), if any, as the Company may require to be provided to the Company
pursuant to any Contract.
9. [FOR DISBURSEMENTS IMMEDIATELY FOLLOWING COMPLETION OF ANY
FOUNDATION FOR ANY BUILDING WITHIN THE BOSSIER CITY PROJECT] The Company shall
have delivered to the Independent Construction Consultant, on a building by
building basis, a foundation endorsement from the Title Company insuring that
the foundations for each building within the Bossier City Project are
constructed wholly within the boundaries of the Property then owned in fee
simple by the Company and does not encroach on any easements or violate any
covenants, conditions or restrictions of record.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
[FOR HARD COST DISBURSEMENTS ONLY] Attached to this Disbursement Request
are certificate(s) from the Max Foote, for Max Foote Hard Costs, if any,
Bellows for Bellows Hard Costs, if any, and the Project Architect.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
Received and Reviewed:
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
Title:
F-3
SCHEDULE 1 TO DISBURSEMENT REQUEST AND CERTIFICATE
[attach form]
F-4
EXHIBIT 1 TO EXHIBIT F
CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
(DISBURSEMENT REQUEST FOR CONSTRUCTION EXPENSES)
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Disbursement Request No. Under Cash Collateral and
Disbursement
Agreement of Casino Magic of Louisiana, Corp. (the "COMPANY")
Ladies and Gentlemen:
The undersigned (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby certifies
as follows:
1. The Independent Construction Consultant has reviewed the above
referenced Disbursement Request and the Cash Collateral and Disbursement
Agreement dated August 22, 1996, to which the Company is a party. All
capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Cash Collateral and Disbursement Agreement.
2. [HARD COSTS ONLY] The Independent Construction Consultant has
received from the Company all Plans applicable to the Disbursement requested
pursuant to the Disbursement Request and, in the Independent Construction
Consultant's professional opinion, the construction performed as of the date
hereof is in accordance with the Plans and the disbursement is appropriate in
light of the percentage of construction completed and the amount of stored
materials. Further, all disbursements requested under this Disbursement
Request are from the Payment of Hard Costs incurred for work consistent with
Plans which will pen-nit the Company to complete construction of the Bossier
City Project on or before the Operating Deadline.
3. The Independent Construction Consultant has reviewed all
disbursements made from the Construction Disbursement Account and compared the
documentation supporting the disbursements with the Construction Disbursement
Budget category and confirms that the total disbursements to date in such
category do not exceed the budgeted amount for such category.
4. The Independent Construction Consultant does not dispute the
appropriateness of any item or items the value of which exceeds One-Hundred
Thousand Dollars ($100,000) funded with the proceeds of a previous
Construction Disbursement Request.
5. The Construction Disbursement Budget accurately sets forth the
anticipated costs of
Completion of the Bossier City Project through the date that the Bossier City
Project is Operating.
6. After giving effect to the requested disbursement from the
Construction Disbursement
F-5
Account and the payments contemplated from the Disbursed Funds Account in
connection therewith, there are sufficient Available Funds to pay for the
anticipated costs to complete construction of the Bossier City Project (and
component parts thereof) in accordance with the aggregate amounts (and line
items set forth in the Construction Disbursement Budget), and the Independent
Construction Consultant is not aware of any other expenses that will be needed
to be paid or incurred by the Company in order to cause the Bossier City
Project to be Operating on or before its Operating Deadline.
7. Pursuant to its duties under the Disbursement Agreement and that
certain side letter from the Independent Construction Consultant in favor of
the Company and the Trustee, the Independent Construction Consultant has
inspected the Bossier City Project within the previous four weeks of the date
of this certificate.
8. [FINAL DISBURSEMENT ONLY] The Bossier City Project is complete in
accordance with the Plans and all applicable building laws, ordinances and
regulations and was Operating on or before April 30, 1997, and continues to be
Operating as of the date hereof.
9. [FOR HARD COSTS ONLY] The Independent Construction Consultant has
received (a) duly executed conditional lien releases from all contractors,
subcontractors, suppliers and materialmen having provided work, materials
and/or services constituting completed construction or stored materials
relating to the Bossier City Project (except as to Retainage Amounts and such
amounts as the Independent Construction Consultant determines to have been
reasonable withheld) for all Disbursements identified on the Disbursement
Request and (b) duly executed acknowledgments of payment and unconditional
(except as to Retainage Amounts) lien releases, in form and substance
satisfactory to Independent Construction Consultant, from all payees
identified on the previous Disbursement Request for payment of Hard Costs and
acknowledging the receipt by such payee of all sums payable to such Contractor
from previous Disbursement Requests (except as to Retainage Amounts and such
amounts as Disbursement Agent determines to have been reasonably withheld).
10. The Independent Construction Consultant has received from the
Company copies of all Contracts for the Bossier City Project with payment
obligations of at least Fifty Thousand Dollars (50,000) and, with respect to
each such Contract: (i) a consent to collateral assignments in the
formattached hereto as EXHIBIT Jsigned by the third-party Contractor under
each such Contract; and (ii) copies of such performance and payment bonds
(naming the Company and Trustee as additional insureds), if any, as the
Company may require to be provided to the Company pursuant to any Contract.
11. [FOR DISBURSEMENTS IMMEDIATELY FOLLOWING COMPLETION OF ANY
FOUNDATION FOR ANY BUILDING WITHIN THE BOSSIER CITY PROJECT] The Independent
Construction Consultant shall have received a copy of a foundation
endorsement, on a building by building basis, from the Title Company insuring
that the foundations for each building within the Bossier City Project are
constructed wholly within the boundaries of the Property then owned in fee
simple by the Company and that such foundation(s) does not encroach on any
easements or violate any covenants, conditions or restrictions of record.
F-6
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
F-7
EXHIBIT 2 TO EXHIBIT F
CERTIFICATE OF GENERAL CONTRACTOR
(DISBURSEMENT REQUEST FOR CONSTRUCTION EXPENSES)
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Disbursement Request No. Under Cash Collateral and
Disbursement
Agreement of Casino Magic of Louisiana Corp. (the "COMPANY")
Ladies and Gentlemen:
[W.S. Bellows Construction Corporation][Max Foote Construction Company] (the
"GENERAL
CONTRACTOR") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced Disbursement
Request and
the Cash Collateral and Disbursement Agreement dated , 1996,
to which the Company is a party, to the extent necessary to understand the
defined terms contained herein and in the Disbursement Request that are
incorporated by reference from the Cash Collateral and Disbursement Agreement
and to provide the certification contained herein.
2. The General Contractor hereby certifies and confirms the accuracy
of the certifications in paragraphs 1, 2, 3, 4, and 6 of the above-referenced
Disbursement Request.
3. The General Contractor hereby certifies that to the best of its
knowledge, the Bossier City Project may be constructed in accordance with its
Construction Disbursement Budget presently in effect.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
F-8
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Cash Collateral and Disbursement Agreement.
[W.S. BELLOWS CORPORATION] [MAX FOOTE CONSTRUCTION COMPANY]
By:
Name:
Title:
F-9
EXHIBIT 3 TO EXHIBIT F
CERTIFICATE OF PROJECT ARCHITECT
(DISBURSEMENT REQUEST )
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Disbursement Request No. Under Cash Collateral and
Disbursement
Agreement of Casino Magic of Louisiana Corp. (the "COMPANY")
Ladies and Gentlemen:
Kuhlmann design Group, Inc. (the "PROJECT ARCHITECT") hereby certifies as
follows:
1. The Project Architect has reviewed the above referenced ' Cash
Collateral and Disbursement Agreement dated August 22, 1996, to which the
Company is a party to the extent necessary to understand the defined terms
contained herein and in the Disbursement Request that are incorporated by
reference from the Cash Collateral and Disbursement Agreement and to provide
the certification contained herein.
2. The Project Architect hereby certifies and confirms the accuracy
of the certifications contained in paragraphs 1, 2, 3, 4, and 6 of the
above-referenced Disbursement Request.
3. The Project Architect hereby certifies that to the best of its
knowledge, the Bossier City Project may be constructed in accordance with its
Construction Disbursement Budget presently in effect.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
F-10
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Cash Collateral and Disbursement Agreement.
KUHLMANN DESIGN GROUP, INC., a
Missouri Corporation
By:
Name:
Title:
Title:
F-11
EXHIBIT F-2 TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
ADVANCE DISBURSEMENT REQUEST AND CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Advance Disbursement Request No. Under Cash
Collateral
and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp. a Louisiana corporation (the "Company")
hereby submits this Advance Disbursement Request and Certificate (the
"Disbursement Request") pursuant to that certain Cash Collateral and
Disbursement Agreement dated August 22, 1996 to which you are a party (the
"Disbursement Agreement"). Capitalized terms used herein without definition
shall have the meanings assigned in the Disbursement Agreement.
The Company hereby requests that you, in your capacity under the Disbursement
Agreement, authorize the disbursement Agent to make a disbursement of $
[amount not to exceed $250,000] from the Construction Disbursement
Account to Account No.
At (the "Disbursed Funds
Account").
The Company hereby represents, warrants and certifies that (a) amounts
disbursed pursuant to this Disbursement Request shall be used solely for the
payment of Soft Costs and/or deposits for the purchase of equipment for the
Bossier City Project, (b) there is no Event of Default under the Indenture of
the Disbursement Agreement or any event, omission or failure of a condition
which would constitute an Event of Default under the Indenture or the
Disbursement Agreement after notice or lapse of time or both, (c) in the event
that any Advance Disbursements have previously been made, the Company has
provided the same supporting documentation as is required under the
Disbursement Agreement with respect to other Construction Disbursement
Requests within 15 days after such Advance Disbursement was made and (d) the
amount of the requested Disbursement hereunder together with Advance
Disbursements previously made to the Company which have not otherwise been
documented as required in subsection (c) hereof, do not exceed the amount of
$250,000.
F-12
The foregoing representations, warranties and certifications are true and
correct and the Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the disbursement.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
F-13
EXHIBIT G TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Casino Magic of Louisiana, Corp.
Amendment No. to Construction Disbursement
Budget for Bossier City Project
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp., a Louisiana corporation ("THE COMPANY")
requests that the Construction Disbursement Budget for the Bossier City
Project (the "CONSTRUCTION DISBURSEMENT BUDGET") be amended as set forth on
SCHEDULE 1 to this certificate. This certificate is delivered pursuant to
that certain Cash Collateral and Disbursement Agreement dated August 22, 1996
(the "DISBURSEMENT AGREEMENT"), to which you are a party. Capitalized terms
used in this certificate that are otherwise not defined shall have the meaning
assigned in the Disbursement Agreement. In connection with the requested
Construction Disbursement Budget amendment, the Company hereby represents,
warrants and certifies as follows:
1. The proposed amendment is set forth in SCHEDULE 1 hereto,
2. The following circumstances resulted in the reasonable necessity
of the proposed amendment:
3. The circumstances described in paragraph 3 above were not
reasonably anticipated by the Company in preparing the Construction
Disbursement Budget for the following reasons:
G-1
4. The Construction Disbursement Budget in effect immediately prior
to the proposed amendment is attached to this Construction Disbursement Budget
Amendment Certificate as SCHEDULE 2,and the Construction Disbursement Budget
which will be in effect upon effectiveness of the proposed amendment is
attached to this Construction Disbursement Budget Amendment as SCHEDULE 3.
5. immediately following the proposed amendment: (i) the Construction
Disbursement Budget will include all costs to be incurred in causing the
Bossier City Project to be Operating; (ii) the funds in the Construction
Disbursement Account will be sufficient to cause the Bossier City Project to
be Operating (and the component parts hereof) in accordance with the aggregate
amounts (and line items) set forth in the Construction Disbursement Budget.
6. [If any line item on the Construction Disbursement Budget is
reduced] The work represented by the line item entitled will
be completed for a total cost of $. , which amount is less than $
[should correspond to $ amount set forth in the Construction
Disbursement Budget prior to proposed amendment] and such savings will be
reallocated, pursuant to the amendment to another line item.
7. The construction performed as of the date hereof is in accordance
with the Plans. The undersigned have no reason to believe that the date on
which the Bossier City Project will become Operating will not occur on or
prior to its Operating Deadline.
8. There is no Event of Default under the Indenture or the
Disbursement Agreement any event, omission or failure of a condition which
could constitute an Event of Default under the Indenture or the Disbursement
Agreement after notice or lapse of time or both.
The undersigned certifies that the Construction Disbursement Budget
amendment contemplated hereby is permitted pursuant to the Disbursement
Agreement and the Indenture, and all conditions precedent thereto have been
met.
G-2
Attached to this Construction Disbursement Budget Amendment Certificate
are certificates from the Independent Construction Consultant, the Project
Architect, Bellows and Max Foote.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
Received and Reviewed:
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
Title:
G-3
SCHEDULE 1 TO CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
Amendment No. - to Construction Disbursement Budget.
1. Increases to Line Items:
The following line item is increased:
Old Amount of Line Item:
Amount of Increase:
New Total For Line Item:
Source of Funds For Increase:
Amount
Source
Realized Savings
Additional Revenue
Allocation of Funds from
Completion Reserve Account
Total
II. Decreases to Line Items:
The following line item is decreased:
Old Amount of Line Item:
Amount of Decrease:
New Amount of Line Item:
Reason For Decrease of Line Item:
Realized Savings
III. New Construction Disbursement Budget Totals
a. The total Construction Disbursement Budget for the
Bossier City Project is now: $
b. The amount disbursed to date for the
Bossier City Project is now: $
c. Remaining amounts to be spent: $
d. Available Funds for the Bossier City
Project: $
G-4
Item d should be greater than or equal to item c.
G-5
SCHEDULE 2 TO CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT CERTIFICATE
EXISTING CONSTRUCTION DISBURSEMENT BUDGET'
1 (OR PORTION THEREOF BEING AMENDED)
G-6
SCHEDULE 3 TO CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT CERTIFICATE
REVISED CONSTRUCTION DISBURSEMENT BUDGET
G-7
EXHIBIT 1 TO EXHIBIT G
CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Construction Disbursement Budget Amendment Certificate dated
1
199- of Casino Magic of Louisiana, Corp. (the "COMPANY")
Ladies and Gentlemen:
2nd Opinion, Inc. (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby certifies
as follows:
1. The Independent Construction Consultant has reviewed the above
referenced Construction Disbursement Budget Amendment Certificate and the Cash
Collateral and Disbursement Agreement dated August 22, 1996, to which the
Company is a party (the "Disbursement Agreement"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in
the Disbursement Agreement.
2. The Independent Construction Consultant hereby certifies and
confirms the accuracy of the certifications in paragraphs 1, 4, 5, 6 and 7 of
the above-referenced Construction Disbursement Budget Amendment Certificate.
The foregoing representations, warranties and certifications are true and
correct and the Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the amendment to the Construction Disbursement Budget.
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
Title:
G-8
EXHIBIT 2 TO EXHIBIT G
CERTIFICATE OF GENERAL CONTRACTOR
CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Construction Disbursement Budget Amendment Certificate dated
199- of Casino Magic of Louisiana, Corp. (the "COMPANY")
Ladies and Gentlemen:
The undersigned (the "GENERAL CONTRACTOR") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced
Construction Disbursement Budget Amendment Certificate and the Cash Collateral
and Disbursement Agreement dated August 22, 1996, to which the Company is a
party, to the extent necessary to understand the defined terms contained
herein and in the Construction Disbursement Budget Amendment Certificate that
are incorporated by reference from the Cash Collateral and Disbursement
Agreement, and to provide the certification contained herein.
2. The General Contractor hereby certifies and confirms that with
respect to that portion of the amendment relating to [Max Foote] [Bellows]
Hard Costs, the accuracy of the certifications in paragraphs 1, 4, 5, 6 and 7
of the above-referenced Construction Disbursement Budget Amendment
Certificate.
The foregoing representations, warranties and certifications are true and
correct and the Disbursement Agent and the Independent Construction Consultant
are entitled to rely on the foregoing in authorizing and making the amendment
to the Construction Disbursement Budget.
G-9
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Disbursement Agreement.
[W.S. BELLOWS CONSTRUCTION CORPORATION] [MAX FOOTE CONSTRUCTION
COMPANY]
By:
Name:
Title:
G-10
EXHIBIT 3 TO EXHIBIT G
CERTIFICATE OF PROJECT ARCHITECT
CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Construction Disbursement Budget Amendment Certificate dated
199- of Casino Magic of Louisiana, Corp. (the "COMPANY")
Ladies and Gentlemen:
Kuhlmann design Group, Inc. (the "PROJECT ARCHITECT") hereby certifies as
follows:
1. The Project Architect has reviewed the above referenced Cash
Collateral and Disbursement Agreement dated August 22, 1996, to which the
Company is a party to the extent necessary to understand the defined terms
contained herein and in the Construction Disbursement Budget Amendment
Certificate that are incorporated by reference from the Cash Collateral and
Disbursement Agreement and to provide the certification contained herein.
2. The Project Architect hereby certifies and confirms that with
respect to that portion of the amendment relating to Hard Costs, the accuracy
of the certifications contained in paragraphs 1, 4, 5, 6 and 7 of the
above-referenced Construction Disbursement Budget Amendment Certificate.
The foregoing representations, warranties and certifications are true and
correct and the Disbursement Agent and the Independent Construction Consultant
are entitled to rely on the foregoing relative to the amendment to the
Construction Disbursement Budget.
G-11
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Disbursement Agreement.
KUHLMANN DESIGN GROUP, INC., a
Missouri Corporation
By:
Name:
Title:
G-12
EXHIBIT H TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
CONTRACT AMENDMENT CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Casino Magic of Louisiana, Corp. (the "COMPANY") Amendment No.
to Contract dated between the Company
("CONTRACT")
and (the "CONTRACTOR")
Ladies and Gentlemen:
The Company requests that the above-referenced Contract be amended as set
forth onSCHEDULE 1to this certificate. This certificate is delivered
pursuant to that certain Cash Collateral and Disbursement Agreement dated
August 22, 1996 (the "DISBURSEMENT AGREEMENT"), to which you are a party.
Capitalized terms used in this certificate that are otherwise not defined
shall have the meaning assigned in the Disbursement Agreement. In connection
with the requested Contract amendment, the Company hereby represents, warrants
and certifies as follows:
1 . After giving effect to such amendment (and any related amendment
to the Construction
Disbursement Budget for the Bossier City Project):
(a) Such Construction Disbursement Budget will continue to call for
construction
of improvements constituting the Bossier City Project;
(b) If the amendment will effect a reduction in the scope of the work
to be performed by Contractor, then the work eliminated from the scope of work
either (i) is not necessary to complete the Bossier City Project, or (ii) to
the extent necessary for the completion of the Bossier City Project, will be
completed by the contractors set forth below under the new or amended
contracts described below. Each such contractor is competent to perform the
work called for by the new or amended contract in exchange for the payments
contemplated thereby.
Work Contractor
Contract
H-1
(c) The Company will continue to be able to complete the work within
the line items pertaining to the Contract: (i) in a timely manner so as to
permit the date on which the Bossier City Project becomes Operating to occur
on or prior to its Operating Deadline; and (ii) within the aggregate amounts
specified for the line item on its Construction Disbursement Budget.
2. There is no Event of Default under the Indenture or the
Disbursement Agreement or any event, omission or failure of a condition which
could constitute an Event of Default under the Indenture or the Disbursement
Agreement after notice or lapse of time or both.
The undersigned certifies that this Contract Amendment Certificate is
authorized hereby is permitted pursuant to the Disbursement Agreement and the
Indenture, and all conditions precedent thereto have been met.
Attached to this Contract Amendment Certificate is a certificate from the
Independent Construction Consultant [FOR CONTRACTS RELATING TO HARD COSTS
ONLY] [and a certificate from each of Bellows, Max Foote and the Project
Architect].
CASINO MAGIC OF LOUISIANA, CORP.
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
Received and Reviewed:
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
Title:
H-2
SCHEDULE 1 TO CONTRACT AMENDMENT CERTIFICATE
(COPY OF EXECUTED CONTRACT AMENDMENT)
H-3
EXHIBIT I TO EXHIBIT H
CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
CONTRACT AMENDMENT
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Casino Magic of Louisiana, Corp. (the "COMPANY") Amendment No.
to Contract dated (the "CONTRACT") between the Company
and ("CONTRACTOR")
Ladies and Gentlemen:
2nd Opinion, Inc. (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby certifies
as follows:
1 . The Independent Construction Consultant has reviewed the above
referenced Contract Amendment Certificate and the Cash Collateral and
Disbursement Agreement dated August 22, 1996, to which the Company is a party.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Cash Collateral and Disbursement Agreement.
2. The Independent Construction Consultant hereby certifies and
confirms the accuracy of the certifications in paragraph I of the
above-referenced Contract Amendment Certificate.
The foregoing representations, warranties and certifications are true and
correct and the Disbursement Agent is entitled to rely on the foregoing
relative to the amendment to the Contract.
2ND OPINION, INC.,
a Louisiana corporation
By:
Name:
Title:
H-4
EXHIBIT 2 TO EXHIBIT H
CERTIFICATE OF GENERAL CONTRACTOR
CONTRACT AMENDMENT
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Casino Magic of Louisiana Corp. (the "COMPANY") Amendment No.
to Contract dated (the "CONTRACT") between the Company
and ("CONTRACTOR")
Ladies and Gentlemen:
The undersigned (the "GENERAL CONTRACTOR") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced Contract
Amendment
Certificate and the Cash Collateral and Disbursement Agreement dated 1996,
to which the Company is a party, to the extent necessary to understand the
defined terms contained herein and in the Contract Amendment Certificate that
are incorporated by reference from the Cash Collateral and Disbursement
Agreement, and to provide the certification contained herein.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in paragraph I of the above-referenced Contract Amendment
Certificate, as such certifications relate to [Max Foote] [Bellows] Hard
Costs.
The foregoing representations, warranties and certifications are true and
correct and the Independent Construction Consultant and the Disbursement Agent
are entitled to rely on the foregoing relative to the amendment to the
Contract.
H-5
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Cash Collateral and Disbursement Agreement.
[W.S. BELLOWS CONSTRUCTION CORPORATION] [MAX FOOTE CONSTRUCTION
COMPANY]
By:
Name:
Title:
H-6
EXHIBIT 3 TO EXHIBIT H
CERTIFICATE OF PROJECT ARCHITECT
CONTRACT AMENDMENT
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
2nd Opinion, Inc., as
Independent Construction Consultant
PO Box 74382
Metairie, Louisiana 70033
Re: Casino Magic of Louisiana Corp. (the "COMPANY") Amendment No. to
Contract dated (the "CONTRACT") between the Company
and ("CONTRACTOR")
Ladies and Gentlemen:
Kuhlmann design Group, Inc. (the "PROJECT ARCHITECT") hereby certifies as
follows:
1. The Project Architect has reviewed the above referenced Contract
Amendment
Certificate and the Cash Collateral and Disbursement Agreement dated 5
1996, to which the Company is a party to the extent necessary to understand
the defined terms contained herein and in the Contract Amendment Certificate
that are incorporated by reference from the Cash Collateral and Disbursement
Agreement, and to provide the certification contained herein.
2. The Project Architect hereby certifies and confirms the accuracy of the
certifications contained in paragraph I of the above-referenced Contract
Amendment Certificate, as such certifications relate to Hard Cost.
The foregoing representations, warranties and certifications are true and
correct and Independent Construction Consultant and Disbursement Agent are
entitled to rely on the foregoing relative to the amendment to the Contract.
H-7
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Cash Collateral and Disbursement Agreement.
KUHLMANN DESIGN GROUP, INC., a
Missouri Corporation
By:
Name:
Title:
H-8
EXHIBIT I TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
ESCROW DISBURSEMENT REQUEST AND CERTIFICATE
[Date]
First National Bank of Commerce, as
Disbursement Agent
Corporate Trust Division
Commerce Building 16th Floor
821 Gravier Street
New Orleans, Louisiana 70112
Re: Escrow Disbursement Request No. under
Cash Collateral and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp., a Louisiana corporation (the "COMPANY")
hereby submits this Escrow Disbursement Request and Certificate (the
"DISBURSEMENT REQUEST") pursuant to that certain Cash Collateral and
Disbursement Agreement dated August 22, 1996, to which you are a party (the
"DISBURSEMENT AGREEMENT"). Capitalized terms used herein without definition
shall have the meanings assigned in the Disbursement Agreement.
The Company hereby requests that you, in your capacity as disbursement
agent under the Disbursement Agreement disburse $
(the "DISBURSEMENT") from the Escrow
Account to Account No. at , (the
"DISBURSED FUNDS ACCOUNT").
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
1. The voters of both Bossier Parish and Caddo Parish have approved
the continuation of riverboat gaming pursuant to the Louisiana Referendum and
attached hereto is a copy of a letter of counsel to the Company confirming
such fact.
2. The Company will use all funds disbursed pursuant to this
Disbursement pursuant to the requirements of SECTION 4.10 of the Indenture.
I-1
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By:
Name:
Title:
By:
Name:
Title:
I-2
EXHIBIT J TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
FORM OF CONSENT TO COLLATERAL ASSIGNMENT OF CONTRACT
THIS CONTRACTING PARTY'S CONSENT TO ASSIGNMENT (the "Consent") is made as
of , 199_, by , a corporation
(the "CONTRACTING PARTY"), whose address is , for the benefit of
First
Union Bank of Connecticut, as trustee for the benefit of the holders of the
Notes (the "TRUSTEE"), whose address is 10 State House Square, 2nd Floor CT
5845. 765 Broad Street, Hartford, Connecticut 061033690, Attention: Corporate
Trust Department.
RECITALS
A. NOTES. Pursuant to that certain Indenture dated as of August
22, 1996, by and among Casino Magic of Louisiana, Corp., a Louisiana
corporation, as issuer, (the "COMPANY"), , and Jefferson Casino Corp. a
Louisiana corporation (the "GUARANTOR") as guarantor, and the Trustee, as
trustee (the "INDENTURE"), the Company has issued $115,000,000 principal
amount of its First Mortgage Notes due 2003 with Contingent Interest (the
"SERIES A Notes" and, together with the Series B Notes issued in exchange
therefor, the "NOTES"). All defined terms used herein and not otherwise
defined, shall have the meanings set forth in the Indenture. The proceeds of
the Notes, minus certain debt financing costs, have been deposited into an
escrow account maintained by Disbursement Agent ("DISBURSEMENT AGENT")
pursuant to a Cash Collateral and Disbursement Agreement ("CASH COLLATERAL
AGREEMENT") of even date with the Indenture among First National Bank of
Commerce, as Disbursement Agent (the "DISBURSEMENT AGENT"), the Trustee and
the Company.
B. SECURITY.The Company must use the proceeds of the Notes disbursed
pursuant to the Cash Collateral and Disbursement Agreement for the
construction of the Bossier City Project (as defined in the Disbursement
Agreement). Contracting Party and the Company. are parties to that certain
[NAME CONTRACT] dated as
of , 1996 (the "CONTRACT")
relating to the construction or operation of the Bossier City Project. The
Company. has executed a Collateral Assignment collaterally assigning all of
the Company's right, title and interest in and to, among other things, the
Contract (the "COLLATERAL ASSIGNMENT"), dated of even date with the Indenture,
in favor of Trustee, in order to secure the obligations of the Company under,
among other documents, the Notes, the Guarantees and the Indenture (the
"OBLIGATIONS").
CONSENT
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby
acknowledged, Contracting Party agrees as follows:
1. CONSENT TO ASSIGNMENT. Pursuant to the Contract, Contracting
Party has performed or supplied, or agreed to perform or supply, certain
services, materials or documents in connection with the Bossier City Project.
Contracting Party hereby consents to the assignment thereof by the Company to
Trustee as provided in the Collateral Assignment and this Consent.
2. THE COMPANY'S DEFAULT UNDER CONTRACT. If the Company
defaults under the
J-1
Contract, before exercising any remedy, Contracting Party shall deliver to
Trustee at its address set forth above, by registered or certified mail,
postage prepaid, return receipt requested, written notice of such default,
specifying the nature of the default and the steps necessary to cure the same.
If the Company fails to cure the default within the time permitted under the
Contract, then Trustee shall have an additional 30 days after the expiration
of the time permitted under the Contract (but in no event less than an
additional 30 days after the receipt by Trustee of said notice from
Contracting Party) within which Trustee shall have the right, but not the
obligation, to cure such default. Contracting Party's delivery of such a
notice of default to Trustee and their failure to cure the same within the
said additional period shall be conditions precedent to the exercise of any
right or remedy of Contracting Party arising by reason of such default, except
that Contracting Party shall not be required to continue performance under the
Contract for the said additional period, unless and until Trustee agrees to
pay Contracting Party for that portion of the work, labor and materials
rendered during the said period.
3. COMPANY'S DEFAULT UNDER OBLIGATIONS. If Trustee gives written
notice to Contracting Party that the Company. has defaulted under the
Obligations and requests that Contracting Party continue its performance under
the Contract, Contracting Party shall thereafter perform for Trustee under the
Contract in accordance with its terms, so long as Contracting Party shall be
paid pursuant to the Contract for all work, labor and materials rendered
thereunder, including payment of any sums due to Contracting Party for work
performed up to and including the date of the Company's default.
4. PERFORMANCE FOR TRUSTEE.If Trustee (a) cures any default by the
Company pursuant to Paragraph 2 above, (b) gives written notice to Contracting
Party that the Company has defaulted under the Collateral Documents pursuant
to Paragraph 3 above, (c) becomes the owner of the Bossier City Project, (d)
undertakes to complete the construction of the Bossier City Project pursuant
to its rights under the Collateral Documents, or (e) following an Event of
Default, otherwise requires the performance of Contracting Party's obligations
under the Contract or the use of any plans and specifications, drawings,
surveys or other materials or documents previously prepared or provided by
Contracting Party pursuant to the Contract, then in any such event, so long as
Contracting Party has received and continues to receive the compensation
required under the Contract related thereto, Trustee shall have the right to
obtain performance from Contracting Party of all of its obligations under the
Contract, and to use all such plans and specifications, drawings, surveys and
other materials and documents, and the ideas, designs and concepts contained
therein, in connection with the completion of the Bossier City Project,
without the payment of any additional fees or charges to Contracting Party.
5. AMENDMENTS AND CHANGE ORDERS. Contracting Party agrees that it
will not modify, amend, supplement or in any way join in the release or
discharge of Contracting Party's obligations under the Contract unless (a)
such change is commercially reasonable and (b) Disbursement Agent consents to
such change in writing, or such change is otherwise expressly permitted by the
Disbursement Agreement, and that it will not perform any work pursuant to any
change order or directive unless the same is issued and executed in accordance
with the terms and conditions of the Contract.
6. LIST OF SUBCONTRACTING PARTIES.Upon the written request of
Trustee at any time and from time to time, Contracting Party shall furnish to
Trustee a current list of all Persons with whom Contracting Party has entered
into subcontracts or other agreements related to the rendering of work, labor
or materials under the Contract, together with a statement as to the status of
each such subcontractor agreement, and the respective amounts, if any, owed by
Contracting Party related thereto.
J-2
7. REPRESENTATIONS AND WARRANTIES.Contracting Party represents and
warrants to Trustee that (a) it is duly licensed to conduct its business in
the jurisdiction contemplated by the Contract, and will at all times maintain
its license in full force and effect throughout the term thereof, (b) the
Contract has not been amended, modified or supplemented except as set forth
therein, (c) the Contract constitutes a valid and binding obligation of
contracting Party and is enforceable in accordance with its terms, (d) there
have been no prior assignments of the Contract, and (e) all covenants,
conditions and agreements of the Company and Contracting Party contained in
the Contract have been performed as required therein, except for those that
are not due to be performed until after the date hereof.
8. APPLICATIONOF FUNDS. Nothing herein imposes or shall be
construed to impose upon Trustee any duty to direct the application of any
proceeds of the Notes, and Contracting Party acknowledges that Trustee is not
obligated to Contracting Party or any of its subcontracting parties,
materialmen, suppliers or laborers.
9. ACKNOWLEDGMENT OF INDUCEMENT.Contracting Party is executing
this consent to induce the purchasers of the Notes to purchase the Notes.
Contracting Party understands that the purchasers of the Notes would not
advance such funds and make such purchases but for Contracting Party's
execution and delivery hereof.
10. GOVERNING LAW.This Consent shall be governed by the laws
of the State of Louisiana.
IN WITNESS WHEREOF, Contracting Party has executed this Consent as of the
date first above written.
CONTRACTING PARTY:
By:
Name:
Title:
J-3
EXHIBIT K TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
[ATTACH FORM OF MECHANIC'S LIEN ENDORSEMENT]
K-1
EXHIBIT L TO CASH COLLATERAL AND DISBURSEMENT AGREEMENT
199-
SEI Fund Resources, a Delaware business trust, as administrator of the Marquis
Funds, a Massachusetts business trust and the issuer of the Marquis Funds
Treasury Securities Money Market Fund
680 Swedesford Road
Wayne, Pennsylvania 19087
Attention: Jeff Cohen, Fund Accountant (fax number 610-989-6046)
Re: Pledge of Shares of Marquis Funds Treasury Securities Money Market
Fund (the "ISSUER")
Dear Fund Accountant:
This letter shall provide you with irrevocable instructions concerning account
number of the Marquis Funds Treasury Securities Money Market Fund, and all
shares of beneficial interest of the Issuer and other assets and investments
from time to time credited thereto or deposited therein (collectively, the
"ACCOUNT"). Said Account shall be registered in the name of Casino Magic of
Louisiana, Corp. (the "SHAREHOLDER"). The Shareholder hereby certifies and
agrees as follows:
1. The Shareholder has pledged and granted a security interest (the
"PLEDGE")in the Account, together with all shares of beneficial interest of
the Issuer credited thereto and all assets, investments, interest, dividends,
gains, income, reinvestments and other proceeds, to First Union Bank of
Connecticut (the "TRUSTEE"), in its capacity as trustee under that certain
Indenture dated as of August 22, 1996 among the Shareholder., Jefferson Casino
Corporation and First Union Bank of Connecticut and pertaining to the
Shareholder's First Mortgage Notes due 2003 With Contingent Interest. In such
capacity, the Trustee is referred to herein as the "PLEDGEE."
2. The Shareholder hereby represents to you that: (a) the Pledgee has
designated First
National Bank of Commerce (the "AGENT") to serve as the Pledgee's designee and
agent in order to perfect the security interest in favor of the Pledgee; and
(b) the Shareholder has not granted any security interest, right or claim in
the Account to any Person other than the Pledgee.
3. Accordingly, the Shareholder hereby irrevocably directs you to
make such notations in the records pertaining to the Account as are necessary
to reflect the Pledge, including the registration of the Account (and all
shares, assets and other investments from time to time credited thereto or
deposited therein) in the name of the Shareholder and the registration of the
Pledge of the Account (and all shares, assets and other investments from time
to time credited thereto or deposited therein) in the following name:
"First National Bank of Commerce, as agent for First Union Bank of
Connecticut, in the latter's capacity as trustee under that certain Indenture
dated as of August 22, 1996 among Casino Magic of Louisiana, Corp., Jefferson
Casino Corporation and First Union Bank of Connecticut and pertaining to
Casino Magic of Louisiana, Corp.'s First Mortgage Notes due 2003 With
Contingent Interest"
4. The Shareholder hereby further irrevocably directs you to reinvest
all dividends or distributions from net investment income and capital gains in
additional shares of the Marquis Funds Treasury Securities Money Market Fund,
subject to the Pledge. In addition, the Shareholder hereby irrevocably
instructs you, notwithstanding any contrary instructions from the Shareholder,
to follow only instructions received from the Agent, furnished in writing,
concerning (a) the payment or reinvestment of dividends or distributions with
respect to the Account and (b) the redemption, transfer, sale or any other
disposition or transaction concerning the Account (and all shares, assets and
other investments from time to time credited thereto or deposited therein) or
the interest, dividends, gains and other income thereon.
5. The Shareholder also irrevocably authorizes and directs you
to send all notices,
L-1
statements and all other communications concerning the Account to the
following address or such other address as may be specified in written
instructions from the Agent:
First National Bank of Commerce,
as agent for First Union Bank of Connecticut
Corporate Trust Division
Commerce Building, 16th Floor
New Orleans, Louisiana 70112
Attn: Denis Milliner
Re: Casino Magic of Louisiana, Corp.
6. The Shareholder agrees that neither you, the Issuer or any of
their respective partners, trustees, officers, employees or affiliates
(collectively, the "ISSUER AFFILIATES") shall be liable for complying in good
faith with the instructions contained herein or failing to comply with any
contrary or inconsistent instructions that may subsequently be issued by the
Shareholder. The Shareholder further agrees to hold harmless and indemnify
each of the Issuer Affiliates against any claim or loss arising out of any
actions or omissions taken by any Person in reliance on or compliance with the
instructions and authorizations contained herein.
7. The Shareholder agrees that the instructions contained herein may
be revoked by the Shareholder only upon the receipt by you of the Agent's
written consent to such revocation or written notification from the Agent that
the Pledge has been terminated.
8. This letter and any amendments, waivers, consents or supplements
may be executed in any number of counterparts, each of which when so executed
and delivered shall be deemed an original, but all of which shall together
constitute one and the same agreement.
Very truly yours,
CASINO MAGIC OF LOUISIANA, CORP.
By:
Name:
Title:
cc: SEI Financial Services Corporation, Attn: Mark Cahn, Esq. (fax number
610-254-1040)
DST Systems, Inc., Attn: Sal DaRosa (fax number 816-843-5783)
GUARANTEE OF SIGNATURE
Authorized Signature
By:
Title:
Dated:
L-2
CONFIRMATION FROM ISSUER
The undersigned hereby confirms the following for the benefit of the
above-referenced Pledgee and Agent:
(i) The undersigned is the administrator and agent for the Issuer in
connection with (among other things) the registration of transfers and pledges
of the Issuer's uncertificated securities, and the Issuer has been organized
under the laws of a jurisdiction which has adopted Article 8 of the Uniform
Commercial Code pertaining to uncertificated securities, and said laws
accordingly permit the undersigned to register a pledge of the Account in
favor of the Pledgee by taking the steps in numbered paragraph 3 of the above
letter.
(ii) The undersigned shall comply, and shall cause the transfer and
other agents of the Issuer to comply, with the instructions in the above
letter. The Pledge has been registered on
199-.
(iii) Immediately after registration of the Pledge, there were no
liens, restrictions or adverse claims (as to which the undersigned has a duty
to disclose under the Uniform Commercial Code) to the Account, other than the
Pledge.
Date:199
SEI Fund Resources, a Delaware business trust
By:
Name:
Title:
L-3
EXHIBIT M TO CASH COLLATERAL AND DISBURSEMENT ACCOUNT
[attach pro forma title policy]
Source and documentation (receipts for purchased goods) for Realized Savings
are attached.
M-1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "SECURITY AGREEMENT") is made and entered into
this 22nd day of August, 1996, between CASINO MAGIC OF LOUISIANA, CORP., a
Louisiana corporation (the "DEBTOR"), and FIRST UNION BANK OF CONNECTICUT, a
Connecticut banking corporation, as trustee for the benefit of the holders of
the Notes (as defined below) (in such capacity, the "SECURED PARTY").
Recitals
A. Notes. Debtor is the issuer of those certain $115,000,000 13 % First
Mortgage Notes due 2003 With Contingent Interest (the "Series A Notes," and
together with any Series B Notes issued in exchange therefor, the "NOTES")
pursuant to that certain Indenture dated as of August 22, 1996 (the
"INDENTURE"), by and among Debtor, Jefferson Casino Corporation, a Louisiana
corporation, as guarantor, and Secured Party. Any capitalized term used in
this Security Agreement without definition, but defined in the Indenture,
shall have the same meaning here as in the Indenture.
B. PURPOSE.As a material inducement to Secured Party to enter into the
Indenture, Debtor has agreed to execute this Security Agreement in favor of
Secured Party and to pledge all its right, title and interest in the
collateral described herein to Secured Party.
AGREEMENT
Now therefore, in consideration of the above recitals and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1 . CREATION OF SECURITY INTEREST.Debtor hereby assigns, pledges and grants
to Secured Party, for the equal and ratable benefit of the Holders of the
Notes, a security interest in all of Debtor's right, title and interest in and
to the collateral described in Section 2 hereinbelow (the "COLLATERAL") in
each case whether now in existence or hereafter arising, now owned or
hereafter acquired by Debtor and wherever located, in order to secure the
payment and performance of the obligations of Debtor to Secured Party
described in Section 3 hereinbelow.
2. COLLATERAL.The Collateral under this Security Agreement is:
(a) all of Debtor's personal property, goods, furnishings, fixtures and
equipment, supplies, building and other materials of every nature whatsoever
and all other personal property, including, but not limited to, communication
systems, visual and electronic surveillance systems and transportation systems
and including all property and materials stored therein in which Debtor has an
interest and all tools, utensils, food and beverage, liquor, uniforms, linens,
housekeeping and maintenance supplies, vehicles, fuel, advertising and
promotional material, blueprints, surveys, plans and other documents relating
to the Project, all gaming and general equipment and devices which are or are
to be installed and used in connection with the operation of Casino
Magic-Bossier City (the "PROJECT"), and the Vessels (as hereinafter defined),
all computer equipment, calculators, adding machines, and gaming tables, video
game and slot machines and any other electronic equipment, all furniture,
fixtures, equipment, gaming equipment, appurtenances and personal property now
or in the future contained in, used in connection with, attached to, or
otherwise useful or convenient to the use, operation, or occupancy of, or
placed on, but unattached to, any part of the Project or the land upon which
the Project will be constructed, including all removable window and floor
coverings, all furniture and furnishings, heating, lighting, plumbing,
ventilating, air conditioning, refrigerating, incinerating and elevator and
escalator plants, cooking facilities, vacuum cleaning systems, public address
and communications systems, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, motors, machinery, pipes, appliances,
equipment, fittings, fixtures, and building materials, together with all
venetian blinds, shades, draperies, drapery and curtain rods, brackets, bulbs,
cleaning apparatus, mirrors, lamps, ornaments, cooling apparatus and
equipment, ranges and ovens, garbage disposals, dishwashers, mantels, and any
and all such property which is at any time installed in affixed to or placed
upon the land upon which the Project will be constructed, all fixtures for
generating or distributing air, water, heat, electricity, light, fuel or
refrigeration, or for ventilating or sanitary purposes, or for the exclusion
of vermin or insects, or for the removal of dust, refuse or garbage, all
specifically designed installations and ftirnishings, and all other personal
property, furniture, fixtures and equipment of every nature used or located at
the Project (all of the foregoing property and similar or after-acquired
property included as Collateral under Section 2(i) below being hereinafter
referred to as "EQUIPMENT");
(b) all of Debtor's accounts and accounts receivable, including, without
limitation, all rights to payment for goods sold or leased or for services
rendered which are not evidenced by an instrument or chattel paper, all other
present or ftiture rights for money due or to become due, all of Debtor's
chattel paper, instruments, promissory notes (including, without limitation,
all inter-company notes), markers and general intangibles for money due or to
become due of any kind, in each case whether now existing or hereafter arising
and wherever arising and whether or not earned by performance and all
royalties, earnings, income, proceeds, products, rents, revenues, reversions,
remainders, issues, profits, avails, and other benefits directly or indirectly
derived or otherwise arising from any of the foregoing, (collectively, the
"RECEIVABLES"), other general intangibles, documents of title, warehouse
receipts, leases, deposit accounts, including, without limitation, the
Interest Reserve Account, the Construction Disbursement Account, the Operating
Reserve Account, the Completion Reserve Account, and the Escrow Account,
money, tax refund claims, partnership interests, indemnification and other
similar claims and contract rights, permits and licenses, including, without
limitation, any licenses held or to be held by Debtor necessary to operate the
Project (including, without limitation, licenses in favor of Debtor granted
pursuant to the Management Agreement or otherwise), franchises, variances,
special permits, rulings, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights and agreements
(including, without limitation, options, option rights and contract rights)
certificates, stock, any and all books, records, customer lists, concession
agreements, supply or service contracts, documents, unearned premiums,
rebates, deposits, refunds, including, but not limited to, income tax refunds,
prepaid expenses, rebates, tax and insurance escrow and impound accounts, if
any, and all rights in, to and under all security agreements, mortgages, deeds
of trust, guarantees, leases and other agreements or contracts securing or
otherwise relating to any of the foregoing or now or hereafter obtained by
Debtor from any Goverrunental Authority having or claiming jurisdiction over
the Project, and all things in action, rights represented by judgments, awards
of damages, settlements and claims arising out of tort, warranty or contract
(including, without limitation, the right to assert and otherwise be the
proper party of interest to commence, control, prosecute and/or settle such
actions, whether as claims, counterclaims or otherwise, and whether involving
matters arising from casualty, condenmation, indemnification, negligence,
strict liability, other tort, contract, warranty or in any other manner), and
all securities of any Subsidiary, whether now in existence or hereafter
incorporated or formed, (all of the foregoing property, including, without
limitation, the Receivables, and similar or after-acquired property included
as Collateral under Section 2(i) below being hereinafter referred to as
"INTANGIBLES");
(c) all of the trademarks and service marks now held or hereafter acquired
by Debtor or licensed to Debtor, which are registered in the United States
Patent and Trademark Office or in any similar office or agency of the United
States or any state thereof or any political subdivision thereof and any
application for such trademarks and service marks, as well as any unregistered
marks used by Debtor in the United States and trade dress including logos,
designs, trade names, business names, fictitious business names and other
business identifiers in connection with which any of these registered or
unregistered marks are used in the United States ("MARKS"), together with the
registration and right to renewals thereof, and the goodwill of the business
of Debtor symbolized by the Marks and all licenses associated therewith;
(d) all United States copyrights which Debtor now or hereafter has
registered with the United States Copyright Office, as well as any application
for a United States copyright registration now or hereafter made with the
United States Copyright Office by Debtor (" COPYRIGHTS ");
(e) all patents and patent applications, and any divisions or
continuations thereof, which are registered in the United States Patent and
Trademark Office or any similar office or agency of the United States or any
state thereof or political subdivision thereof ("PATENTS") together with the
registration and right to renewals, reissues and extensions thereof, and the
goodwill of the business of Debtor symbolized by the Patents;
(f) all computer programs of Debtor and all intellectual property rights
therein and all other proprietary information of Debtor, including, but not
limited to, trade secrets;
(g) all contract rights, warranty rights and other intangible rights of the
debtor of any kind pertaining to (i) that certain riverboat gaming vessel "
MARY'S PRIZE, " U.S. Coast Guard Official Number 102801 1, (ii) that
certain riverboat gaming vessel "CRESCENT CITY QUEEN," U.S. Coast Guard
Official Number 1028319, and (iii) all other riverboat gaming vessels or other
vessels now or hereafter owned by Debtor, including, without limitation, any
and all engines, boilers, machinery, components, gaming equipment, masts,
boats, capstans, outfit, tools, pumps, gear, ftimishings, appliances,
fittings, spare and replacement parts and any and all other appurtenances
thereto or appertaining or belonging to any of the aforesaid vessels, whether
on board or not on board (collectively the "Vessels"); and
(h) all of Debtor's right, title and interest in and to any and all maps,
plans, preliminary plans, specifications, surveys, studies, tests, reports,
data and drawings relating to the development of the Project including,
without limitation, all marketing plans, feasibility studies, soils tests,
design contracts and all contracts and agreements of Debtor relating thereto
including, without limitation, architectural, structural, mechanical and
engineering plans and specifications, studies, data and drawings prepared for
or relating to the development of the Project or the construction, renovation
or restoration of the Project as finalized, amended, supplemented, or
otherwise modified from time to time by 2nd Opinion, Inc., a Louisiana
corporation (the "INDEPENDENT CONSTRUCTION CONSULTANT"), in accordance with
the terms of the Cash Collateral and Disbursement Agreement, or the extraction
of minerals, sand, gravel or other valuable substances from the land upon
which the Project will be constructed and purchase contracts or any agreement
granting Debtor a right to acquire any land situated within the Parish of
Bossier, Louisiana, or the Parish of Caddo, Louisiana; and
(i) the Collateral includes all items described in this Section 2, whether now
owned or hereafter at any time acquired by Debtor and wherever located, and
includes all replacements, additions, parts, appurtenances, accessions,
substitutions, repairs, proceeds, products, offspring, rents and profits,
relating thereto or therefrom, and all documents, records, ledger sheets and
files of Debtor relating thereto ("PROCEEDS"). Proceeds hereunder include (i)
whatever is now or hereafter receivable or received by Debtor upon the sale,
exchange, collection or other disposition of any item of Collateral, whether
voluntary or involuntary, whether such proceeds constitute Equipment,
Intangibles, Vessels, Receivables or other assets; (ii) to the extent
permitted by law, whatever is now or hereafter receivable or received by
Debtor upon the sale, exchange, collection or other disposition of any Gaming
License, regardless of whether such Gaming License is Collateral or an
Excluded Asset; (iii) any such items which are now or hereafter acquired by
Debtor with any proceeds of Collateral hereunder; and (iv) any insurance or
payments under any indemnity, warranty or guaranty now or hereafter payable by
reason of loss or damage or otherwise with respect to any item of Collateral
or any proceeds thereof. Notwithstanding the foregoing, "Collateral,"
"Equipment," "Receivables," and "Intangibles" shall not include any of the
following assets (the "EXCLUDED Assets"): (i) Gaming Licenses (as defined in
the Indenture) or any other governmental approval or permit, to the extent
that, under the terms and conditions of such approval or under applicable law,
it cannot be subjected to a Lien in favor of Secured Party without the
approval of the relevant Govermnental Authority, to the extent that such
approval has not been obtained; (ii) any Equipment (A) the purchase of which
was not financed with the proceeds of the Notes and (B) that Debtor is
permitted to encumber and has encumbered pursuant to Section 4.09 of the
Indenture and (C) in which Secured Party is prohibited from maintaining a
security interest pursuant to the terms of the FF&E Financing Agreement (as
defined below) encumbering such Equipment; and (iii) if Debtor incurs
indebtedness on a secured basis to finance the costs of constructing the
Casino Magic-Bossier City Hotel pursuant to Section 4.09 of the Indenture and
satisfies any and all conditions set forth therein, any FF&E, Equipment or
other personal property that is used or located at olr in connection with the
operation of the Casino Magic-Bossier City Hotel; providedthat, in such
event, Secured Party shall execute and deliver any instruments necessary or
appropriate to release the lien of this Security Agreement on all such FF&E,
Equipment or other personal property.
3. SECURED OBLIGATIONS OF DEBTOR.The Collateral secures and shall
hereafter secure (i) the payment by Debtor to the Holders or Secured Party of
all indebtedness now or hereafter owed to the Holders or Secured Party by
Debtor in connection with the transactions related to the Notes and the
Indenture (the "BOSSIER CITY FINANCING"), whether at stated maturity, by
acceleration or otherwise, including, without limitation, Debtor's obligations
under the Indenture, the Notes or any related documents securing the
obligations thereunder, together with any interest thereon as provided
therein, payments for early termination, fees, expenses, increased costs,
indemnification or otherwise, in connection therewith and extensions,
modifications and renewals thereof, (ii) the perfon-nance by Debtor of all
other obligations and the discharge of all other liabilities of Debtor to the
Holders or Secured Party of every kind and character arising from the Bossier
City Financing, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, joint, several, joint and
several (i.e., solidary), whether or not arising after the commencement of a
proceeding under Bankruptcy Law (including postpetition interest) and whether
or not recovery of any such obligation or liability may be barred by a statute
of limitations or prescriptive period or such obligation or liability may
otherwise be unenforceable, and whether created under this Security Agreement
or any other agreement to which Debtor and Secured Party are parties, (iii)
any and all sums advanced by Secured Party in order to preserve the Collateral
or preserve Secured Party's security interest in the Collateral (or the
priority thereof), and (iv) the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of Secured Party referred to above,
or of any exercise by Secured Party of its rights hereunder, together with
reasonable attorneys' fees and disbursements and court costs (collectively,
the "SECURED OBLIGATIONS"). All payments and performance by Debtor with
respect to any Secured Obligations shall be in accordance with the terms under
which said indebtedness, obligations and liabilities were or are hereafter
incurred or created.
4. Debtor's RepresentationsAND Warranties. Debtor represents and
warrants that:
(a) Debtor is (or, to the extent that the Collateral is acquired after the
date hereof, will be) the sole legal and beneficial owner of the Collateral
and has exclusive possession and control thereof; there are no security
interests in, Liens, charges or encumbrances on, or adverse claims of title
to, or any other interest whatsoever in, the Collateral or any portion thereof
except Permitted Liens (as defined in the Indenture, including, without
limitation, Liens that are created by this Security Agreement); and no
financing statement, notice of lien, mortgage, deed of trust or instrument
similar in effect covering the Collateral or any portion thereof ("LIEN
NOTICE") exists or is on file in any public office, and no Collateral or any
portion thereof is in the possession of any third party, except as relates to
Permitted Liens, including, without limitation, Liens as may have been filed
in favor of Secured Party relating to this Security Agreement or related
agreements, or for which duly executed termination statements have been
delivered to Secured Party for filing;
(b) Debtor has full right, power and authority to execute, deliver and
perform this Security Agreement. This Security Agreement constitutes a
legally valid and binding obligation of Debtor, enforceable against Debtor in
accordance with its terms. Subject to the completion of the items identified
in Section 4(c) below, the provisions of this Security Agreement are effective
to create in favor of Secured Party a valid and enforceable first, prior and
perfected security interest in the Collateral subject only to Permitted Liens;
(c) except for (i) the filing or recording of the financing statements and
fixture filings done concurrently with the execution and delivery hereof, (ii)
the actual taking of possession of instruments constituting Collateral by the
Trustee hereunder, if required by the Louisiana Uniform Connnercial Code,
Commercial Laws - Secured Transactions, (iii) all consents received and
actions taken in connection with the closing of the offering of the Notes, and
(iv) any filings necessary to perfect Secured Party's security interest in any
Patent, Trademark or Copyright, no authorization, approval or other action by,
no notice to or registration or filing with, any person or entity, including
without limitation, any stockholder or creditor of Debtor or any governmental
authority or regulatory body is required (x) for the grant by Debtor of the
security interest in the Collateral pursuant to this Security Agreement or for
the execution, delivery or performance of this Security Agreement by Debtor,
(y) for the perfection or maintenance of such security interest created
hereby, including the first priority nature of such security interest subject
to Permitted Liens, or (except for notices required under the Louisiana
Uniform Commercial Code, Commercial Laws - Secured Transactions) the exercise
by Secured Party of the rights and remedies provided for in this Security
Agreement (other than any required governmental consent or filing with respect
to any Patents, Trademarks, Copyrights, governmental claims, tax refunds,
licenses or permits or the exercise of remedies requiring prior court
approval, notices, consents, approvals or authorizations in connection with
the sale of any securities under laws affecting the offering and sale of
securities generally), or (z) for the enforceability of such security interest
against third parties, including, without limitation, judgment lien creditors;
(d) except as set forth on Exhibit "A" attached hereto, Debtor does not do
business, and for the previous five (5) years has not done business, under any
fictitious business names or trade names;
(e) the Collateral has not been and shall not be used or bought by Debtor
for personal, family or household purposes. In addition, the Collateral does
not include crops, timber, farm products, minerals or the like or accounts
resulting from the sale of such minerals at the wellhead or minehead;
(f) Debtor's chief executive office is located at 1701 Old Minden Road,
Bossier City, Louisiana 71 1 1 1, Debtor's federal tax identification number
is 6408781 10, and Debtor has no places of business other than such address
and the Collateral is now and shall at all times hereafter be located at
Debtor's places of business or as Debtor may otherwise notify Secured Party in
writing;
(g) Debtor does not maintain any deposit accounts other than those set
forth in Exhibit " B " hereto and Debtor is not now indebted to any
organization with which Debtor maintains a deposit account;
(h) Debtor has not purchased any Collateral, other than for cash, within
twenty-one (21) days prior to the date hereof;
(i) all originals of all promissory notes, other instruments or chattel
paper which evidence Receivables (other than checks received by Debtor in the
ordinary course of business, which Debtor promptly shall deposit into one of
the deposit accounts encumbered hereunder) have been delivered to Secured
Party (with all necessary or appropriate endorsements);
(j) none of the execution, delivery and performance of this Security
Agreement by Debtor, the consummation of the transactions herein contemplated,
the FTILFILLMENT of the terms hereof or the exercise by Secured Party of any
rights or remedies hereunder shall constitute or result in a breach of any of
the terms or provisions of, or constitute a default under, or constitute an
event which with notice or lapse of time or both shall result in a breach of
or constitute a default under, any material agreement, or any indenture,
mortgage, deed of trust, equipment lease, instrument or other document to
which Debtor is a party, conflict with or require approval, authorization,
notice or consent under any material law, order, rule, regulation, license or
pen-nit applicable to Debtor of any court or any federal or state government,
regulatory body or administrative agency, or any other governmental body
having jurisdiction over Debtor or its properties or require notice, consent,
approval or authorization by or registration or filing with any person or
entity (including, without limitation, any stockholder or creditor of Debtor)
other than (i) any notices to Debtor from Secured Party required hereunder,
(ii) notices and filings in connection with the perfection of Liens hereunder,
and (iii) notices, consents, approvals or authorizations in connection with
the sale of any securities under laws affecting the offering and sale of
securities generally. Except for documents entered into in connection with
Permitted Liens, none of the Collateral is subject to any material agreement,
or any indenture, mortgage, deed of trust, equipment lease, instrument or
other document to which Debtor is a party which may restrict or inhibit
Secured Party's rights or ability to sell or dispose of the Collateral or any
part thereof after the occurrence of a Default or an Event of Default (as
defined herein);
(k) Debtor is the true lawful exclusive owner or licensee of the Marks
listed in Annex 1, except those listed as being held under a non-exclusive
license, and that said listed Marks include all the United States federal
registrations or applications registered in the United States Patent and
Trademark office and that said Marks are valid, subsisting and have not been
cancelled. Debtor represents and warrants that, except as indicated on Annex
1, it owns or is licensed to use or not prohibited from using all Marks that
it uses. Debtor ftirther warrants that, except as indicated on Annex 1, it
is aware of no third party claim that any aspect of Debtor's present or
contemplated business operations infringes or will infringe Debtor's Marks.
Debtor represents and warrants that it is the owner of record of all United
States registrations and applications listed in Annex 1 hereto and that said
registrations are valid, subsisting, have not been cancelled and that such is
not aware of any third party claim that any of said registrations is invalid
or unenforceable; and
(l) Debtor is the true and lawful exclusive owner of all rights in the
Patents listed in Amex 2 hereto and in the Copyrights listed in Annex 3
hereto, that said Patents include all the United States patents and
applications for United States patents that Debtor owns and that said
Copyrights constitute all the United States copyrights registered in the
United States Copyright Office and applications for United States copyrights
that it now uses or practices under. Debtor further warrants that it is aware
of no third party claiirn that any aspect of Debtor's present or contemplated
business operations infringes or will infringe any Patent or any Copyright.
5. COVENANTS OF DEBTOR.Debtor covenants and agrees that:
(a) Debtor shall not move or permit to be moved the Collateral or any
portion thereof to any location other than that set forth in Section 4(f)
hereof or the Project or locations established in compliance with Section 5(B)
hereof, in each case without the prior written consent of Secured Party, which
consent shall not be unreasonably withheld, and the prior filing of a
financing statement with the proper offices and in the proper form, to the
extent necessary or appropriate, to perfect or continue the perfection
(without loss of priority) of the security interests created herein, which
filing shall be satisfactory in form, substance and location to Secured Party
prior to such filing;
(b) Debtor shall not voluntarily or involuntarily change its name,
identity, corporate structure, or location of its chief executive office or
any of its other places of business, unless in any such case (i) Debtor shall
have first received the prior written consent of Secured Party, (ii) Debtor
shall have executed and caused to be filed financing statements with the
proper offices and in the proper form, to the extent necessary or appropriate,
to perfect or continue the perfection (without loss of priority) of the
security interests created herein, which filing shall be satisfactory in form,
substance and location to Secured Party prior to such filing, and (iii) Debtor
shall have delivered to Secured Party any other documents that may be required
by Secured Party in a form and substance reasonably satisfactory to Secured
Party to perfect or continue the perfection (without loss of priority) of the
security interest created herein;
(c) Debtor shall not establish or create any deposit accounts other than
those set forth in Exhibit "A" without the prior written consent of Secured
Party, and Debtor shall not hereafter incur any indebtedness to any
organization listed in said Exhibit "A" except any indebtedness permitted
under the terms of the Indenture;
(d) Debtor shall promptly, and in no event later than twenty-one (21) days
after a request by Secured Party, procure or execute and deliver all further
instruments and documents (including, without limitation, notices, legal
opinions, financing statements, mortgagee waivers, landlord disclaimers and
subordination agreements) satisfactory to Secured Party, and take any other
actions which are necessary or, in the judgment of Secured Party, desirable or
appropriate to perfect or to continue the perfection, priority and
enforceability of Secured Party's security interests in the Collateral, to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, to protect the Collateral against the rights,
claims or interests of third persons (other than holders of Permitted Liens),
or to effect or to assure further the purposes and provisions of this Security
Agreement, and shall pay all costs incurred in connection therewith. Without
limiting the generality of the foregoing, Debtor shall: (i) mark conspicuously
each item of chattel paper and each other contract included in the Collateral
with a legend, in fonn and substance satisfactory to Secured Party, indicating
that such chattel paper and other contracts are subject to the security
interests granted hereby; (ii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as
may be necessary or desirable, which Secured Party may reasonably request in
order to perfect and preserve the perfection and priority of the security
interests granted or purported to be granted hereby; (iii) if any Receivable
shall be evidenced by a promissory note or other instrument or chattel paper
(other than checks received by Debtor in the ordinary course of business,
which Debtor promptly shall deposit into one of the deposit accounts
encumbered hereunder), deliver and pledge to Secured Party such note or
instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to Secured Party; (iv) if any Collateral is at any time in the
possession or control of any warehouseman, bailee, consignee or any of
Debtor's agents or processors, Debtor shall notify such warehouseman, bailee,
consignee, agent or processor of the security interests created or purported
to be created hereby, shall cause such warehouseman, bailee, consignee, agent
or processor to execute any financing statements or other documents which
Secured Party may request, and, upon the request of Secured Party after the
occurrence and during the continuation of a Default or an Event of Default,
shall instruct such person to hold all such Collateral for Secured Party's
account subject to Secured Party's instructions; (v) deliver and pledge to
Secured Party all securities and instruments (other than checks, received by
Debtor in the ordinary course of business, which Debtor promptly shall deposit
into one of the deposit accounts encumbered hereunder) constituting Collateral
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Secured Party; and (vi)
at the request of Secured Party, deliver to Secured Party any and all
certificates of title, applications for title or similar evidence of ownership
of all Equipment and shall cause Secured Party to be named as lienholder on
any such certificate of title or other evidence of ownership;
(e) without the prior written consent of Secured Party pursuant to or as
expressly permitted by the Indenture, Debtor shall not in any way encumber, or
hypothecate, or create or permit to exist, any Lien, security interest, charge
or encumbrance or adverse claim upon or other interest in the Collateral,
except for Permitted Liens, including without limitation, encumbrances
permitted by the Indenture and the liens created by this Security Agreement,
and Debtor shall defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein (other than
holders of Permitted Liens), except as expressly provided herein. Debtor
shall not permit any Lien Notices to exist or be on file in any public office
with respect to all or any portion of the Collateral except, in each case, for
Lien Notices of holders of Permitted Liens, including without limitation,
encumbrances permitted by the Indenture or except as may have been filed by or
for the benefit of Secured Party relating to this Security Agreement or
related agreements. Debtor shall promptly notify Secured Party of any
attachment or other legal process levied against any of the Collateral and any
information received by Debtor relative to the Collateral, which may in any
material way affect the value of the Collateral or the rights and remedies of
Secured Party in respect thereto;
(f) except as expressly permitted by the Indenture, Debtor shall not sell,
transfer, assign (by operation of law or otherwise), exchange or otherwise
dispose of all or any portion of the Collateral or any interest therein. If
the proceeds of any such prohibited sale are notes, instruments, documents of
title, letters of credit or chattel paper, such proceeds shall be promptly
delivered to Secured Party to be held as Collateral hereunder (with all
necessary or appropriate endorsements). If the Collateral, or any part
thereof or interest therein, is sold, transferred, assigned, exchanged, or
otherwise disposed of in violation of these provisions, the security interest
of Secured Party shall continue in such Collateral or part thereof
notwithstanding such sale, transfer, assignment, exchange or other
disposition, and Debtor shall hold the proceeds thereof in a separate account
for Secured Party's benefit. Debtor shall, at Secured Party's request,
transfer such proceeds to Secured Party in kind, with such endorsements, if
any, that Secured Party requires;
(g) Secured Party is hereby authorized to file one or more financing
statements or fixture filings, and continuations thereof and amendments
thereto, relative to all or any part of the Collateral, without the signature
of Debtor where permitted by law;
(h) except as expressly permitted by the Indenture, Debtor shall not enter
into any indenture, mortgage, deed of trust, contract, undertaking, document,
instrument or other agreement, except for the Indenture and any documents,
instruments or agreements related thereto or issue any securities which may
restrict or inhibit Secured Party's rights or ability to sell or otherwise
dispose of the Collateral or any part thereof after the occurrence of a
Default or an Event of Default;
(i) except as expressly permitted by the Indenture, Debtor shall not enter
into, modify or amend any existing or future contracts or agreements relating
to the sale or disposition of the Collateral or any part thereof outside the
ordinary course of business without the prior written consent of Secured Party
pursuant to the Indenture. Upon request of Secured Party, Debtor shall
provide Secured Party with copies of all existing and hereafter created
contracts and agreements pertaining to any such sale or disposition and of all
amendments and modifications thereto;
(j) except as expressly permitted by the Indenture, Debtor shall pay and
discharge all taxes, assessments and governmental charges or levies against
the Collateral prior to delinquency thereof and shall keep the Collateral free
of all unpaid claims and charges (including claims for labor, materials and
supplies) whatsoever,
(k) Debtor shall keep and maintain the Collateral in good condition,
working order and repair, ordinary wear and tear excepted, and from time to
time shall make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable toward
such end. Debtor shall not misuse or abuse the Collateral, or waste or allow
it to deteriorate except for the ordinary wear and tear of its normal and
expected use in Debtor's business in accordance with Debtor's policies as then
in effect ( ided that no changes are made to Debtor's policies as in effect on
the date hereof that would be materially adverse to the interests of Secured
Party), and shall comply with all material laws, statutes and regulations
pertaining to the use or ownership of the Collateral. Debtor shall promptly
notify Secured Party regarding any material loss or damage to any material
portion of the Collateral;
(l) Debtor shall take (i) all actions consistent with reasonable business
judgment, or (ii) upon the occurrence and during the continuation of a Default
or an Event of Default, all actions directed by Secured Party in Secured
Party's sole and absolute discretion, to create, preserve and enforce any
Liens or guaranties available to secure or guaranty payments due Debtor under
any contracts or other agreements with third parties, shall not voluntarily
permit any such payments to become more than thirty (30) days delinquent and
shall in a timely manner record and assign to Secured Party, to the extent and
at the earliest time permitted by law, any such Liens and rights under such
guaranties. Debtor shall give Secured Party written notice of any payments
due Debtor within five (5) days after any such payments become thirty (30)
days delinquent;
(m) upon Secured Party's request, Debtor shall promptly deliver to Secured
Party records and schedules that show the status, condition and location of
the Collateral, including accounts receivable aging reports and other reports
reasonably requested by Secured Party, all in reasonable detail; shall
promptly notify Secured Party in writing of any event, or change of law,
regulation, business practice, or business condition that may materially
adversely affect the value of the Collateral; and shall provide Secured Party
with current financial information concerning Debtor's business on a monthly,
quarterly and audited fiscal year end basis, with detail satisfactory to
Secured Party and which shall be prepared in accordance with generally
accepted accounting principles consistently applied. Secured Party shall have
the right to review and verify such records, schedules, financial information
and notices, and Debtor shall reimburse Secured Party for all costs incurred
thereby. Such review and verification shall include the right of Secured
Party to contact account debtors to confirm balances owing on and the terms of
Receivables, which right shall be subject to providing prior notice to Debtor
so long as no Default or Event of Default has occurred and is continuing;
(n) except as otherwise provided in this Section 5(n), Debtor shall continue
to collect, at its own expense, all amounts due or to be become due Debtor
under the Receivables or the Intangibles. In connection with such
collections, Debtor may take (and at Secured Party's reasonable direction,
shall take) such action as Debtor or Secured Party (or, upon the occurrence
and during the continuation of a Default or an Event of Default, Secured
Party) may deem necessary or advisable to enforce collection of the
Receivables or the Intangibles; provided, however, that Debtor shall not
adjust, settle or compromise the amount or payment of any Receivable or
Intangible, or release wholly or partly any account debtor or obligor thereof,
or allow any credit or discount thereon, other than adjustments, settlements,
or discounts that are in accordance with Debtor's policies as then in effect;
provided that no changes are made to Debtor's policies as in effect on the
date hereof that would be materially adverse to the interests of Secured
Party. Secured Party shall have the right at any time after the occurrence
and during the continuation of a Default or an Event of Default to notify the
account debtors or obligors under any of the Receivables or the Intangibles of
the assiginment of such Receivables or Intangibles to Secured Party and to
direct such account debtors or obligors to make payment of all amounts due or
to become due to Debtor thereunder directly to Secured Party and, upon such
notification and at the expense of Debtor, to enforce collection of any such
Receivables or Intangibles, and to adjust, settle or compromise the amount or
payment thereof, as Secured Party may deem appropriate in its sole discretion.
After the occurrence and during the continuation of a Default or an Event of
Default (i) all amounts and proceeds (including instruments) received by
Debtor in respect of the Receivables or the Intangibles shall be received in
trust for the benefit of Secured Party hereunder and, upon notice from Secured
Party, shall be segregated from other funds of Debtor and shall be forthwith
paid over to Secured Party in the sarne form as so received (with all
necessary or appropriate endorsements as required by Secured Party) to be held
as cash collateral and applied as provided by the Indenture, and (ii) Debtor
shall not adjust, settle or compromise the amount or payment of any Receivable
or Intangible, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon;
(o) Secured Party shall have the right during regular business hours and
upon prior notice to Debtor to enter into and upon any premises where any of
the Collateral or records with respect thereto are located for the purpose of
inspecting the same, performing any audit, making copies of records, observing
the use of any part of the Collateral, or otherwise protecting its security
interest in the Collateral. Debtor shall hold and preserve all records
concerning the Receivables and (unless required to be delivered to Secured
Party) all originals of all chattel paper that evidences any Receivables;
(p) Secured Party shall have the right at any time, but shall not be
obligated, to make any payments and do any other acts Secured Party may deem
necessary or desirable to protect its security interest in the Collateral,
including, without limitation, the right to pay, purchase, contest or
compromise any encumbrance, charge or Lien (excluding any Permitted Liens)
applicable or purported to be applicable to any Collateral hereunder, and
appear in and defend any action or proceeding purporting to affect its
security interest in and/or the value of any Collateral, and in exercising any
such powers or authority, the right to pay all expenses incurred in connection
therewith, including reasonable attorneys' fees. Debtor hereby agrees that it
shall be bound by any such payment made or incurred or act taken by Secured
Party hereunder and shall reimburse Secured Party for all payments made and
expenses incurred under this Security Agreement, which amounts shall be
secured under this Security Agreement. Secured Party shall have no obligation
to make any of the foregoing payments or perform any of the foregoing acts;
(q) if Debtor shall become entitled to receive or shall receive any
certificate, instrument, option or right (other than checks received by Debtor
in the ordinary course of business, which Debtor promptly shall deposit into
one of the deposit accounts encumbered hereunder), whether as an addition to,
in substitution of, or in exchange for any or all of the Collateral or any
part thereof, or otherwise, Debtor shall accept any such instruments as
Secured Party's agent, shall hold them in trust for Secured Party, and shall
deliver them forthwith to Secured Party in the exact form received, with
Debtor's endorsement when necessary or appropriate, or accompanied by duly
executed instruments of transfer or assignment in blank or, if requested by
Secured Party, an additional pledge agreement or security agreement executed
and delivered by Debtor, all in form and substance satisfactory to Secured
Party, to be held by Secured Party, subject to the terms hereof, as additional
Collateral to secure the obligations hereunder;
(r) Secured Party is hereby authorized to pay all reasonable costs and
expenses incurred in the exercise or enforcement of its rights hereunder,
including reasonable attorneys' fees, and, while a Default or an Event of
Default exists, to apply any Collateral or proceeds thereof against such
amounts, and then to credit or use any further proceeds of the Collateral in
accordance herewith;
(s)Secured Party may take any actions permitted hereunder or in connection
with the Collateral by or through agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of counsel concerning
all such matters; and
(t) Debtor hereby agrees to take all actions necessary to maintain Secured
Party's first prior security interest (subject to Permitted Liens) in all
Marks, Patents and Copyrights, to preserve the value of all Marks, Patents and
Copyrights, to prosecute and defend such Marks, Patents and Copyrights against
infringement, and to provide Secured Party with notice of any material
pertinent information regarding any such infringement, any material actions
with the United States Patent and Trademark Office and any other information
which could have a material adverse effect on the Marks, Patents and
Copyrights.
6. DEFAULTS AND REMEDIES
(a) The occurrence of any "Default" or "Event of Default" under the
Indenture (subject to the cure rights set forth therein) shall constitute a
Default or an Event of Default, as the case may be, under this Security
Agreement.
(b) Upon the occurrence and continuation of a Default or an Event of
Default hereunder, Debtor expressly covenants and agrees that Secured Party
may, at its option, subject to the terms of the Indenture, in addition to
other rights and remedies provided herein or otherwise available to it,
without notice to or demand upon Debtor (except as otherwise required
herein), exercise any one or more of the rights as set forth as follows:
i) declare all advances made by Secured Party to Debtor hereunder, all
other indebtedness owed by Debtor to Secured Party and all Secured Obligations
to be immediately due and payable, whereupon all unpaid principal and interest
on said advances and other indebtedness and Secured Obligations shall become
and be immediately due and payable;
ii) iniinediately take possession of any of the Collateral wherever it may
be found or require Debtor to assemble the Collateral or any part thereof and
make it available at one or more places as Secured Party may designate, and to
deliver possession of the Collateral or any part thereof to Secured Party, who
shall have ftill right to enter upon any or all of Debtor's places of
business, premises and property to exercise Secured Party's rights hereunder;
iii) exercise any or all of the rights and remedies provided for by the
Louisiana Uniform Commercial Code, Commercial Laws - Secured Transactions,
specifically including, without limitation, the right to recover the
attorneys' fees and other expenses incurred by Secured Party in the
enforcement of this Security Agreement or in connection with Debtor's
redemption of the Collateral. Secured Party may exercise its rights under
this Security Agreement independently of any other collateral or guaranty that
Debtor may have granted or provided to Secured Party in order to secure
payment and performance of the Secured Obligations, and Secured Party shall be
under no obligation or duty to foreclose or levy upon any other collateral
given by Debtor to secure any Secured Obligation or to proceed against any
guarantor before enforcing its rights under this Security Agreement;
iv) use, manage, operate and control the Collateral and Debtor's business
and property to preserve the Collateral or its value, or to pay the Secured
Obligations, including, without limitation, the rights to take possession of
all of Debtor's premises and property, to exclude Debtor and any third
parties, whether or not claiming under Debtor, from such premises and
property, to make repairs, replacements, alterations, additions and
improvements to the Collateral and to dispose of all or any portion of the
Collateral in the ordinary course of Debtor's business;
v) except as herein provided or as may be required by mandatory provisions
of law, sell the Collateral or any part thereof at public or private sale, for
cash, upon credit or for future delivery, and at such price or prices as
Secured Party may deem satisfactory. Secured Party may be the purchaser of
any or all of the Collateral so sold at any public sale (or, if the Collateral
is of a type customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations, at any private
sale). Debtor shall execute and deliver such documents and take such other
action as Secured Party deems necessary or advisable in order that any such
sale may be made in compliance with law. Upon any such sale Secured Party
shall have the right to deliver, assign and transfer to the purchaser thereof
the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of Debtor which
may be waived, and Debtor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. Debtor agrees that ten (10)
days prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral constitutes "reasonable notification"
within the meaning of Section 9:504(3) (or any comparable section in any other
jurisdiction) of the Louisiana Uniform Conimercial Code, Commercial Laws
Secured Transactions, except that shorter or no notice shall be reasonable as
to any Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. The notice (if
any) of such sale shall (i) in case of a public sale, state the tirne and
place fixed for such sale, (ii) in the case of a private sale, state the day
after which such sale may be consunnnated. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or
places as Secured Party may FIX and the notice of such sale. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels or
portions, as Secured Party may determine and with or without any attendant
foreclosure or sale of real property also serving as collateral for any of the
Secured Obligations. Secured Party shall not be obligated to make any such
sale pursuant to any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the same may
be so adjourned. In case of any sale of all or any part of the Collateral on
credit or for ftiture delivery, the Collateral so sold may be retained by
Secured Party until the selling price is paid by the purchaser thereof, but
Secured Party shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may again be sold upon like notice;
vi) proceed by an action or actions at law or in equity to recover the
indebtedness secured hereunder or to foreclose this Security Agreement and
sell the Collateral, or any portion thereof, pursuant to a judgment or decree
of a court or courts of competent jurisdiction in any mamer permitted by law,
or provided for herein;
vii) in the event Secured Party recovers possession of all or any part of
the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, Secured Party may retain, sell or otherwise
dispose of such Collateral in accordance with this Security Agreement or the
Louisiana Uniform Commercial Code, Commercial Laws - Secured Transactions, and
following such retention, sale or other disposition, Secured Party may
voluntarily dismiss without prejudice the judicial action in which such writ
of possession or other judicial process was issued. Debtor hereby consents to
the voluntary dismissal without prejudice by Secured Party of such judicial
action, and Debtor further consents to the exoneration of any bond which
Secured Party files in such action;
viii) with respect to the sale of securities constituting Collateral, to the
extent Secured Party deems it advisable to do so, in its sole discretion or as
may be required by applicable law, restrict the prospective bidders or
purchasers to persons who in Secured Party's sole judgment are sufficiently
sophisticated and who shall represent and agree that they are purchasing the
securities constituting Collateral then being sold for their own account and
not with a view to the distribution or resale thereof, and upon consunmiation
of any such sale, Secured Party shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the securities constituting
Collateral so sold;
ix) Secured Party, in its sole discretion, if permitted by law, may bid
(which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for and purchase for its account the whole or any part of the
Collateral at any public sale or sale on any securities exchange or other
recognized market;
x) to the full extent provided by law, have a court having jurisdiction
appoint a receiver, which receiver shall take charge and possession of and
protect, preserve, replace and repair the Collateral or any part thereof, and
manage and operate the same, and receive and collect all rents, income,
receipts, royalties, revenues, issues and profits therefrom. Debtor shall
irrevocably consent and shall be deemed to have hereby irrevocably consented
to the appointment thereof, and upon such appointment, Debtor shall
immediately deliver possession of such Collateral to the receiver. Debtor
also irrevocably consents to the entry of an order authorizing such receiver
to invest upon interest any funds held or received by the receiver in
connection with such receivership. Secured Party shall be entitled to such
appointment as a matter of right, if it shall so elect, without the giving of
notice to any other party and without regard to the adequacy of the security
of the Collateral;
xi) enforce one or more remedies hereunder, successively or concurrently,
and such action shall not operate to estop or prevent Secured Party from
pursuing any other or further remedy which it may have hereunder or by law,
and any repossession or retaking or sale of the Collateral pursuant to the
terms hereof shall not operate to release Debtor until full and final payment
of any deficiency has been made in cash. Debtor shall reimburse Secured Party
upon demand for, or Secured Party may apply any proceeds of Collateral to, the
costs and expenses (including attorneys' fees, transfer taxes and any other
charges) incurred by Secured Party in connection with any sale, disposition,
repair, replacement, alteration, addition, improvement or retention of any
Collateral hereunder;
xii) upon the occurrence of a Default or an Event of Default hereunder,
any cash held by Secured Party as Collateral and all cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral may, in the discretion of Secured
Party, be held by Secured Party as collateral for and/or then or at any time
thereafter applied (including application to the payment of any costs,
expenses, indemnification and other amounts payable to Secured Party
hereunder, which amounts may be paid in whole or in part prior to the other
Secured Obligations) in whole or in part by Secured Party against all or any
part of the Secured Obligations in such order as Secured Party shall elect.
Any surplus of such cash or cash proceeds held by Secured Party and remaining
after payment in full of all the Seeured Obligations shall be paid over to
Debtor or to whomever may be lawfully entitled to receive such surplus or as a
court of competent jurisdiction may direct; provided, however, that in the
event that all of the conditions to termination of this Security Agreement
under Section 7(l) shall have not been fulfilled, such balance shall be held
as additional Collateral hereunder and applied from time to thne to Secured
Party's costs and expenses and as otherwise provided hereunder until all such
conditions shall have been fulfilled; and
xiii) effect an absolute assignment of all of Debtor's right, title and
interest in and to each Mark (and the goodwill of the business of Debtor
associated therewith), Patent and Copyright.
(c) The provisions of this Subsection 6(c) shall, without limiting the
generality of any other provision of this Security Agreement, be applicable in
the event any foreclosure shall take place in Louisiana on any Collateral or,
in connection with any foreclosure hereunder, Louisiana law shall otherwise be
applicable. Secured Party, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose this Security Agreement and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction. For the purposes of Louisiana executory process procedures,
Debtor does hereby acknowledge the Secured Obligations and confess judgment in
favor of Secured Party for the full amount of such Secured Obligations.
Debtor does by these presents consent and agree that upon the occurrence of a
Default or an Event of Default it shall be lawful for Secured Party to cause
all and singular the Collateral to be seized and sold under executory or
ordinary process, at Secured Party's sole option, without appraisement,
appraisement being hereby expressly waived, in one lot as an entirety or in
separate parcels or portions as Secured Party may determine, to the highest
bidder, and otherwise exercise the rights, powers and remedies afforded herein
and under applicable Louisiana law. Any and all declarations of fact made by
authentic act before a Notary Public in the presence of two (2) witnesses by a
person declaring that such facts lie within his knowledge shall constitute
authentic evidence of such facts for the purpose of executory process. Debtor
hereby waives in favor of Secured Party: (a) the benefit of appraisement as
provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and
2724, and all other laws conferring the same; (b) the demand and three (3)
days delay accorded by Louisiana Code of Civil Procedure Articles 2639 and
2721; (c) the notice of seizure required by Louisiana Code of Civil Procedure
Articles 2293 and 2721; (d) the three (3) days delay provided by Louisiana
Code of Civil Procedure Articles 2331 and 2722; and (e) benefit of the other
provisions of Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723
not specifically mentioned above. In the event the Collateral, or any part
thereof, is seized as an incident to an action for the recognition or
enforcement of this Security Agreement by executory process, ordinary process,
sequestration, writ of fieri facias, or otherwise, Debtor and Secured Party
agree that the court issuing any such order shall, if petitioned for by
Secured Party, direct the applicable sheriff or marshall to appoint as a
keeper of the Collateral, Secured Party or any agent designated by Secured
Party or any Person named by Secured Party at the thne such seizure is
effected. This designation is pursuant to Louisiana Revised Statutes
9:51369:5140.2 and Secured Party shall be entitled to all the rights and
benefits afforded thereunder as the same may be amended. It is hereby agreed
that the keeper shall be entitled to receive as compensation, in excess of its
reasonable costs and expenses incurred in the administration or preservation
of the Collateral, an amount equal to $250.00 per day payable on a monthly
basis. The designation of keeper made herein shall not be deemed to require
Secured Party to provoke the appointment of such a keeper.
7. MISCELLANEOUS PROVISIONS
(a) Notices. All notices, requests, approvals, consents and other
communications required or permitted to be made hereunder shall, except as
otherwise provided, be in writing and may be delivered personally or sent by
telegram, telecopy, facsimile, telex, first class mail or overnight courier,
postage prepaid, to the parties addressed as follows:
To Debtor: Casino Magic of Louisiana Corp. 1701 Old Minden Road Bossier
City, Louisiana 71 1 1 1
Attn: Robert A. Callaway, Esq.
Ph: (318) 746-0711
Fax: (318) 746-0853
To Secured Party: First Union Bank of Connecticut 10 State Street Square
Hartford, Connecticut 06103-3698
Ph: (203) 247-1353
Fax: (860) 247-1356
Attn: Corporate Trust Administration
With a copy to:
Brian Christaldi, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue, 12th Floor
New York, New York 10022
Ph: (212) 836-7447
Fax: (212) 836-7152
Such notices, requests and other communications sent as provided hereinabove
shall be effective when received by the addressee thereof, unless sent by
registered or certified mail, postage prepaid, in which case they shall be
effective exactly three (3) business days after being deposited in the United
States mail. The parties hereto may change their addresses by giving notice
thereof to the other parties hereto in conformity with this section.
(b) Headings. The various headings in this Security Agreement are
inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof.
(c) Amendments. This Security Agreement or any provision hereof may be
changed, waived, or terminated only by a statement in writing signed by the
party against which such change, waiver or termination is sought to be
enforced, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(d) No Waiver. No failure on the part of Secured Party to exercise, and
no delay in exercising, and no course of dealing with respect to, any power,
privilege or right under this Security Agreement or any related agreement
shall operate as a waiver thereof nor shall any single or partial exercise by
Secured Party of any power, privilege or right under this Security Agreement
or any related agreement preclude any other or further exercise thereof or the
exercise of any other power, privilege or right. The powers, privileges and
rights in this Security Agreement are cumulative and are not exclusive of any
other remedies provided by law. No waiver by Secured Party of any default
hereunder shall be effective unless in writing, nor shall any waiver operate
as a waiver of any other default or of the same default on a future occasion.
(e) Binding Agreement. All rights of Secured Party hereunder shall
inure to the benefit of its successors and assigns. Debtor shall not assign
any of its interest under this Security Agreement without the prior written
consent of Secured Party. Any purported assigrunent inconsistent with this
provision shall, at the option of Secured Party, be null and void.
(f) Entire Agreement. This Security Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a
final expression of their agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof. Acceptance of or
acquiescence in a course of performance rendered under this Security Agreement
shall not be relevant to determine the meaning of this Security Agreement even
though the accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
(g) Choice of Law. The existence, validity, construction, operation and
effect of any and all terms and provisions of this Security Agreement shall be
determined in accordance with and governed by the substantive laws of the
State of Louisiana, without giving effect to its conflicts of law principles.
(h) Severabiliiy. If any provision or obligation of this Security
Agreement should be found to be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions and obligations or any other agreement executed in connection
herewith, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby and shall nonetheless remain in
FTILL force and effect to the maximum extent permitted by law.
(i) Survival of Provisions. ALL representations, warranties and
covenants of Debtor contained herein shall survive the execution and delivery
of this Security Agreement, and shall terminate only upon the termination of
this Security Agreement pursuant
to Subsection 7(l) hereof.
(j) Power of Attorney. Debtor hereby irrevocably appoints Secured Party
its attorney-in-fact, which appointment is coupled with an interest, with full
authority in THE place and stead of Debtor and in the name of Debtor, Secured
Party or otherwise, from time to time in Secured Party's discretion (a) to
execute and file financing and continuation statements (and amendments thereto
and modifications thereof) on behalf and in the name of Debtor with respect to
the security interests granted or purported to be granted hereby, (b) to take
any action and to execute any instrument which Secured Party may deem
necessary or advisable to exercise its rights under Section 5(r) hereunder,
and (c) upon the occurrence and during the continuance of a Default or an
Event of Default, to take any action and to execute any instrument which
Secured Party may deem necessary or advisable to accomplish the purposes of
this Security Agreement, including, without limitation:
(i) to obtain and adjust insurance required to be paid to Secured Party
pursuant hereto;
(ii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral;
(iii) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (i) and (ii) above;
(iv) to sell, convey or otherwise transfer any item of Collateral to any
purchaser thereof; and
(v) to file any claims or take any action or institute any proceedings
which Secured Party may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Collateral.
(k) Counterparts. This Security Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same agreement.
(1) Termination of Agreement. Subject to Section 10.01 of the
Indenture, this Security Agreement and the security interest hereunder shall
not terminate until full and final payment and performance of all of the
Secured Obligations. At such time, Secured Party shall reassign and redeliver
to Debtor all of the Collateral hereunder which has not been sold, disposed
of, retained or applied by Secured Party in accordance with the terms hereof,
and execute and deliver to Debtor such documents as Debtor may reasonably
request to evidence such termination. Such reassigm-nent and redelivery shall
be without warranty by or recourse to Secured Party, and shall be at the
expense of Debtor; provided, however, that this Security Agreement
(including all representations, warranties and covenants contained herein and
the priority of the security interests hereunder) shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Secured Party in respect of the indebtedness and obligations
secured hereunder is rescinded or must otherwise be restored or returned by
Secured Party upon or in connection with the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Debtor or any other person or
upon or in connection with the appointment of any intervenor or conservator
of, or trustee or similar official for, Debtor or any other person or any
substantial part of its assets, or otherwise, all as though such payments had
not been made and Debtor shall take all action required by Secured Party in
connection therewith.
(m) Release of Collateral. If pursuant to Section 4.09 of the
Indenture, Debtor is permitted to encumber any portion of the Casino
Magic-Bossier City Hotel, then, upon the satisfaction of any and all
conditions set forth in such Section and Section 10.03 of the Indenture,
Secured Party shall execute and deliver any instruments necessary or
appropriate to effectuate or confirm any encumbrance, free from the lien of
this Security Agreement.
(n) Successors and Assigns. This Security Agreement shall inure to the
benefit of Secured Party, its successors and assigns, including the assignees
of any Secured Obligation or of the benefit of any Secured Obligation and
shall bind the heirs, executors, administrators, successors and assigns of
Debtor. This Security Agreement is assignable by Secured Party with respect
to all or any portion of the Secured Obligations, and when so assigned, Debtor
shall be liable to the assignees under this Security Agreement without in any
manner affecting the liability of Debtor hereunder with respect to any of the
Secured Obligations retained by Secured Party. Each reference herein to
powers or rights of Secured Party shall also be deemed a reference to the same
power or right of such assignees, to the extent of the interest assigned to
them.
(o) Interaction with Financing Documents.
(i) IncoLporation by Reference. All terms, covenants, conditions,
provisions and requirements of the Indenture are incorporated by reference in
this Security Agreement.
(ii) Conflicts with Indenture. Notwithstanding any other provision of
this Security Agreement, the terms and provisions of this Security Agreement
shall be subject and subordinate to the terms of the Indenture. To the extent
that the Indenture provides Debtor with a particular cure or notice period, or
establishes any limitations or conditions on Secured Party's actions with
regard to a particular set of facts, Debtor shall be entitled to the same cure
periods and notice periods, and Secured Party shall be subject to the same
limitations and conditions in place of the cure periods, notice periods,
limitations and conditions provided for under the Indenture; provided,
however, that such cure periods, notice periods, limitations and conditions
shall not be cumulative as between the Indenture and this Security Agreement.
In the event of any conflict or inconsistency between the provisions of this
Security Agreement and those of the Indenture, including without limitation,
any conflicts or inconsistencies in any definitions
herein or therein, the provisions or definitions of the Indenture shall
govern.
(p) Gaming Laws and Regulations. Debtor and Secured Party acknowledge
that, to the extent required under applicable law, the consummation of the
transactions contemplated hereby and the exercise of remedies hereunder may be
subject to the Louisiana Riverboat Economic Development and Gaming Control
Act, La. R.S. 4:501, g s"e ., and the Louisiana Gaming Control Law, La. R.S.
27:1-3, 11-26, 31 and 32, and the regulations promulgated pursuant to each
such law, all as amended from time to time. Debtor and Secured Party further
acknowledge that the Gaming License held by Debtor is not part of the
collateral of this Security Agreement and that, under the above described
legislation and rules promulgated thereunder, the Secured Party may be
precluded from or otherwise limited in taking possession of or in selling the
collateral of this Security Agreement under the Defaults and Remedies
provisions of this Security Agreement. Debtor and Secured Party also
acknowledge that due to various legal restrictions, including, without
limitation, licensing of operators of gaming facilities and prior approval of
the sale or disposition of assets of a licensed gaming operation, the sale of
collateral may be denied by Gaming Authorities or delayed pending Gaming
Authority approval.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be duly executed and delivered by their respective undersigned duly authorized
officers as of the date first above written.
DEBTOR:
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President, General
Council
SECURED PARTY:
FIRST UNION BANK OF CONNECTICUT, a Connecticut banking corporation, as trustee
for the benefit of the holders of the Notes
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title: Vice President
S-1
EXHIBIT "A"
OTHER BUSINESS OR TRADE NAMES USED BY DEBTOR
NONE.
A-1
EXHIBIT "B"
DEPOSIT ACCOUNTS
Casino Magic of Louisiana Corp.
Open Bank Accounts as of August 21, 1996
o The Peoples Bank-
Address
P.O. Drawer 529
Biloxi, MS 39533
Telephone 601-496-9296
Account number 1500156
ABA number 065500752
o Hibernia National Bank-
Address
P.O. Box 61540
New Orleans, LA 70161
Telephone 318-674-3883
Account number 762079313
ABA number 065000090
B-1
ANNEX 1
A. SCHEDULE OF U.S. TRADEMARK REGISTRATIONS
PURSUANT TO SECTION 10 OF THE MANAGEMENT AGREEMENT DATED AUGUST 22,1996,
BETWEEN DEBTOR AND CASINO MAGIC CORP. ("LICENSOR"), LICENSOR GRANTED TO DEBTOR
THE NON-EXCLUSIVE LICENSE TO USE "CASINO MAGIC" AS A SERVICE MARK AND AS PART
OF ITS TRADE NAME SOLELY IN CONNECTION WITH THE BUSINESS OF GAMING FACILITIES
AND RELATED AMENITIES IN BOSSIER CITY, LOUISIANA.
B. SCHEDULE OF PENDING APPLICATIONS FOR U.S. TRADEMARK REGISTRATIONS ON
THE BASIS OF USE IN COMMERCE UNDER 17 USC 1051(a)
NONE.
C. SCHEDULE OF PENDING APPLICATION FOR U.S. TRADEMARK REGISTRATIONS ON THE
BASIS OF INTENT TO USE THE MARK IN COMMERCE UNDER 17 USC 1051(b)
NONE.
AX-1
ANNEX2
SCHEDULE OF PATENTS AND APPLICATIONS
NONE.
AX-2
ANNEX3
SCHEDULE OF COPYRIGHTS AND APPLICATIONS
NONE.
AX-3
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Stock Pledge
Agreement"), dated as of August 22, 1996, is executed by JEFFERSON CASINO
CORPORATION, a Louisiana corporation ("Shareholder"), in favor of FIRST
UNION BANK OF CONNECTICUT, a Connecticut banking corporation, as trustee (in
such capacity, "Trustee"), for the holders of those certain $115,000,000 13%
First Mortgage Notes due 2003 With Contingent Interest (the "Series A Notes,"
and together with any Series B Notes issued in exchange therefor, the
"Notes," and such holders the "Noteholders"), as security for that certain
Guaranty (the "Guaranty") set forth in that certain Indenture dated as of
August 22, 1996 (the "Indenture"), by and among Trustee, Casino Magic of
Louisiana, Corp., a Louisiana corporation (the "Borrower"), and Trustee, as
trustee for benefit of the Noteholders.
RECITALS
A. Shareholder owns one hundred percent (100%) of the
outstanding stock of Borrower.
B. The Noteholders are willing to purchase the Notes for the
purposes of, among other things, providing funds to the Borrower to finance
the cost of developing, constructing, and equipping the Casino Magic-Bossier
City in Bossier City, Louisiana.
C. Shareholder will derive substantial benefit from the purchase
of the Notes by the Noteholders.
D. It is a condition precedent to purchasing the Notes that
Shareholder pledge one hundred percent (100%) of its interest in the Borrower
to Trustee, for the benefit of the Noteholders, as security for the Guaranty.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Shareholder hereby agrees with Trustee as follows:
1. Definitions and Interpretation. When used in this Stock
Pledge Agreement, the following terms shall have the following respective
meanings:
"Borrower" means Casino Magic of Louisiana, Corp., a Louisiana
corporation.
"Collateral" shall have the meaning given to that term in
Paragraph 2 hereof.
"Obligations" shall mean and include all obligations, howsoever
arising, whether or not arising after the commencement of a proceeding under
Bankruptcy Law (including post-petition interest) and whether or not recovery
of any such obligation or liability may be barred by a statute of limitations
or prescriptive period or such obligation or liability may otherwise be
unenforceable, owed by Shareholder to the Noteholders of every kind and
description, pursuant to the terms of the Guaranty (whether or not evidenced
by any note or instrument and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including without limitation all interest, fees, charges,
expenses, attorneys' fees and accountants' fees chargeable to Shareholder and
payable by Shareholder hereunder and thereunder.
"Stock" shall mean all shares, options, warrants, interests,
participations or other equivalents (regardless of how designated) of or in
Borrower, whether now existing or hereafter arising, and whether voting or
nonvoting, including, without limitation, common stock, preferred stock, or
any other equity ownership interest in Borrower.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Louisiana.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Indenture shall have the respective meanings given to those
terms in the Indenture, and all terms defined in the UCC shall have the
respective meanings given to those terms in the UCC. To the extent the
meanings given herein or in the Indenture are inconsistent with those given in
the UCC, the meanings given herein shall govern. Shareholder has previously
received a copy of the Indenture.
2. Pledge. As security for the Obligations, Shareholder
hereby pledges and assigns to Trustee, for the equal and ratable benefit of
the Noteholders and grants to Trustee, for the equal and ratable benefit of
the Noteholders, a security interest in all right, title and interests of
Shareholder in and to the Stock, whether now owned or hereafter acquired
(collectively, the "Shareholder's Stock"), including without limitation the
Shareholder's Stock described in Exhibit "A" hereto, and all proceeds
thereof, including without limitation, dividends and other property received
and receivable by Shareholder in connection with the Shareholder's Stock other
than dividends and other distributions made by Borrower in compliance with the
Indenture (the Shareholder's Stock and such proceeds to be referred to herein
collectively as the "Collateral").
3. Representations and Warranties. Shareholder represents
and warrants to Trustee, for the benefit of the Noteholders, that: (a) the
execution, delivery and performance by Shareholder of this Stock Pledge
Agreement are within the power of Shareholder and have been duly authorized by
all necessary actions on the part of Shareholder; (b) this Stock Pledge
Agreement has been duly executed and delivered by Shareholder and constitutes
a legal, valid and binding obligation of Shareholder, enforceable against it
in accordance with its terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and general principles of equity; (c) the
execution, delivery and performance of this Stock Pledge Agreement do not (i)
violate any requirement of law, regulation or statute, (ii) violate any
provision of, or result in the breach or the acceleration of or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, any indenture, mortgage, lien, lease,
agreement, license, instrument, guaranty, or other document to which
Shareholder is a party or by which Shareholder or its property is bound, or
(iii) result in the creation or imposition of any lien upon any property,
material asset or revenue of Shareholder (except such liens as may be created
in favor of Trustee, for the benefit of the Noteholders, pursuant to this
Stock Pledge Agreement); (d) no consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental authority or
other Person (including, without limitation, the shareholders of any Person)
is required in connection with the execution, delivery and performance by the
Shareholder of this Stock Pledge Agreement, other than those which have been
obtained; (e) Shareholder is the record and beneficial owner of the Collateral
(or, in the case of after-acquired Collateral, at the time Shareholder
acquires rights in the Collateral, will be the record and beneficial owner
thereof) and no other Person has (or, in the case of after-acquired
Collateral, at the time Shareholder acquires rights therein, will have) any
right, title, claim or interest (by way of lien or otherwise) in, against or
to the Collateral; (f) all of the Collateral which are shares of capital stock
are and such future Collateral will be validly issued, fully paid and
nonassessable securities of Borrower; (g) the Collateral includes all of the
issued and outstanding shares of capital stock of Borrower; (h) except for the
Collateral, there are no outstanding options, warrants or other rights to
subscribe for or purchase voting or non-voting capital stock of Borrower, nor
any notes, bonds, debentures or other evidences of indebtedness that (1) are
at any time convertible into capital stock of Borrower, or (2) have or at any
time would have voting rights with respect to Borrower; (i) upon transfer to
Trustee of all Collateral consisting of securities, Trustee (on behalf of the
Noteholders) will have a first priority perfected security interest in such
Collateral, and (or in the case of all other after-acquired Collateral, at the
time Shareholder acquires rights therein, will have) a first priority
perfected security interest in all other Collateral, other than Permitted
Liens; (j) all information heretofore, herein or hereafter supplied in writing
to Trustee, taken as a whole, by or on behalf of Shareholder with respect to
the Collateral does not contain and will not contain any untrue statements of
a material fact and does not omit and will not omit to state any material fact
necessary to make any information so supplied, in light of the circumstances
under which they were supplied, not misleading; and (k) Shareholder's
principal place of business is 1701 Old Minden Road, Bossier City, Louisiana
71111.
4. Covenants. Shareholder hereby agrees: (a) to perform all
acts that may be necessary to maintain, preserve, protect and perfect the
Collateral, the lien granted to Trustee hereunder and the first priority of
such lien, subject only to Permitted Liens; (b) to promptly deliver to Trustee
all originals of certificates and other documents, instruments and agreements
evidencing the Collateral which are now held or hereafter received by
Shareholder, together with such blank stock powers executed by Shareholder as
Trustee may request; (c) to procure, execute and deliver from time to time any
endorsements, assignments, financing statements and other documents,
instruments and agreements and take other actions deemed necessary, as Trustee
may request, to perfect, maintain and protect its lien hereunder and the
priority thereof; (d) to appear in and defend any action or proceeding which
may affect its title to or Trustee's interest in the Collateral; (e) to keep
the Collateral free of all liens except those created hereunder and those
approved in writing by Trustee pursuant to or as expressly permitted under the
Indenture; (f) not to vote to enable, or take any other action to permit,
Borrower to issue any Stock except as expressly permitted by the Indenture;
(g) to pay, and to save Trustee and the Noteholders harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and
all stamps, excise, sales or other similar taxes which may be payable or
determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Stock Pledge
Agreement; and (h) not to sell, dispose of or transfer (directly or
indirectly) or covenant to sell, dispose of or transfer (directly or
indirectly) the Collateral.
5. Dividends and Voting Rights Prior to Default. Until a
Default or an Event of Default (as such terms are defined in the Indenture)
shall have occurred and be continuing, (a) the irrevocable proxy granted by
Shareholder to Trustee under this Stock Pledge and Security Agreement shall be
suspended and shall not be effective and (b) Shareholder shall be permitted
(i) to receive all dividends paid on Shareholder's Stock (other than dividends
paid in additional Stock unless such additional Stock is pledged to Trustee,
for the benefit of the Noteholders, pursuant to this Stock Pledge Agreement)
which are expressly permitted by the Indenture and (ii) to exercise all voting
and corporate rights with respect to the Stock; provided, however, that no
vote shall be cast or corporate right exercised or other action taken which
would be reasonably likely to impair the Collateral or be inconsistent with or
result in any violation of any provision of the Indenture.
6. Default and Remedies.
(a) Event of Default. The occurrence (whether as a result of
acts or omissions by Borrower or any other Person) of a Default or an Event of
Default under the Indenture (subject to such cure rights as may be expressly
set forth in such Indenture), whatever the reason for such Default or Event of
Default, shall constitute a "Default" or an "Event of Default," as the
case may be, hereunder.
(b) Dividends and Voting Rights. Upon the occurrence and
during the continuance of any Default or Event of Default hereunder, Trustee
may (i) notify Borrower to pay all dividends on Shareholder's Stock to
Trustee, for the benefit of the Noteholders, receive and collect all such
dividends and make application thereof to the obligations in such order as
Trustee may determine, (ii) exercise all voting, corporate and other rights
pertaining to Shareholder's Stock at any meeting of shareholders of Borrower
or otherwise, and (iii) register all of Shareholder's Stock in the name of
Trustee or its nominee, for the benefit of the Noteholders, and Trustee or its
nominee may exercise any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to Shareholder's Stock
as if it were the absolute owner thereof (including, without limitation, after
Trustee has commenced to exercise remedies (or such remedies are deemed
commenced) under the Indenture, the right to exchange at its discretion any
and all of Shareholder's Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
Borrower, or upon the exercise by Shareholder or Trustee of any right,
privilege or option pertaining to Shareholder's Stock, and in connection
therewith, the right to deposit and deliver any and all of Shareholder's Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine), all without
liability except to account for property actually received by it, but Trustee
shall have no duty to Shareholder to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing. Without limiting the generality of the foregoing, Shareholder shall
deliver to Trustee on the date hereof, and at any time hereafter, if required
by Trustee, an irrevocable proxy in respect of the Collateral in the form of
Exhibit "B" attached hereto, which upon its execution shall be deemed to
have been accepted by Trustee. Promptly after the waiver or cure of the
Default or Event of Default giving rise to Trustee's election under this
Paragraph 6(b), Trustee shall notify Shareholder and Borrower of such waiver
or cure and for so long as no subsequent continuing Default or Event of
Default exists, Shareholder shall have all rights as a shareholder it had
prior to the occurrence of such Default or Event of Default, the Shareholder's
Stock shall again be registered in the name of Shareholder and Borrower shall
again make all payments and distributions with respect to Shareholder's Stock
to Shareholder.
(c) Additional Remedies. Subject to the terms of the
Indenture, upon the occurrence and during the continuance of a Default or an
Event of Default, Trustee may exercise, in addition to all other rights and
remedies granted in this Stock Pledge Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, any and all
rights and remedies at law, including, without limitation, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, Trustee may, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind to or upon
Shareholder, Borrower or any other Person (except notice of time and place of
sale and any other notice required by law and any notice referred to below or
in the Indenture) forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give
option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of Trustee
or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem commercially reasonable, for cash or on credit or
for future delivery without assumption of any credit risk. Trustee shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in
Shareholder, which right or equity is hereby waived and released. Trustee
shall apply any proceeds from time to time held by it and the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of Trustee
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to Trustee, to the payment in whole or in part of the
Obligations, in such order as Trustee may elect, and only after such
application and after the payment by Trustee of any other amount required by
any provision of law, need Trustee account for the surplus, if any, to
Shareholder or such other Person as may be entitled thereto. To the extent
permitted by applicable law, Shareholder waives all claims, damages and
demands it may acquire against Trustee arising out of the exercise by it of
any rights hereunder except as may arise solely from Trustee's gross
negligence or willful misconduct. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 5 business days before such
sale or other disposition. Shareholder further waives and agrees not to
assert any rights or privileges which it may acquire under paragraphs (a)
through (e) of Section 9-112 of the UCC.
(d) Foreclosure. The Trustee, instead of exercising the power
of sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the security interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction. For the purposes of Louisiana executory process procedures, the
Shareholder does hereby acknowledge the Obligations secured hereunder and does
hereby confess judgment in favor of the Trustee for the full amount of such
Obligations. Trustee does by these presents consent, agree and stipulate that
upon the occurrence of a Default or an Event of Default it shall be lawful for
the Trustee, and Shareholder does hereby authorize the Trustee, to cause all
and singular the Collateral to be seized and sold under executory or ordinary
process, at the Trustee's sole option, without appraisement, appraisement
being hereby expressly waived, in one lot as an entirety or in separate
portions or parcels as the Trustee may determine, to the highest bidder, and
otherwise exercise the rights, powers and remedies afforded herein and under
applicable Louisiana law. Any and all declarations of fact made by authentic
act before a Notary Public in the presence of two witnesses by a person
declaring that such facts lie within his knowledge shall constitute authentic
evidence of such facts for the purpose of executory process.
7. Authorized Actions. Shareholder acknowledges that the
Obligations hereunder may be supplemented, augmented and otherwise increased
as a result of changes in the underlying obligations of Borrower guaranteed
pursuant to the Guarantee. In that regard, Shareholder authorizes Trustee, in
its discretion, without notice to Shareholder, irrespective of any change in
the financial condition of Borrower or Shareholder since the date hereof, and
without affecting or impairing in any way the liability of Shareholder
hereunder, from time to time to (a) create new Obligations, and, either before
or after receipt of notice of revocation, renew, compromise, extend,
accelerate or otherwise change the time for payment or performance of, or
otherwise change the terms of the Obligations or any part thereof, including
increase or decrease of the rate of interest thereon; (b) take and hold
additional security for the payment or performance of the Obligations and
exchange, enforce, waive or release any such additional security; (c) apply
such additional security and direct the order or manner of sale thereof; (d)
purchase such additional security at public or private sale; (e) upon the
occurrence and during the continuance of a Default or an Event of Default,
make any payments and do any other acts Trustee shall deem necessary to
protect the Noteholders' security interest in the Collateral, including,
without limitation, pay, purchase, contest or compromise any encumbrance,
charge or lien which in the judgment of Trustee appears to be prior to or
superior to the security interest granted hereunder, and appear in and defend
any action or proceeding purporting to affect its security interest in and/or
the value of the Collateral, and in exercising any such powers or authority,
pay all expenses incurred in connection therewith, including reasonable
attorneys' fees, and Shareholder hereby agrees it shall be bound by any such
payment made or act taken by Trustee hereunder and shall reimburse Trustee for
all reasonable payments made and expenses incurred, which amounts shall be
secured under this Stock Pledge Agreement; provided, however, that Trustee
shall have no obligation to make any of the foregoing payments or perform any
of the foregoing acts; (f) otherwise exercise any right or remedy it may have
against Borrower, Shareholder or any security, including, without limitation,
the right to foreclose upon any such security by judicial or nonjudicial sale;
(g) settle, compromise with, release or substitute any one or more makers,
endorsers or guarantors of the Obligations or underlying obligations of
Borrower; and (h) assign the Obligations, the underlying obligations of
Borrower or this Stock Pledge Agreement in whole or in part (subject to the
terms and conditions of the Indenture).
8. Waivers. Shareholder waives (a) any right to require
Trustee or the Noteholders to (i) proceed against Borrower, (ii) proceed
against or exhaust any security received from Borrower or (iii) pursue any
other remedy in Trustee's power whatsoever; (b) any defense resulting from the
absence, impairment or loss of any right of reimbursement or subrogation or
other right or remedy of Shareholder against Borrower or any security, whether
resulting from an election by Trustee to foreclose upon security by
nonjudicial sale, or otherwise; (c) any setoff or counterclaim of Borrower or
any defense which results from any disability or other defense of Borrower or
the cessation or stay of enforcement from any cause whatsoever of the
liability of Borrower; (d) any right to exoneration of sureties which would
otherwise be applicable; (e) any right of subrogation or reimbursement and any
right of contribution, and right to enforce any remedy which Trustee now has
or may hereafter have against Borrower, and any benefit of, and any right to
participate in, any security now or hereafter received by Trustee until the
ninety-first (91st) day after the Obligations and the underlying obligations
of Borrower have been indefeasibly paid in cash in full; (f) all presentments,
demands for performance, notices of non-performance, protests, notice of
dishonor, and notices of acceptance of the Stock Pledge Agreement and of the
existence, creation or incurrence of new or additional Obligations; (g) the
benefit of any statute of limitations (to the extent permitted by law); and
(h) any right to be informed by Trustee of the financial condition of Borrower
or any change therein or any other circumstances bearing upon the risk of
nonpayment or nonperformance of the Obligations or the underlying obligations
of Borrower; (i) the benefit of appraisement as provided in Louisiana Code of
Civil Procedure Articles 2332, 2336, 2723 and 2724, and all other laws
conferring the same; (j) the demand and three days delay accorded by Louisiana
Code of Civil Procedure Articles 2639 and 2721; (k) the notice of seizure
required by Louisiana Code of Civil Procedure Articles 2293 and 2721; (l) the
three days delay provided by Louisiana Code of Civil Procedure Articles 2331
and 2722; and (m) the benefit of the other provisions of Louisiana Code of
Civil Procedure Articles 2331, 2722 and 2723 not specifically mentioned above.
Shareholder has the ability and assumes the responsibility for keeping
informed of the financial condition of Borrower and of other circumstances
affecting such nonpayment and nonperformance risks.
9. Limitation on Duties Regarding Collateral. Trustee's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC or otherwise,
shall be to deal with it in the same manner as Trustee deals with similar
securities and property for its own account and as would be dealt by a prudent
person in the reasonable administration of its affairs. Neither Trustee nor
any of its directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Shareholder or otherwise.
10. Termination. This Stock Pledge Agreement shall terminate
upon the satisfaction of all Obligations and underlying obligations of
Borrower, and Trustee shall promptly thereafter redeliver the Stock
certificates held by it hereunder to Shareholder and, at Shareholder's
expense, execute and deliver to Shareholder such documents as Shareholder
shall reasonably request to evidence such termination. Such redelivery shall
be without warranty by or recourse to Trustee, and shall be at the expense of
Shareholder; provided, however, that this Stock Pledge Agreement
(including all representations, warranties and covenants contained herein)
shall continue to be effective or be reinstated, as the case may be, if at any
time any amount received by Trustee in respect of the Obligations is rescinded
or must otherwise be restored or returned by Trustee upon or in connection
with the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Shareholder, Borrower or any other Person or upon or in connection with the
appointment of any intervenor or conservator of, or trustee or similar
official for, Shareholder, Borrower or any other Person or any substantial
part of its assets, or otherwise, all as though such payments had not been
made.
11. Power of Attorney. Shareholder hereby appoints and
constitutes Trustee as Shareholder's attorney-in-fact for purposes of (a)
collecting any Collateral, (b) conveying any item of Collateral to any
purchaser thereof, and (c) making any payments or taking any acts under
Paragraph 6 hereof. Trustee's authority hereunder shall include, without
limitation, upon the occurrence and during the continuance of a Default or an
Event of Default, the authority to endorse and negotiate, for Trustee's own
account, any checks or instruments in the name of Trustee, to execute or
receipt for any document, to transfer title to any item of Collateral, and to
take any other actions necessary or incident to the powers granted to Trustee
in this Stock Pledge Agreement. This power of attorney is coupled with an
interest and is irrevocable by Shareholder.
12. Gaming Laws and Regulations. The parties hereto
acknowledge that, to the extent required under applicable law, the
consummation of the transactions contemplated hereby and the exercise of
remedies hereunder may be subject to the Louisiana Riverboat Economic
Development and Gaming Control Act, La. R.S. 4:501, et seq., and the
Louisiana Gaming Control Law, La. R.S. 27:1-3, 11-26, 31 and 32, and the
regulations promulgated pursuant to each such law, all as amended from time to
time. The parties hereto further acknowledge that the Gaming License held by
Borrower is not part of the collateral of this Stock Pledge Agreement and
that, under the above discussed legislation and rules promulgated thereunder,
the Trustee may be precluded from or otherwise limited in taking possession of
or in selling the collateral of this Stock Pledge Agreement under the Defaults
and Remedies provisions of this Stock Pledge Agreement. The parties hereto
also acknowledge that due to various legal restrictions, including, without
limitation, licensing of operators of gaming facilities and prior approval of
the sale or disposition of assets of a licensed gaming operation, the sale of
collateral may be denied by Gaming Authorities or delayed pending Gaming
Authority approval.
13. Conflicts with Indenture. Notwithstanding any other
provision of this Stock Pledge Agreement, the terms and provisions of this
Stock Pledge Agreement shall be subject and subordinate to the terms of the
Indenture. To the extent that the Indenture provides Borrower or Shareholder
with a particular cure or notice period, or establishes any limitations or
conditions on Trustee's actions with regard to a particular set of facts,
Borrower and Shareholder shall be entitled to the same cure periods and notice
periods, and Trustee shall be subject to the same limitations and conditions
in place of the cure periods, notice periods, limitations and conditions
provided for under the Indenture; provided, however, such cure periods, notice
periods, limitations and conditions shall not be cumulative as between the
Indenture and this Stock Pledge Agreement. In the event of any conflict or
provisions of this Stock Pledge Agreement and those of the Indenture,
including without limitation, any conflicts or inconsistencies in any
definitions herein or therein, the provisions or definitions of the Indenture
shall govern.
14. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all
notices, requests, demands of other communications to or upon the parties
hereto shall be addressed to the parties at the respective addresses indicated
below or at such other address as either party hereto may designate by written
notice to the other party, and shall be deemed to have been given (i) in the
case of notice by letter, three (3) days after deposited in the mails
registered and return receipt requested, or (ii) in the case of notice given
by telecommunication, when sent:
Trustee: First Union Bank of Connecticut
10 State Street Square
Hartford, Connecticut 06103-3698
Attn: Corporate Trust Administration
Phone: (203) 247-1353
Fax: (860) 247-1353
With a copy to:
Brian Christaldi, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue, 12th Floor
New York, New York 10022
Phone: (212) 836-7447
Fax: (212) 836-7152
Shareholder: Jefferson Casino Corporation
1701 Old Minden Road
Bossier City, Louisiana 71111
Attn: Robert A. Callaway, Esq.
Phone: (318) 746-0711
Fax: (318) 746-0853
Borrower: Casino Magic of Louisiana, Corp.
1701 Old Minden Road
Bossier City, Louisiana 71111
Attn: Robert A. Callaway, Esq.
Phone: (318) 746-0711
Fax: (318) 746-0853
(b) Nonwaiver. No failure or delay on Trustee's part in
exercising any right hereunder shall operate as a waiver thereof or of any
other right nor shall any single or partial exercise of any such right
preclude any other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Stock Pledge Agreement may
not be amended or modified, nor may any of its terms be waived, except by
written instruments signed by the party or parties against which enforcement
thereof is sought. Each waiver or consent under any provision hereof shall be
effective only in the specific instances for the purpose for which given.
(d) Assignment. This Stock Pledge Agreement shall be binding
upon inure to the benefit of Trustee, the Noteholders and Shareholder and
their respective successors and assigns; provided, however, that Shareholder
may not assign its rights or delegate its duties hereunder without the prior
written consent of Trustee. Trustee may assign or otherwise transfer all or
any part of its interest under this Stock Pledge Agreement, upon notice to
Shareholder. Trustee may disclose this Stock Pledge Agreement and any
financial or other information relating to Shareholder to any potential
assignee or participant.
(e) Cumulative Rights, etc. The rights, powers and remedies
of Trustee under this Stock Pledge Agreement shall be in addition to all
rights, powers and remedies given to Trustee by virtue of the Indenture, any
applicable governmental rule or regulation or any other agreement, all of
which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Trustee's lien in the
Collateral. Shareholder waives any right to require Trustee to proceed
against any Person or to exhaust any Collateral or to pursue any remedy in
Trustee's power.
(f) Governing Law. This Stock Pledge Agreement shall be
governed by and construed in accordance with the laws of the State of New
York, except to the extent that the validity or perfection of the lien and
security interest hereunder, or remedies hereunder, in respect of any
particular Collateral are governed by the laws of the State of Louisiana.
IN WITNESS WHEREOF, Shareholder has caused this Stock Pledge and
Security Agreement to be executed in favor of Trustee as of the day and year
first above written.
SHAREHOLDER:
JEFFERSON CASINO CORPORATION,
a Louisiana corporation
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Vice President and
Secretary
ACKNOWLEDGED AND AGREED:
FIRST UNION BANK OF CONNECTICUT,
a Connecticut banking corporation,
as trustee for the benefit
of the holders of the Notes
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title: Vice President
<PAGE> S-1
ACKNOWLEDGMENT AND
CONSENT OF BORROWER
Casino Magic of Louisiana, Corp., a Louisiana corporation
("Borrower"), hereby acknowledges receipt of a copy of the above Stock
Pledge and Security Agreement, agrees to be bound by and comply with the terms
thereof, including, without limitation, Paragraph 6 thereof and agrees to
perform all covenants and obligations therein which, by their express or
implied terms are to be performed by Borrower.
CASINO MAGIC OF LOUISIANA, CORP.,
a Louisiana corporation
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Vice President and Secretary
<PAGE>
EXHIBIT "A"
DESCRIPTION OF SHAREHOLDER'S STOCK
Percentage of
Class Stock Outstanding
Issuer of Stock Certificate No. No. of Shares Shares
Casino Magic Common 4 100 100%
of Louisiana,
Corp.
<PAGE> A-1
EXHIBIT "B"
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS that, subject to the approval of the
Louisiana gaming authorities if required thereby, the undersigned does hereby
make, constitute and appoint FIRST UNION BANK OF CONNECTICUT, and each of its
officers, employees and attorneys (collectively, the "Trustee"), to be its
true and lawful attorney, for it and in its name, place and stead, to act as
its proxy in respect of one-hundred (100) shares of capital stock of CASINO
MAGIC OF LOUISIANA, CORP., a Louisiana corporation (the "Corporation"), and
any other shares of the Corporation that hereafter may from time to time be
pledged or transferred to Trustee, which it now or hereafter may own or hold
(whether held jointly with any other person or individually), including,
without limitation, the right, on behalf of the undersigned, to demand the
call by any proper officer of the Corporation pursuant to the provisions of
its Articles of Incorporation or By-Laws and as permitted by law of a meeting
(or written consent) of its shareholders and at any such meeting of
shareholders (whether annual, general or special), or in connection with any
such written consent, to vote for the transaction of any and all business that
may come before the meeting (or written consent), or at any adjournment
thereof, including, without limitation, the right to vote for the sale of all
or any part of the assets of the Corporation and/or the liquidation and
dissolution of the Corporation; giving and granting to Trustee the full power
and authority to do and perform each and every act and thing whether necessary
or desirable to be done in and about the premises, as fully as it might or
could do if personally present with full power of substitution, appointment
and revocation, hereby ratifying and confirming all that Trustee shall do or
cause to be done by virtue hereof.
This Proxy is given to Trustee in consideration of the purchase of
the Notes by the Holders thereof pursuant to that certain Indenture of even
date herewith by and among the undersigned, Trustee and the Corporation (as
amended, modified or supplemented from time to time, the "Indenture"), and
as a material inducement to Trustee to enter into the Indenture and in order
to carry out the covenant of the undersigned contained in that certain Stock
Pledge and Security Agreement of even date herewith (as it may from time to
time be amended, modified or supplemented, the "Stock Pledge Agreement") by
and among the undersigned and Trustee (executed and delivered in connection
with the Indenture), and this Proxy shall not be revocable or revoked by the
undersigned, and shall be binding upon its heirs, administrators, executors,
successors and assigns until the payment in full of all of the Obligations (as
such term is defined in the Stock Pledge Agreement) and may be exercised only
after (and therefore is suspended until) the occurrence of any Default or
Event of Default (as such term is defined in the Indenture). This Proxy is
coupled with an interest and shall survive longer than eleven (11) months.
The parties hereto acknowledge that, to the extent required under
applicable law, the consummation of the transactions contemplated hereby and
the exercise of remedies hereunder may be subject to the Louisiana Riverboat
Economic Development and Gaming Control Act, La. R.S. 4:501, et seq., and
the Louisiana Gaming Control Law, La. R.S. 27:1-3, 11-26, 31 and 32, and the
regulations promulgated pursuant to each such law, all as amended from time to
time. The parties hereto further acknowledge that the Gaming License held by
the Corporation is not part of the collateral of this Stock Pledge Agreement
and that, under the above discussed legislation and rules promulgated
thereunder, the Trustee may be precluded from or otherwise limited in taking
possession of or in selling the collateral of this Stock Pledge Agreement
under the Defaults and Remedies provisions of this Stock Pledge Agreement.
The parties hereto also acknowledge that due to various legal restrictions,
including, without limitation, licensing of operators of gaming facilities and
prior approval of the sale or disposition of assets of a licensed gaming
operation, the sale of collateral may be denied by Gaming Authorities or
delayed pending Gaming Authority approval.
Any capitalized term used in this Proxy without definition, but
defined in the Indenture, shall have the same meaning here as in the
Indenture.
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable
Proxy as of the 22nd day of August, 1996.
JEFFERSON CASINO CORPORATION,
a Louisiana Corporation
By:
Name:
Tile:
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "SECURITY AGREEMENT") is made and entered
into this 22nd day of August, 1996, between JEFFERSON CASINO CORPORATION, a
Louisiana corporation (the "DEBTOR"), and FIRST UNION BANK OF CONNECTICUT, a
Connecticut banking corporation, as trustee for the benefit of the holders of
the Notes (as defined below) (in such capacity, the "SECURED PARTY").
RECITALS
A. NOTES. Casino Magic of Louisiana, Inc., a Louisiana corporation
("BORROWER"), is the issuer of those certain $115,000,000 13 % First Mortgage
Notes due 2003 With Contingent Interest (the "Series A Notes, " and together
with any Series B Notes issued in exchange therefor, the "NOTES") pursuant to
that certain Indenture dated as of August 22, 1996 (the "INDENTURE"), by and
among Borrower, as issuer, Debtor, as guarantor, and Secured Party, as trustee
for the benefit of the holders of the Notes. Any capitalized term used in
this Security Agreement without definition, but defined in the Indenture,
shall have the same meaning here as in the Indenture. Debtor is entering into
this Security Agreement as security for, among other things, that certain
Guaranty (the "GUARANTY") set forth in the Indenture.
B. PURPOSE.As a material inducement to Secured Party to enter into
the Indenture, Debtor has agreed to execute this Security Agreement in favor
of Secured Party and to pledge all its right, title and interest in the
collateral described herein to Secured Party.
AGREEMENT
Now therefore, in consideration of the above recitals and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Creation of Security Interest. Debtor hereby assigns, pledges
and grants to Secured Party, for the equal and ratable benefit of the Holders
of the Notes, a security interest in all of Debtor's right, title and interest
in and to the collateral described in Section 2 herein below (the
"Collateral") in each case whether now in existence or hereafter arising, now
owned or hereafter acquired by Debtor and wherever located, in order to secure
the payment and performance of the obligations of Debtor to Secured Party
described in Section 3 herein below.
2. COLLATERAL. The Collateral under this Security Agreement is:
(a) all of Debtor's personal property, goods, furnishings, fixtures and
equipment, supplies, building and other materials of every nature whatsoever
and all other personal property, including, but not limited to, communication
systems, visual and electronic surveillance systems and transportation systems
and including all property and materials stored therein in which Debtor has an
interest and all tools, utensils, food and beverage, liquor, uniforms, linens,
housekeeping and maintenance supplies, vehicles, fuel, advertising and
promotional material, blueprints, surveys, plans and other documents relating
to the Project, all gaming and general equipment and devices which are or are
to be installed and used in connection with the operation of Casino
Magic-Bossier City (the "PROJECT"), and the Vessels (as hereinafter defined),
all computer equipment, calculators, adding machines, and gaming tables, video
game and slot machines and any other electronic equipment, all furniture,
fixtures, equipment, gaming equipment, appurtenances and personal property now
or in the future contained in, used in connection with, attached to, or
otherwise useful or convenient to the use, operation, or occupancy of, or
placed on, but unattached to, any part of the Project or the land upon which
the Project will be constructed, including all removable window and floor
coverings, all furniture and furnishings, heating, lighting, plumbing,
ventilating, air conditioning, refrigerating, incinerating and elevator and
escalator plants, cooking facilities, vacuum cleaning systems, public address
and communications systems, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, motors, machinery, pipes, appliances,
equipment, fittings, fixtures, and building materials, together with all
venetian blinds, shades, draperies, drapery and curtain rods, brackets, bulbs,
cleaning apparatus, mirrors, lamps, ornaments, cooling apparatus and
equipment, ranges and ovens, garbage disposals, dishwashers, mantels, and any
and all such property which is at any time installed in affixed to or placed
upon the land upon which the Project will be constructed, all fixtures for
generating or distributing air, water, heat, electricity, light, fuel or
refrigeration, or for ventilating or sanitary purposes, or for the exclusion
of vermin or insects, or for the removal of dust, refuse or garbage, all
specifically designed installations and furnishings, and all other personal
property, furniture, fixtures and equipment of every nature used or located at
the Project (all of the foregoing property and similar or after-acquired
property included as Collateral under Section 2(i) below being hereinafter
referred to as "EQUIPMENT");
(b) all of Debtor's accounts and accounts receivable, including, without
limitation, all rights to payment for goods sold or leased or for services
rendered which are not evidenced by an instrument or chattel paper, all other
present or future rights for money due or to become due, all of Debtor's
chattel paper, instruments, promissory notes (including, without limitation,
all inter-company notes), markers and general intangibles for money due or to
become due of any kind, in each case whether now existing or hereafter arising
and wherever arising and whether or not earned by performance and all
royalties, earnings, income, proceeds, products, rents, revenues, reversions,
remainders, issues, profits, avails, and other benefits directly or indirectly
derived or otherwise arising from any of the foregoing, (collectively, the
"RECEIVABLES"), other general intangibles, documents of title, warehouse
receipts, leases, deposit accounts, money, tax refund claims, partnership
interests, indemnification and other similar claims and contract rights,
permits and licenses, including, without limitation, any licenses held or to
be held by Debtor, franchises, variances, special permits, rulings,
validations, exemptions, filings, registrations, authorizations, consents,
approvals, waivers, orders, rights and agreements (including, without
limitation, options, option rights and contract rights) certificates, stock,
any and all books, records, customer lists, concession agreements, supply or
service contracts, documents, unearned premiums, rebates, deposits, refunds,
including, but not limited to, income tax rebates, prepaid expenses, rebates,
tax and insurance escrow and impound accounts, if any, and all rights in, to
and under all security agreements, mortgages, deeds of trust, guarantees,
leases and other agreements or contracts securing or otherwise relating to any
of the foregoing or now or hereafter obtained by Debtor from any Governmental
Authority having or claiming jurisdiction over the Project, and all things in
action, rights represented by judgments, awards of damages, settlements and
claims arising out of tort, warranty or contract (including, without
limitation, the right to assert and otherwise be the proper party of interest
to commence, control, prosecute and/or settle such actions, whether as claims,
counterclaims or otherwise, and whether involving matters arising from
casualty, condemnation, indemnification, negligence, strict liability, other
tort, contract, warranty or in any other manner), and all securities of any
Subsidiary, whether now in existence or hereafter incorporated or formed, (all
of the foregoing property, including, without limitation, the Receivables, and
similar or after-acquired property included as Collateral under Section 2(i)
below being hereinafter referred to as "INTANGIBLES");
(c) all of the trademarks and service marks now held or hereafter
acquired by Debtor or licensed to Debtor, which are registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any state thereof or any political subdivision thereof and
any application for such trademarks and service marks, as well as any
unregistered marks used by Debtor in the United States and trade dress
including logos, designs, trade names, business names, fictitious business
names and other business identifiers in connection with which any of these
registered or unregistered marks are used in the United States ("MARKS"),
together with the registration and right to renewals thereof, and the goodwill
of the business of Debtor symbolized by the Marks and all licenses associated
therewith;
(d) all United States copyrights which Debtor now or hereafter has
registered with the United States Copyright Office, as well as any application
for a United States copyright registration now or hereafter made with the
United States Copyright Office by Debtor ("COPYRIGHTS");
(e) all patents and patent applications, and any divisions or
continuations thereof, which are registered in the United States Patent and
Trademark Office or any similar office or agency of the United States or any
state thereof or political subdivision thereof ("PATENTS") together with the
registration and right to renewals, reissues and extensions thereof, and the
goodwill of the business of Debtor symbolized by the Patents;
(f) all computer programs of Debtor and all intellectual property
rights therein and all other proprietary information of Debtor, including, but
not limited to, trade secrets;
(g) all contract rights, warranty rights and other intangible rights
of the debtor of any kind pertaining to any and all riverboat gaming vessels
or other vessels now or hereafter owned by Debtor, including, without
limitation, any and all engines, boilers, machinery, components, gaming
equipment, masts, boats, capstans, outfit, tools, pumps, gear, furnishings,
appliances, fittings, spare and replacement parts and any and all other
appurtenances thereto or appertaining or belonging to any of the aforesaid
vessels, whether on board or not on board (collectively the "VESSELS"); and
(h) all of Debtor's right, title and interest in and to any and all maps,
plans, preliminary plans, specifications, surveys, studies, tests, reports,
data and drawings relating to the development of the Project including,
without limitation, all marketing plans, feasibility studies, soils tests,
design contracts and all contracts and agreements of Debtor relating thereto
including, without limitation, architectural, structural, mechanical and
engineering plans and specifications, studies, data and drawings prepared for
or relating to the development of the Project or the construction, renovation
or restoration of the Project as finalized, amended, supplemented, or
otherwise modified from time to time by 2nd Opinion, Inc., a Louisiana
corporation (the "INDEPENDENT CONSTRUCTION CONSULTANT"), in accordance with
the terms of the Cash Collateral and Disbursement Agreement, or the extraction
of minerals, sand, gravel or other valuable substances from the land upon
which the Project will be constructed and purchase contracts or any agreement
granting Debtor a right to acquire any land situated within the Parish of
Bossier, Louisiana, or the Parish of Caddo, Louisiana; and
(i) the Collateral includes all items described in this Section 2,
whether now owned or hereafter at any time acquired by Debtor and wherever
located, and includes all replacements, additions, parts, appurtenances,
accessions, substitutions, repairs, proceeds, products, offspring, rents and
profits, relating thereto or therefrom, and all documents, records, ledger
sheets and files of Debtor relating thereto ("PROCEEDS"). Proceeds hereunder
include (i) whatever is now or hereafter receivable or received by Debtor upon
the sale, exchange, collection or other disposition of any item of Collateral,
whether voluntary or involuntary, whether such proceeds constitute Equipment,
Intangibles, Vessels, Receivables or other assets; (ii) to the extent
permitted by law, whatever is now or hereafter receivable or received by
Debtor upon the sale, exchange, collection or other disposition of any Gaming
License; (iii) any such items which are now or hereafter acquired by Debtor
with any proceeds of Collateral hereunder; and (iv) any insurance or payments
under any indemnity, warranty or guaranty now or hereafter payable by reason
of loss or damage or otherwise with respect to any item of Collateral or any
proceeds thereof.
3. SECURED OBLIGATIONS OFDebtor. The Collateral secures and shall
hereafter secure (i) the payment by Debtor to the Holders or Secured Party of
all indebtedness now or hereafter owed to the Holders or Secured Party by
Debtor in connection with the transactions related to its Guaranty, the Notes
and the Indenture (the "BOSSIER CITY FINANCING"), whether at stated maturity,
by acceleration or otherwise, including, without limitation, Debtor's
obligations under the Indenture, the Notes, its Guaranty or any related
documents securing the obligations thereunder, together with any interest
thereon as provided therein, payments for early termination, fees, expenses,
increased costs, indemnification or otherwise, in connection therewith and
extensions, modifications and renewals thereof, (ii) the performance by Debtor
of all other obligations and the discharge of all other liabilities of Debtor
to the Holders or Secured Party of every kind and character arising from the
Bossier City Financing, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, joint, several, joint
and several (i.e., soldiery), whether or not arising after the commencement of
a proceeding under Bankruptcy Law (including post-petition interest) and
whether or not recovery of any such obligation or liability may be barred by a
statute of limitations or prescriptive period or such obligation or liability
may otherwise be unenforceable, and whether created under this Security
Agreement or any other agreement to which Debtor and Secured Party are
parties, (iii) any and all sums advanced by Secured Party in order to preserve
the Collateral or preserve Secured Party's security interest in the Collateral
(or the priority thereof), and (iv) the expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of Secured Party referred to above,
or of any exercise by Secured Party of its rights hereunder, together with
reasonable attorneys' fees and disbursements and court costs (collectively,
the "SECURED OBLIGATIONS"). All payments and performance by Debtor with
respect to any Secured Obligations shall be in accordance with the terms under
which said indebtedness, obligations and liabilities were or are hereafter
incurred or created.
4. DEBTOR'S REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants that:
(a) Debtor is (or, to the extent that the Collateral is acquired
after the date hereof, will be) the sole legal and beneficial owner of the
Collateral and has exclusive possession and control thereof; there are no
security interests in, Liens, charges or encumbrances on, or adverse claims of
title to, or any other interest whatsoever in, the Collateral or any portion
thereof except Liens that are created by this Security Agreement; and no
financing statement, notice of lien, mortgage, deed of trust or instrument
similar in effect covering the Collateral or any portion thereof ("LIEN
NOTICE") exists or is on file in any public office, and no Collateral or any
portion thereof is in the possession of any third party, except as relates to
Liens as may have been filed in favor of Secured Party relating to this
Security Agreement or related agreements, or for which duly executed
termination statements have been delivered to Secured Party for filing;
(b) Debtor has full right, power and authority to execute, deliver
and perform this Security Agreement. This Security Agreement constitutes a
legally valid and binding obligation of Debtor, enforceable against Debtor in
accordance with its terms. Subject to the completion of the items identified
in Section 4(c) below, the provisions of this Security Agreement are effective
to create in favor of Secured Party a valid and enforceable first, prior and
perfected security interest in the Collateral subject only to Permitted Liens;
(c) except for (i) the filing or recording of the financing
statements and fixture filings done concurrently with the execution and
delivery hereof, (ii) the actual taking of possession of instruments
constituting Collateral by the Trustee hereunder, if required by the Louisiana
Uniform Commercial Code, Commercial Laws - Secured Transactions, (iii) all
consents received and actions taken in connection with the closing of the
offering of the Notes, and (iv) any filings necessary to perfect Secured
Party's security interest in any Patent, Trademark or Copyright, no
authorization, approval or other action by, no notice to or registration or
filing with, any person or entity, including without limitation, any
stockholder or creditor of Debtor or any governmental authority or regulatory
body is required (x) for the grant by Debtor of the security interest in the
Collateral pursuant to this Security Agreement or for the execution, delivery
or performance of this Security Agreement by Debtor, (y) for the perfection or
maintenance of such security interest created hereby, including the first
priority nature of such security interest, or (except for notices required
under the Louisiana Uniform Commercial Code, Commercial Laws - Secured
Transactions) the exercise by Secured Party of the rights and remedies
provided for in this Security Agreement (other than any required governmental
consent or filing with respect to any Patents, Trademarks, Copyrights,
governmental claims, tax refunds, licenses or permits or the exercise of
remedies requiring prior court approval, notices, consents, approvals or
authorizations in connection with the sale of any securities under laws
affecting the offering and sale of securities generally), or (z) for the
enforceability of such security interest against third parties, including,
without limitation, judgment lien creditors;
(d) except as set forth on Exhibit "A" attached hereto, Debtor does
not do business, and for the previous five (5) years has not done business,
under any fictitious business names or trade names;
(e) the Collateral has not been and shall not be used or bought by
Debtor for personal, family or household purposes. In addition, the
Collateral does not include crops, timber, farm products, minerals or the like
or accounts resulting from the sale of such minerals at the wellhead or
minehead;
(f) Debtor's chief executive office is located at 1701 Old Minden
Road, Bossier City, Louisiana 71111, Debtor's federal tax identification
number is 721310739, and Debtor has no places of business other than such
address and the Collateral is now and shall at all times hereafter be located
at Debtor's places of business or as Debtor may otherwise notify Secured Party
in writing.,
(g) Debtor does not maintain any deposit accounts other than those
set forth in Exhibit "B" hereto and Debtor is not now indebted to any
organization with which Debtor maintains a deposit account;
(h) Debtor has not purchased any Collateral, other than for cash,
within twenty-one (21) days prior to the date hereof;
(i) all originals of all promissory notes, other instruments or
chattel paper which evidence Receivables (other than checks received by Debtor
in the ordinary course of business, which Debtor promptly shall deposit into
one of the deposit accounts encumbered hereunder) have been delivered to
Secured Party (with all necessary or appropriate endorsements);
(j) none of the execution, delivery and performance of this Security
Agreement by Debtor, the consummation of the transactions herein contemplated,
the fulfillment of the terms hereof or the exercise by Secured Party of any
rights or remedies hereunder shall constitute or result in a breach of any of
the terms or provisions of, or constitute a default under, or constitute an
event which with notice or lapse of time or both shall result in a breach of
or constitute a default under, any material agreement, or any indenture,
mortgage, deed of trust, equipment lease, instrument or other document to
which Debtor is a party, conflict with or require approval, authorization,
notice or consent under any material law, order, rule, regulation, license or
permit applicable to Debtor of any court or any federal or state government,
regulatory body or administrative agency, or any other governmental body
having jurisdiction over Debtor or its properties or require notice, consent,
approval or authorization by or registration or filing with any person or
entity (including, without limitation, any stockholder or creditor of Debtor)
other than (i) any notices to Debtor from Secured Party required hereunder,
(ii) notices and filings in connection with the perfection of Liens hereunder,
and (iii) notices, consents, approvals or authorizations in connection with
the sale of any securities under laws affecting the offering and sale of
securities generally. None of the Collateral is subject to any material
agreement, or any indenture, mortgage, deed of trust, equipment lease,
instrument or other document to which Debtor is a party which may restrict or
inhibit Secured Party's rights or ability to sell or dispose of the Collateral
or any part thereof after the occurrence of a Default or an Event of Default
(as defined herein);
(K) Debtor is the true lawful exclusive owner or licensee of the
Marks listed in Annex 1, except those listed as being held under a
non-exclusive license, and that said listed Marks include all the United
States federal registrations or applications registered in the United States
Patent and Trademark office and that said Marks are valid, subsisting and have
not been cancelled. Debtor represents and warrants that, except as indicated
on Annex 1, it owns or is licensed to use or not prohibited from using all
Marks that it uses. Debtor further warrants that, except as indicated on
Annex 1, it is aware of no third party claim that any aspect of Debtor's
present or contemplated business operations infringes or will infringe
Debtor's Marks. Debtor represents and warrants that it is the owner of record
of all United States registrations and applications listed in Annex 1 hereto
and that said registrations are valid, subsisting, have not been cancelled and
that such is not aware of any third party claim that any of said registrations
is invalid or unenforceable; and
(1) Debtor is the true and lawful exclusive owner of all rights in
the Patents listed in Annex 2 hereto and in the Copyrights listed in Annex 3
hereto, that said Patents include all the United States patents and
applications for United States patents that Debtor owns and that said
Copyrights constitute all the United States copyrights registered in the
United States Copyright Office and applications for United States copyrights
that it now uses or practices under. Debtor further warrants that it is aware
of no third party claim that any aspect of Debtor's present or contemplated
business operations infringes or will infringe any Patent or any Copyright.
5. COVENANTS OFDebtor. Debtor covenants and agrees that:
(a) Debtor shall not move or permit to be moved the Collateral or any
portion thereof to any location other than that set forth in Section 4(f)
hereof or the Project or locations established in compliance with Section 5(b)
hereof, in each case without the prior written consent of Secured Party, which
consent shall not be unreasonably withheld, and the prior filing of a
financing statement with the proper offices and in the proper form, to the
extent necessary or appropriate, to perfect or continue the perfection
(without loss of priority) of the security interests created herein, which
filing shall be satisfactory in form, substance and location to Secured Party
prior to such filing;
(b) Debtor shall not voluntarily or involuntarily change its name,
identity, corporate structure, or location of its chief executive office or
any of its other places of business, unless in any such case (i) Debtor shall
have first received the prior written consent of Secured Party, (ii) Debtor
shall have executed and caused to be filed financing statements with the
proper offices and in the proper form, to the extent necessary or appropriate,
to perfect or continue the perfection (without loss of priority) of the
security interests created herein, which filing shall be satisfactory in form,
substance and location to Secured Party prior to such filing, and (iii) Debtor
shall have delivered to Secured Party any other documents that may be required
by Secured Party in a form and substance reasonably satisfactory to Secured
Party to perfect or continue the perfection (without loss of priority) of the
security interest created herein;
(c) Debtor shall not establish or create any deposit accounts other
than those set forth in Exhibit "A" without the prior written consent of
Secured Party, and Debtor shall not hereafter incur any indebtedness to any
organization listed in said Exhibit "A";
(d) Debtor shall promptly, and in no event later than twenty-one (21)
days after a request by Secured Party, procure or execute and deliver all
further instruments and documents (including, without limitation, notices,
legal opinions, financing statements, mortgagee waivers, landlord disclaimers
and subordination agreements) satisfactory to Secured Party, and take any
other actions which are necessary or, in the judgment of Secured Party,
desirable or appropriate to perfect or to continue the perfection, priority
and enforceability of Secured Party's security interests in the Collateral, to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, to protect the Collateral against the rights,
claims or interests of third persons, or to effect or to assure further the
purposes and provisions of this Security Agreement, and shall pay all costs
incurred in connection therewith. Without limiting the generality of the
foregoing, Debtor shall: (i) mark conspicuously each item of chattel paper and
each other contract included in the Collateral with a legend, in form and
substance satisfactory to Secured Party, indicating that such chattel paper
and other contracts are subject to the security interests granted hereby; (ii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices as may be necessary or
desirable, which Secured Party may reasonably request in order to perfect and
preserve the perfection and priority of the security interests granted or
purported to be granted hereby; (iii) if any Receivable shall be evidenced by
a promissory note or other instrument or chattel paper (other than checks
received by Debtor in the ordinary course of business, which Debtor promptly
shall deposit into one of the deposit accounts encumbered hereunder), deliver
and pledge to Secured Party such note or instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form-n and substance reasonably satisfactory to Secured
Party; (iv) if any Collateral is at any time in the possession or control of
any warehouseman, bailee, consignee or any of Debtor's agents or processors,
Debtor shall notify such warehouseman, bailee, consignee, agent or processor
of the security interests created or purported to be created hereby, shall
cause such warehouseman, bailee, consignee, agent or processor to execute any
financing statements or other documents which Secured Party may request, and,
upon the request of Secured Party after the occurrence and during the
continuation of a Default or an Event of Default, shall instruct such person
to hold all such Collateral for Secured Party's account subject to Secured
Party's instructions; (v) deliver and pledge to Secured Party all securities
and instruments (other than checks, received by Debtor in the ordinary course
of business, which Debtor promptly shall deposit into one of the deposit
accounts encumbered hereunder) constituting Collateral duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to Secured Party; and (vi) at the request of
Secured Party, deliver to Secured Party any and all certificates of title,
applications for title or similar evidence of ownership of all Equipment and
shall cause Secured Party to be named as lienholder on any such certificate of
title or other evidence of ownership;
(e) Debtor shall not in any way encumber, or hypothecate, or create or
permit to exist, any Lien, security interest, charge or encumbrance or adverse
claim upon or other interest in the Collateral, including without limitation,
the liens created by this Security Agreement, and Debtor shall defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein, except as expressly provided herein. Debtor
shall not permit any Lien Notices to exist or be on file in any public office
with respect to all or any portion of the Collateral except, in each case, for
Lien Notices of holders of Permitted Liens, including without limitation,
encumbrances permitted by the Indenture or except as may have been filed by or
for the benefit of Secured Party relating to this Security Agreement or
related agreements. Debtor shall promptly notify Secured Party of any
attachment or other legal process levied against any of the Collateral and any
information received by Debtor relative to the Collateral, which may in any
material way affect the value of the Collateral or the rights and remedies of
Secured Party in respect thereto;
(f) Debtor shall not sell, transfer, assign (by operation of law or
otherwise), exchange or otherwise dispose of all or any portion of the
Collateral or any interest therein. If the proceeds of any such prohibited
sale are notes, instruments, documents of title, letters of credit or chattel
paper, such proceeds shall be promptly delivered to Secured Party to be held
as Collateral hereunder (with all necessary or appropriate endorsements). If
the Collateral, or any part thereof or interest therein, is sold, transferred,
assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest of Secured Party shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange or other disposition, and Debtor shall hold the proceeds thereof in a
separate account for Secured Party's benefit. Debtor shall, at Secured
Party's request, transfer such proceeds to Secured Party in kind, with such
endorsements, if any, that Secured Party requires;
(g) Secured Party is hereby authorized to file one or more financing
statements or fixture filings, and continuations thereof and amendments
thereto, relative to all or any part of the Collateral, without the signature
of Debtor where permitted by law;
(h) Debtor shall not enter into any indenture, mortgage, deed of
trust, contract, undertaking, document, instrument or other agreement, except
for the Indenture and any documents, instruments or agreements related thereto
or issue any securities which may restrict or inhibit Secured Party's rights
or ability to sell or otherwise dispose of the Collateral or any part thereof
after the occurrence of a Default or an Event of Default;
(i) Debtor shall not enter into, modify or amend any existing or
future contracts or agreements relating to the sale or disposition of the
Collateral or any part thereof outside the ordinary course of business without
the prior written consent of Secured Party pursuant to the Indenture. Upon
request of Secured Party, Debtor shall provide Secured Party with copies of
all existing and hereafter created contracts and agreements pertaining to any
such sale or disposition and of all amendments and modifications thereto;
(j) Debtor shall pay and discharge all taxes, assessments and
governmental charges or levies against the Collateral prior to delinquency
thereof and shall keep the Collateral free of all unpaid claims and charges
(including claims for labor, materials and supplies) whatsoever;
(k) Debtor shall keep and maintain the Collateral in good condition,
working order and repair, ordinary wear and tear excepted, and from time to
time shall make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable toward
such end. Debtor shall not misuse or abuse the Collateral, or waste or allow
it to deteriorate except for the ordinary wear and tear of its normal and
expected use in Debtor's business in accordance with Debtor's policies as then
in effect (provided that no changes are made to Debtor's policies as in
effect on the date hereof that would be materially adverse to the interests of
Secured Party), and shall comply with all material laws, statutes and
regulations pertaining to the use or ownership of the Collateral. Debtor
shall promptly notify Secured Party regarding any material loss or damage to
any material portion of the Collateral;
(1) Debtor shall take (i) all actions consistent with reasonable business
judgment, or (ii) upon the occurrence and during the continuation of a Default
or an Event of Default, all actions directed by Secured Party in Secured
Party's sole and absolute discretion, to create, preserve and enforce any
Liens or guaranties available to secure or guaranty payments due Debtor under
any contracts or other agreements with third parties, shall not voluntarily
permit any such payments to become more than thirty (30) days delinquent and
shall in a timely manner record and assign to Secured Party, to the extent and
at the earliest time permitted by law, any such Liens and rights under such
guaranties. Debtor shall give Secured Party written notice of any payments
due Debtor within five (5) days after any such payments become thirty (30)
days delinquent;
(m) upon Secured Party's request, Debtor shall promptly deliver to
Secured Party records and schedules that show the status, condition and
location of the Collateral, including accounts receivable aging reports and
other reports reasonably requested by Secured Party, all in reasonable detail;
shall promptly notify Secured Party in writing of any event, or change of law,
regulation, business practice, or business condition that may materially
adversely affect the value of the Collateral; and shall provide Secured Party
with current financial information concerning Debtor's business on a monthly,
quarterly and audited fiscal year end basis, with detail satisfactory to
Secured Party and which shall be prepared in accordance with generally
accepted accounting principles consistently applied. Secured Party shall have
the right to review and verify such records, schedules, financial information
and notices, and Debtor shall reimburse Secured Party for all costs incurred
thereby. Such review and verification shall include the right of Secured
Party to contact account debtors to confirm balances owing on and the terms of
Receivables, which right shall be subject to providing prior notice to Debtor
so long as no Default or Event of Default has occurred and is continuing;
(n) except as otherwise provided in this Section 5(n), Debtor shall
continue to collect, at its own expense, all amounts due or to be become due
Debtor under the Receivables or the Intangibles. In connection with such
collections, Debtor may take (and at Secured Party's reasonable direction,
shall take) such action as Debtor or Secured Party (or, upon the occurrence
and during the continuation of a Default or an Event of Default, Secured
Party) may deem necessary or advisable to enforce collection of the
Receivables or the Intangibles; provided, however, that Debtor shall not
adjust, settle or compromise the amount or payment of any Receivable or
Intangible, or release wholly or partly any account debtor or obligor thereof,
or allow any credit or discount thereon, other than adjustments, settlements,
or discounts that are in accordance with Debtor's policies as then in effect;
provided that no changes are made to Debtor's policies as in effect on the
date hereof that would be materially adverse to the interests of Secured
Party. Secured Party shall have the right at any time after the occurrence
and during the continuation of a Default or an Event of Default to notify the
account debtors or obligors under any of the Receivables or the Intangibles of
the assignment of such Receivables or Intangibles to Secured Party and to
direct such account debtors or obligors to make payment of all amounts due or
to become due to Debtor thereunder directly to Secured Party and, upon such
notification and at the expense of Debtor, to enforce collection of any such
Receivables or Intangibles, and to adjust, settle or compromise the amount or
payment thereof, as Secured Party may deem appropriate in its sole discretion.
After the occurrence and during the continuation of a Default or an Event of
Default (i) all amounts and proceeds (including instruments) received by
Debtor in respect of the Receivables or the Intangibles shall be received in
trust for the benefit of Secured Party hereunder and, upon notice from Secured
Party, shall be segregated from other funds of Debtor and shall be forthwith
paid over to Secured Party in the same form as so received (with all necessary
or appropriate endorsements as required by Secured Party) to be held as cash
collateral and applied as provided by the Indenture, and (ii) Debtor shall not
adjust, settle or compromise the amount or payment of any Receivable or
Intangible, or release wholly or partly any account debtor or obligor thereof,
or allow any credit or discount thereon;
(o) Secured Party shall have the right during regular business hours
and upon prior notice to Debtor to enter into and upon any premises where any
of the Collateral or records with respect thereto are located for the purpose
of inspecting the same, performing any audit, making copies of records,
observing the use of any part of the Collateral, or otherwise protecting its
security interest in the Collateral. Debtor shall hold and preserve all
records concerning the Receivables and (unless required to be delivered to
Secured Party) all originals of all chattel paper that evidences any
Receivables;
(p) Secured Party shall have the right at any time, but shall not be
obligated, to make any payments and do any other acts Secured Party may deem
necessary or desirable to protect its security interest in the Collateral,
including, without limitation, the right to pay, purchase, contest or
compromise any encumbrance, charge or Lien applicable or purported to be
applicable to any Collateral hereunder, and appear in and defend any action or
proceeding purporting to affect its security interest in and/or the value of
any Collateral, and in exercising any such powers or authority, the right to
pay all expenses incurred in connection therewith, including reasonable
attorneys' fees. Debtor hereby agrees that it shall be bound by any such
payment made or incurred or act taken by Secured Party hereunder and shall
reimburse Secured Party for all payments made and expenses incurred under this
Security Agreement, which amounts shall be secured under this Security
Agreement. Secured Party shall have no obligation to make any of the
foregoing payments or perform any of the foregoing acts;
(q) if Debtor shall become entitled to receive or shall receive any
certificate, instrument, option or right (other than checks received by Debtor
in the ordinary course of business, which Debtor promptly shall deposit into
one of the deposit accounts encumbered hereunder), whether as an addition to,
in substitution of, or in exchange for any or all of the Collateral or any
part thereof, or otherwise, Debtor shall accept any such instruments as
Secured Party's agent, shall hold them in trust for Secured Party, and shall
deliver them forthwith to Secured Party in the exact form-n received, with
Debtor's endorsement when necessary or appropriate, or accompanied by duly
executed instruments of transfer or assignment in blank or, if requested by
Secured Party, an additional pledge agreement or security agreement executed
and delivered by Debtor, all in form and substance satisfactory to Secured
Party, to be held by Secured Party, subject to the terms hereof, as additional
Collateral to secure the obligations hereunder;
(r) Secured Party is hereby authorized to pay all reasonable costs
and expenses incurred in the exercise or enforcement of its rights hereunder,
including reasonable attorneys' fees, and, while a Default or an Event of
Default exists, to apply any Collateral or proceeds thereof against such
amounts, and then to credit or use any further proceeds of the Collateral in
accordance herewith;
(s) Secured Party may take any actions permitted hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters; and
(t) Debtor hereby agrees to take all actions necessary to maintain
Secured Party's first prior security interest (subject to Permitted Liens) in
all Marks, Patents and Copyrights, to preserve the value of all Marks, Patents
and Copyrights, to prosecute and defend such Marks, Patents and Copyrights
against infringement, and to provide Secured Party with notice of any material
pertinent information regarding any such infringement, any material actions
with the United States Patent and Trademark Office and any other information
which could have a material adverse effect on the Marks, Patents and
Copyrights.
6. DEFAULTS AND REMEDIES
(a) The occurrence of any "Default" or "Event of Default" under the
Indenture (subject to the cure rights set forth therein) shall constitute a
Default or an Event of Default, as the case may be, under this Security
Agreement.
(b) Upon the occurrence and continuation of a Default or an Event of
Default hereunder, Debtor expressly covenants and agrees that Secured Party
may, at its option, subject to the terms of the Indenture, in addition to
other rights and remedies provided herein or otherwise available to it,
without notice to or demand upon Debtor (except as otherwise required herein),
exercise any one or more of the rights as set forth as follows:
i) declare all advances made by Secured Party to Debtor hereunder,
all other indebtedness owed by Debtor to Secured Party and all Secured
Obligations to be immediately due and payable, whereupon all unpaid principal
and interest on said advances and other indebtedness and Secured Obligations
shall become and be immediately due and payable;
ii) immediately take possession of any of the Collateral wherever it may
be found or require Debtor to assemble the Collateral or any part thereof and
make it available at one or more places as Secured Party may designate, and to
deliver possession of the Collateral or any part thereof to Secured Party, who
shall have full right to enter upon any or all of Debtor's places of business,
premises and property to exercise Secured Party's rights hereunder
iii) exercise any or all of the rights and remedies provided for by
the Louisiana Uniform Commercial Code, Commercial Laws - Secured Transactions,
specifically including, without limitation, the right to recover the
attorneys' fees and other expenses incurred by Secured Party in the
enforcement of this Security Agreement or in connection with Debtor's
redemption of the Collateral. Secured Party may exercise its rights under
this Security Agreement independently of any other collateral or guaranty that
Debtor may have granted or provided to Secured Party in order to secure
payment and performance of the Secured Obligations, and Secured Party shall be
under no obligation or duty to foreclose or levy upon any other collateral
given by Debtor to secure any Secured Obligation or to proceed against any
guarantor before enforcing its rights under this Security Agreement;
iv) use, manage, operate and control the Collateral and Debtor's
business and property to preserve the Collateral or its value, or to pay the
Secured Obligations, including, without limitation, the rights to take
possession of all of Debtor's premises and property, to exclude Debtor and any
third parties, whether or not claiming under Debtor, from such premises and
property, to make repairs, replacements, alterations, additions and
improvements to the Collateral and to dispose of all or any portion of the
Collateral in the ordinary course of Debtor's business;
v) except as herein provided or as may be required by mandatory provisions
of law, sell the Collateral or any part thereof at public or private sale, for
cash, upon credit or for future delivery, and at such price or prices as
Secured Party may deem satisfactory. Secured Party may be the purchaser of
any or all of the Collateral so sold at any public sale (or, if the Collateral
is of a type customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations, at any private
sale). Debtor shall execute and deliver such documents and take such other
action as Secured Party deems necessary or advisable in order that any such
sale may be made in compliance with law. Upon any such sale Secured Party
shall have the right to deliver, assign and transfer to the purchaser thereof
the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of Debtor which
may be waived, and Debtor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. Debtor agrees that ten (10)
days prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral constitutes "reasonable notification"
within the meaning of Section 9:504(3) (or any comparable section in any other
jurisdiction) of the Louisiana Uniform Commercial Code, Commercial Laws -
Secured Transactions, except that shorter or no notice shall be reasonable as
to any Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. The notice (if
any) of such sale shall (i) in case of a public sale, state the time and place
fixed for such sale, (ii) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places
as Secured Party may fix and the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels or
portions, as Secured Party may determine and with or without any attendant
foreclosure or sale of real property also serving as collateral for any of the
Secured Obligations. Secured Party shall not be obligated to make any such
sale pursuant to any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the same may
be so adjourned. In case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by
Secured Party until the selling price is paid by the purchaser thereof, but
Secured Party shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may again be sold upon like notice;
vi) proceed by an action or actions at law or in equity to recover
the indebtedness secured hereunder or to foreclose this Security Agreement and
sell the Collateral, or any portion thereof, pursuant to a judgment or decree
of a court or courts of competent jurisdiction in any manner permitted by law,
or provided for herein;
vii) in the event Secured Party recovers possession of all or any
part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, Secured Party may retain, sell or
otherwise dispose of such Collateral in accordance with this Security
Agreement or the Louisiana Uniform Commercial Code, Commercial Laws - Secured
Transactions, and following such retention, sale or other disposition, Secured
Party may voluntarily dismiss without prejudice the judicial action in which
such writ of possession or other judicial process was issued. Debtor hereby
consents to the voluntary dismissal without prejudice by Secured Party of such
judicial action, and Debtor further consents to the exoneration of any bond
which Secured Party files in such action;
viii) with respect to the sale of securities constituting Collateral,
to the extent Secured Party deems it advisable to do so, in its sole
discretion or as may be required by applicable law, restrict the prospective
bidders or purchasers to persons who in Secured Party's sole judgment are
sufficiently sophisticated and who shall represent and agree that they are
purchasing the securities constituting Collateral then being sold for their
own account and not with a view to the distribution or resale thereof, and
upon consummation of any such sale, Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
securities constituting Collateral so sold;
ix) Secured Party, in its sole discretion, if permitted by law, may
bid (which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for and purchase for its account the whole or any part of the
Collateral at any public sale or sale on any securities exchange or other
recognized market;
X) to the full extent provided by law, have a court having jurisdiction
appoint a receiver, which receiver shall take charge and possession of and
protect, preserve, replace and repair the Collateral or any part thereof, and
manage and operate the same, and receive and collect all rents, income,
receipts, royalties, revenues, issues and profits therefrom. Debtor shall
irrevocably consent and shall be deemed to have hereby irrevocably consented
to the appointment thereof, and upon such appointment, Debtor shall
immediately deliver possession of such Collateral to the receiver. Debtor
also irrevocably consents to the entry of an order authorizing such receiver
to invest upon interest any funds held or received by the receiver in
connection with such receivership. Secured Party shall be entitled to such
appointment as a matter of right, if it shall so elect, without the giving of
notice to any other party and without regard to the adequacy of the security
of the Collateral;
xi) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to stop or prevent Secured
Party from pursuing any other or further remedy which it may have hereunder or
by law, and any repossession or retaking or sale of the Collateral pursuant to
the terms hereof shall not operate to release Debtor until full and final
payment of any deficiency has been made in cash. Debtor shall reimburse
Secured Party upon demand for, or Secured Party may apply any proceeds of
Collateral to, the costs and expenses (including attorneys' fees, transfer
taxes and any other charges) incurred by Secured Party in connection with any
sale, disposition, repair, replacement, alteration, addition, improvement or
retention of any Collateral hereunder;
xii) upon the occurrence of a Default or an Event of Default
hereunder, any cash held by Secured Party as Collateral and all cash proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
Secured Party, be held by Secured Party as collateral for and/or then or at
any time thereafter applied (including application to the payment of any
costs, expenses, indemnification and other amounts payable to Secured Party
hereunder, which amounts may be paid in whole or in part prior to the other
Secured Obligations) in whole or in part by Secured Party against all or any
part of the Secured Obligations in such order as Secured Party shall elect.
Any surplus of such cash or cash proceeds held by Secured Party and remaining
after payment in full of all the Secured Obligations shall be paid over to
Debtor or to whomever may be lawfully entitled to receive such surplus or as a
court of competent jurisdiction may direct; provided, however, that in the
event that all of the conditions to termination of this Security Agreement
under Section 7(l) shall have not been fulfilled, such balance shall be held
as additional Collateral hereunder and applied from time to time to Secured
Party's costs and expenses and as otherwise provided hereunder until all such
conditions shall have been fulfilled; and
xiii) effect an absolute assignment of all of Debtor's right, title
and interest in and to each Mark (and the goodwill of the business of Debtor
associated therewith), Patent and Copyright.
(c) The provisions of this Subsection 6(c) shall, without limiting
the generality of any other provision of this Security Agreement, be
applicable in the event any foreclosure shall take place in Louisiana on any
Collateral or, in connection with any foreclosure hereunder, Louisiana law
shall otherwise be applicable. Secured Party, instead of exercising the power
of sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose this Security Agreement and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction. For the purposes of Louisiana executory process procedures,
Debtor does hereby acknowledge the Secured Obligations and confess judgment in
favor of Secured Party for the full amount of such Secured Obligations.
Debtor does by these presents consent and agree that upon the occurrence of a
Default or an Event of Default it shall be lawful for Secured Party to cause
all and singular the Collateral to be seized and sold under executory or
ordinary process, at Secured Party's sole option, without apraisement,
appraisement being hereby expressly waived, in one lot as an entirety or in
separate parcels or portions as Secured Party may determine, to the highest
bidder, and otherwise exercise the rights, powers and remedies afforded herein
and under applicable Louisiana law. Any and all declarations of fact made by
authentic act before a Notary Public in the presence of two (2) witnesses by a
person declaring that such facts lie within his knowledge shall constitute
authentic evidence of such facts for the purpose of executory process. Debtor
hereby waives in favor of Secured Party: (a) the benefit of appraisement as
provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and
2724, and all other laws conferring the same; (b) the demand and three (3)
days delay accorded by Louisiana Code of Civil Procedure Articles 2639 and
2721; (c) the notice of seizure required by Louisiana Code of Civil Procedure
Articles 2293 and 2721; (d) the three (3) days delay provided by Louisiana
Code of Civil Procedure Articles 2331 and 2722; and (e) benefit of the other
provisions of Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723
not specifically mentioned above. In the event the Collateral, or any part
thereof, is seized as an incident to an action for the recognition or
enforcement of this Security Agreement by executory process, ordinary process,
sequestration, writ of fieri facias, or otherwise, Debtor and Secured Party
agree that the court issuing any such order shall, if petitioned for by
Secured Party, direct the applicable sheriff or marshall to appoint as a
keeper of the Collateral, Secured Party or any agent designated by Secured
Party or any Person named by Secured Party at the time such seizure is
effected. This designation is pursuant to Louisiana Revised Statutes
9:5136-9:5140.2 and Secured Party shall be entitled to all the rights and
benefits afforded thereunder as the same may be amended. It is hereby agreed
that the keeper shall be entitled to receive as compensation, in excess of its
reasonable costs and expenses incurred in the administration or preservation
of the Collateral, an amount equal to $250.00 per day payable on a monthly
basis. The designation of keeper made herein shall not be deemed to require
Secured Party to provoke the appointment of such a keeper.
7. MISCELLANEOUS PROVISIONS
(a) Notices. All notices, requests, approvals, consents and other
communications required or permitted to be made hereunder shall, except as
otherwise provided, be in writing and may be delivered personally or sent by
telegram, telecopy, facsimile, telex, first class mail or overnight courier,
postage prepaid, to the parties addressed as follows:
To Debtor: Jefferson Casino Corporation 1701 Old Minden Road Bossier City,
Louisiana 71111
Attn: Robert A. Callaway, Esq.
Ph: (318) 746-0711
Fax: (318) 746-0853
To Secured Party: First Union Bank of Connecticut
10 State Street Square
Hartford, Connecticut 06103-3698
Ph: (203) 247-1353
Fax: (860) 247-1356
Attn: Corporate Trust Administration
With a copy to:
Brian Christaldi, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue, 12th Floor
New York, New York 10022
Ph: (212) 836-7447
Fax: (212) 836-7152
Such notices, requests and other communications sent as provided herein above
shall be effective when received by the addressee thereof, unless sent by
registered or certified mail, postage ,prepaid, in which case they shall be
effective exactly three (3) business days after being deposited in the United
States mail. The parties hereto may change their addresses by giving notice
thereof to the other parties hereto in conformity with this section.
(b) Headings. The various headings in this Security Agreement are
inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof.
(c) Amendments. This Security Agreement or any provision hereof
may be changed, waived, or terminated only by a statement in writing signed by
the party against which such change, waiver or termination is sought to be
enforced, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(d) No Waiver. No failure on the part of Secured Party to
exercise, and no delay in exercising, and no course of dealing with respect
to, any power, privilege or right under this Security Agreement or any related
agreement shall operate as a waiver thereof nor shall any single or partial
exercise by Secured Party of any power, privilege or right under this Security
Agreement or any related agreement preclude any other or further exercise
thereof or the exercise of any other power, privilege or right. The powers,
privileges and rights in this Security Agreement are cumulative and are not
exclusive of any other remedies provided by law. No waiver by Secured Party
of any default hereunder shall be effective unless in writing, nor shall any
waiver operate as a waiver of any other default or of the same default on a
future occasion.
(e) Binding Agreement. All rights of Secured Party hereunder shall
inure to the benefit of its successors and assigns. Debtor shall not assign
any of its interest under this Security Agreement without the prior written
consent of Secured Party. Any purported assignment inconsistent with this
provision shall, at the option of Secured Party, be
null and void.
(f) Entire Agreement. This Security Agreement, together with any
other agreement executed in connection herewith, is intended by the parties as
a final expression of their agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof. Acceptance of or
acquiescence in a course of performance rendered under this Security Agreement
shall not be relevant to determine the meaning of this Security Agreement even
though the accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
(g) Choice of Law. The existence, validity, construction,
operation and effect of any and all terms and provisions of this Security
Agreement shall be determined in accordance with and governed by the
substantive laws of the State of Louisiana, without giving effect to its
conflicts of law principles.
(h) Severabilily. If any provision or obligation of this Security
Agreement should be found to be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions and obligations or any other agreement executed in connection
herewith, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby and shall nonetheless remain in
full force and effect to the maximum extent permitted by law.
(i) Survival of Provisions. All representations, warranties and
covenants of Debtor contained herein shall survive the execution and delivery
of this Security Agreement, and shall terminate only upon the termination of
this Security Agreement pursuant to Subsection 7(l) hereof.
(j) Power of Attorney. Debtor hereby irrevocably appoints Secured
Party its attorney-in-fact, which appointment is coupled with an interest,
with full authority in the place and stead of Debtor and in the name of
Debtor, Secured Party or otherwise, from time to time in Secured Party's
discretion (a) to execute and file financing and continuation statements (and
amendments thereto and modifications thereof) on behalf and in the name of
Debtor with respect to the security interests granted or purported to be
granted hereby, (b) to take any action and to execute any instrument which
Secured Party may deem necessary or advisable to exercise its rights under
Section 5(r) hereunder, and (c) upon the occurrence and during the continuance
of a Default or an Event of Default, to take any action and to execute any
instrument which Secured Party may deem necessary or advisable to accomplish
the purposes of this Security Agreement, including, without limitation:
(i) to obtain and adjust insurance required to be paid to Secured
Party pursuant hereto;
(ii) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(iii) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (i) and (ii) above;
(iv) to sell, convey or otherwise transfer any item of Collateral to
any purchaser thereof; and
(v) to file any claims or take any action or institute any
proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral.
(k) Counterparts. This Security Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same
agreement.
(1) Termination of Agreement. Subject to Section 10.01 of the
Indenture, this Security Agreement and the security interest hereunder shall
not terminate until full and final payment and performance of all of the
Secured Obligations. At such time, Secured Party shall reassign and redeliver
to Debtor all of the Collateral hereunder which has not been sold, disposed
of, retained or applied by Secured Party in accordance with the terms hereof,
and execute and deliver to Debtor such documents as Debtor may reasonably
request to evidence such termination. Such reassignment and redelivery shall
be without warranty by or recourse to Secured Party, and shall be at the
expense of Debtor; provided, however, that this Security Agreement
(including all representations, warranties and covenants contained herein and
the priority of the security interests hereunder) shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Secured Party in respect of the indebtedness and obligations
secured hereunder is rescinded or must otherwise be restored or returned by
Secured Party upon or in connection with the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Debtor or any other person or
upon or in connection with the appointment of any intervenor or conservator
of, or trustee or similar official for, Debtor or any other person or any
substantial part of its assets, or otherwise, all as though such payments had
not been made and Debtor shall take all action required by Secured Party in
connection therewith.
(m) Successors and Assigns. This Security Agreement shall inure to
the benefit of Secured Party, its successors and assigns, including the
assignees of any Secured Obligation or of the benefit of any Secured
Obligation and shall bind the heirs, executors, administrators, successors and
assigns of Debtor. This Security Agreement is assignable by Secured Party
with respect to all or any portion of the Secured Obligations, and when so
assigned, Debtor shall be liable to the assignees under this Security
Agreement without in any manner affecting the liability of Debtor hereunder
with respect to any of the Secured Obligations retained by Secured Party.
Each reference herein to powers or rights of Secured Party shall also be
deemed a reference to the same power or right of such assignees, to the extent
of the interest assigned to them.
(n) Interaction with Financing Documents.
(i) Incorporation by Reference. All terms, covenants, conditions,
provisions and requirements of the Indenture are incorporated by reference in
this Security Agreement.
(ii) Conflicts with Indenture. Notwithstanding any other provision
of this Security Agreement, the terms and provisions of this Security
Agreement shall be subject and subordinate to the terms of the Indenture. To
the extent that the Indenture provides Debtor with a particular cure or notice
period, or establishes any limitations or conditions on Secured Party's
actions with regard to a particular set of facts, Debtor shall be entitled to
the same cure periods and notice periods, and Secured Party shall be subject
to the same limitations and conditions in place of the cure periods, notice
periods, limitations and conditions provided for under the Indenture;
provided, however, that such cure periods, notice periods, limitations and
conditions shall not be cumulative as between the Indenture and this Security
Agreement. In the event of any conflict or inconsistency between the
provisions of this Security Agreement and those of the Indenture, including
without limitation, any conflicts or inconsistencies in any definitions herein
or therein, the provisions or definitions of the Indenture shall govern.
(o) Gaming Laws and Regulations. Debtor and Secured Party
acknowledge that, to the extent required under applicable law, the
consummation of the transactions contemplated hereby and the exercise of
remedies hereunder may be subject to the Louisiana Riverboat Economic
Development and Gaming Control Act, La. R. S. 4:501, g s"e ., and the
Louisiana Gaming Control Law, La. R. S. 27:1-3, 11-26, 31 and 32, and the
regulations promulgated pursuant to each such law, all as amended from time to
time. Debtor and Secured Party further acknowledge that the Gaming License
held by Borrower is not part of the collateral of this Security Agreement and
that, under the above described legislation and rules promulgated thereunder,
the Secured Party may be precluded from or otherwise limited in taking
possession of or in selling the collateral of this Security Agreement under
the Defaults and Remedies provisions of this Security Agreement. Debtor and
Secured Party also acknowledge that due to various legal restrictions,
including, without limitation, licensing of operators of gaming facilities and
prior approval of the sale or disposition of assets of a licensed gaming
operation, the sale of collateral may be denied by Gaming Authorities or
delayed pending Gaming Authority approval.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered by their respective undersigned
duly authorized officers as of the date first above written.
DEBTOR:
JEFFERSON CASINO CORPORATION,
a Louisiana corporation
By:/s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President and General Council
SECURED PARTY:
FIRST UNION BANK OF CONNECTICUT, a Connecticut banking corporation, as trustee
for the benefit of the holders of the Notes
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title: Vice President
S-1
EXHIBIT "A"
OTHER BUSINESS OR TRADE NAMES USED BY DEBTOR
NONE
A-1
EXHIBIT "B"
DEPOSIT ACCOUNTS
NONE
B-1
ANNEX 1
A. SCHEDULE OF U.S. TRADEMARK REGISTRATIONS NONE.
NONE
B. SCHEDULE OF PENDING APPLICATIONS FOR U.S. TRADEMARK REGISTRATIONS ON
THE BASIS OF USE IN COMMERCE UNDER 17 USC 1051(a)
NONE
C. SCHEDULE OF PENDING APPLICATION FOR U.S. TRADEMARK REGISTRATIONS ON THE
BASIS OF INTENT TO USE THE MARK IN COMMERCE UNDER 17 USC 1051(b)
NONE.
AX-1
ANNEX 2
SCHEDULE OF PATENTS AND APPLICATIONS
NONE.
AX-2
ANNEX 3
SCHEDULE OF COPYRIGHTS AND APPLICATIONS
NONE
AX-3
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF THE
MARY'S PRIZE
(Official Number 1028011)
$115,000,000.00
CASINO MAGIC OF LOUISIANA, CORP.
711 CASINO MAGIC DRIVE
DAY ST. LOUIS, MISSISSIPPI 39520
OWNER AND MORTGAGOR
IN FAVOR OF
FIRST UNION BANK OF CONNECTICUT,
TRUSTEE, in its capacity as
Trustee under
that certain Indenture dated
as of August 22, 1996
10 STATE STREET SQUARE
HARTFORD, CONNECTICUT 06103-3698
MORTGAGEE
Dated as of AUGUST 22, 1996
Discharge Amount: $115,000,000.00 Together
With Interest and Performance
of Mortgage Covenants
<PAGE>
INDEX
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION 4
SECTION 1.01. Definition of Terms 4
SECTION 1.02. Rules of Construction 4
ARTICLE II GENERAL MORTGAGE PROVISIONS
5
SECTION 2.01. General 5
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE MORTGAGOR 5
SECTION 3.01. Corporate Status of Mortgagor
5
SECTION 3.02. Mortgagor's Authority 5
SECTION 3.03. Outstanding Liens 6
SECTION 3.04. Recordation of Mortgage; Compliance With
Law; Location of Vessel 6
SECTION 3.05. Operation of Vessel 7
SECTION 3.06. Payment of Taxes, etc. 7
SECTION 3.07. Notice of Mortgage 8
SECTION 3.08. Release from Arrest 8
SECTION 3.09. Maintenance of Vessel 8
SECTION 3.10. Access to Vessel 9
SECTION 3.11. Documentation of Vessel 9
SECTION 3.12. Sale, Charter or Mortgage of Vessel
9
SECTION 3.13. Insurance 9
SECTION 3.14. Requisition of Title to Vessel 12
SECTION 3.15. Requisition of Vessel but not Title
12
SECTION 3.16. Requisitions Generally 13
SECTION 3.17. Execution of Additional Documents 13
ARTICLE IV EVENTS OF DEFAULT AND REMEDIES 14
SECTION 4.01. Events of Default and Remedies 14
SECTION 4.02. Sale of Vessel by Mortgagee 15
SECTION 4.03. Mortgagee to Sign for Mortgagor 16
SECTION 4.04. Mortgagee to Collect Hire, etc. 16
SECTION 4.05. Mortgagee's Right to Possession 16
SECTION 4.06. Appearance by Mortgagee on Behalf of
Mortgagor 16
SECTION 4.07. Acceleration of Indebtedness Secured
Hereby 16
SECTION 4.08. Right of Mortgagee 17
SECTION 4.09. Cure of Defaults 17
SECTION 4.10. Restoration of Position 18
SECTION 4.11. Proceeds of Sale; Deficiency 18
SECTION 4.12. Repairs to Vessel and Sale of Equipment
18
SECTION 4.13. Advances by Mortgagee 19
ARTICLE V MISCELLANEOUS PROVISIONS 20
SECTION 5.01. Addresses 20
SECTION 5.02. Counterparts 20
SECTION 5.03. Interest of the Mortgagor 20
SECTION 5.04. Survivorship of Covenants 20
SECTION 5.05. Amendments 20
SECTION 5.06 Discharge of Lien 20
SECTION 5.07 Incorporation into Mortgage 20
SECTION 5.08 Gaming Laws and Regulations 20
SECTION 5.09 Governing Law 21
EXHIBIT A - Form of Indenture
EXHIBIT B - Form of Series A Notes and Series B Notes
<PAGE>
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE executed on August 22, 1996,
effective as of August 22, 1996, is granted by:
CASINO MAGIC OF LOUISIANA, CORP.
711 Casino Magic Drive
Bay St. Louis, Mississippi 39520
a corporation organized and existing under and by virtue of the laws of the
State of Louisiana (the "Mortgagor") in favor of:
FIRST UNION BANK OF CONNECTICUT
10 State Street Square
Hartford, Connecticut 06103-3698,
Trustee under the Indenture (as hereinafter defined), Trustee for the Persons
that now or in the future are holders (the "Holders") of the Notes (as
hereinafter defined) issued under the Indenture (in such capacity, the
"Mortgagee'').
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the vessel
identified and described in the Granting Clause of this First Preferred Ship
Mortgage (this "Mortgage").
B. Pursuant to an Indenture dated as of August 22, 1996 (as it may
from time to time be amended, modified, supplemented or restated, the
"Indenture"), among the Mortgagor, as issuer, the Mortgagee, as Trustee for
the benefit of the Holders, a copy of the Indenture, without exhibits, being
attached hereto as Exhibit "All and incorporated herein by reference, and
Jefferson Casino Corporation, a Louisiana corporation, as Guarantor, the
Mortgagor is issuing up to $115,000,000.00 aggregate principal amount of its
13'-. First Mortgage Notes due 2003 with Contingent Interest (the "Series A
Notes", and together with any "Series B Notes" issued in exchange therefor,
the "Notes"), subject to the terms and conditions set forth in the Indenture,
a copy of the form of such Notes (both Series A and Series B) being attached
hereto as Exhibit "B". The Mortgagor thus is or will be truly and justly
indebted unto the Mortgagee in the principal amount up to the full and true
sum of $115,000,000.00, together with interest, expenses, attorneys, fees, and
costs and performance of the covenants and agreements comprising a part of
this Mortgage and the other obligations (hereinafter defined).
C. In order to secure the due and punctual payment of the principal
of and interest on the Notes, together with the payment of all other sums and
the performance of all other obligations now or hereafter owing by the
Mortgagor to the Mortgagee as described in the Granting Clause below, the
Mortgagor has agreed to execute and deliver this Mortgage as follows:
62713
GRANTING CLAUSE
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional covenants
herein contained and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, and for the purpose of securing
as a first priority lien in favor of the Mortgagee (1) the due and punctual
payment of the indebtedness, liabilities and obligations of the Mortgagor
evidenced by the Notes (including without limitation principal, interest,
attorneys I fees and costs) , (2) the due and punctual payment and performance
of all other indebtedness, liabilities, amounts, obligations, covenants and
agreements owed or incurred by the Mortgagor under or in connection with the
Indenture, the Notes and all other Collateral Documents (as defined in the
Indenture) (including without limitation principal, interest, attorneys I fees
and costs), (3) the due and punctual performance of the covenants and
agreements of the Mortgagor contained herein and (4) the due and punctual
payment of all sums expended or advanced by the Mortgagee under or pursuant to
the terms hereof (including without limitation advances and interest thereon
and related attorneys' fees and costs as provided in Sections 4.07 and 4.13
hereof), whether any of the foregoing indebtedness, liabilities and
obligations now exist or are hereafter created or incurred (collectively, the
"Obligations"), THE MORTGAGOR HAS granted, conveyed, mortgaged, pledged,
hypothecated, set over and confirmed AND THE MORTGAGOR DOES BY THESE PRESENTS
grant, convey, mortgage, pledge, hypothecate, set over and confirm UNTO AND IN
FAVOR OF THE MORTGAGEE, for the ratable benefit of the Holders, and to
Mortgagee's successors and assigns in the capacity of Trustee, THE WHOLE OF
the following named and described vessel (hereinafter, together with items
described below, collectively referred to as the "Vessel") to wit:
OFFICIAL GROSS HAILING
NAME NUMBER TONNAGE PORT
MARY'S PRIZE 1028011 1583 Cape Girardeaux, MO
TOGETHER WITH all materials, equipment and accessories now or from time to
time installed thereon, and substitutions therefor, whether now existing or
hereafter acquired, including without limitation its boilers, engines,
machinery, masts, spars, boats, cables, motors, navigation and radar
equipment, tools, anchors, chains, booms, cranes, rigs, pumps, pipe, tanks,
tackle, apparel, furniture, fixtures, rigging, supplies, fittings and
machinery, tools, utensils, food and beverage, liquor, uniforms, linens,
housekeeping and maintenance supplies, fuel, all financial equipment, computer
equipment, calculators, adding machines and any other electronic equipment of
every nature used in connection with the operation of the Vessel, all
machinery, equipment, engines, appliances and fixtures for generating or
distributing air, water, heat, electricity, light, fuel or refrigeration, or
for ventilating or sanitary purposes, or for the exclusion of vermin or
insects, or for the removal of dust, refuse or garbage, all wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers,
partitions, doorstops, vaults, motors, elevators, dumb-waiters, awnings,
window shades, venetian blinds, light fixtures, fire hoses and brackets and
boxes for the same, fire sprinklers, alarms, surveillance and security
systems, computers, drapes, drapery rods and brackets, mirrors, mantels,
screens, linoleum, carpets and carpeting, plumbing, bathtubs, showers, sinks,
basins, pipes, faucets, water closets, laundry equipment, washers, dryers,
ice-boxes and heating units, all kitchen and restaurant equipment, including
but not limited to silverware, dishes, menus, cooking utensils, stoves,
refrigerators, ovens, ranges, dishwashers, disposals, water heaters,
incinerators, furniture, fixtures and furnishings, all cocktail lounge
supplies, including but not limited to bars, glassware, bottles and tables
used in connection with the Vessel, all chaise lounges, hot tubs, swimming
pool heaters and equipment, and all other recreational equipment (computerized
and otherwise) , beauty and barber equipment, and maintenance supplies used in
connection with the Vessel, all specifically designed installations and
furnishings, and all furniture, furnishings and personal property of every
nature whatsoever now or hereafter owned or leased by the mortgagor or in
which the Mortgagor has any rights or interest and located in or on, or
attached to, or used or intended to be used or which are now or may hereafter
be appropriated for use on or in connection with the operation of the Vessel,
or in connection with any construction being conducted or which may be
conducted thereon, and all extensions, additions, accessions, improvements,
betterments, renewals, substitutions, and replacements to any of the
foregoing, all of which (to the fullest extent permitted by law) shall be
conclusively deemed appurtenances to the Vessel, and all other appurtenances
to the Vessel appertaining or belonging, whether now owned or hereafter
acquired, whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel. The Mortgagor and the
Mortgagee acknowledge that significant structures, improvements, additions,
equipment and other appurtenances will be added to the Vessel after the
execution of this Mortgage, and the Mortgagor specifically affirms and agrees
that all such appurtenances to the Vessel shall be subject to this Mortgage.
TO HAVE AND HOLD the same unto the Mortgagee, its successors and assigns,
forever upon the terms herein set forth to secure the performance and
observance of and compliance with the covenants, terms and conditions in or of
the obligations secured hereby.
PROVIDED, only, and the condition of these presents is such, that if the
obligations shall be paid and performed in full, and the Indenture is
satisfied and discharged in accordance with the terms thereof, then these
presents and the rights hereunder shall cease, terminate and be void;
otherwise to be and remain in full force and effect.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND DECLARE that the
Vessel is to be held subject to the following covenants, conditions,
provisions, terms and uses:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
For all purposes of this Mortgage, unless the context otherwise requires:
SECTION 1.01 Definition of Terms.
(a) "Act" shall mean Chapter 313 of Title 46 of the United States Code.
(b) Capitalized terms used herein and not otherwise defined herein but
defined in the Indenture shall have the definitions provided therein.
SECTION 1.02. Rules of Construction. Unless the context otherwise
requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the plural include
the singular;
(d) All references herein to particular articles or sections, unless
otherwise provided, are references to articles or sections of this Mortgage.
(e) The headings herein are solely for convenience of reference and shall
not constitute a part of this Mortgage nor shall they affect its meaning,
construction or effect.
(f) References to the Notes, the Indenture and any other Collateral
Documents and other related instruments shall be deemed to refer to the Notes,
the Indenture, such other Collateral Documents and any other related
instruments as the same may from time to time be amended, modified,
supplemented, restated, extended or renewed.
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.01. General. For purposes of this Mortgage and in order to
comply with Title 46, Section 31321(b) (3) of the Act, the parties to this
Mortgage hereby declare that the principal obligations which are now or may in
the future become owed under the Obligations hereby secured is an amount up to
the sum of $115,000,000.00, together with interest, expenses, attorneys, fees
and costs and performance of the covenants and agreements comprising a part of
this Mortgage and the other Obligations. The discharge amount is the same as
the principal obligations, together with interest, expenses, attorneys' fees
and costs and performance of the covenants and agreements comprising a part of
this Mortgage and the other obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
The Mortgagor represents, warrants, covenants and agrees with the Mortgagee as
follows:
SECTION 3.01. Corporate Status of Mortgagor. The Mortgagor is a
corporation duly organized, validly existing and in good standing under and by
virtue of the laws of the State of Louisiana and is and will remain a citizen
of the United States of America within the meaning of Title 46, Section 802,
of the United States Code, entitled to own and document, and operate, the
vessel in the coastwise trade under the laws of the United States of America.
SECTION 3.02. Mortgogor's Authority. Mortgagor has full power and
authority to conduct the business it is or will be conducting in the State of
Louisiana; it is duly authorized to own and mortgage the Vessel; the execution
and delivery of this Mortgage and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite corporate
action, and no other corporate proceedings on the part of the Mortgagor are
necessary to authorize this Mortgage and the transactions contemplated hereby;
this Mortgage constitutes a valid and binding obligation of the Mortgagor, and
will be enforceable against the Mortgagor in accordance with its terms except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws effecting the rights of creditors generally; there is no legal
impediment to the execution and delivery of this Mortgage or the consummation
of the transactions contemplated hereby and no filing or registration with, or
authorization, consent, waiver or approval of any third person, public body or
authority is necessary for the consummation by the Mortgagor of the
transactions contemplated hereby (except as may be provided in the Indenture)
; there is no litigation, or other proceeding or governmental investigation,
not previously disclosed to the Mortgagee, pending or to the best knowledge of
the Mortgagor threatened against or relating to Mortgagor, its business, or
the transactions contemplated by this Mortgage, that would adversely affect
the Mortgagor's ability to accomplish the transaction contemplated by this
Mortgage; and no representation of the Mortgagor to the Mortgagee in this
Mortgage or any of the documents related hereto contains any untrue statement
of material fact, or omits to state a material fact necessary to make a
statement contained herein and therein not misleading.
SECTION 3.03. Outstanding Liens. The Mortgagor lawfully owns and is
lawfully possessed of the Vessel free and clear of all liens, mortgages, taxes
and encumbrances except for (i) liens accrued in the ordinary course of
business which are not yet past due (which as of the date of this Mortgage is
none), (ii) the mortgage effected hereby and (iii) such other liens,
mortgages, taxes and encumbrances, if any, as are permitted under the
Indenture or otherwise have been consented to in writing by the Mortgagee; and
the Mortgagor does hereby warrant and will defend the title and possession
thereto and to every part thereof for the benefit of Mortgagee against the
claims and demands of all Persons whomsoever.
SECTION 3.04. Recordation of Mortgage; compliance With Law; Location
ofVessel. (a) The Mortgagor will comply with and satisfy all applicable
formalities and provisions of the laws and regulations of the United States of
America (including causing the filing of this Mortgage with the National
Vessel Documentation Center ("NVDC") ) in order to perfect, establish and
maintain this Mortgage, and any supplement or amendment hereto, as a first
preferred mortgage upon the Vessel and upon all additions, improvements and
replacements made in or to the same. From time to time, the Mortgagor shall
furnish to the Mortgagee such proofs as the Mortgagee may reasonably request
with respect to the Mortgagor' s compliance with the foregoing covenant. The
Mortgagor shall promptly pay and discharge all NVDC fees and expenses in
connection with the recordation of this mortgage and any supplement or
amendment hereto. In the event that the Notes or the obligations secured
hereby, or any provisions hereof or thereof, shall be deemed invalidated in
whole or in part by reason of any present or future law or any decision of any
court, then the Mortgagor will execute such other and further assurances and
documents as in the reasonable opinion of the Mortgagee may be required to
more effectually subject the Vessel to the payment and the performance of the
terms and provisions of this Mortgage, the Notes and the obligations.
(b) The Mortgagor shall comply with and satisfy all applicable laws
and regulations of the United States of America and of the State of Louisiana,
including without limitation the Louisiana Riverboat Economic Development and
Gaming Control Act, La. R.S. 4:501, et seq., as amended from time to time,
the Louisiana Gaming Control Law, La. R.S. 27:1-3, 11-26, 31 and 32, as
amended from time to time, and the rules and regulations from time to time
promulgated thereunder. The Mortgagor also will obtain and maintain in force
all necessary permits, licenses and approvals necessary for the operation of
the Vessel at the site where the Vessel is located from time to time or in
connection with its transfer from one site to another.
(c) Upon completion of the improvements and alterations being made to
the Vessel at Service Marine, Inc. in Morgan City, Louisiana, the Mortgagor
shall promptly move the Vessel or cause the Vessel to be moved to the
Mortgagor's place of business in Bossier City, Louisiana, and thereafter the
Mortgagor shall not change the location of the Vessel without the Mortgagee I
s prior written consent, but in any event the Mortgagor shall not permit the
Vessel to leave the State of Louisiana.
SECTION 3.05. Operation of Vessel. The Mortgagor will not cause or
permit the Vessel to be operated in any manner contrary to law and the
Mortgagor will not engage in any unlawful trade or violate any law or expose
the Vessel to penalty or forfeiture, and will not do, or suffer or permit to
be done, anything which can or may injuriously affect the registration or flag
of the Vessel under the laws and regulations of the United States of America.
The Mortgagor will never operate the Vessel outside the navigation limits of
the insurance carried pursuant to Section 3.13 hereof and pursuant to the
Indenture. The Mortgagor shall cause the Vessel to maintain any certificates
or approvals required by the Mortgagee or by applicable law, including without
limitation gaming statutes and regulations promulgated by Louisiana
governmental authorities.
SECTION 3.06. Payment of Taxes, etc.. The Mortgagor will pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or upon the Vessel as well as all
claims of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a lien upon the Vessel; provided, however,
the Mortgagor shall not be required to pay any such tax, assessment, charge,
levy or claim if the amount, applicability or validity thereof shall currently
be contested in good faith by appropriate proceedings diligently conducted and
if the contesting party shall have set up reserves therefor adequate under
generally accepted accounting principles (provided that such reserves may be
set up under generally accepted accounting principles) ; provided, further,
that any such contest shall prevent the sale of the Vessel under special
execution or otherwise for the payment of any such tax, assessment, charge,
levy or claim, or other forfeiture or loss of title to the Vessel.
SECTION 3.07. Notice of Mortgage. The Mortgagor will place, and at all
times will retain, a properly certified copy of this Mortgage and a Notice of
this Mortgage with the Certificate of Documentation of the Vessel on board the
Vessel. The Notice of Mortgage shall read as follows:
NOTICE OF MORTGAGE
MARY'S PRIZE
(OFFICIAL NO. 1028011)
This Vessel, owned by Casino Magic of Louisiana, Corp., is subject to a First
Preferred Ship Mortgage in the principal amount of $115,000,000.00, dated as
of August 22, 1996, as the same may from time to time be amended, modified,
supplemented or restated, in favor of First Union Bank of Connecticut,
Mortgagee, as Trustee for the Holders under an Indenture dated as of August
22, 1996, among the Owner, Jefferson Casino Corporation, and the Mortgagee, as
it may from time to time be amended, modified, supplemented or restated. The
Owner hereby gives notice that it has not granted to itself, any charterer,
the Master of this Vessel or any other person, and none thereof has any right,
power or authority to create, incur or permit to exist upon this Vessel any
liens or encumbrances whatsoever other than as permitted under said Indenture.
Any such right, power or authority is also prohibited under the terms of said
mortgage.
SECTION 3.08. Release From Arrest. If a complaint is filed against the
Vessel, or if the Vessel otherwise is attached, arrested, levied upon or taken
into custody by virtue of any legal proceeding in any court, the Mortgagor
will immediately notify the Mortgagee thereof by telephone, confirmed by
letter, and within ten (10) days will cause the Vessel to be released by
posting security in the form of a Letter of Undertaking or a Release Bond, and
will promptly notify the Mortgagee thereof in the manner aforesaid.
SECTION 3.09. Maintenance of Vessel. The Mortgagor will at its own
expense at all times maintain, preserve and keep the vessel in good condition,
working order and repair and supplied with all necessary equipment, and will
from time to time make all needful and proper repairs, renewals, replacements,
betterments and improvements, including without limitation those replacements
required by Section 4.12 hereof. The Vessel shall, and the Mortgagor
covenants that it will, at all times comply with all applicable laws, treaties
and covenants and rules and regulations issued thereunder. The Mortgagor will
not make, or permit to be made, any change in the structure, type, name or rig
of the Vessel without first receiving written consent thereto from the
Mortgagee, which consent shall be at the sole discretion of the Mortgagee.
SECTION 3.10. Access to Vessel. Unless restricted by Gaming Laws (as
defined in the Indenture), the Mortgagor at all reasonable times will afford
the Mortgagee or its authorized representatives full and complete access to
the Vessel for the purpose of inspecting the same and inspecting and copying
its papers and records, upon reasonable notice of the Mortgagee's or such
representatives desire to do so. In conjunction therewith, and at the request
of the Mortgagee, Mortgagor will deliver for inspection copies of any and all
of the contracts and documents relating to the Vessel, whether on the Vessel
or not.
SECTION 3.11. Documentation of Vessel. The Mortgagor will keep the
Vessel duly documented as a vessel of the United States of America, under the
flag of the United States of America, entitled to engage in the coastwise
trade.
SECTION 3.12. Sale, Charter or Mortgage of Vessel. The Mortgagor will
not sell, transfer, exchange, demise charter, bareboat charter, time charter,
voyage charter, mortgage, lien, hypothecate, encumber or otherwise dispose of
the Vessel without the prior written consent of the Mortgagee, which consent
shall be at the sole discretion of Mortgagee; and any such written consent to
any of the foregoing actions shall not be construed to be a waiver of this
provision in respect of any subsequent proposed sale, transfer, exchange,
demise charter, bareboat charter, time charter, voyage charter, mortgage,
lien, hypothecation, encumbrance or other disposition. Any such sale,
transfer, exchange, demise charter, bareboat charter, time charter, voyage
charter, mortgage, lien, hypothecation, encumbrance or other disposition of
the Vessel shall be subject to the provisions of this Mortgage and the lien it
creates, unless released therefrom by the Mortgagee.
SECTION 3.13. Insurance. Reference is hereby made to section 4. 19 of
the Indenture, containing certain covenants and agreements of the Mortgagor
with respect to the procurement and maintenance of insurance as to Note
Collateral (as defined in the Indenture) and to other provisions of the
Indenture with respect to the uses of insurance proceeds permitted thereby.
Without limiting the generality of the foregoing:
(a) So long as any of the obligations remain outstanding, Mortgagor,
at its expense and at no expense to the Mortgagee, shall keep the Vessel
insured against (i) risks of fire, explosion and marine perils, and against
all other liabilities and risks insured under the form of policy known as
"American Institute Hull Clauses (June 2, 1977)," or equivalent, including,
but not limited to, strikes, riots, and civil commotion coverage, (ii) risks
covered by protection and indemnity insurance (including, without limitation,
coverage against third party claims for pollution liability including
statutory and governmental clean-up liabilities) , (iii) excess protection and
indemnity and (iv) such other risks and liabilities, including worker's
compensation, from time to time reasonably specified by the Mortgagee. The
Mortgagor will keep the Vessel insured, in lawful money of the United States
and in markets acceptable to the Mortgagee, for not less than (A) in the case
of the insurance referred to in clause (i) above, the full insurable value of
the Vessel, and (B) in the case of the insurance referred to in clause (ii)
above, in an amount customarily carried by vessels engaged in the same or
similar trade; provided, however, that any protection and indemnity
insurance shall be in an amount not less than the amount of insurance against
total loss. In case of the insurance referred to in clause (iii) above, the
worker's compensation policy shall be endorsed to cover Mortgagor's liability
under the state or federal compensation act to employees of third persons who
are deemed to be the borrowed employees of Mortgagor.
(b) The policy or policies of insurance shall be issued by
underwriters or associations having an A.M. Best & Company, Inc. rating of A
or higher, or if such underwriter or association is not rated by A.M. Best &
Company, Inc., having the financial stability and size deemed appropriate by a
reputable insurance broker, and shall contain terms customarily imposed on
vessels engaged in the same or similar type of trade. The Mortgagor shall
furnish to the Mortgagee, annually, not later than ninety (90) days after the
end of Mortgagor's fiscal year, a detailed certificate or opinion signed by a
firm of marine insurance brokers reasonably satisfactory to the Mortgagee that
the insurance coverages in place and the amounts thereof are prudent and
reasonably take into account existing industry practices, and the risks
associated with the trade of the Vessel and comply with Mortgagor's
obligations under this Section 3.13. Cover notes and/or certificates for all
insurance coverages provided for herein shall be furnished to the Mortgagee
upon execution of this Mortgage and delivered to Mortgagee whenever requested
but, in all events, no less than annually on or before January 15th of each
year and at the time such insurance coverages are renewed, extended or a new
insurance policy substituted therefor. All policies required hereunder shall
contain provisions that the same may not be cancelable or materially modified
until thirty (30) days following delivery to Mortgagee of written notice of
intent to cancel. Any language contained in the printed policy or insurance
certificate which relieves the insurance carrier from responsibility to the
Mortgagee in the event such carrier fails to provide such notice must be
deleted.
(c) All insurance and the policies evidencing the same shall by their
terms be taken out in the joint names of Mortgagor and Mortgagee, and shall by
their terms be payable to them as their respective interests may appear. The
interest of Mortgagee is hereby declared to be the outstanding amount of the
obligations, whether contingent or absolute, due or to become due, and in
event of a total loss of the Vessel, actual or constructive, or a compromised
constructive loss or requisition, Mortgagee shall be paid the entire amount of
insurance covering the Vessel for application in accordance with the
Indenture. The Mortgagor shall not declare or agree with the underwriters
that the Vessel is a constructive or compromised, agreed or arranged total
loss without the prior written consent of the Mortgagee. The proceeds of all
other insurance shall be paid to the Mortgagor and the Mortgagee jointly
(except in the case of worker's compensation or comparable insurance payments
payable, due to the nature thereof, to third parties), and provided that the
Mortgagor is not in default under this Mortgage, the Mortgagee shall, at its
option, either make available to the Mortgagor by an appropriate payment order
directed to the interested underwriter the proceeds of all insurance to pay
any outstanding bill for supplying or repairing the Vessel and/or outstanding
third-party claim, provided that the Mortgagor pays the amount of the
deductible; or reimburse the Mortgagor in whole or in part for any
expenditures the Mortgagor may have made for repairing the Vessel and/or
obtaining waivers of Liens or appropriate releases for the third-party claims.
Should the Mortgagor not effect repairs to the Vessel or pay third-party
claims, or in either event furnish and/or pay the deductible, or if the
Mortgagor is in default hereunder, then the Mortgagee shall be entitled to
receive the proceeds of any insurance applicable to such loss and upon payment
shall credit the net proceeds of any insurance as provided in the Indenture.
(d) All policies for insurance shall provide that (i) there shall be
no recourse against the Mortgagee for the payment of premiums or commissions
and (ii) if such policies provide for the payment of club calls, assessments
or advances, there shall be no recourse against the Mortgagee for the payment
thereof.
(e) The Mortgagor agrees to renew all insurance policies or cause or
procure the same to be renewed before the relevant policies or contracts
expire and to procure that the insurers or a firm of independent marine
insurance brokers shall promptly confirm in writing to the Mortgagee as and
when each such renewal is effected. The Mortgagor agrees to cause such
insurers or independent marine insurance brokers to agree (x) to advise the
Mortgagee promptly of any failure to renew or other event which could cause a
lapse in coverage and of any default in payment of any premium and of any
other act or omission on the part of the Mortgagor of which they have
knowledge and which might, in their opinion, invalidate or render
unenforceable, or cause the lapse of, or prevent the renewal or extension of,
in whole or in part, the insurance on the Vessel and (y) to mark their records
and advise the Mortgagee at least thirty days prior to the expiration date of
any of the insurance policies, that such insurance policies have been renewed
or replaced with new insurance which complies with the provisions hereof.
(f) The Mortgagor warrants that it will maintain all such insurance
unimpaired by any act, breach of warranty or otherwise, and that it will not
be guilty of or permit any act of omission or commission which will in any way
invalidate, void or suspend any insurance herein provided to be maintained.
The Mortgagor shall also procure and maintain breach of warranty or
Mortgagee's interest insurance in favor of the Mortgagee on each of the above
policies. The Mortgagor shall pay for any loss of or damage to the Vessel by
any cause whatsoever and any third-party claims whatsoever which would
constitute a Lien against the Vessel not covered by insurance or for which no
reimbursement or incomplete reimbursement is secured from the insurance.
SECTION 3.14. Requisition of Title to Vessel. In the event that the
title or ownership of the Vessel shall be requisitioned, purchased or taken by
the United States of America or any government of any state of the United
States or any other country or any department, agency or representative
thereof, pursuant to any present or future law, proclamation, decree, order or
otherwise (any such event being a "Title Requisitioning") , the lien of this
Mortgage shall be deemed to attach to the claim for compensation, and the
compensation, purchase price, reimbursement or award for such Title
Requisitioning shall be and is hereby declared payable to the Mortgagee, who
shall be entitled to receive the same and at its option, in its sole and
absolute discretion, apply it in accordance with the provisions of Section
4.11 hereof or apply the proceeds to the acquisition of a new vessel upon such
conditions as the Mortgagee shall determine. In the event of any such Title
Requisitioning, the Mortgagor shall promptly execute and deliver to the
Mortgagee such documents, if any, as in the opinion of counsel for the
Mortgagee may be necessary or useful to facilitate or expedite the collection
by the Mortgagee of such compensation, purchase price, reimbursement or award.
SECTION 3.15. Requisition of Vessel but not Title. In the event that
the United States of America or any government of any other country or any
department, agency or representative thereof shall not take the title or
ownership of the Vessel but shall requisition, charter, or in any manner take
over the use of the Vessel pursuant to any present or future law,
proclamation, decree, order or otherwise (any such event being a 'Vessel
Requisitioning") , then all charter hire and compensation resulting therefrom
shall be and is hereby declared payable to the Mortgagee, and if, as a result
of such Vessel Requisitioning such government, department, agency or
representative thereof shall pay or become liable to pay any sum by reason of
the loss of or injury to or depreciation of the Vessel, then any such sum is
hereby made, and shall be, payable to the Mortgagee, who shall be entitled to
receive the same and shall apply any such sums referred to in this Section in
accordance with the provisions of Section 4.11 hereof. Such application shall
not cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to such notice. In the event of any such Vessel
Requisitioning, the Mortgagor shall promptly execute and deliver to the
Mortgagee such documents, if any, and shall promptly do and perform such acts,
if any, as in the opinion of counsel for the Mortgagee may be necessary or
useful to facilitate or expedite the collection by the Mortgagee or such
claims arising out of the Vessel Requisitioning.
SECTION 3.16. Requisitions Generally. Should any Title Requisitioning
or Vessel Requisitioning occur or should the Mortgagor receive any notice or
other information regarding any such proceeding, the Mortgagor shall give
prompt written notice thereof to the Mortgagee. In connection therewith, the
Mortgagee shall be entitled at its option to commence and/or appear in and/or
prosecute in its own name, any action or proceedings. The Mortgagee shall
also be entitled to make such compromise or settlement in connection with such
Title Requisitioning or Vessel Requisitioning as it deems appropriate. All
compensation, awards, damages, rights of action and proceeds awarded to the
Mortgagor in connection with any Title Requisitioning or Vessel Requisitioning
(the "Proceeds") are hereby assigned to the Mortgagee as security for the
payment and performance of the Obligations, and the Mortgagor agrees to
execute such further assignments of the Proceeds as the Mortgagee may require.
SECTION 3.17. Execution of Additional Documents. The Mortgagor agrees
to execute all additional documents, instruments, Uniform Commercial Code
Financing Statements and other agreements that the Mortgagee deems necessary
and appropriate, within its sole discretion, in form and substance
satisfactory to the Mortgagee, to keep this Mortgage in effect, to better
reflect the true intent of this mortgage, and to consummate fully all of the
transactions contemplated by the Notes, the Indenture and the other Collateral
Documents.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01.
A. Events of Default. The term "Event of Default", wherever used in
this Mortgage, shall mean the occurrence of an Event of Default under and as
defined in the Indenture.
B. Remedies. Upon the occurrence of any Event of Default, then and in
each and every such case Mortgagee shall have the right to:
(1) Exercise all the rights and remedies in foreclosure and otherwise
given to the Mortgagee by the laws and regulations of the United States of
America or of the country wherein the Vessel shall then be found or of any
country wherein the Vessel may thereafter be found or of any other applicable
jurisdiction;
(2) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for any and all amounts due under the Notes, the
Indenture, this Mortgage and the other Collateral Documents, and collect the
same from the Mortgagor and/or out of any property of the Mortgagor covered by
this Mortgage or otherwise granted by the Mortgagor as security for the
payment and performance of the obligations;
(3) Take the Vessel without legal process wherever the same may be;
and the Mortgagor or other Person in possession, forthwith upon demand of the
Mortgagee shall surrender to the Mortgagee possession of the Vessel and the
Mortgagee may, without being responsible for loss or damage, hold, lay up,
lease, charter, operate or otherwise use the Vessel for such time and upon
such terms as it may deem to be for its best advantage, accounting only for
the net profits, if any, arising from such use of the Vessel and charging upon
all receipts from the use of the Vessel or from the sale thereof by court
proceedings or pursuant to subsection (B)(4) of Section 4.01 next following,
all costs, expenses, charges, damages or losses by reason of such use; and if
at any time the Mortgagee shall avail itself of the right herein given it to
take the Vessel, the Mortgagee shall have the right to dock the Vessel for a
reasonable time at any dock, pier, or other premises of the Mortgagor or
leased by the Mortgagor without charge, or to dock it at any other place at
the cost and expense of the
Mortgagor;
(4) Without being responsible for loss or damage, sell the Vessel at
any place and at such time as the Mortgagee may specify and in such manner as
the Mortgagee may deem advisable free from any claim by the mortgagor in
admiralty, in equity, at law or by statute, after first giving notice of the
time and place of sale with a general description of the property in the
following manner (or as may otherwise be provided by law):
(a) By publishing such notice on three (3) different days, the first
of which shall be published at least ten (10) days and the last at least three
(3) days immediately preceding the sale, in a daily newspaper of general
circulation published in Bossier City or Shreveport, Louisiana;
(b) If the place of sale should not be Bossier City, Louisiana, then
also by publication of a similar notice in a daily newspaper, if any,
published at the place of sale; and
(c) By mailing a similar notice to the Mortgagor on the day of first
publication.
The Mortgagee may adjourn any such sale from time to time by announcement
at the time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such sale at
the time and place to which the same shall be so adjourned. Any such sale may
be conducted without bringing the Vessel to be sold to the place designated
for such sale and in such manner as the Mortgagee may deem to be for its best
advantage.
(5) The Mortgagor hereby consents to the appointment of a consent
keeper or substitute custodian by the Mortgagee with the costs thereof to be a
cost of the sale to be paid from the proceeds of the sale or by the Mortgagor.
SECTION 4.02. Sale of vessel by Mortgagee. Any sale of the Vessel
made in pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right, title
and interest of any nature whatsoever of the Mortgagor therein and thereto,
and shall bar the Mortgagor, its successors and assigns, and all Persons
claiming by, through or under them. At any such sale, the Mortgagee may bid
for and purchase the Vessel and upon compliance with the terms of sale may
hold, retain and dispose of such property without further accountability
therefor. In case of any such sale, the Mortgagee shall be entitled, for the
purpose of making settlement or payment for the property purchased, to use and
apply the Notes or any portion thereof in order that there may be credited
against the amount remaining due and unpaid thereon the sums payable to the
Mortgagee out of the net proceeds of such sale after allowing for the costs
and expense of sale and other charges; and thereupon the Mortgagee shall be
credited, on account of such purchase price, with the net proceeds that shall
have been so credited upon the Notes. No purchaser shall be bound to inquire
whether notice has been given, or whether any default has occurred, or as to
the propriety of the sale or as to the application of the proceeds thereof.
SECTION 4.03. Mortgagee to Sign for Mortgagor. The Mortgagee is hereby
irrevocably appointed attorney-in-fact of the Mortgagor, upon the occurrence
of an Event of Default, to execute and deliver to any purchaser aforesaid and
is hereby vested with full power and authority to make, in the name and in
behalf of the Mortgagor, a good conveyance of the title to the Vessel so sold.
In the event of any sale of the Vessel, under any power herein contained, the
Mortgagor will, if and when required by the mortgagee, execute such form of
conveyance of such Vessel as the Mortgagee may direct or approve.
SECTION 4.04. Mortgagee to Collect Hire, etc.. The Mortgagee is hereby
irrevocably appointed attorney-in-fact of the Mortgagor, upon the occurrence
of an Event of Default, in the name and on behalf of the Mortgagor to demand,
collect, receive, compromise and sue for, so far as may be permitted by law,
all earnings, tolls, rents, issues, revenues, income and profits of the
Vessel.
SECTION 4.05. Mortgagee's Right to Possession. Whenever any right to
enter and take possession of the Vessel accrues to the Mortgagee, it may
require the Mortgagor to deliver, and the Mortgagor shall on demand, at its
own cost and expense, deliver the Vessel to the Mortgagee as demanded. If any
legal proceedings shall be taken to enforce any right under this Mortgage, the
Mortgagee shall be entitled as a matter of right to the appointment of a
receiver of the Vessel and the earnings, tolls, rents, issues, revenues,
income and profits due or to become due and arising from the operation
thereof.
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor. The
Mortgagor authorizes and empowers the Mortgagee or its appointees or any of
them to appear in the name of the Mortgagor, its successors and assigns, in
any court where a suit is pending against the Vessel because of or on account
of any alleged lien against the Vessel from which the Vessel has not been
released and to take such proceedings as to them or any of them may seem
proper towards the defense of such suit and the discharge of such lien, in the
event that the Mortgagor shall not be taking proceedings reasonably
satisfactory to the Mortgagee, and in such case all expenditures made or
incurred by the Mortgagee or its appointees for the purpose of such defense or
discharge shall be a debt due from the Mortgagor, its successors and assigns,
to the Mortgagee, and shall be secured by the lien of this Mortgage in like
manner and extent as if the amount and description thereof were written
herein.
SECTION 4.07. Acceleration of Indebtedness Secured Hereby. The
Mortgagor covenants that upon the happening of any one or more of the Events
of Default, then upon written demand of the Mortgagee, the Mortgagor will pay
to the Mortgagee the whole of the Notes and pay and perform its indebtedness,
liabilities, obligations, agreements and covenants to the Mortgagee under the
Indenture, this Mortgage, the other Collateral Documents and the other
obligations, and in case the Mortgagor shall fail to pay the same forthwith
upon such demand, the Mortgagee shall be entitled to recover judgment for the
whole amount so due and unpaid, together with such further amounts as shall
besufficient to cover the reasonable costs and expenses of collection,
including a reasonable compensation to the Mortgagee's agents, attorneys and
counsel and any necessary advances, expenses and liabilities made or incurred
by them hereunder. All moneys collected by the Mortgagee under this Section
shall be applied by the Mortgagee in accordance with the provisions of Section
4.11 hereof.
SECTION 4.08. Right of Mortgagee. Each and every power and remedy
herein given to the Mortgagee shall be cumulative and shall be in addition to
every other power and remedy herein given or now or hereafter existing at law,
in equity, in admiralty or by statute, and each and every power and remedy
whether herein given or otherwise existing may be exercised from time to time
and as often and in such order as may be deemed expedient by the Mortgagee,
and the exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other power or remedy. No delay or omission by the Mortgagee
in the exercise of any right or power or in the pursuance of any remedy
accruing upon any default as above defined shall impair any such right, power
or remedy or be construed to be a waiver of any such Event of Default or to be
any acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Notes after any Event of
Default or of any payment on account of any past default be construed to be a
waiver of any right to take advantage of any future Event of Default or of any
past Event of Default not completely cured thereby.
SECTION 4.09. Cure of Defaults. If at any time after an Event of
Default and prior to the actual sale of the Vessel by the Mortgagee or prior
to any foreclosure proceedings, the Mortgagor completely cures all Events of
Default and pays all expenses, advances and damages to the Mortgagee arising
under or otherwise in connection with such Events of Default (including
without limitation interest thereon at the increased rate set forth in Section
4.01 of the Indenture (the "Default Rate"), then the Mortgagee shall retain
the option to restore the Mortgagor to its former position, but such action,
if any, shall not affect any subsequent Event of Default or impair any rights
consequent thereon.
SECTION 4.10. Restoration of Position. In case the Mortgagee shall
have proceeded to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Mortgagee, then and in every such case the Mortgagor and the
Mortgagee shall be restored to their former positions and rights hereunder
with respect to the property subject or intended to be subject to this
Mortgage, and all rights, remedies and powers of the Mortgagee shall continue
as if no such proceedings had been taken.
SECTION 4.11. Proceeds of Sale; Deficiency. (a) The proceeds of any
sale of the vessel and the net earnings from the hire or from any operation or
use of the Vessel by the Mortgagee under any of the powers herein specified
and any and all other money received by the Mortgagee pursuant to or under
theterms of this Mortgage or in any proceedings hereunder, the application of
which has not elsewhere herein been specifically provided, shall be applied at
the discretion of the Mortgagee with the Mortgagee having the right to impute
payments as it may desire among the following:
(i) To the payment of all reasonable expenses and charges, including
the expenses of any sale, and expenses of any retaking, attorneys' fees, court
costs, keepers' or receiver's fees, necessary repairs and any other expenses
or advances (including without limitation Advances) made or incurred by the
Mortgagee in the protection of its rights or the pursuance of its remedies
hereunder, and to provide adequate indemnity against liens claiming priority
over or equality with the lien of this Mortgage;
(ii) To the payment in full of any amounts then due and unpaid under
the Notes and the other obligations (including without limitation principal
and interest thereon); and
(iii) To the payment of any surplus thereafter remaining to the Mortgagor
or to whomsoever may be entitled thereto under applicable law.
(b) To the extent the proceeds of the sale of the Vessel are not
sufficient to pay all the amounts under clauses (i) and (ii) of subsection (a)
above, any Person also liable for the obligations (including without
limitation the Mortgagor) shall be liable for such deficiency. Without
limiting the generality of the foregoing, the rights and remedies of the
Mortgagee under this Mortgage and the other agreements, documents and
instruments securing or guarantying any of the obligations shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
SECTION 4.12. Repairs to Vessel and Sale of Equipment. Until one or
more of the Events of Default hereinabove described shall happen, the
Mortgagor (a) shall be suffered and permitted to retain actual possession and
use of the Vessel; (b) may at any time alter, repair, change or re-equip the
Vessel, subject, however, to the provisions of Section 3.09 hereof and any
restrictions in the Indenture; and (c) from time to time in its discretion and
without obtaining a release thereof by the Mortgagee, may dispose of, free
from the lien hereof, equipment or other appurtenances of the Vessel that may
become worn out or obsolete or otherwise are no longer useful, necessary,
profitable or advantageous in the operation of the vessel, provided that
either prior to or promptly following such removal any such property shall be
replaced with serviceable equipment or other appurtenances of substantially
equal utility and of a value at least equal to that of the replaced property
when first acquired and free of any security interest of any other Person
(except liens permitted under the Indenture), which shall forthwith become
subject to the lien of this Mortgage as a preferred mortgage thereon.
SECTION 4.13 Advances by Mortgagee. The Mortgagor authorizes the
Mortgagee in the Mortgagee's discretion to advance any sums necessary for the
purpose of paying (i) insurance premiums, (ii) any and all excise, property,
sales, use and other taxes, forced contributions, service charges,
localassessments and governmental charges on the Vessel ' (iii) any liens
affecting the Vessel (whether superior or subordinate to the lien of this
mortgage) not permitted by this Mortgage or the Indenture, (iv) necessary
repairs and maintenance expenses of the vessel, or (v) any other amounts which
the Mortgagee deems necessary and appropriate to preserve the validity and
ranking of this Mortgage, to cure any Default (as defined in the Indenture) or
Event of Default, to protect or preserve the Vessel or to prevent the
occurrence of any Default or Event of Default (collectively, the "Advances")
of whatever kind; provided, however, that nothing herein contained shall
be construed as making such Advances obligatory upon the Mortgagee, or as
making the Mortgagee liable for any loss, damage, or injury resulting from the
nonpayment thereof. The Mortgagor covenants and agrees that upon demand
therefor by the Mortgagee, the Mortgagor will repay the Advances to the
Mortgagee, together with interest thereon at the Default Rate, and in addition
will repay any other reasonable costs, attorneys' fees and expenses, charges
and expenses of any and every kind incurred by the Mortgagee in connection
with the expenditures under items (i) through (v) above or otherwise for the
full protection and preservation of the Vessel or this Mortgage, including
payments required in respect to any lien affecting the Vessel, together with
interest thereon at the Default Rate. All such Advances and amounts
(including interest) shall be included in the Obligations secured hereby.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01. Addresses. Any notice to be given under this mortgage shall,
except as otherwise expressly provided herein, be made in accordance with
Section 12.02 of the Indenture.
SECTION 5.02. Counterparts. This Mortgage may be executed in any number of
counterparts and all such counterparts executed and delivered each as an
original shall constitute but one and the same instrument.
SECTION 5.03. Interest of the Mortgagor. THE INTEREST OF THE MORTGAGOR IN
THE VESSEL AND THE INTEREST MORTGAGED BY THIS MORTGAGE IS THAT OF ONE HUNDRED
PERCENT (100%) ABSOLUTE AND SOLE OWNERSHIP.
SECTION 5.04. Survivorship of Covenants. All the covenants, promises,
stipulations and agreements of the Mortgagor in the Obligations secured hereby
shall bind the Mortgagor and its successors and assigns and shall inure to the
benefit of the Mortgagee and its successors and assigns.
SECTION 5.05. Amendments. The Notes, the Indenture, this Mortgage, the
other Collateral Documents and the other obligations may not be modified,
supplemented or amended in any respect, or any waiver given in regard to any
of the provisions hereof, in any case which might affect the rights of the
Mortgagee hereunder, except with the written consent of the Mortgagee, and so
long as the Mortgagor shall do all acts and things necessary to maintain the
preferred status of this Mortgage.
SECTION 5.06. Discharge of Lien. When the Obligations have been
satisfied in full, the Mortgagee shall, at the Mortgagor's expense, execute
and deliver to the Mortgagor such documents as the Mortgagor shall reasonably
request to evidence the surrender and discharge of the lien hereof upon the
Vessel.
SECTION 5.07. Incorporation into Mortgage. The Whereas Clauses and the
Granting Clause of this Mortgage are incorporated in and are made a part of
this mortgage.
SECTION 5.08. Gaming Laws and Regulations. The Mortgagor and the
Mortgagee acknowledge that, to the extent required under applicable law, the
consummation of the transactions contemplated hereby and the exercise of
remedies hereunder may be subject to the Louisiana Riverboat Economic
Development and Gaming Control Act, La. R.S. 4:501, et seq., the Louisiana
Gaming Control Law, La. R.S. 23:1-3, 11-26, 31 and 32, and the regulations
promulgated pursuant to each such law, all as amended from time to time. The
Mortgagor and the Mortgagee further acknowledge that the Gaming License held
by the Mortgagor is not part of the collateral of this Mortgage and that,
under the above-described legislation and rules promulgated thereunder, the
Mortgagee may be precluded from or otherwise limited in taking possession of
or in selling the collateral of this Mortgage under the Remedies provisions of
this Mortgage. The Mortgagor and the Mortgagee also acknowledge that due to
various legal restrictions, including, but not limited to, licensing of
operators of gaming facilities and prior approval of sale or disposition of
assets of a licensed gaming operator, the sale of collateral may be denied by
Gaming Authorities or delayed pending Gaming Authority approval.
SECTION 5.09. Governing Law. This Mortgage shall be governed by and
construed according to the provisions of the Act, and where silent, by the
General Maritime Law of the United States, and only to the extent not
addressed thereby, by the laws of the State of Louisiana.
IN WITNESS WHEREOF, the Mortgagor has executed this mortgage in
multiple original counterparts on the day and year first above written.
WITNESSES: CASINO MAGIC OF LOUISIANA, CORP.
Name: Gwyn Timms By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Vice President and General Council
Name: Susan Shannon
ACKNOWLEDGMENT
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN, that on August 1996, personally appeared before me, Notary
Public, duly commissioned and qualified and the undersigned authority for the
said state and county/parish, and within my jurisdiction,
("Appearer") , who, being duly sworn, did depose, acknowledge and say:
That Appearer is of Casino Magic of Louisiana, Corp. , the corporation
described in and which executed the foregoing First Preferred Ship Mortgage;
that by order and authority of the Board of Directors of said corporation
Appearer signed his name thereto and acknowledged to me that he executed said
First Preferred Ship Mortgage as such officer of said corporation; and that
the same is the free and voluntary act and deed of said corporation, and of
himself as such officer thereof, for the uses and purposes therein expressed,
after first having been duly authorized by said corporation so to do.
IN WITNESS WHEREOF, Appearer has signed this Acknowledgment in the
presence of the two undersigned witnesses and me, Notary, on the day and in
the month and year first above written.
WITNESSES: Robert A. Callaway
Name:
Name:
Gwyn Timms
Name: Susan Shannon
Name:
Veronica Caban
NOTARY PUBLIC
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF THE
CRESCENT CITY QUEEN
(Official Number 1028319)
$115,000,000.00
CASINO MAGIC OF LOUISIANA, CORP.
711 CASINO MAGIC DRIVE
BAY ST. LOUIS, MISSISSIPPI 39520
OWNER AND MORTGAGOR
IN FAVOR OF
FIRST UNION BANK OF CONNECTICUT,
TRUSTEE, in its capacity as
Trustee under
that certain Indenture dated
as of August 22, 1996
10 STATE STREET SQUARE
HARTFORD, CONNECTICUT 06103-3698
MORTGAGEE
Dated as of August 22, 1996
Discharge Amount: $115,000,000.00 Together
With Interest and Performance
of Mortgage Covenants
<PAGE>
INDEX
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION . . . . . 4
SECTION 1.01 Definition of Terms. . . . . . . . . . . . 4
SECTION 1.02. Rules of Construction. . . . . . . . . . . 4
ARTICLE II GENERAL MORTGAGE PROVISIONS . . . . . . . . . . 5
SECTION 2.01. General. . . . . . . . . . . . . . . . . . 5
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE MORTGAGOR . . . . . . . . . . . . . . . . . 5
SECTION 3.01. Corporate Status of Mortgagor. . . . . . . 5
SECTION 3.02. Mortgagor's Authority. . . . . . . . . . . 5
SECTION 3.03. Outstanding Liens. . . . . . . . . . . . . 6
SECTION 3.04. Recordation of Mortgage; Compliance With
Law; Location of Vessel. . . . . . . . . . 6
SECTION 3.05. Operation of Vessel. . . . . . . . . . . . 7
SECTION 3.06. Payment of Taxes, etc. . . . . . . . . . . 7
SECTION 3.07. Notice of Mortgage . . . . . . . . . . . . 8
SECTION 3.08. Release From Arrest. . . . . . . . . . . . 8
SECTION 3.09. Maintenance of Vessel. . . . . . . . . . . 9
SECTION 3.10. Access to Vessel . . . . . . . . . . . . . 9
SECTION 3.11. Documentation of Vessel. . . . . . . . . . 9
SECTION 3.12. Sale, Charter or Mortgage of Vessel. . . . 9
SECTION 3.13. Insurance. . . . . . . . . . . . . . . . . 9
SECTION 3.14. Requisition of Title to Vessel . . . . . . 12
SECTION 3.15. Requisition of Vessel but not Title. . . . 12
SECTION 3.16. Requisitions Generally . . . . . . . . . . 13
SECTION 3.17. Execution of Additional Documents. . . . . 13
ARTICLE IV EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . 14
SECTION 4.01. Events of Default and Remedies . . . . . . 14
SECTION 4.02. Sale of Vessel by Mortgagee. . . . . . . . 15
SECTION 4.03. Mortgagee to Sign for Mortgagor. . . . . . 16
SECTION 4.04. Mortgagee to Collect Hire, etc.. . . . . . 16
SECTION 4.05. Mortgagee's Right to Possession. . . . . . 16
SECTION 4.06. Appearance by Mortgagee on Behalf of
Mortgagor. . . . . . . . . . . . . . . . . 16
SECTION 4.07. Acceleration of Indebtedness Secured
Hereby . . . . . . . . . . . . . . . . . . 16
SECTION 4.08. Right of Mortgagee . . . . . . . . . . . . 17
SECTION 4.09. Cure of Defaults . . . . . . . . . . . . . 17
SECTION 4.10. Restoration of Position. . . . . . . . . . 17
SECTION 4.11. Proceeds of Sale . . . . . . . . . . . . . 18
SECTION 4.12. Repairs to Vessel and Sale of Equipment. . 18
SECTION 4.13 Advances by Mortgagee. . . . . . . . . . . 19
ARTICLE V MISCELLANEOUS PROVISIONS. . . . . . . . . . . . 20
SECTION 5.01. Addresses. . . . . . . . . . . . . . . . . 20
SECTION 5.02. Counterparts . . . . . . . . . . . . . . . 20
SECTION 5.03. Interest of the Mortgagor. . . . . . . . . 20
SECTION 5.04. Survivorship of Covenants. . . . . . . . . 20
SECTION 5.05. Amendments . . . . . . . . . . . . . . . . 20
SECTION 5.06. Discharge of Lien. . . . . . . . . . . . . 20
SECTION 5.07. Incorporation into Mortgage. . . . . . . . 20
SECTION 5.08. Gaming Laws and Regulations. . . . . . . . 20
SECTION 5.09. Governing Law. . . . . . . . . . . . . . . 21
EXHIBIT A - Form of Indenture
EXHIBIT B - Form of Notes
<PAGE>
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE executed on August
____, 1996,
effective as of August ___, 1996, is granted by:
CASINO MAGIC OF LOUISIANA, CORP.
711 Casino Magic Drive
Bay St. Louis, Mississippi 39520
a corporation organized and existing under and by virtue of the laws of the
State
of Louisiana (the "Mortgagor") in favor of:
FIRST UNION BANK OF CONNECTICUT
10 State Street Square
Hartford, Connecticut 06103-3698,
Trustee under the Indenture (as hereinafter defined), Trustee for the Persons
that now or in the future are holders (the "Holders") of the Notes (as
hereinafter defined) issued under the Indenture (in such capacity, the
"Mortgagee").
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the vessel
identified and described in the Granting Clause of this First Preferred Ship
Mortgage (this "Mortgage").
B. Pursuant to an Indenture dated as of ______________, 1996 (as
it may from time to time be amended, modified, supplemented or restated, the
"Indenture"), among the Mortgagor, as issuer, the Mortgagee, as Trustee for
the
benefit of the Holders, a copy of the Indenture, without exhibits, being
attached
hereto as Exhibit "A" and incorporated herein by reference, and Jefferson
Casino
Corporation, a Louisiana corporation, as Guarantor, the Mortgagor is issuing
up
to $115,000,000.00 aggregate principal amount of its 13% First Mortgage Notes
due
2003 with Contingent Interest (the "Series A Notes", and together with any
"Series B Notes" issued in exchange therefor, the "Notes"), subject to the
terms
and conditions set forth in the Indenture, a copy of the form of such Notes
(both
Series A and Series B) being attached hereto as Exhibit "B". The Mortgagor
thus
is or will be truly and justly indebted unto the Mortgagee in the principal
amount up to the full and true sum of $115,000,000.00, together with interest,
expenses, attorneys' fees, and costs and performance of the covenants and
agreements comprising a part of this Mortgage and the other Obligations
(hereinafter defined).
C. In order to secure the due and punctual payment of the
principal of and interest on the Notes, together with the payment of all other
sums and the performance of all other obligations now or hereafter owing by
the
Mortgagor to the Mortgagee as described in the Granting Clause below, the
Mortgagor has agreed to execute and deliver this Mortgage as follows:
GRANTING CLAUSE
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and for the purpose of
securing as a first priority lien in favor of the Mortgagee (1) the due and
punctual payment of the indebtedness, liabilities and obligations of the
Mortgagor evidenced by the Notes (including without limitation principal,
interest, attorneys' fees and costs), (2) the due and punctual payment and
performance of all other indebtedness, liabilities, amounts, obligations,
covenants and agreements owed or incurred by the Mortgagor under or in
connection
with the Indenture, the Notes and all other Collateral Documents (as defined
in
the Indenture) (including without limitation principal, interest, attorneys'
fees
and costs), (3) the due and punctual performance of the covenants and
agreements
of the Mortgagor contained herein and (4) the due and punctual payment of all
sums expended or advanced by the Mortgagee under or pursuant to the terms
hereof
(including without limitation advances and interest thereon and related
attorneys' fees and costs as provided in Sections 4.07 and 4.13 hereof),
whether
any of the foregoing indebtedness, liabilities and obligations now exist or
are
hereafter created or incurred (collectively, the "Obligations"), THE MORTGAGOR
HAS granted, conveyed, mortgaged, pledged, hypothecated, set over and
confirmed
AND THE MORTGAGOR DOES BY THESE PRESENTS grant, convey, mortgage, pledge,
hypothecate, set over and confirm UNTO AND IN FAVOR OF THE MORTGAGEE, for the
ratable benefit of the Holders, and to Mortgagee's successors and assigns in
the
capacity of Trustee, the whole of the following named and described vessel
(hereinafter, together with items described below, collectively referred to as
the "Vessel") to wit:
OFFICIAL GROSS HAILING
NAME NUMBER TONNAGE PORT
CRESCENT CITY QUEEN 1028319 3615 New Orleans, LA
TOGETHER WITH all materials, equipment and accessories now or from time to
time
installed thereon, and substitutions therefor, whether now existing or
hereafter
acquired, including without limitation its boilers, engines, machinery, masts,
spars, boats, cables, motors, navigation and radar equipment, tools, anchors,
chains, booms, cranes, rigs, pumps, pipe, tanks, tackle, apparel, furniture,
fixtures, rigging, supplies, fittings and machinery, equipment and accessories
relating to gaming operations (including but not limited to gaming equipment
(hereinafter defined) and communication systems, visual and electronic
surveillance systems and transportation systems), tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies,
fuel,
all financial equipment, computer equipment, calculators, adding machines and
any
other electronic equipment of every nature used in connection with the
operation
of the Vessel, all machinery, equipment, engines, appliances and fixtures for
generating or distributing air, water, heat, electricity, light, fuel or
refrigeration, or for ventilating or sanitary purposes, or for the exclusion
of
vermin or insects, or for the removal of dust, refuse or garbage, all
wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers,
partitions,
doorstops, vaults, motors, elevators, dumb-waiters, awnings, window shades,
venetian blinds, light fixtures, fire hoses and brackets and boxes for the
same,
fire sprinklers, alarms, surveillance and security systems, computers, drapes,
drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets and
carpeting, plumbing, bathtubs, showers, sinks, basins, pipes, faucets, water
closets, laundry equipment, washers, dryers, ice-boxes and heating units, all
kitchen and restaurant equipment, including but not limited to silverware,
dishes, menus, cooking utensils, stoves, refrigerators, ovens, ranges,
dishwashers, disposals, water heaters, incinerators, furniture, fixtures and
furnishings, all cocktail lounge supplies, including but not limited to bars,
glassware, bottles and tables used in connection with the Vessel, all chaise
lounges, hot tubs, swimming pool heaters and equipment, and all other
recreational equipment (computerized and otherwise), beauty and barber
equipment,
and maintenance supplies used in connection with the Vessel, all specifically
designed installations and furnishings, and all furniture, furnishings and
personal property of every nature whatsoever now or hereafter owned or leased
by
the Mortgagor or in which the Mortgagor has any rights or interest and located
in or on, or attached to, or used or intended to be used or which are now or
may
hereafter be appropriated for use on or in connection with the operation of
the
Vessel, or in connection with any construction being conducted or which may be
conducted thereon, and all extensions, additions, accessions, improvements,
betterments, renewals, substitutions, and replacements to any of the
foregoing,
all of which (to the fullest extent permitted by law) shall be conclusively
deemed appurtenances to the Vessel, and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made
in
or to the Vessel. The Mortgagor and the Mortgagee acknowledge that
significant
structures, improvements, additions, equipment and other appurtenances will be
added to the Vessel after the execution of this Mortgage, and the Mortgagor
specifically affirms and agrees that all such appurtenances to the Vessel
shall
be subject to this Mortgage. For purposes hereof, "gaming equipment" shall
mean
any equipment or mechanical, electromechanical or electronic contrivance,
component or machine, including a slot machine, used directly or indirectly in
connection with gaming or any game, which affects the result of a wager by
determining wins or losses.
TO HAVE AND HOLD the same unto the Mortgagee, its successors and
assigns, forever upon the terms herein set forth to secure the performance and
observance of and compliance with the covenants, terms and conditions in or of
the Obligations secured hereby.
PROVIDED, only, and the condition of these presents is such, that if
the Obligations shall be paid and performed in full, and the Indenture is
satisfied and discharged in accordance with the terms thereof, then these
presents and the rights hereunder shall cease, terminate and be void;
otherwise
to be and remain in full force and effect.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND DECLARE that
the Vessel is to be held subject to the following covenants, conditions,
provisions, terms and uses:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
For all purposes of this Mortgage, unless the context otherwise
requires:
SECTION 1.01 Definition of Terms.
(a) "Act" shall mean Chapter 313 of Title 46 of the United States
Code.
(b) Capitalized terms used herein and not otherwise defined herein
but defined in the Indenture shall have the definitions provided therein.
SECTION 1.02. Rules of Construction. Unless the context
otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the plural
include the singular;
(d) All references herein to particular articles or sections,
unless otherwise provided, are references to articles or sections of this
Mortgage.
(e) The headings herein are solely for convenience of reference and
shall not constitute a part of this Mortgage nor shall they affect its
meaning,
construction or effect.
(f) References to the Notes, the Indenture and any other Collateral
Documents and other related instruments shall be deemed to refer to the Notes,
the Indenture, such other Collateral Documents and any other related
instruments
as the same may from time to time be amended, modified, supplemented,
restated,
extended or renewed.
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.01. General. For purposes of this Mortgage and in
order to comply with Title 46, Section 31321(b)(3) of the Act, the parties to
this Mortgage hereby declare that the principal obligations which are now or
may
in the future become owed under the Obligations hereby secured is an amount up
to the sum of $115,000,000.00, together with interest, expenses, attorneys'
fees
and costs and performance of the covenants and agreements comprising a part of
this Mortgage and the other Obligations. The discharge amount is the same as
the
principal obligations, together with interest, expenses, attorneys' fees and
costs and performance of the covenants and agreements comprising a part of
this
Mortgage and the other Obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
The Mortgagor represents, warrants, covenants and agrees with the
Mortgagee as follows:
SECTION 3.01. Corporate Status of Mortgagor. The Mortgagor is
a corporation duly organized, validly existing and in good standing under and
by
virtue of the laws of the State of Louisiana and is and will remain a citizen
of
the United States of America within the meaning of Title 46, Section 802, of
the
United States Code, entitled to own and document, and operate, the Vessel in
the
coastwise trade under the laws of the United States of America.
SECTION 3.02. Mortgagor's Authority. Mortgagor has full power and
authority to conduct the business it is or will be conducting in the State of
Louisiana; it is duly authorized to own and mortgage the Vessel; the execution
and delivery of this Mortgage and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite corporate
action,
and no other corporate proceedings on the part of the Mortgagor are necessary
to
authorize this Mortgage and the transactions contemplated hereby; this
Mortgage
constitutes a valid and binding obligation of the Mortgagor, and will be
enforceable against the Mortgagor in accordance with its terms except as
limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws
effecting the rights of creditors generally; there is no legal impediment to
the
execution and delivery of this Mortgage or the consummation of the
transactions
contemplated hereby and no filing or registration with, or authorization,
consent, waiver or approval of any third person, public body or authority is
necessary for the consummation by the Mortgagor of the transactions
contemplated
hereby (except as may be provided in the Indenture); there is no litigation,
or
other proceeding or governmental investigation, not previously disclosed to
the
Mortgagee, pending or to the best knowledge of the Mortgagor threatened
against
or relating to Mortgagor, its business, or the transactions contemplated by
this
Mortgage, that would adversely affect the Mortgagor's ability to accomplish
the
transaction contemplated by this Mortgage; and no representation of the
Mortgagor
to the Mortgagee in this Mortgage or any of the documents related hereto
contains
any untrue statement of material fact, or omits to state a material fact
necessary to make a statement contained herein and therein not misleading.
SECTION 3.03. Outstanding Liens. The Mortgagor lawfully owns and
is lawfully possessed of the Vessel free and clear of all liens, mortgages,
taxes
and encumbrances except for (i) liens accrued in the ordinary course of
business
which are not yet past due (which as of the date of this Mortgage is none),
(ii)
the mortgage effected hereby and (iii) such other liens, mortgages, taxes and
encumbrances, if any, as are permitted under the Indenture or otherwise have
been
consented to in writing by the Mortgagee; and the Mortgagor does hereby
warrant
and will defend the title and possession thereto and to every part thereof for
the benefit of Mortgagee against the claims and demands of all Persons
whomsoever.
SECTION 3.04. Recordation of Mortgage; Compliance With Law;
Location
of Vessel. (a) The Mortgagor will comply with and satisfy all applicable
formalities and provisions of the laws and regulations of the United States of
America (including causing the filing of this Mortgage with the National
Vessel
Documentation Center ("NVDC")) in order to perfect, establish and maintain
this
Mortgage, and any supplement or amendment hereto, as a first preferred
mortgage
upon the Vessel and upon all additions, improvements and replacements made in
or
to the same. From time to time, the Mortgagor shall furnish to the Mortgagee
such proofs as the Mortgagee may reasonably request with respect to the
Mortgagor's compliance with the foregoing covenant. The Mortgagor shall
promptly
pay and discharge all NVDC fees and expenses in connection with the
recordation
of this Mortgage and any supplement or amendment hereto. In the event that
the
Notes or the Obligations secured hereby, or any provisions hereof or thereof,
shall be deemed invalidated in whole or in part by reason of any present or
future law or any decision of any court, then the Mortgagor will execute such
other and further assurances and documents as in the reasonable opinion of the
Mortgagee may be required to more effectually subject the Vessel to the
payment
and the performance of the terms and provisions of this Mortgage, the Notes
and
the Obligations.
(b) The Mortgagor shall comply with and satisfy all applicable laws
and regulations of the United States of America and of the State of Louisiana,
including without limitation the Louisiana Riverboat Economic Development and
Gaming Control Act, La. R.S. 4:501, et seq., as amended from time to time, the
Louisiana Gaming Control Law, La. R.S. 27:1-3, 11-26, 31 and 32, as amended
from
time to time, and the rules and regulations from time to time promulgated
thereunder. The Mortgagor also will obtain and maintain in force all
necessary
permits, licenses and approvals necessary for the operation of the Vessel at
the
site where the Vessel is located from time to time or in connection with its
transfer from one site to another.
(c) The Vessel is currently located at Service Marine, Inc. in
Morgan City, Louisiana. The Mortgagor shall not change the location of the
Vessel without the Mortgagee's prior written consent.
SECTION 3.05. Operation of Vessel. The Mortgagor will not cause
or permit the Vessel to be operated in any manner contrary to law and the
Mortgagor will not engage in any unlawful trade or violate any law or expose
the
Vessel to penalty or forfeiture, and will not do, or suffer or permit to be
done,
anything which can or may injuriously affect the registration or flag of the
Vessel under the laws and regulations of the United States of America. The
Mortgagor will never operate the Vessel outside the navigation limits of the
insurance carried pursuant to Section 3.13 hereof and pursuant to the
Indenture.
The Mortgagor shall cause the Vessel to maintain any certificates or approvals
required by the Mortgagee or by applicable law, including without limitation
gaming statutes and regulations promulgated by Louisiana governmental
authorities.
SECTION 3.06. Payment of Taxes, etc.. The Mortgagor will pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or upon the Vessel as well as all
claims of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a lien upon the Vessel; provided, however, the
Mortgagor shall not be required to pay any such tax, assessment, charge, levy
or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted and if
the contesting party shall have set up reserves therefor adequate under
generally
accepted accounting principles (provided that such reserves may be set up
under
generally accepted accounting principles); provided, further, that any such
contest shall prevent the sale of the Vessel under special execution or
otherwise
for the payment of any such tax, assessment, charge, levy or claim, or other
forfeiture or loss of title to the Vessel.
SECTION 3.07. Notice of Mortgage. The Mortgagor will place, and
at all times will retain, a properly certified copy of this Mortgage and a
Notice
of this Mortgage with the Certificate of Documentation of the Vessel on board
the
Vessel. The Notice of Mortgage shall read as follows:
NOTICE OF MORTGAGE
CRESCENT CITY QUEEN
(OFFICIAL NO. 1028319)
This Vessel, owned by Casino Magic of Louisiana, Corp.,
is subject to a First Preferred Ship Mortgage in the
principal amount of $115,000,000.00, dated as of August
22, 1996, as the same may from time to time be
amended, modified, supplemented or restated, in favor of
First Union Bank of Connecticut, Mortgagee, as Trustee
for the Holders under an Indenture dated as of August
22, 1996, among the Owner, Jefferson Casino
Corporation, and the Mortgagee, as it may from time to
time be amended, modified, supplemented or restated.
The Owner hereby gives notice that it has not granted to
itself, any charterer, the Master of this Vessel or any
other person, and none thereof has any right, power or
authority to create, incur or permit to exist upon this
Vessel any liens or encumbrances whatsoever other than
as permitted under said Indenture. Any such right,
power or authority is also prohibited under the terms of
said Mortgage.
SECTION 3.08. Release From Arrest. If a complaint is filed
against the Vessel, or if the Vessel otherwise is attached, arrested, levied
upon
or taken into custody by virtue of any legal proceeding in any court, the
Mortgagor will immediately notify the Mortgagee thereof by telephone,
confirmed
by letter, and within ten (10) days will cause the Vessel to be released by
posting security in the form of a Letter of Undertaking or a Release Bond, and
will promptly notify the Mortgagee thereof in the manner aforesaid.
SECTION 3.09. Maintenance of Vessel. The Mortgagor will at its
own expense at all times maintain, preserve and keep the Vessel in good
condition, working order and repair and supplied with all necessary equipment,
and will from time to time make all needful and proper repairs, renewals,
replacements, betterments and improvements, including without limitation those
replacements required by Section 4.12 hereof. The Vessel shall, and the
Mortgagor covenants that it will, at all times comply with all applicable
laws,
treaties and covenants and rules and regulations issued thereunder. The
Mortgagor will not make, or permit to be made, any change in the structure,
type,
name or rig of the Vessel without first receiving written consent thereto from
the Mortgagee, which consent shall be at the sole discretion of the Mortgagee.
SECTION 3.10. Access to Vessel. Unless restricted by Gaming Laws
(as defined in the Indenture), the Mortgagor at all reasonable times will
afford
the Mortgagee or its authorized representatives full and complete access to
the
Vessel for the purpose of inspecting the same and inspecting and copying its
papers and records, upon reasonable notice of the Mortgagee's or such
representative's desire to do so. In conjunction therewith, and at the
request
of the Mortgagee, Mortgagor will deliver for inspection copies of any and all
of
the contracts and documents relating to the Vessel, whether on the Vessel or
not.
SECTION 3.11. Documentation of Vessel. The Mortgagor will keep
the Vessel duly documented as a vessel of the United States of America, under
the
flag of the United States of America, entitled to engage in the coastwise
trade.
SECTION 3.12. Sale, Charter or Mortgage of Vessel. The Mortgagor
will not sell, transfer, exchange, demise charter, bareboat charter, time
charter, voyage charter, mortgage, lien, hypothecate, encumber or otherwise
dispose of the Vessel without the prior written consent of the Mortgagee,
which
consent shall be at the sole discretion of Mortgagee; and any such written
consent to any of the foregoing actions shall not be construed to be a waiver
of
this provision in respect of any subsequent proposed sale, transfer, exchange,
demise charter, bareboat charter, time charter, voyage charter, mortgage,
lien,
hypothecation, encumbrance or other disposition. Any such sale, transfer,
exchange, demise charter, bareboat charter, time charter, voyage charter,
mortgage, lien, hypothecation, encumbrance or other disposition of the Vessel
shall be subject to the provisions of this Mortgage and the lien it creates,
unless released therefrom by the Mortgagee.
SECTION 3.13. Insurance. Reference is hereby made to Section
4.19 of the Indenture, containing certain covenants and agreements of the
Mortgagor with respect to the procurement and maintenance of insurance as to
Note
Collateral (as defined in the Indenture) and to other provisions of the
Indenture
with respect to the uses of insurance proceeds permitted thereby. Without
limiting the generality of the foregoing:
(a) So long as any of the Obligations remain outstanding,
Mortgagor, at its expense and at no expense to the Mortgagee, shall keep the
Vessel insured against (i) risks of fire, explosion and marine perils, and
against all other liabilities and risks insured under the form of policy known
as "American Institute Hull Clauses (June 2, 1977)," or equivalent, including,
but not limited to, strikes, riots, and civil commotion coverage, (ii) risks
covered by protection and indemnity insurance (including, without limitation,
coverage against third party claims for pollution liability including
statutory
and governmental clean-up liabilities), (iii) excess protection and indemnity
and
(iv) such other risks and liabilities, including worker's compensation, from
time
to time reasonably specified by the Mortgagee. The Mortgagor will keep the
Vessel insured, in lawful money of the United States and in markets acceptable
to the Mortgagee, for not less than (A) in the case of the insurance referred
to
in clause (i) above, the full insurable value of the Vessel, and (B) in the
case
of the insurance referred to in clause (ii) above, in an amount customarily
carried by vessels engaged in the same or similar trade; provided, however,
that
any protection and indemnity insurance shall be in an amount not less than the
amount of insurance against total loss. In case of the insurance referred to
in
clause (iii) above, the worker's compensation policy shall be endorsed to
cover
Mortgagor's liability under the state or federal compensation act to employees
of third persons who are deemed to be the borrowed employees of Mortgagor.
(b) The policy or policies of insurance shall be issued by
underwriters or associations having an A.M. Best & Company, Inc. rating of A
or
higher, or if such underwriter or association is not rated by A.M. Best &
Company, Inc., having the financial stability and size deemed appropriate by a
reputable insurance broker, and shall contain terms customarily imposed on
vessels engaged in the same or similar type of trade. The Mortgagor shall
furnish to the Mortgagee, annually, not later than ninety (90) days after the
end
of Mortgagor's fiscal year, a detailed certificate or opinion signed by a firm
of marine insurance brokers reasonably satisfactory to the Mortgagee that the
insurance coverages in place and the amounts thereof are prudent and
reasonably
take into account existing industry practices, and the risks associated with
the
trade of the Vessel and comply with Mortgagor's obligations under this Section
3.13. Cover notes and/or certificates for all insurance coverages provided
for
herein shall be furnished to the Mortgagee upon execution of this Mortgage and
delivered to Mortgagee whenever requested but, in all events, no less than
annually on or before January 15th of each year and at the time such insurance
coverages are renewed, extended or a new insurance policy substituted
therefor.
All policies required hereunder shall contain provisions that the same may not
be cancelable or materially modified until thirty (30) days following delivery
to Mortgagee of written notice of intent to cancel. Any language contained in
the printed policy or insurance certificate which relieves the insurance
carrier
from responsibility to the Mortgagee in the event such carrier fails to
provide
such notice must be deleted.
(c) All insurance and the policies evidencing the same shall
by their terms be taken out in the joint names of Mortgagor and Mortgagee, and
shall by their terms be payable to them as their respective interests may
appear.
The interest of Mortgagee is hereby declared to be the outstanding amount of
the
Obligations, whether contingent or absolute, due or to become due, and in
event
of a total loss of the Vessel, actual or constructive, or a compromised
constructive loss or requisition, the Mortgagee shall be paid the entire
amount
of insurance covering the Vessel for application in accordance with the
Indenture. The Mortgagor shall not declare or agree with the underwriters
that
the Vessel is a constructive or compromised, agreed or arranged total loss
without the prior written consent of the Mortgagee. The proceeds of all other
insurance shall be paid to the Mortgagor and the Mortgagee jointly (except in
the
case of worker's compensation or comparable insurance payments payable, due to
the nature thereof, to third parties), and provided that the Mortgagor is not
in
default under this Mortgage, the Mortgagee shall, at its option, either make
available to the Mortgagor by an appropriate payment order directed to the
interested underwriter the proceeds of all insurance to pay any outstanding
bill
for supplying or repairing the Vessel and/or outstanding third-party claim,
provided that the Mortgagor pays the amount of the deductible; or reimburse
the
Mortgagor in whole or in part for any expenditures the Mortgagor may have made
for repairing the Vessel and/or obtaining waivers of Liens or appropriate
releases for the third-party claims. Should the Mortgagor not effect repairs
to
the Vessel or pay third-party claims, or in either event furnish and/or pay
the
deductible, or if the Mortgagor is in default hereunder, then the Mortgagee
shall
be entitled to receive the proceeds of any insurance applicable to such loss
and
upon payment shall credit the net proceeds of any insurance as provided in the
Indenture.
(d) All policies for insurance shall provide that (i) there
shall be no recourse against the Mortgagee for the payment of premiums or
commissions and (ii) if such policies provide for the payment of club calls,
assessments or advances, there shall be no recourse against the Mortgagee for
the
payment thereof.
(e) The Mortgagor agrees to renew all insurance policies or
cause or procure the same to be renewed before the relevant policies or
contracts
expire and to procure that the insurers or a firm of independent marine
insurance
brokers shall promptly confirm in writing to the Mortgagee as and when each
such
renewal is effected. The Mortgagor agrees to cause such insurers or
independent
marine insurance brokers to agree (x) to advise the Mortgagee promptly of any
failure to renew or other event which could cause a lapse in coverage and of
any
default in payment of any premium and of any other act or omission on the part
of the Mortgagor of which they have knowledge and which might, in their
opinion,
invalidate or render unenforceable, or cause the lapse of, or prevent the
renewal
or extension of, in whole or in part, the insurance on the Vessel and (y) to
mark
their records and advise the Mortgagee at least thirty days prior to the
expiration date of any of the insurance policies, that such insurance policies
have been renewed or replaced with new insurance which complies with the
provisions hereof.
(f) The Mortgagor warrants that it will maintain all such
insurance unimpaired by any act, breach of warranty or otherwise, and that it
will not be guilty of or permit any act of omission or commission which will
in
any way invalidate, void or suspend any insurance herein provided to be
maintained. The Mortgagor shall also procure and maintain breach of warranty
or
Mortgagee's interest insurance in favor of the Mortgagee on each of the above
policies. The Mortgagor shall pay for any loss of or damage to the Vessel by
any
cause whatsoever and any third-party claims whatsoever which would constitute
a
Lien against the Vessel not covered by insurance or for which no reimbursement
or incomplete reimbursement is secured from the insurance.
SECTION 3.14. Requisition of Title to Vessel. In the event that
the title or ownership of the Vessel shall be requisitioned, purchased or
taken
by the United States of America or any government of any state of the United
States or any other country or any department, agency or representative
thereof,
pursuant to any present or future law, proclamation, decree, order or
otherwise
(any such event being a "Title Requisitioning"), the lien of this Mortgage
shall
be deemed to attach to the claim for compensation, and the compensation,
purchase
price, reimbursement or award for such Title Requisitioning shall be and is
hereby declared payable to the Mortgagee, who shall be entitled to receive the
same and at its option, in its sole and absolute discretion, apply it in
accordance with the provisions of Section 4.11 hereof or apply the proceeds to
the acquisition of a new vessel upon such conditions as the Mortgagee shall
determine. In the event of any such Title Requisitioning, the Mortgagor shall
promptly execute and deliver to the Mortgagee such documents, if any, as in
the
opinion of counsel for the Mortgagee may be necessary or useful to facilitate
or
expedite the collection by the Mortgagee of such compensation, purchase price,
reimbursement or award.
SECTION 3.15. Requisition of Vessel but not Title. In the event
that the United States of America or any government of any other country or
any
department, agency or representative thereof shall not take the title or
ownership of the Vessel but shall requisition, charter, or in any manner take
over the use of the Vessel pursuant to any present or future law,
proclamation,
decree, order or otherwise (any such event being a "Vessel Requisitioning"),
then
all charter hire and compensation resulting therefrom shall be and is hereby
declared payable to the Mortgagee, and if, as a result of such Vessel
Requisitioning such government, department, agency or representative thereof
shall pay or become liable to pay any sum by reason of the loss of or injury
to
or depreciation of the Vessel, then any such sum is hereby made, and shall be,
payable to the Mortgagee, who shall be entitled to receive the same and shall
apply any such sums referred to in this Section in accordance with the
provisions
of Section 4.11 hereof. Such application shall not cure or waive any default
or
notice of default hereunder or invalidate any act done pursuant to such
notice.
In the event of any such Vessel Requisitioning, the Mortgagor shall promptly
execute and deliver to the Mortgagee such documents, if any, and shall
promptly
do and perform such acts, if any, as in the opinion of counsel for the
Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee or such claims arising out of the Vessel Requisitioning.
SECTION 3.16. Requisitions Generally. Should any Title
Requisitioning or Vessel Requisitioning occur or should the Mortgagor receive
any
notice or other information regarding any such proceeding, the Mortgagor shall
give prompt written notice thereof to the Mortgagee. In connection therewith,
the Mortgagee shall be entitled at its option to commence and/or appear in
and/or
prosecute in its own name, any action or proceedings. The Mortgagee shall
also
be entitled to make such compromise or settlement in connection with such
Title
Requisitioning or Vessel Requisitioning as it deems appropriate. All
compensation, awards, damages, rights of action and proceeds awarded to the
Mortgagor in connection with any Title Requisitioning or Vessel Requisitioning
(the "Proceeds") are hereby assigned to the Mortgagee as security for the
payment
and performance of the Obligations, and the Mortgagor agrees to execute such
further assignments of the Proceeds as the Mortgagee may require.
SECTION 3.17. Execution of Additional Documents. The Mortgagor
agrees to execute all additional documents, instruments, Uniform Commercial
Code
Financing Statements and other agreements that the Mortgagee deems necessary
and
appropriate, within its sole discretion, in form and substance satisfactory to
the Mortgagee, to keep this Mortgage in effect, to better reflect the true
intent
of this Mortgage, and to consummate fully all of the transactions contemplated
by the Notes, the Indenture and the other Collateral Documents.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01.
A. Events of Default. The term "Event of Default", wherever used
in this Mortgage, shall mean the occurrence of an Event of Default under and
as
defined in the Indenture.
B. Remedies. Upon the occurrence of any Event of Default, then
and in each and every such case Mortgagee shall have the right to:
(1) Exercise all the rights and remedies in foreclosure and
otherwise given to the Mortgagee by the laws and regulations of the United
States of America or of the country wherein the Vessel shall then be found or
of
any country wherein the Vessel may thereafter be found or of any other
applicable
jurisdiction;
(2) Bring suit at law, in equity or in admiralty, as it may
be advised, to recover judgment for any and all amounts due under the Notes,
the
Indenture, this Mortgage and the other Collateral Documents, and collect the
same
from the Mortgagor and/or out of any property of the Mortgagor covered by this
Mortgage or otherwise granted by the Mortgagor as security for the payment and
performance of the Obligations;
(3) Take the Vessel without legal process wherever the same
may be; and the Mortgagor or other Person in possession, forthwith upon demand
of the Mortgagee shall surrender to the Mortgagee possession of the Vessel and
the Mortgagee may, without being responsible for loss or damage, hold, lay up,
lease, charter, operate or otherwise use the Vessel for such time and upon
such
terms as it may deem to be for its best advantage, accounting only for the net
profits, if any, arising from such use of the Vessel and charging upon all
receipts from the use of the Vessel or from the sale thereof by court
proceedings
or pursuant to subsection (B)(4) of Section 4.01 next following, all costs,
expenses, charges, damages or losses by reason of such use; and if at any time
the Mortgagee shall avail itself of the right herein given it to take the
Vessel,
the Mortgagee shall have the right to dock the Vessel for a reasonable time at
any dock, pier, or other premises of the Mortgagor or leased by the Mortgagor
without charge, or to dock it at any other place at the cost and expense of
the
Mortgagor;
(4) Without being responsible for loss or damage, sell the
Vessel at any place and at such time as the Mortgagee may specify and in such
manner as the Mortgagee may deem advisable free from any claim by the
Mortgagor
in admiralty, in equity, at law or by statute, after first giving notice of
the
time and place of sale with a general description of the property in the
following manner (or as may otherwise be provided by law):
(a) By publishing such notice on three (3) different
days, the first of which shall be published at least ten (10) days and the
last
at least three (3) days immediately preceding the sale, in a daily newspaper
of
general circulation published in [_____________________], Louisiana;
(b) If the place of sale should not be
[____________________________], Louisiana, then also by publication of a
similar
notice in a daily newspaper, if any, published at the place of sale; and
(c) By mailing a similar notice to the Mortgagor on the
day of first publication.
The Mortgagee may adjourn any such sale from time to time by
announcement at the time and place appointed for such sale or for such
adjourned
sale, and without further notice or publication the Mortgagee may make any
such
sale at the time and place to which the same shall be so adjourned. Any such
sale may be conducted without bringing the Vessel to be sold to the place
designated for such sale and in such manner as the Mortgagee may deem to be
for
its best advantage.
(5) The Mortgagor hereby consents to the appointment of a
consent keeper or substitute custodian by the Mortgagee with the costs thereof
to be a cost of the sale to be paid from the proceeds of the sale or by the
Mortgagor.
SECTION 4.02. Sale of Vessel by Mortgagee. Any sale of the
Vessel made in pursuance of this Mortgage, whether under the power of sale
hereby
granted or any judicial proceedings, shall operate to divest all right, title
and
interest of any nature whatsoever of the Mortgagor therein and thereto, and
shall
bar the Mortgagor, its successors and assigns, and all Persons claiming by,
through or under them. At any such sale, the Mortgagee may bid for and
purchase
the Vessel and upon compliance with the terms of sale may hold, retain and
dispose of such property without further accountability therefor. In case of
any
such sale, the Mortgagee shall be entitled, for the purpose of making
settlement
or payment for the property purchased, to use and apply the Notes or any
portion
thereof in order that there may be credited against the amount remaining due
and
unpaid thereon the sums payable to the Mortgagee out of the net proceeds of
such
sale after allowing for the costs and expense of sale and other charges; and
thereupon the Mortgagee shall be credited, on account of such purchase price,
with the net proceeds that shall have been so credited upon the Notes. No
purchaser shall be bound to inquire whether notice has been given, or whether
any
default has occurred, or as to the propriety of the sale or as to the
application
of the proceeds thereof.
SECTION 4.03. Mortgagee to Sign for Mortgagor. The Mortgagee is
hereby irrevocably appointed attorney-in-fact of the Mortgagor, upon the
occurrence of an Event of Default, to execute and deliver to any purchaser
aforesaid and is hereby vested with full power and authority to make, in the
name
and in behalf of the Mortgagor, a good conveyance of the title to the Vessel
so
sold. In the event of any sale of the Vessel, under any power herein
contained,
the Mortgagor will, if and when required by the Mortgagee, execute such form
of
conveyance of such Vessel as the Mortgagee may direct or approve.
SECTION 4.04. Mortgagee to Collect Hire, etc.. The Mortgagee is
hereby irrevocably appointed attorney-in-fact of the Mortgagor, upon the
occurrence of an Event of Default, in the name and on behalf of the Mortgagor
to
demand, collect, receive, compromise and sue for, so far as may be permitted
by
law, all earnings, tolls, rents, issues, revenues, income and profits of the
Vessel.
SECTION 4.05. Mortgagee's Right to Possession. Whenever any
right to enter and take possession of the Vessel accrues to the Mortgagee, it
may
require the Mortgagor to deliver, and the Mortgagor shall on demand, at its
own
cost and expense, deliver the Vessel to the Mortgagee as demanded. If any
legal
proceedings shall be taken to enforce any right under this Mortgage, the
Mortgagee shall be entitled as a matter of right to the appointment of a
receiver
of the Vessel and the earnings, tolls, rents, issues, revenues, income and
profits due or to become due and arising from the operation thereof.
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor.
The Mortgagor authorizes and empowers the Mortgagee or its appointees or any
of
them to appear in the name of the Mortgagor, its successors and assigns, in
any
court where a suit is pending against the Vessel because of or on account of
any
alleged lien against the Vessel from which the Vessel has not been released
and
to take such proceedings as to them or any of them may seem proper towards the
defense of such suit and the discharge of such lien, in the event that the
Mortgagor shall not be taking proceedings reasonably satisfactory to the
Mortgagee, and in such case all expenditures made or incurred by the Mortgagee
or its appointees for the purpose of such defense or discharge shall be a debt
due from the Mortgagor, its successors and assigns, to the Mortgagee, and
shall
be secured by the lien of this Mortgage in like manner and extent as if the
amount and description thereof were written herein.
SECTION 4.07. Acceleration of Indebtedness Secured Hereby. The
Mortgagor covenants that upon the happening of any one or more of the Events
of
Default, then upon written demand of the Mortgagee, the Mortgagor will pay to
the
Mortgagee the whole of the Notes and pay and perform its indebtedness,
liabilities, obligations, agreements and covenants to the Mortgagee under the
Indenture, this Mortgage, the other Collateral Documents and the other
Obligations, and in case the Mortgagor shall fail to pay the same forthwith
upon
such demand, the Mortgagee shall be entitled to recover judgment for the whole
amount so due and unpaid, together with such further amounts as shall be
sufficient to cover the reasonable costs and expenses of collection, including
a reasonable compensation to the Mortgagee's agents, attorneys and counsel and
any necessary advances, expenses and liabilities made or incurred by them
hereunder. All moneys collected by the Mortgagee under this Section shall be
applied by the Mortgagee in accordance with the provisions of Section 4.11
hereof.
SECTION 4.08. Right of Mortgagee. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition
to every other power and remedy herein given or now or hereafter existing at
law,
in equity, in admiralty or by statute, and each and every power and remedy
whether herein given or otherwise existing may be exercised from time to time
and
as often and in such order as may be deemed expedient by the Mortgagee, and
the
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter
any other power or remedy. No delay or omission by the Mortgagee in the
exercise
of any right or power or in the pursuance of any remedy accruing upon any
default
as above defined shall impair any such right, power or remedy or be construed
to
be a waiver of any such Event of Default or to be any acquiescence therein;
nor
shall the acceptance by the Mortgagee of any security or of any payment of or
on
account of the Notes after any Event of Default or of any payment on account
of
any past default be construed to be a waiver of any right to take advantage
of
any future Event of Default or of any past Event of Default not completely
cured
thereby.
SECTION 4.09. Cure of Defaults. If at any time after an Event
of Default and prior to the actual sale of the Vessel by the Mortgagee or
prior
to any foreclosure proceedings, the Mortgagor completely cures all Events of
Default and pays all expenses, advances and damages to the Mortgagee arising
under or otherwise in connection with such Events of Default (including
without
limitation interest thereon at the increased rate set forth in Section 4.01 of
the Indenture (the "Default Rate"), then the Mortgagee shall retain the option
to restore the Mortgagor to its former position, but such action, if any,
shall
not affect any subsequent Event of Default or impair any rights consequent
thereon.
SECTION 4.10. Restoration of Position. In case the Mortgagee
shall have proceeded to enforce any right, power or remedy under this Mortgage
by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely
to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee
shall be restored to their former positions and rights hereunder with respect
to
the property subject or intended to be subject to this Mortgage, and all
rights,
remedies and powers of the Mortgagee shall continue as if no such proceedings
had
been taken.
SECTION 4.11. Proceeds of Sale; Deficiency. (a) The proceeds of
any sale of the Vessel and the net earnings from the hire or from any
operation
or use of the Vessel by the Mortgagee under any of the powers herein specified
and any and all other money received by the Mortgagee pursuant to or under the
terms of this Mortgage or in any proceedings hereunder, the application of
which
has not elsewhere herein been specifically provided, shall be applied at the
discretion of the Mortgagee with the Mortgagee having the right to impute
payments as it may desire among the following:
(i) To the payment of all reasonable expenses and
charges, including the expenses of any sale, and expenses of any retaking,
attorneys' fees, court costs, keepers' or receiver's fees, necessary repairs
and
any other expenses or advances (including without limitation Advances) made or
incurred by the Mortgagee in the protection of its rights or the pursuance of
its
remedies hereunder, and to provide adequate indemnity against liens claiming
priority over or equality with the lien of this Mortgage;
(ii) To the payment in full of any amounts then due and
unpaid under the Notes and the other Obligations (including without limitation
principal and interest thereon); and
(iii) To the payment of any surplus thereafter remaining
to the Mortgagor or to whomsoever may be entitled thereto under applicable
law.
(b) To the extent the proceeds of the sale of the Vessel are
not sufficient to pay all the amounts under clauses (i) and (ii) of subsection
(a) above, any Person also liable for the Obligations (including without
limitation the Mortgagor) shall be liable for such deficiency. Without
limiting
the generality of the foregoing, the rights and remedies of the Mortgagee
under
this Mortgage and the other agreements, documents and instruments securing or
guarantying any of the Obligations shall be cumulative, and the exercise or
partial exercise of any such right or remedy shall not preclude the exercise
of
any other right or remedy.
SECTION 4.12. Repairs to Vessel and Sale of Equipment. Until one
or more of the Events of Default hereinabove described shall happen, the
Mortgagor (a) shall be suffered and permitted to retain actual possession and
use
of the Vessel; (b) may at any time alter, repair, change or re-equip the
Vessel,
subject, however, to the provisions of Section 3.09 hereof and any
restrictions
in the Indenture; and (c) from time to time in its discretion and without
obtaining a release thereof by the Mortgagee, may dispose of, free from the
lien
hereof, equipment or other appurtenances of the Vessel that may become worn
out
or obsolete or otherwise are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, provided that either prior to or
promptly following such removal any such property shall be replaced with
serviceable equipment or other appurtenances of substantially equal utility
and
of a value at least equal to that of the replaced property when first acquired
and free of any security interest of any other Person (except liens permitted
under the Indenture), which shall forthwith become subject to the lien of this
Mortgage as a preferred mortgage thereon.
SECTION 4.13 Advances by Mortgagee. The Mortgagor authorizes
the Mortgagee in the Mortgagee's discretion to advance any sums necessary for
the
purpose of paying (i) insurance premiums, (ii) any and all excise, property,
sales, use and other taxes, forced contributions, service charges, local
assessments and governmental charges on the Vessel, (iii) any liens affecting
the
Vessel (whether superior or subordinate to the lien of this Mortgage) not
permitted by this Mortgage or the Indenture, (iv) necessary repairs and
maintenance expenses of the Vessel, or (v) any other amounts which the
Mortgagee
deems necessary and appropriate to preserve the validity and ranking of this
Mortgage, to cure any Default (as defined in the Indenture) or Event of
Default,
to protect or preserve the Vessel or to prevent the occurrence of any Default
or
Event of Default (collectively, the "Advances") of whatever kind; provided,
however, that nothing herein contained shall be construed as making such
Advances
obligatory upon the Mortgagee, or as making the Mortgagee liable for any loss,
damage, or injury resulting from the nonpayment thereof. The Mortgagor
covenants
and agrees that upon demand therefor by the Mortgagee, the Mortgagor will
repay
the Advances to the Mortgagee, together with interest thereon at the Default
Rate, and in addition will repay any other reasonable costs, attorneys' fees
and
expenses, charges and expenses of any and every kind incurred by the Mortgagee
in connection with the expenditures under items (i) through (v) above or
otherwise for the full protection and preservation of the Vessel or this
Mortgage, including payments required in respect to any lien affecting the
Vessel, together with interest thereon at the Default Rate. All such Advances
and amounts (including interest) shall be included in the Obligations secured
hereby.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01. Addresses. Any notice to be given under this
Mortgage shall, except as otherwise expressly provided herein, be made in
accordance with Section 12.02 of the Indenture.
SECTION 5.02. Counterparts. This Mortgage may be executed in any
number of counterparts and all such counterparts executed and delivered each
as
an original shall constitute but one and the same instrument.
SECTION 5.03. Interest of the Mortgagor. The interest of the
Mortgagor in the Vessel and the interest mortgaged by this Mortgage is that of
one hundred percent (100%) absolute and sole ownership.
SECTION 5.04. Survivorship of Covenants. All the covenants,
promises, stipulations and agreements of the Mortgagor in the Obligations
secured
hereby shall bind the Mortgagor and its successors and assigns and shall inure
to the benefit of the Mortgagee and its successors and assigns.
SECTION 5.05. Amendments. The Notes, the Indenture, this
Mortgage, the other Collateral Documents and the other Obligations may not be
modified, supplemented or amended in any respect, or any waiver given in
regard
to any of the provisions hereof, in any case which might affect the rights of
the
Mortgagee hereunder, except with the written consent of the Mortgagee, and so
long as the Mortgagor shall do all acts and things necessary to maintain the
preferred status of this Mortgage.
SECTION 5.06. Discharge of Lien. When the Obligations have been
satisfied in full, the Mortgagee shall, at the Mortgagor's expense, execute
and
deliver to the Mortgagor such documents as the Mortgagor shall reasonably
request
to evidence the surrender and discharge of the lien hereof upon the Vessel.
SECTION 5.07. Incorporation into Mortgage. The Whereas Clauses
and the Granting Clause of this Mortgage are incorporated in and are made a
part
of this Mortgage.
SECTION 5.08. Gaming Laws and Regulations. The Mortgagor and the
Mortgagee acknowledge that, to the extent required under applicable law, the
consummation of the transactions contemplated hereby and the exercise of
remedies
hereunder may be subject to the Louisiana Riverboat Economic Development and
Gaming Control Act, La. R.S. 4:501, et seq., the Louisiana Gaming Control Law,
La. R.S. 23:1-3, 11-26, 31 and 32, and the regulations promulgated pursuant to
each such law, all as amended from time to time. The Mortgagor and the
Mortgagee
further acknowledge that the Gaming License held by the Mortgagor is not part
of
the collateral of this Mortgage and that, under the above-described
legislation
and rules promulgated thereunder, the Mortgagee may be precluded from or
otherwise limited in taking possession of or in selling the collateral of this
Mortgage under the Remedies provisions of this Mortgage. The Mortgagor and
the
Mortgagee also acknowledge that due to various legal restrictions, including,
but
not limited to, licensing of operators of gaming facilities and prior approval
of sale or disposition of assets of a licensed gaming operator, the sale of
collateral may be denied by Gaming Authorities or delayed pending Gaming
Authority approval.
SECTION 5.09. Governing Law. This Mortgage shall be governed by
and construed according to the provisions of the Act, and where silent, by the
General Maritime Law of the United States, and only to the extent not
addressed
thereby, by the laws of the State of Louisiana.
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage in
multiple original counterparts on the day and year first above written.
WITNESSES: CASINO MAGIC OF LOUISIANA, CORP.
By: /s/Robert A. Callaway
Name: Robert A. Callaway
Name: Susan Shannon Title: Executive Vice President / General
Council
Name: Gwyn Timms
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN, that on August 22, 1996, personally appeared before
me, Notary Public, duly commissioned and qualified and the undersigned
authority
for the said state and county/parish, and within my jurisdiction,
_________________________ ("Appearer"), who, being duly sworn, did depose,
acknowledge and say:
That Appearer is Robert A. Callaway of Casino Magic of Louisiana,
Corp., the corporation described in and which executed the foregoing First
Preferred Ship Mortgage; that by order and authority of the Board of Directors
of said corporation Appearer signed his name thereto and acknowledged to me
that
he executed said First Preferred Ship Mortgage as such officer of said
corporation; and that the same is the free and voluntary act and deed of said
corporation, and of himself as such officer thereof, for the uses and purposes
therein expressed, after first having been duly authorized by said corporation
so to do.
IN WITNESS WHEREOF, Appearer has signed this Acknowledgment in the
presence of the two undersigned witnesses and me, Notary, on the day and in
the
month and year first above written.
WITNESSES: Robert A. Callaway
Name:
Gwyn Timms
Name:
Susan Shannon
Name:
Veronica Caban
NOTARY PUBLIC
MORTGAGE AND ASSIGNMENT OF * UNITED STATES OF AMERICA
LEASES AND RENTS * STATE OF NEW YORK
BY * COUNTY OF NEW YORK
CASINO MAGIC OF LOUISIANA, CORP. *
BE IT KNOWN, that on this 22nd day of August, 1996, before the undersigned
Notary Public, duly commissioned and qualified, and in the presence of the
undersigned witnesses, personally came and appeared:
CASINO MAGIC OF LOUISIANA, CORP., a Louisiana corporation, having a mailing
address of 1701 Old Minden Road, Bossier City, Louisiana 71111, and a federal
taxpayer identification number of 6408781 10 appearing herein through its
undersigned representative, duly authorized hereunto pursuant to resolutions
of its Board of Directors, a true and correct copy of which is attached hereto
as Exhibit "A",
(the "Mortgagor"), who declared that Mortgagor does by these presents
declare and acknowledge an indebtedness unto:
FIRST UNION BANK OF CONNECTICUT, a Connecticut banking corporation, as trustee
for the benefit of the holders of the Notes (as hereinafter defined) issued
pursuant to that certain Indenture dated August 22, 1996 (the "Indenture"), by
and among Mortgagor, as issuer, Jefferson Casino Corporation, a Louisiana
corporation, as guarantor, and Mortgagee (as hereinafter defined), as trustee,
as having a mailing address of 10 State Street Square, Hartford, Connecticut
061033698, Attention: Corporate Trust Administration, and a federal taxpayer
identification number of 060547320,
(in such capacity, and together with any successor in such capacity, the
"Mortgagee"), as Mortgagee for the benefit of the holders of those certain
$115,000,000 13% First Mortgage Notes due 2003 With Contingent Interest (the
"Series A Notes," and together with any Series B Notes issued in exchange
therefor, the "Notes," and such holders the "Noteholders") issued pursuant
to the Indenture, which accepts this Mortgage (as hereinafter defined).
RECITALS
A. Mortgagor is the issuer of the Notes pursuant to the Indenture.
B. As a material inducement to the Noteholders to purchase the Notes
and to Mortgagee to enter into the Indenture and in order to secure the full
and punctual payment and performance of the Obligations (as hereinafter
defined), Mortgagor has agreed to execute and deliver this Mortgage and to
grant a mortgage lien and collateral assignment in and to the collateral
described herein.
ARTICLE 1
PURPOSES, DEFINITIONS
1.1 Purposes. Mortgagor declares that this Mortgage is granted to
secure the due and punctual payment and performance of any and all present and
future obligations and liabilities of Mortgagor of every type or description
to Mortgagee:
(a) arising under or in connection with the Indenture or the Notes,
whether for principal, premium, if any, interest, expenses, indemnities or
other amounts (including attorneys' fees and expenses); or
(b) arising under or in connection with this Mortgage or any other
Loan Document, including for reimbursement of amounts that may be advanced or
expended by Mortgagee (i) to satisfy amounts required to be paid by Mortgagor
under this Mortgage or any other Loan Document (as hereinafter DEFINED),
together with interest thereon to the extent provided, or (ii) to maintain or
preserve the Mortgaged Property (as hereinafter defined), or any portion
thereof, or to create, perfect, continue or protect the Mortgaged Property, or
any portion thereof, or the lien thereon, or its priority;
in each case, whether due or not due, direct or indirect, joint and/or several
or joint and several (i.e., solidary), absolute or contingent, voluntary or
involuntary, liquidated or unliquidated, determined or undetermined, now or
hereafter existing, renewed or restructured, whether or not from time to time
decreased or extinguished and later increased, created or incurred, whether or
not arising after the commencement of a proceeding under Bankruptcy Law (as
hereinafter defined) (including post-petition interest) and whether or not
recovery of any such obligation or liability may be barred by a statute of
limitations or prescriptive period or such obligation or liability may
otherwise be unenforceable, and including all obligations and liabilities of
Mortgagor under any instrument now or hereafter evidencing or securing any of
the foregoing and all future advances hereunder or pursuant to the Indenture,
the Notes and/or the Loan Documents to the fullest extent permitted by
Louisiana Civil Code Article 3298 (all obligations and liabilities of
Mortgagor described in this Section 1. 1 shall be collectively referred to as
the "Obligations"). This Mortgage may be construed and enforced variously
and simultaneously as a mortgage, assignment, pledge or contract as may be
appropriate under applicable law from time to time in order to effectuate
fully the purposes and agreements set forth herein.
The maximum amount of the Obligations that may be outstanding at any time
and from time to time that this Mortgage secures, including without
limitation, as an assignment of Space Leases (as hereinafter defined) and
Rents (as hereinafter defined), is $200,000,000, including all principal plus
interest and any expenses and advances incurred by Mortgagee and all other
amounts included within the indebtedness secured hereunder. This Mortgage is
and shall remain effective, even though the amount of the Obligations secured
hereunder may now be zero or may later be reduced to zero, until all of the
amounts, liabilities and obligations, present and future, comprising the
Obligations have been incurred and are extinguished. When no Obligations
exist and Mortgagee is not bound to permit any Obligations to be incurred,
this Mortgage may be terminated by Mortgagor upon thirty (30) days prior
written notice sent by Mortgagor to Mortgagee in accordance with the
provisions of this Mortgage or otherwise in any manner permitted by the
Indenture.
1.2 Definitions. As used in this Mortgage, the following terms have the
meanings hereinafter set forth:
2
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling," 44
controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of ten percent (1 0 %) or more of the
voting securities of a Person shall be deemed to be control.
"APPURTENANT RIGHTS" means all single tenements, hereditaments, rights
(including all batture rights, rights of accretion and riparian rights),
reversions, remainders, development rights, privileges, benefits, servitudes,
easements (in gross or appurtenant), rights-of-way, privileges, prescriptions,
advantages, strips of land, streets, ways, alleys, passages, sewer rights,
water courses, water rights and powers, and all appurtenances whatsoever and
claims or demands of Trustor at law or in equity in any way belonging,
benefitting, relating, attaching or appertaining to the Land, the airspace
over the Land, the Improvements or any of the Mortgaged Property encumbered by
this Mortgage, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by Mortgagor.
"BANKRUPTCY" means, with respect to any Person, that such Person is or
becomes bankrupt or Insolvent or: (a) is the subject of any order for relief
under any Bankruptcy Law; (b) commences a voluntary proceeding under any
Bankruptcy Law; (c) consents to the entry of an order for relief in an
involuntary proceeding under any Bankruptcy Law; (d) consents to the
appointment of, or taking possession by any receiver or keeper; (e) makes any
assignment for the benefit of creditors; (f) is unable or fails, or admits in
writing its inability, to pay its debts as such debts become due; (g) is the
subject of any involuntary proceeding under any Bankruptcy Law or involuntary
appointment of a receiver or keeper, and such involuntary proceeding or
appointment is not dismissed and terminated within sixty (60) days; (h) is the
subject of any other proceeding or relief similar to any of the foregoing
under any law; (i) is the subject of a warrant of attachment, execution, or
similar process with respect to such Person or any substantial part of such
Person's property, which warrant or similar process remains in effect for
sixty (60) days without having been bonded or discharged; or 0) otherwise
ceases to do business as a going concern.
"BANKRUPTCY LAW" means Title 1 1, U.S. Code or any similar federal or state
law for the relief of debtors.
"BOSSIER RIVERBOAT" means that certain riverboat gaming vessel "MARY'S
PRIZE, " U. S. Coast Guard Official No. 102801 1, purchased by Mortgagor from
Boyd Gaming Corporation pursuant to that certain Buy-Sell Agreement dated
August 2, 1996.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on
which banking institutions in the City of Shreveport, Louisiana, the City of
Bossier City, Louisiana, the City of New Orleans, Louisiana, the City of
Hartford, Connecticut, or the City of New York are not required to be open.
"CASH COLLATERAL AND DISBURSEMENT AGREEMENT" means that certain Cash
Collateral and Disbursement Agreement, dated as of the date hereof, by and
between Mortgagor, Mortgagee, and First National Bank of Commerce, a national
banking association, as Disbursement Agent.
3
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and FULLY guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six (6) months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six (6) months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven (7) 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 (6) months after the date of acquisition, and
(vi) investment funds investing solely in securities of the types described in
clauses (ii), (iii), (iv) or (v) above.
"CRESCENT CITY RIVERBOAT" means the riverboat gaming vessel "CRESCENT
CITY QUEEN," U.S. Coast Guard Official No. 1028319, measuring approximately
four hundred thirty (430) feet by one hundred (100) feet with a total area of
approximately eighty-eight thousand (88,000) square feet spread across three
(3) decks.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including, natural resources (including flora and fauna), soil, surface water,
ground water, any present or potential drinking supply, subsurface strata or
the ambient air, relating to or arising out of the use, handling, storage,
treatment, recycling, generation, transportation, release, spilling, leaking,
pumping, pouring, emptying, discharging, injecting, escaping, leaching,
disposal, dumping or threatened release of Hazardous Materials by Mortgagor or
Mortgagor's predecessors in interest, agents, representatives, employees or
independent contractors. With respect to claims by employees, Environmental
Conditions also includes the exposure of persons to Hazardous Materials within
any workplace that is part of the Land or the Project.
"ENVIRONMENTAL LAWS" means any and all laws and Legal Requirements
relating to environmental matters, pollution, or hazardous substances,
including: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S. C. 9601-9657; the Resource Conservation and
Recovery Act of 1976, 42 U.S. C. 6901 et seq.; the Hazardous Materials
Transportation Act (49 U. S. C. 1801 et seq.); the Louisiana Environmental
Quality Act, La. R. S. 30:2001-2376; the Louisiana Air Control Law, La. R.S.
30:2051-2063, the Louisiana Water Control Law, La. R.S. 30:2071-2088; the
Louisiana Hazardous Waste Control Law, La. R.S. 30:2171-2207; the Louisiana
Inactive and Abandoned Hazardous Waste Site Law, La. R.S. 30:2221-2226; the
Liability for Hazardous Substance Remedial Action, La. R. S. 30:2271-2290;
any other Laws that may form the basis of any claim, action, demand, suit,
proceeding, hearing, or notice of violation that is based on or related to the
generation, manufacture, processing, distribution, use, existence, treatment,
storage, disposal, transport, or handling, or the emission, discharge,
release, or threatened release into the environment, of any hazardous
substance, or other threat to the environment.
"ENVIRONMENTAL NONCOMPLIANCE" means (1) the release or threatened release
of any Hazardous Materials into the environment, any storm drain, sewer,
septic system or publicly owned treatment works, in violation of any
applicable effluent or emission limitations, standards or other criteria or
guidelines established by any federal, state or local law, regulation, rule,
ordinance, plan or order; (2) any noncompliance of physical structure,
equipment, process or facility with the requirements of applicable building or
fire codes, zoning or land use regulations or ordinances, conditional use
permits and the like; (3) any noncompliance with applicable federal, state or
local requirements governing occupational safety and health; (4) any facility
operations, procedures, designs, or other matters which
4
do not conform to the Environmental Laws intended to protect public health,
welfare and the environment; and (5) the operation of any facility or
equipment in violation of any permit condition, schedule of compliance,
administrative or court order and the like.
"EVENT OF DEFAULT" has the meaning set forth in Section 5.1 hereof.
"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 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 (iii) any settlement in
lieu of clause (ii) above or with respect to the institution of any
proceedings for any such condemnation, seizure, taking, confiscation or
requisition.
"EXCLUDED ASSETS" means (i) Gaming Licenses or any other governmental
approval or permit, to the extent that, under the terms and conditions of such
approval or under applicable law, it cannot be subjected to a Lien in favor of
Mortgagee without the approval of the relevant Governmental Authority, to the
extent that such approval has not been obtained; (ii) any Equipment (A) the
purchase of which was not financed with the proceeds of the Notes and (B) that
Mortgagor is permitted to encumber and has encumbered pursuant to Section 4.09
of the Indenture and (C) in which Mortgagee is prohibited from maintaining a
security interest pursuant to the terms of the FF&E Financing Agreement
encumbering such Equipment; and (iii) if Mortgagor incurs indebtedness on a
secured basis to finance the costs of constructing the Casino Magic-Bossier
City Hotel pursuant to Section 4.09 of the Indenture and satisfies any and all
conditions set forth therein, any FF&E, Equipment or other personal property
that is used or located at or in connection with the operation of the Casino
Magic-Bossier City Hotel or that portion of the Land on which the Casino
Magic-Bossier City Hotel is located; provided that, in such event, Mortgagee
shall execute and deliver any instruments necessary or appropriate to release
the lien of this Mortgage on all such FF&E, Equipment or other property.
"FF&E" means all furniture, fixtures, component parts, equipment, gaming
equipment, appurtenances and personal property now or in the future contained
in, used in connection with, attached to, or otherwise useful or convenient to
the use, operation, or occupancy of, or placed on, but unattached to, any part
of the Land or Improvements whether or not the same constitutes real property
or fixtures in the State of Louisiana, including all removable window and
floor coverings, all furniture and furnishings, heating, lighting, plumbing,
ventilating, air conditioning, refrigerating, incinerating and elevator and
escalator plants, cooking facilities, vacuum cleaning systems, public address
and communications systems, sprinkler systems and other FIRE prevention and
extinguishing apparatus and materials, motors, machinery, pipes, appliances,
equipment, fittings, fixtures, and building materials, together with all
venetian blinds, shades, draperies, drapery and curtain rods, brackets, bulbs,
cleaning apparatus, mirrors, lamps, ornaments, cooling apparatus and
equipment, ranges and ovens, garbage disposals, dishwashers, mantels, and any
and all such property which is at any time installed in, affixed to or placed
upon the Land or Improvements.
'FF&E FINANCING AGREEMENT" shall mean (A) any financing (i) as to which
the lender holds a security interest in only the assets purchased, constructed
or leased by such financing for the payment of principal, interest and other
amounts in connection therewith, (ii) which is permitted by the Indenture to
be incurred and (iii) the proceeds of which are used to acquire, construct or
lease the FF&E subject to such security interest, and (B) any refinancing or
renewal of any financing under clause (A).
"GAMING AUTHORITY" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States of America or foreign
5
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, the Louisiana Gaming Control Board and any other
agency with authority to regulate any gaming operation (or proposed gaming
operation) owned, managed or operated by Mortgagor or any of its Subsidiaries.
"GAMING LAW" means the gaming laws of any jurisdiction or jurisdictions
to which Mortgagor, any of its Subsidiaries or any of the Guarantors is, or
may at any time after the date hereof, be subject.
"GAMING LICENSE" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct gaining activities of
Mortgagor or any of its Subsidiaries, including without limitation, all such
licenses granted under the Louisiana Riverboat Economic Development and Gaming
Control Act and regulated under the Louisiana Gaming Control Law, the
regulations promulgated pursuant to each such law, and other applicable
federal, state, foreign or local laws.
"GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau,
commission, department, office, public entity, or instrumentality of any
nature whatsoever of the United States federal or foreign government, any
state, province or any city or other political subdivision or otherwise,
whether now or hereafter in existence, or any officer or official thereof,
including, without limitation, any Gaming Authority.
"GUARANTEES" means any guarantee given by any Guarantor pursuant to the terms
of the Indenture.
"GUARANTOR" means each of Jefferson Casino Corporation, a Louisiana
corporation, and any Subsidiary of Mortgagor which has executed or hereafter
executes a Guaranty in accordance with Section 4.18 of the Indenture, and its
successors and assigns.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases, including but not limited to substances defined as
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," chemicals known to cause cancer or reproductive toxicity,
"radioactive materials," or other similar designations in, or otherwise
subject to regulation under any Environmental Laws now or hereafter in effect.
"HOLDER" means a Person in whose name a Note is registered.
"IMPOSITION" means any taxes, assessments, water rates, sewer rates,
maintenance charges, other governmental impositions and other charges now or
hereafter levied or assessed or imposed against the Mortgaged Property or any
part thereof.
"IMPROVEMENTS" means (1) all the buildings, structures, facilities and
improvements of every nature whatsoever now or hereafter situated on the Land
or any real property encumbered hereby, and (2) all fixtures, machinery,
appliances, goods, building or other materials, equipment, including without
limitation all gaming equipment and devices, and all machinery, equipment,
engines, appliances and fixtures for generating or distributing air, water,
heat, electricity, light, fuel or refrigeration, or for ventilating or
sanitary purposes, or for the exclusion of vermin or insects, or for the
removal of dust, refuse or garbage; all wall-beds, wall-safes, built-in
furniture and installations, shelving, lockers, partitions, doorstops, vaults,
motors, elevators, dumb-waiters, awnings, window shades, venetian blinds,
light fixtures, fire hoses and brackets and boxes for the same, fire
sprinklers, alarm, surveillance and
6
security systems, computers, drapes, drapery rods and brackets, mirrors,
mantels, screens, linoleum, carpets and carpeting, plumbing, bathtubs, sinks,
basins, pipes, faucets, water closets, laundry equipment, washers, dryers,
ice-boxes and heating units; all kitchen and restaurant equipment, including
but not limited to silverware, dishes, menus, cooking utensils, stoves,
refrigerators, ovens, ranges, dishwashers, disposals, water heaters,
incinerators, furniture, fixtures and furnishings, communication systems, and
equipment; all cocktail lounge supplies, including but not limited to bars,
glassware, bottles and tables used in connection with the Land; all chaise
lounges, hot tubs, swimming pool heaters and equipment and all other
recreational equipment (computerized and otherwise), beauty and barber
equipment, and maintenance supplies used in connection with the Land; all
amusement rides and attractions attached to the Land, all SPECIFICALLY
designed installations and furnishings, and all furniture, furnishings and
personal property of every nature whatsoever now or hereafter owned or leased
by Mortgagor or in which Mortgagor has any rights or interest and located in
or on, or attached to, or used or intended to be used or which are now or may
hereafter be appropriated for use on or in connection with the operation of
the Land or any real or personal property encumbered hereby or any other
Improvements, or in connection with any construction being conducted or which
may be conducted thereon, and all extensions, additions, accessions,
improvements, betterments, renewals, substitutions, and replacements to any of
the foregoing, and all of the right, title and interest of Mortgagor in and to
any such property, which, to the FULLEST extent permitted by law, shall be
conclusively deemed fixtures and improvements and a part of the real property
hereby encumbered. Without limiting the generality of the foregoing,
Improvements shall include: (i) any vessel and its now existing or hereafter
arising components and appurtenances, including without limitation, the
Vessels to the extent such Vessels are or may be deemed to be an improvement
to or on the Land; and (ii) all buildings and improvements situated on the
Land, and all component parts of the Land, and all component parts of any
building, improvement or other construction located on the Land, now or
hereafter a part of or attached to the foregoing or used in connection
therewith.
"INDENTURE" means that certain Indenture, dated as of August 22, 1996, by
and among Mortgagee, as trustee for the benefit of the holders of the Notes,
and Mortgagor, as issuer, and Jefferson Casino Corporation, a Louisiana
corporation, as guarantor, as such Indenture is amended or supplemented from
time to time in accordance with the terms thereof.
"INDEPENDENT CONSTRUCTION CONSULTANT" means 2nd Opinion, Inc., a Louisiana
Corporation.
"INSOLVENT" means with respect to any Person or entity, that such Person
or entity shall be deemed to be insolvent if he or it is unable to pay his or
its debts as they become due and/or if the fair market value of his or its
assets does not exceed his or its aggregate liabilities.
"LAND" means the real property situated in the State of Louisiana, Parish
of Bossier or Parish of Caddo, more specifically described in "Exhibit B"
attached hereto and incorporated herein by this reference, including any after
acquired title thereto.
"LEGAL REQUIREMENTS" means all applicable restrictive covenants,
applicable zoning and subdivision ordinances and building codes, all
applicable health and Environmental Laws and regulations, all applicable
gaming laws and regulations, and all other applicable laws, ordinances, rules,
regulations, judicial decisions, administrative orders, and other requirements
of any Governmental Authority having jurisdiction over Mortgagor, the
Mortgaged Property and/or any Affiliate of Mortgagor, in effect either at the
time of execution of this Mortgage or at any time during the term hereof,
including, without limitation, all Environmental Laws and Gaming Control Acts.
7
"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 DOCUMENTS" means the Indenture, the Notes, this Mortgage, that
certain Security Agreement, dated as of August 22, 1996, by and between
Mortgagor and Mortgagee, that certain Security Agreement dated as of August
22, 1996, by and between Guarantor and Mortgagee, that certain Stock Pledge
and Security Agreement dated as of August 22, 1996, by and between Guarantor
and Mortgagee, that certain Collateral Assignment dated as of August 22, 1996,
by Mortgagor in favor of Mortgagee, that certain First Preferred Ship Mortgage
on the whole of the Crescent City Riverboat dated as of August 22, 1996, by
Mortgagor in favor of Mortgagee, that certain First Preferred Ship Mortgage on
the whole of the Bossier Riverboat dated as of August 22, 1996 by Mortgagor in
favor of Mortgagee, and any other documents evidencing, guaranteeing or
securing the Obligations of Mortgagor under such documents or otherwise
executed and delivered by Mortgagor or any Guarantor of the Notes in
connection with the foregoing.
"MORTGAGE" means this Mortgage and Assignment of Leases and Rents, as it may
be increased, amended or modified from time to time.
"MORTGAGED PROPERTY" means all of the property described in Granting
Clauses (A) through (K) below, inclusive, and each item of property therein
described, provided, however, that such term shall not include the property
described in Granting Clause (L) below.
"MORTGAGEE" means First Union Bank of Connecticut, a Connecticut banking
corporation, as trustee under the Indenture, and any substitute trustee
designated from time to time under the Indenture.
"MORTGAGOR" means Casino Magic of Louisiana, Corp., a Louisiana
corporation, and includes not only the original Mortgagor hereunder, but also
any successors or assigns of the Mortgaged Property, or any part thereof, at
any time and from time to time, as the case requires.
"NOTEHOLDERS" means the holders of the Notes.
"NOTES" means those certain Series A $115,000,000 13 % First Mortgage
Notes due 2003 With Contingent Interest issued pursuant to the Indenture and
any Series B Notes issued in exchange thereto.
"OFFERING MEMORANDUM" means that certain Offering Memorandum, dated as of
August 16, 1996, relating to the offering of the Notes, and all supplements,
schedules or other attachments thereto.
"PERMITTED DISPOSITIONS" means the sale, transfer, lease or other
disposition of assets in the Mortgaged Property, in the ordinary course of
business, of inventory held in the ordinary course of business and other
sales, transfers, lease or other dispositions of assets in the Mortgaged
Property; provided that all provisions of the Indenture are complied with,
including Section 4. 10.
8
"PERMITTED LIENS" means (i) Liens in favor of Mortgagor; provided, that
if such Liens are on any Note Collateral, such Liens are either collaterally
assigned to the Mortgagee or subordinate to the Lien in favor of the Mortgagee
securing the Notes or any Guarantee; (ii) Liens on property of a Person
existing at the time such Person is merged into or consolidated with Mortgagor
or any Subsidiary of Mortgagor; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend
to any assets other than those of the Person merged into or consolidated with
Mortgagor or such Subsidiary; (iii) Liens on property existing at the time of
acquisition thereof by Mortgagor or any Subsidiary of Mortgagor; provided
that such Liens were in existence prior to the contemplation of such
acquisition and do not extend to any assets other than those of the Subsidiary
so acquired; (iv) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like
nature incurred in the ordinary course of business; (v) Liens existing on the
date hereof; (vi) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (vii)
statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by an appropriate process of law, and for which a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made, and, with respect to such Liens arising in connection with Casino
Magic-Bossier City, for which Mortgagor has obtained the title insurance
endorsements required under the Cash Collateral and Disbursement Agreement;
(viii) Liens on FF&E to secure Indebtedness permitted by clause (vi) of the
second paragraph of Section 4.09 of the Indenture; (ix) Liens on assets
comprising the Casino Magic-Bossier City Hotel to secure Indebtedness
permitted by clause (vii) of the second paragraph of Section 4.09 of the
Indenture; provided, that the holder of such Lien enters into a reciprocal
easement agreement in the form attached as an exhibit to the Indenture; (x)
Liens securing obligations in respect of the Indenture, the Notes or
Guarantees; (xi) pledges or deposits in the ordinary course of business to
secure lease obligations or nondelinquent obligations under workers'
compensation, unemployment insurance or similar legislation; (xii) easements,
rights-of-way, restrictions, minor defects or irregularities in title and
other similar charges or encumbrances not interfering in any material respect
with the business of Mortgagor or any Subsidiary incurred in the ordinary
course of business; (xiii) Liens arising from filing UCC financing statements
for precautionary purpose in connection with true leases of personal property
that are otherwise permitted under the Indenture and under which Mortgagor or
any Subsidiary is lessee; and (xiv) any lease of the Crescent City Riverboat
permitted pursuant to the terms of the Indenture and granted to other Persons
not materially interfering with the conduct of the business of Mortgagor and
its Subsidiaries.
"PERMITTING NONCOMPLIANCE" means the failure to have obtained permits,
variances or other authorizations necessary for the legal operation of any
equipment, process, facility or any other activity as required for the current
phase of construction.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"PLANS" means the plans and specifications for Casino Magic-Bossier City,
as delivered to Mortgagor by the architect for the Casino Magic-Bossier City
on or before the date hereof, including without limitation, preliminary plans
so delivered, and as finalized, amended, supplemented or otherwise modified
from time to time as approved by the Independent Construction Consultant in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
9
"PROCEEDS" has the meaning assigned to it under the UCC and, in any
event, shall include but not be limited to (i) any and all proceeds of any
insurance (including without limitation property casualty and title
insurance), indemnity, warranty or guaranty payable from time to time with
respect to any of the Mortgaged Property (including without limitation,
proceeds attributable to the insurance loss of the Land, the Improvements and
the Appurtenant Rights as provided under La. R.S. 9:5386); (ii) any and all
proceeds in the form of accounts, security deposits, tax escrows (if any),
down payments (to the extent the same may be pledged under applicable law),
collections, contract rights, documents, instruments, chattel paper, liens and
security instruments, guarantees or general intangibles relating in whole or
in part to the Project and all rights and remedies of whatever kind or nature
Mortgagor may hold or acquire for the purpose of securing or enforcing any
obligation due Mortgagor thereunder; (iii) any and all payments in any form
whatsoever made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Mortgaged Property by any Governmental Authority; (iv) subject to
the absolute assignment contained herein, the Rents or other benefits arising
out of, in connection with or pursuant to any Space Lease of the Mortgaged
Property; and (v) any and all other amounts from time to time paid or payable
in connection with any of the Mortgaged Property; provided, however, that
Mortgagor is not authorized to dispose of any of the Mortgaged Property unless
such disposition is a Permitted Disposition.
"Project" means Casino Magic-Bossier City as described in the Offering
Memorandum, as the Plans may be amended pursuant to the Cash Collateral and
Disbursement Agreement and the Indenture, but excluding (i) any obsolete
personal property or real property improvements determined in good faith by
Mortgagor's Board of Directors to be no longer useful or necessary to the
operations or support of Casino Magic-Bossier City and (ii) any equipment
leased from a third party in the ordinary course of business, and any hotel,
casino or resort constructed on the Land in the future.
"RENTS" means all rents, room revenues, income, receipts, issues,
profits, revenues and maintenance fees, room, food and beverage revenues,
license and concession fees, proceeds and other benefits to which Mortgagor
may now or hereafter be entitled from the Land, the Improvements, the Space
Leases or any property encumbered hereby or any business or other activity
conducted by Mortgagor at the Land or the Improvements; provided, however,
that "Rents" shall not include rents, room revenues, income, receipts, issues,
profits, revenues and maintenance fees, room, food and beverage revenues,
license and concession fees, proceeds and other benefits generated by or
received from the Casino Magic-Bossier City Hotel or the Land on which the
Casino Magic-Bossier City Hotel is located, or any portion thereof, if the
same shall be an Excluded Asset.
"SECURITY AGREEMENT" means that certain Security Agreement dated as of the
date hereof by and between Mortgagor and Mortgagee.
"SPACE LEASES" means any and all present and future leases, subleases,
lettings, licenses, concessions, operating agreements, management agreements,
and all other agreements affecting the Mortgaged Property that Mortgagor has
entered into, taken by assignment, taken subject to, or assumed, or has
otherwise become bound by, now or in the future, that give any Person the
right to conduct its business on, or otherwise use, operate or occupy, all or
any portion of the Land or Improvements, and all guaranties, letters of credit
or other credit enhancement documents of any of the foregoing, and any leases,
agreements or arrangements permitting anyone to enter upon or use any of the
Mortgaged Property to extract or remove natural resources of any kind,
together with all amendments, extensions, and renewals of the foregoing
entered into in compliance with this Mortgage, together with all rental,
occupancy, service, maintenance or any other similar agreements pertaining to
use or occupation of, or the rendering of services at the Land, the
Improvements or any part thereof.
10
"SPACE LESSEE(S)" means any and all present and FUTURE tenants, licensees, or
other grantees of the Space Leases and any and all guarantors, sureties,
endorsers or others having primary or secondary liability with respect to such
Space Lease.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"TITLE INSURER" means Louisiana Title Company, a Louisiana corporation.
"UCC" means Uniform Commercial Code, Commercial Laws - Secured Transactions
La.
R.S. 10:9-101-9-605) in the State of Louisiana, as amended from time to time.
"VESSELS" means any vessel and its now existing or hereafter arising
components and appurtenances, including, without limitation, the Bossier
Riverboat, the Crescent City Riverboat, and all other riverboat gaming vessels
or other vessels now or hereafter owned by Mortgagor.
1.3 Undefined Terms. Any capitalized terms used in this Mortgage which
are not otherwise
defined herein shall have the meaning ascribed to such terms in the Indenture.
1.4 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, references in this Mortgage to a
particular agreement, instrument or document also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements
of any such agreement, instrument or document, provided that nothing contained
in this Section shall be construed to authorize any Person to execute or enter
into any such renewal, extension, amendment, modification, supplement or
restatement.
ARTICLE 2
LIENS AND SECURITY INTEREST
2.1 Hypothecation. FOR THE PURPOSE OF SECURING in favor of
Mortgagee the due and punctual payment and performance of the Obligations and
the payment of all such additional loans or advances as hereafter may be made
by Mortgagee to Mortgagor or its successors or assigns when evidenced by a
promissory note or notes reciting that they are secured by this Mortgage;
provided, however, that any and all future advances by Mortgagee to
Mortgagor made for the improvement, protection or preservation of the
Mortgaged Property, together with interest at the interest rate on the Notes,
shall be automatically secured hereby unless such a note or instrument
evidencing such advances specifically recites that it is not intended to be
secured hereby. Mortgagor, in consideration of the premises, and for the
purposes aforesaid, does hereby MORTGAGE, ASSIGN, BARGAIN, PLEDGE, RELEASE,
HYPOTHECATE AND WARRANT UNTO MORTGAGEE FOR THE BENEFIT OF THE NOTEHOLDERS each
of the following:
(A) The Land;
(B) TOGETHER WITH the Improvements;
(C) TOGETHER WITH all Appurtenant Rights;
(D) TOGETHER WITH (i) all the estate, right, title and interest of
Mortgagor of, in and to all judgments and decrees, insurance proceeds
(including without limitation, the right to receive proceeds attributable to
the insurance loss of the Land, the Improvements and the Appurtenant Rights,
all as provided in La. R.S. 9:5386), awards of damages and settlements
hereafter made resulting from condemnation proceedings or the taking of any of
the property described in Granting Clauses (A), (B) and (C) hereof or any part
thereof under the power of eminent domain, or for any drainage (whether caused
by such taking or otherwise) to the property described in Granting Clauses
(A), (B) and (C) hereof or any part thereof, or to any Appurtenant Rights
thereto, and Mortgagee is hereby authorized, subject to the provisions and
limitations contained in the Indenture, to collect and receive said awards and
proceeds and to give proper receipts and acquittance therefor, and (subject to
the terms hereof) to apply the same toward the payment of the
Obligations, notwithstanding the fact that the amount owing thereon may
not then be due and payable; (ii) subject to the provisions and limitations
contained in the Indenture, all proceeds of any sales or other
dispositions of the property or rights
described in Granting Clauses (A), (B) and (C) hereof or any part
thereof whether voluntary or involuntary, provided, however, that the
foregoing shall not be deemed to permit such sales, transfers, or other
dispositions except as specifically permitted herein; and (iii) subject to the
provisions and limitations contained in the Indenture, whether arising from
any voluntary or involuntary disposition of the property described in Granting
Clauses (A), (B) and (C), all Proceeds, products, replacements, additions,
substitutions, renewals and accessions, remainders, reversions and
after-acquired interest in, of and to such property;
(E) TOGETHER WITH the absolute assignment of any Space Leases or any
part thereof that Mortgagor has entered into, taken by assignment, taken
subject to, or assumed, or has otherwise become bound by, now or in the
future, together with all of the following (including all "Cash Collateral"
within the meaning of the Bankruptcy Law) arising from the Space Leases: (a)
Rents (subject, however, to the aforesaid absolute assignment to Mortgagee and
the conditional permission herein below given to Mortgagor to collect the
Rents), (b) all security deposits, and (c) all of Mortgagor's right, title,
and interest under the Space Leases, including the following: (i) the right to
receive and collect the Rents from the lessee, sublessee, guarantors or
licensee, or their Successor(s), under any Space Lease(s) and (ii) the right
to enforce against any tenants thereunder and otherwise any and all remedies
under the Space Leases, including Mortgagor's right to evict from possession
any tenant thereunder or to retain, apply, use, draw upon, pursue, enforce or
realize upon any guaranty of any Space Lease; to terminate, modify, or amend
the Space Leases; to obtain possession of, use, or occupy, any of the real or
personal property subject to the Space Leases; and to enforce or exercise,
whether at law or in equity or by any other means, all provisions of the Space
Leases and all obligations of the tenants thereunder and guarantors thereof
based upon (A) any breach by any such tenant or guarantor under the applicable
Space Lease (including any claim that Mortgagor may have by reason of a
termination, rejection, or disaffirmance of such Space Lease pursuant to any
Bankruptcy Law) and (B) the use and occupancy of the premises demised, whether
or not pursuant to the applicable Space Lease (including any claim for use and
occupancy arising under landlord-tenant law of the State of Louisiana or any
Bankruptcy Law). Permission is hereby given to Mortgagor, so long as no Event
of Default has occurred and is continuing hereunder, to collect and use the
Rents, as they become due and payable, but not in advance thereof. Upon the
occurrence of a Default or an Event of Default, the permission hereby given to
Mortgagor to collect the Rents shall automatically terminate, but such
permission shall be reinstated upon a cure of such Default or Event of
Default. Mortgagee shall have the right, at any time and from time to time,
to notify any Space Lessee of the rights of Mortgagee as provided by this
Section;
12
Notwithstanding anything to the contrary contained herein, the foregoing
provisions of this Paragraph (E) shall not constitute an assignment for
purposes of security but shall constitute an absolute and present assignment
of the Rents to Mortgagee, subject, however, to the conditional license given
to Mortgagor to collect and use the Rents as herein above provided; and the
existence or exercise of such right of Mortgagor shall not operate to
subordinate this assignment to any subsequent assignment, in whole or in part,
by Mortgagor;
(F) TOGETHER WITH, to the extent permitted by applicable law, all of
Mortgagor's right, title, and interest in and to any and all licenses,
permits, variances, special permits, franchises, certificates, rulings,
certifications, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights and agreements
(including, without limitation, options, option rights and contract rights)
now or hereafter obtained by Mortgagor from any Governmental Authority having
or claiming jurisdiction over the Land, the FF&E, the Project, or any other
element of the Mortgaged Property or providing access thereto, or the
operation of any business on, at, or from the Land, (including, without
limitation, any Gaming Licenses (except for any registrations, licenses,
findings of suitability or approvals issued by the Gaming Authority or any
other gaming licenses which are nonassignable); ]provided, that upon an
Event of Default hereunder or under the Indenture, if Mortgagee is not
qualified under the Gaming Laws to hold such Gaining Licenses, then Mortgagee
shall designate an appropriately qualified third party to which an assignment
of such Gaming Licenses can be made in compliance with the Gaining Laws;
(G) TOGETHER WITH all water stock, water permits and other water or
riparian rights relating to the Land;
(H) TOGETHER WITH all of Mortgagor's right, title and interest in and
to oil and gas and other mineral rights, if any, in or pertaining to the Land
and all royalty, leasehold and other rights of Mortgagor pertaining thereto;
(I) TOGETHER WITH any and all monies and other property, real or
personal, which may from time to time be subjected to the lien hereof by
Mortgagor or by anyone on its behalf or with its consent, or which may come
into the possession or be subject to the control of Mortgagee pursuant to this
Mortgage or any Loan Document, including, without limitation, any protective
advances under this Mortgage (provided that the maximum amount of principal
secured does not exceed the amount set forth in Section 1. I hereof); and all
of Mortgagor's right, title, and interest in and to all extensions,
improvements, betterments, renewals, substitutes for and replacements of, and
all additions, accessions, and appurtenances to, any of the foregoing that
Mortgagor may subsequently acquire or obtain by any means, or construct,
assemble, or otherwise place on any of the Mortgaged Property, and all
conversions of any of the foregoing; it being the intention of Mortgagor that
all property hereafter acquired by Mortgagor and required by any Loan Document
or this Mortgage to be subject to the lien of this Mortgage or intended so to
be shall forthwith upon the acquisition thereof by Mortgagor be subject to the
lien of this Mortgage as if such property were now owned by Mortgagor and were
specifically described in this Mortgage and granted hereby or pursuant hereto,
and Mortgagee is hereby authorized, subject to Gaming Laws, to receive any and
all such property as and for additional security for the obligations secured
or intended to be secured hereby. Mortgagor agrees to take any action as may
reasonably be necessary to evidence and perfect such liens or security
interests, including, without limitation, the execution of any documents
necessary to evidence and perfect such liens or security interests;
13
(J) TOGETHER WITH Proceeds of the foregoing property described in
Granting
Clauses (A) through (1) and Proceeds of any and all Gaming Licenses even if
such Gaming Licenses are not subject to the liens granted hereunder;
(K) TOGETHER WITH (i) Mortgagor's rights further to assign, sell, lease,
encumber or otherwise transfer or dispose of the property described in
Granting Clauses (A) through (J) inclusive, above, for debt or otherwise,
except to the extent expressly reserved by Mortgagor pursuant to Sections
4.09 and 4. 10 of the Indenture, or to evidence or secure a Permitted Lien
or Permitted Disposition; and
(L) EXPRESSLY EXCLUDING, HOWEVER, the Excluded Assets and FF&E (to
the extent that (i) the purchase of such FF&E was not financed with the
proceeds of the Notes, (ii) Mortgagor is permitted to enter into a FF&E
Financing Agreement for such FF&E under the Indenture and (iii) such FF&E
Financing Agreement prohibits Mortgagee from maintaining a security interest
in the FF&E covered thereby).
Mortgagor, for itself and its successors and assigns, covenants and
agrees to and with Mortgagee that, at the time or times of the execution of
and delivery of these presents or any instrument of further assurance with
respect thereto, Mortgagor has good right, full power and lawful authority to
assign, grant, convey, warrant, transfer, bargain or sell its interests in the
Mortgaged Property in the manner and form as aforesaid, and that the Mortgaged
Property is free and clear of all liens and encumbrances whatsoever, except
the Permitted Liens, and Mortgagor shall warrant and forever defend the
Mortgaged Property in the quiet and peaceable possession of Mortgagee and its
successors and assigns against all and every Person or Persons lawfully or
otherwise claiming or to claim the whole or any part thereof, except for the
Permitted Liens. Mortgagor agrees that any greater title to the Mortgaged
Property hereafter acquired by Mortgagor during the term hereof shall be
automatically subject hereto.
ARTICLE 3
COVENANTS OF MORTGAGOR
The purchasers of the Notes have been induced to purchase the Notes on the
basis of the following material covenants, all agreed to by Mortgagor:
3.1 PERFORMANCE OF LOAN DOCUMENTS..Mortgagor shall perform, observe
and comply with each and every provision hereof, and with each and every
provision contained in the Loan Documents and shall promptly pay to Mortgagee,
when payment shall become due, the principal with interest thereon and all
other sums required to be paid by Mortgagor under this Mortgage and the Loan
Documents.
3.2 GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES.Mortgagor
represents, covenants and warrants that: (a) Mortgagor has good and marketable
title to an indefeasible fee estate in the Land, the Improvements, the
Appurtenant Rights, the Space Leases, the Rents and the other Mortgaged
Property, free and clear of all encumbrances except Permitted Liens, and that
it has the right to hold, occupy and enjoy its interest in the Mortgaged
Property, and has good right, FULL power and lawful authority to subject the
Mortgaged Property to the Lien of this Mortgage and pledge the same as
provided herein and Mortgagee may at all times peaceably and quietly enter
upon, hold, occupy and enjoy the entire Mortgaged Property in accordance with
the terms hereof; (b) neither Mortgagor nor any Affiliate of Mortgagor is
Insolvent and no bankruptcy or insolvency proceedings are pending or
contemplated by or, to the best of Mortgagor's knowledge, against Mortgagor or
any Affiliate of Mortgagor; (c) all costs arising from construction of any
Improvements, the performance of any labor and the purchase of all
14
Improvements have been or shall be paid when due; (d) the Land has frontage
on, and direct access for ingress and egress to dedicated street(s); (e)
Mortgagor shall at all times conduct and operate the Mortgaged Property in a
manner so as not to lose the right to conduct gaming activities at the
Project; (f) no material part of the Mortgaged Property has been damaged,
destroyed, condemned or abandoned; (g) no part of the Mortgaged Property is
the subject of condemnation proceedings, and Mortgagor has no knowledge of any
contemplated or pending condemnation proceeding with respect to any portion of
the Mortgaged Property; and (h) the Mortgaged Property and all activities
thereon are in compliance with all applicable zoning and land use ordinances
and regulations, building codes, and fire codes.
3.3 COMPLIANCE WITH LEGAL REQUIREMENTS.Mortgagor shall promptly,
fully, and faithfully comply with all Legal Requirements and shall cause all
portions of the Mortgaged Property and its use and occupancy to fully comply
with Legal Requirements at all times and to be free of any Permitting
Noncompliance, whether or not such compliance requires work or remedial
measures that are ordinary or extraordinary, foreseen or unforeseen,
structural or nonstructural, or that interfere with the use or enjoyment of
the Mortgaged Property.
3.4 TAXES. Mortgagor shall pay all Impositions prior to delinquency
and shall deliver to Mortgagee promptly upon Mortgagee's request, evidence
satisfactory to Mortgagee that the Impositions have been paid or are not
delinquent; Mortgagor shall not suffer to exist, permit or initiate the joint
assessment of the real and personal property, or any other procedure whereby
the lien of the real property taxes and the lien of the personal property
taxes shall be assessed, levied or charged to the Land as a single lien,
except as may be required by law. In the event of the passage of any law
deducting from the value of real property for the purposes of taxation any
lien thereon, or changing in any way the taxation of deeds of trust or
obligations secured thereby for state or local purposes, or the manner of
collecting such taxes and imposing a tax, either directly or indirectly, on
this Mortgage or the Notes, Mortgagor shall pay all such taxes.
3.5 INSURANCE
(a) HAZARD INSURANCE REQUIREMENTS AND PROCEEDS.
(1) Hazard Insurance. Mortgagor shall at its sole expense obtain
for, deliver to, assign and maintain for the benefit of Mortgagee, during the
term of this Mortgage, insurance policies insuring the Mortgaged Property and
liability insurance policies, all in accordance with the requirements of
Section 4.19 of the Indenture. Mortgagor shall pay promptly when due any
premiums on such insurance policies and on any renewals thereof. Mortgagor
shall have provided Mortgagee with insurance certificates evidencing such
insurance prior to the effective date of this Mortgage and shall thereafter
provide such certificates prior to the anniversary or renewal date of each
such policy which certificate shall expressly state the expiration date for
each policy listed. All such insurance policies shall be issued by carriers
having an A.M. Best & Company, Inc. rating of A or higher and a financial size
category of not less than X, or if such carrier is not rated by A.M. Best &
Company, Inc., having the financial stability and size deemed appropriate by
an opinion from a reputable insurance broker. All such policies (except with
respect to workers' compensation policies) shall contain a noncontributory
standard mortgagee or beneficiary endorsement (Form 438 BFU or its equivalent)
naming Mortgagee as an additional insurer or loss payee, as the case may be,
with losses in excess of $ 10,000,000 payable jointly to Mortgagor and
Mortgagee (unless a Default or Event of Default has occurred and is then
continuing, in which case all losses are payable solely to Mortgagee), with no
recourse against Mortgagee for the payment of premiums, deductibles,
commissions or club calls, and shall provide for at least thirty (30) days
notice of cancellation. At least thirty (30) days prior to the expiration
date of all such policies, evidence of the renewal thereof satisfactory to
Mortgagee and expressly stating the expiration date for
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such policies shall be delivered to Mortgagee together with receipts
evidencing the payment of all premiums on such insurance policies and
renewals. In the event of loss, Mortgagor shall give immediate written notice
to Mortgagee and Mortgagee may make proof of loss if not made promptly by
Mortgagor. In the event of the foreclosure of this Mortgage or any other
transfer of title to the Mortgaged Property in extinguishment of the
indebtedness and other sums secured hereby, all right, title and interest of
Mortgagee in and to all insurance policies and renewals thereof then in force
shall pass to the purchaser or grantee of such Mortgaged Property at such
foreclosure sale.
(2) Handling of Proceeds. Pursuant to its rights granted hereunder
in all Proceeds from any insurance policies, Mortgagee is hereby
authorized and
empowered, subject to the provisions and limitations set forth in
the Indenture, at its option to adjust or compromise any loss, under
any insurance policies on the Mortgaged Property and to collect and receive
the Proceeds from any such policy or policies. So long as Mortgagor complies
with the provisions in Section 4. 11 of the Indenture, each insurance company
is hereby authorized to make payment for all such losses less than $25,000,000
to Mortgagor; provided that for all such losses more than $25,000,000 each
insurance company is hereby authorized and directed to make payment for such
losses directly to Mortgagee. Mortgagor hereby covenants and agrees to apply
such Proceeds in accordance with the terms of the Indenture and the following
provisions:
(A) Immediately upon receipt of such Proceeds and pending any
disbursement of such Proceeds for any permitted rebuilding, repair,
replacement or construction or the completion of any Event of Loss Offer (as
defined in the Indenture), the Mortgagor shall deposit such Proceeds and
without any commingling with Mortgagee or its designee subject to a first
priority security interest for the benefit of the Holders of the Notes as
depository for the disbursement thereof as provided in Section 4. 1 1 of the
Indenture.
(B) Mortgagor shall be permitted to use such proceeds in accordance
with Section 4. 1 1 of the Indenture and the requirements of this Section 3.5
(C) Pending the final application of such Proceeds for permitted
rebuilding, repair, replacement, construction or completion of any Event of
Loss Offer, such Proceeds shall be invested in Cash Equivalents.
(D) In the event that (a) Mortgagor uses the Proceeds to repair,
rebuild, replace or construct the Project and (b) such Proceeds exceed
$12,000,000, such Proceeds shall be deposited in the Construction Disbursement
Account (as defined in the Indenture) and such Proceeds shall be disbursed
pursuant to the terms of the Cash Collateral and Disbursement Agreement.
(E) In the event that (a) Mortgagor uses the Proceeds to repair,
rebuild, replace or construct the Project and (b) such Proceeds are equal to
or less than $12,000,000, the restoration work and the performance thereof
shall be subject to and performed in accordance with each of the following
provisions: (1) such work and the performance thereof shall be conducted in a
first-class, workmanlike manner, shall not permanently weaken nor impair the
structural strength of any existing Improvements, nor change the character
thereof or the purpose for which the same may be used, nor lessen the value of
the Mortgaged Property; (2) before the commencement of any such work, the
plans and specifications therefor (the "RESTORATION PLANS"), to the extent
required by law, shall be filed with and approved by all Governmental
Authorities having jurisdiction and all necessary licenses, permits and/or
authorizations from all Governmental Authorities shall have been obtained, and
all such work shall be done subject to and in accordance with all applicable
Legal Requirements; and (3) before commencing any such work, Mortgagor shall,
at Mortgagor's expense, have delivered to Mortgagee the Restoration
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Plans and a line item budget setting forth with reasonable particularity the
cost of completing such work, together with a written opinion from a reputable
architect certifying (a) that the execution of the work described in the
Restoration Plans will substantially restore the Project, and (b) that the
budget constitutes a reasonable approximation of the cost of so restoring the
Project in accordance with the Restoration Plans; provided, however, that in
the event that, such Proceeds are less than $50,000 Mortgagor shall not be
required to comply with Subsection 3 above.
(b) INSURANCE ESCROW. In order to secure the performance and
discharge of the Mortgagor's obligations under this Section 3.5, but not in
lieu of such obligations, Mortgagor shall, upon a failure to pay or provide
such insurance, at the times and in the manner required herein, pay over to
Mortgagee an amount equal to one-twelfth (1/12th) of the next maturing annual
insurance premiums for each month that has elapsed since the last date to
which such premiums were paid; and Mortgagor shall, in addition, pay over to
Mortgagee, on the first day of each succeeding month, sufficient funds (as
estimated from time to time) to permit Mortgagee to pay said premiums when
due. Such deposits shall not be, nor be deemed to be, trust funds but may be
commingled with the general funds of Mortgagee, and no interest shall be
payable in respect thereof except as required by law. Upon demand by
Mortgagee, Mortgagor shall deliver to Mortgagee such additional monies as are
necessary to make up any deficiencies in the amounts necessary to enable
Mortgagee to pay such premiums when due.
(c) COMPLIANCE WITH INSURANCE POLICIES. Mortgagor shall not violate
or permit to be violated any of the conditions or provisions of any policy of
insurance required by the Indenture or this Mortgage and Mortgagor shall so
perform and satisfy the requirements of the companies writing such policies
that, at all times, companies of good standing shall be willing to write
and/or continue such insurance. Mortgagor further covenants to promptly send
to Mortgagee copies of all notices relating to any violation of such policies
or otherwise affecting Mortgagor's insurance coverage or ability to obtain and
maintain such insurance coverage.
3.6 CONDEMNATION.Mortgagee is hereby authorized, at its option, to
commence, appear in and prosecute in its own or Mortgagor's name any action or
proceeding relating to any condemnation, seizure or taking by the exercise of
the power of eminent domain of any of the Mortgaged Property and to settle or
compromise any claim in connection therewith, and Mortgagor hereby appoints
Mortgagee as its attorney-in-fact to take any action in Mortgagor's name
pursuant to Mortgagee's rights hereunder. Immediately upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Mortgaged Property or any portion thereof, Mortgagor shall notify Mortgagee of
the pendency of such proceedings. Mortgagor from time to time shall execute
and deliver to Mortgagee all instruments requested by it to permit such
participation; provided, however, that such instruments shall be deemed as
supplemental to the foregoing grant of permission to Mortgagee, and unless
otherwise required, the foregoing permission shall, without more, be deemed
sufficient to permit Mortgagee to participate in such proceedings on behalf of
Mortgagor. All such compensation awards, damages, claims, rights of action
and Proceeds, and any other payments or relief, and the right thereto, are
included in the Mortgaged Property. To the extent such condemnation, seizure
or taking constitutes an Event of Loss, Mortgagee, after deducting therefrom
all its expenses, including reasonable attorneys fees, shall, or shall
authorize Mortgagor to apply such Proceeds in accordance with the provisions
of Section 4. 1 1 of the Indenture.
3.7 CARE OF MORTGAGED PROPERTY.
(a) Mortgagor shall preserve and maintain the Mortgaged Property in
good condition and repair, reasonable wear and tear excepted. Mortgagor shall
not permit, commit or suffer to exist any waste, impairment or deterioration
of the Mortgaged Property or of any part thereof that in any manner
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materially impairs Mortgagee's security hereunder and shall not take any
action which will increase the risk of fire or other hazard to the Mortgaged
Property or to any part thereof.
(b) Except for Permitted Dispositions, no part of the Improvements
shall be removed, demolished or materially altered in a manner which adversely
affects the value of the Improvements without the prior written consent of
Mortgagee, which consent shall not be unreasonably withheld, but subject in
any event to evidence as may be required by Mortgagee. Mortgagor shall have
the right, without such consent, to remove and dispose of free from the lien
of this Mortgage any part of the Improvements as from time to time may become
worn out or obsolete, provided that either (i) such removal or disposition
does not materially affect the value of the Mortgaged Property or (ii) prior
to or promptly following such removal, any such property shall be replaced
with other property of substantially equal utility and of a value at least
substantially equal to that of the replaced property when FIRST acquired and
free from any security interest of any other Person (subject only to Permitted
Liens), and by such removal and replacement Mortgagor shall be deemed to have
subjected such replacement property to the lien of this Mortgage.
(c) Notwithstanding the foregoing provisions of this Section 3.7,
Mortgagor may develop the Project in the manner contemplated by the Offering
Memorandum, to the extent permitted by the Indenture.
3.8 SPACE LEASES
(a) Mortgagor represents and warrants that
(i) Mortgagor has delivered to Mortgagee true, correct and complete
copies of all Space Leases, including all amendments and modifications,
written or oral existing as of the date hereof;
(ii) Mortgagor has not executed or entered into any modifications or
amendments of the Space Leases, either orally or in writing, other than
amendments that have been disclosed to Mortgagee in writing;
(iii) no material default now exists under any Space Lease;
(iv) no event has occurred that, with the giving of notice or the
passage of time or both, would constitute such a material default or would
entitle Mortgagor or any other party under such Space Lease to cancel the same
or otherwise avoid its obligations;
(v) Mortgagor has not accepted prepayments of installments of Rent under
any Space Leases, except for security deposits not in excess of one month's
Rent;
(vi) except for the assignment effected hereby, Mortgagor has not
executed any assignment or pledge of any of Space Leases, the Rents, or of
Mortgagor's right, title and interest in the same; and
(vii) this Mortgage conforms and complies with all Space Leases, does
not constitute a violation or default under any Space Lease, and is and shall
at all times constitute a valid lien on Mortgagor's interests in the
Space Leases.
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(b) Mortgagee shall not be responsible for any security deposits
concerning any Space Leases except for such security deposits as are within
Mortgagee's possession.
(c) Mortgagor shall promptly deliver to Mortgagee a copy of any Space
Leases entered into and, from time to time, as entered into, all amendments,
supplements and modifications thereto and thereof.
3.9 FURTHER ENCUMBRANCE.
(a) Mortgagor covenants that at all times prior to the discharge of
the Indenture, except for Permitted Liens, Permitted Dispositions and
dispositions permitted under Section 3.10, Mortgagor shall neither make nor
suffer to exist, nor enter into any agreement for, any sale, assignment,
exchange, mortgage, transfer, Lien, hypothecation or encumbrance of all or any
part of the Mortgaged Property, including, without limitation, the Rents. As
used herein, "transfer" includes the actual transfer or other disposition,
whether voluntary or involuntary, by law, or otherwise, except those transfers
specifically permitted herein, provided, however, that "transfer" shall not
include the granting of utility or other beneficial easements with respect to
the Mortgaged Property which have been granted by Mortgagor and are reasonably
necessary to the construction, maintenance or operation of the Project.
(b) Mortgagor agrees that in the event the ownership of the Mortgaged
Property or any part thereof becomes vested in a Person other than Mortgagor,
Mortgagee may, without notice to Mortgagor, deal in any way with such
successor or successors in interest with reference to this Mortgage, the Notes
and other Obligations hereby secured without in any way vitiating or
discharging Mortgagor's or any guarantor's, surety's or endorser's liability
hereunder or upon the Obligations hereby secured. No sale of the Mortgaged
Property and no forbearance to any Person with respect to this Mortgage and no
extension to any Person of the time for payment of the Notes, and other sums
hereby secured given by Mortgagee shall operate to release, discharge, modify,
change or affect the original liability of Mortgagor, or such guarantor,
surety or endorser either in whole or in part.
(c) This Mortgage, as applied to property subject to an FF&E
Financing Agreement, shall be subordinated to the liens of any FF&E Financing
Agreements if required by such FF&E Financing Agreement (or if required by an
FF&E Financing Agreement, it shall be released; providedthat, upon the
payment of the indebtedness represented by any such FF&E Financing Agreement,
then the property previously subject thereto shall become and be subject to
this Mortgage thereafter) and any future or further advances made thereunder
and to any modifications, renewals or extensions thereof to which the lien of
this Mortgage attaches; provided, further, however, that any such FF&E
Financing Agreement shall encumber only that FF&E specifically subject to the
FF&E Financing Agreement. Mortgagor covenants and agrees to comply with all
of the terms and conditions set forth in any FF&E Financing Agreement with
respect to which Mortgagee has taken a lien hereunder. If Mortgagor shall
fail to make any payment of principal of or interest on the sums secured by
such security interest or any payment in order to perform or observe any other
term, covenant, condition or agreement of any FF&E Financing Agreement with
respect to which Mortgagee has taken a lien hereunder on its part to be
performed or observed, except where Mortgagor is contesting such payment in
good faith, then Mortgagee may make such payment of the principal of or
interest on the sums secured by such security interest or may make any payment
in order to perform or observe any other term, covenant, condition or
agreement of any FF&E Financing Agreement on Mortgagor's part to be performed
or observed and any and all sums so expended by Mortgagee shall be Obligations
and shall be secured by this Mortgage and shall be repaid by Mortgagor upon
demand, together with interest thereon at one percent (I %) per annum in
excess of the interest rate on the Notes from the date of advance. In
furtherance of such subordination or release, as applicable, Mortgagee, upon
receipt of an officer's certificate from
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Mortgagor certifying that the requirements of this Section 3.9(c) have been
satisfied, shall execute, acknowledge and deliver to Mortgagor, at Mortgagor's
expense, any and all such evidence and documents necessary to evidence the
subordination or release of this Mortgage in accordance with the foregoing
provisions of this Section 3.9(c).
3.10 PARTIAL RELEASES OF MORTGAGED PROPERTY.
(a) Mortgagor may from time to time (i) transfer a portion of the
Mortgaged Property (including any temporary taking) to any Person legally
empowered to exercise the power of eminent domain, (ii) make a Permitted
Disposition, (iii) grant utility easements reasonably necessary for the
construction and operation of the Project, which grant or transfer is for the
benefit of the Mortgaged Property or (iv) encumber that portion of the Land on
which the Casino Magic-Bossier City Hotel will be constructed and all
improvements relating to the Casino Magic-Bossier City Hotel as expressly
permitted pursuant to Section 4.09 of the Indenture; provided that the
lender financing the construction of the Casino Magic-Bossier City Hotel and
the Trustee shall have consented to a reciprocal easement agreement
substantially in the form of the Form of Reciprocal Easement Agreement
attached as Exhibit 0 to the Indenture, relating to the Mortgaged Property.
In each such case, Mortgagee shall execute and deliver any instruments
necessary or appropriate to effectuate or confirm any such transfer or grant,
free from the lien of this Mortgage; provided, however, that Mortgagee shall
execute a lien release or subordination agreement, as appropriate, for matters
described in clauses (i) and (iii) above only if:
(A) Mortgagee shall have received any Officer's Certificate or
Opinion of
Counsel required or authorized by Section 10.03 of the Indenture;
(B) No default or event of default shall have occurred under the
Indenture, no Event of Default shall have occurred hereunder, and no event
which with notice or lapse of time or both would constitute such Event of
Default, has occurred and is continuing and that the conditions of this
Section 3. 10 have been fulfilled, and such transfer, grant or release is
permitted by the Indenture;
(C) Mortgagee shall have received a counterpart of the instrument
pursuant to which such transfer, grant or release is to be made, and each
instrument which Mortgagee is requested to execute in order to effectuate or
confirm such transfer, grant or release;
(D) Mortgagee shall have received such other instruments,
certificates
(including evidence of authority) and opinions as Mortgagee may reasonably
request or as required or authorized under the Indenture, including, but
not limited to, opinions that the proposed release is permitted by this
Section 3.10.
(b) Any consideration received for a transfer to any Person empowered
to exercise the right of eminent domain shall be subject to Section 3.6
hereof.
3.11 FURTHER ASSURANCES.
(a) At its sole cost and without expense to Mortgagee, Mortgagor
shall do, execute, acknowledge and deliver any and all such further
reasonable acts, deeds, conveyances, notices, requests for notices,
financing statements, continuation statements, certificates, assignments,
notices of assignments, agreements, instruments and further assurances,
and shall mark any chattel paper, deliver any chattel paper or instruments
to Mortgagee and take any other actions that are reasonably necessary,
prudent, or requested by Mortgagee to perfect or continue the perfection
and first priority of Mortgagee's
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security interest in the Mortgaged Property, to protect the Mortgaged Property
against the rights, claims, or interests of third Persons other than holders
of Permitted Liens or to effect the purposes of this Mortgage, including the
security agreement and the absolute assignment of Rents contained herein, or
for the filing, registering or recording thereof.
(b) Mortgagor shall forthwith upon the execution and delivery of this
Mortgage, and thereafter from time to time, cause this Mortgage and each
instrument of further assurance to be FILED, indexed, registered, recorded,
given or delivered in such manner and in such places as may be required by any
present or future law in order to publish notice of and fully to protect the
lien hereof upon, and the title of Mortgagee to, the Mortgaged Property.
3.12 ASSIGNMENT OF RENTS.The assignment of Space Leases and Rents
set out above in Granting Clause (E) shall constitute an absolute and present
assignment to Mortgagee, subject to the license herein given to Mortgagor to
collect the Rents, and shall be fully operative without any further action on
the part of any party, and specifically Mortgagee shall be entitled upon the
occurrence of an Event of Default hereunder to all Rents, whether or not
Mortgagee takes possession of the Mortgaged Property, or any portion thereof
and, in connection therewith, Mortgagor irrevocably agrees that all tenants
and guarantors of Space Leases (and any other Person liable for Rents) shall
be authorized to pay Rents directly to Mortgagee without liability of such
tenants, guarantors or such other Persons for the determination of the
existence of any Default or Event of Default claimed by Mortgagee. Tenants,
guarantors and such other Persons liable for Rents shall be expressly relieved
of any and all duty, liability and obligation to Mortgagor in connection with
any and all Rents so paid. The absolute assignment contained in Granting
Clause (E) shall not be deemed to impose upon Mortgagee any of the obligations
or duties of Mortgagor provided in any such Space Lease (including, without
limitation, any liability under the covenant of quiet enjoyment contained in
any Space Lease in the event that any lessee shall have been joined as a party
defendant in any action to foreclose this Mortgage and shall have been barred
and foreclosed thereby of all right, title and interest and equity of
redemption in the Mortgaged Property or any part thereof). Mortgagor shall
and does hereby indemnify and hold Mortgagee harm-less from, against and in
respect of (i) any and all actions, causes of action, suits, claims, demands,
judgments, proceedings and investigations (or any appeal thereof or relative
thereto or other review thereof), arising out of any Space Lease; and (ii) any
and all liabilities, damages, losses, costs, expenses (including counsel fees
and expenses and disbursements of counsel) and amounts paid in compromise or
settlement, suffered, incurred or sustained by Mortgagee as a result of, or by
reason of or in connection with, any of the matters covered by the immediately
preceding clause (i).
3.13 EXPENSES.
(a) Except as otherwise agreed by Mortgagor and the Initial
Purchasers, Mortgagor shall pay when due and payable all costs, including
without limitation, those reasonable appraisal fees, recording fees, taxes,
brokerage fees and commissions, abstract fees, title policy fees, escrow fees,
attorneys' and paralegal fees, travel expenses, fees for inspecting
architect(s) and engineer(s) and all other reasonable costs and expenses of
every character which have been incurred or which may hereafter be incurred by
Mortgagee or any assignee of Mortgagee in connection with the preparation and
execution of Loan Documents, amendments thereto or instruments, agreements or
documents of further assurance, the funding of the Notes secured hereby, and
the enforcement of any Loan Document; and
(b) Mortgagor shall, upon demand by Mortgagee, reimburse Mortgagee or
any assignee of Mortgagee for all such reasonable expenses described in
Section 3.13(a) which have been incurred or which shall be incurred by it; and
21
(c) Mortgagor shall indemnify Mortgagee with respect to any transaction or
matter or loss, liability, claim, cost, damage or expense of any kind,
including reasonable attorneys' fees, in any way connected with any
portion of the Mortgaged Property, this Mortgage, including any occurrence
at, in, on, upon
or about the Mortgaged Property (including any personal injury, loss of life,
or property damage), or Mortgagor's use, occupancy, or operation of the
Mortgaged Property, or the filing or enforcement of any mechanic's lien, or
directly or indirectly resulting from any Hazardous Materials being present or
released in, on or around any part of the Mortgaged Property, or in the soil,
groundwater or soil vapor on or under the land which has occurred during or
prior to Mortgagor's ownership of the Mortgaged Property, or otherwise caused
in whole or in part by any act, omission or negligence occurring on or at the
Mortgaged Property, including failure to comply with any Legal Requirement or
with any requirement of this Mortgage that applies to Mortgagor, unless caused
by the gross negligence or willful misconduct of Mortgagee. If Mortgagee is a
party to any litigation as to which either Mortgagor is required to indemnify
Mortgagee (or is made a defendant in any action of any kind against Mortgagor
or relating directly or indirectly to any portion of the Mortgaged Property)
then, at Mortgagee's option, Mortgagor shall undertake Mortgagee's defense,
using counsel satisfactory to Mortgagee (and any settlement shall be subject
to Mortgagee's consent, not to be unreasonably withheld, and in any case shall
indemnify Mortgagee against such litigation). Mortgagor shall pay all
reasonable costs and expenses, including reasonable legal costs, that
Mortgagee pays or incurs in connection with any such litigation. Any amount
payable under any indemnity in this Mortgage shall be a demand obligation,
shall be added to, and become a part of, the Obligations under this Mortgage,
shall be secured by this Mortgage, and shall bear interest at one percent (1
%) per annum in excess of the interest rate on the Notes. Such indemnity
shall survive any release of this Mortgage and any foreclosure hereunder.
3.14 MORTGAGEE'S CURE OF MORTGAGOR'SDefault. If Mortgagor defaults
in the payment of any tax, assessment, lien, encumbrance or other Imposition,
in its obligation to furnish insurance hereunder, or in the performance or
observance of any other covenant, condition or term of this Mortgage or any
Loan Document unless Mortgagor is contesting in good faith such Imposition and
posts an adequate bond therefor or deposits in a segregated account a reserved
amount equal to such Contested Imposition, Mortgagee may, but is not obligated
to, to preserve its interest in the Mortgaged Property, perform or observe the
same, and all payments made (whether such payments are regular or accelerated
payments) and reasonable costs and expenses incurred or paid by Mortgagee in
connection therewith shall become due and payable immediately. The amounts so
incurred or paid by Mortgagee, together with interest thereon at one percent
(I %) per annum in excess of the interest rate on the Notes from the date
incurred until paid by Mortgagor, shall be added to the Obligations and
secured by the lien of this Mortgage. Mortgagee is hereby empowered to enter
and to authorize others to enter upon the Land or any part thereof for the
purpose of performing or observing any such defaulted covenant, condition or
term, without thereby becoming liable to Mortgagor or any Person in possession
holding under Mortgagor. No exercise of any rights under this Section by
Mortgagee shall cure or waive any Default or Event of Default or notice of
default hereunder or invalidate any act done pursuant hereto or to any such
notice, but shall be cumulative of all other rights and remedies.
3.15 COMPLIANCE WITH PERMITTED LIEN AGREEMENTS.Mortgagor or any
Affiliate of Mortgagor shall comply with each and every material
obligation imposed upon it and contained in any agreement pertaining to a
material Permitted Lien.
3.16 DEFENSE OF ACTIONS.Mortgagor shall appear in and defend any
action or proceeding affecting or purporting to affect the security hereof or
the rights or powers of Mortgagee, and shall pay all costs and expenses,
including cost of title search and insurance or other evidence of title,
preparation of survey, and reasonable attorneys' fees in any such action or
proceeding in which Mortgagee may appear or may be joined as a party and in
any suit brought by Mortgagee based upon or in connection
22
with this Mortgage or any Loan Document. Nothing contained in this section
shall, however, limit the right of Mortgagee to appear in such action or
proceeding with counsel of its own choice, either on its own behalf or on
behalf of Mortgagor, and all payments made and reasonable costs incurred or
paid by Mortgagee in connection therewith (including without limitation,
attorneys' fees and expenses) shall be payable by Mortgagor on demand,
accruing interest thereon from the date(s) incurred until paid, at one percent
(1 %) per annum in excess of the interest rate on the Notes, and such amounts
shall be included in the Obligations secured hereby.
3.17 SUBSIDIARIES ANDAffiliates.
(a) Subject to Mortgage. Mortgagor shall cause all of its Subsidiaries in
any way involved with the operation of the Mortgaged Property or the
Project to observe the covenants and conditions of this Mortgage to the
extent necessary
to give the full intended effect to such covenants and conditions and to
protect and preserve the security of Mortgagee hereunder. Mortgagor shall, at
Mortgagee's request, cause any such Affiliate to execute and deliver to
Mortgagee such further instruments or documents as Mortgagee may reasonably
deem necessary to effectuate the terms of this Section 3.17.
(b) RESTRICTION ON USE OF SUBSIDIARY OR AFFILIATE. Mortgagor shall not use
any Affiliate in the operation of the Mortgaged Property or the Project if
such use would in any way impair the security for the Notes and the
Indenture or circumvent any covenant or condition of this Mortgage
or of any other Loan Document.
3.18 TITLE INSURANCE. Concurrently with the execution and delivery
of this Mortgage, Mortgagor shall cause to be delivered to Mortgagee at
Mortgagor's expense, one or more ALTA extended coverage Mortgagee's Policies
of Title Insurance (1970) showing fee title to the real property situated in
the City of Bossier City, Parish of Bossier or Parish of Caddo, State of
Louisiana, more specifically described in "Exhibit B" attached hereto,
vested in Mortgagor and the lien of this Mortgage to be a perfected lien,
prior to any and all encumbrances other than Permitted Liens, and subject only
to such exceptions and with such endorsements as shall be satisfactory to
Mortgagee (including without limitation, zoning (including parking), access,
contiguity (if the Land constitutes more than one parcel), comprehensive REM,
extended coverage (deletion of general exceptions listed in Schedule B) and a
waiver of the arbitration clause). The title insurer shall obtain reinsurance
in such amounts as Mortgagee shall require.
3.19 REPRESENTATIONS AND WARRANTIES REGARDING, HAZARDOUSMaterials.
Before signing this Agreement, Mortgagor researched and inquired into the
previous uses and owners of the Mortgaged Property. In the event that
Mortgagor learns, or has reason to believe, that any of the following
representations and warranties are not true, Mortgagor hereby covenants to
give notice thereof to Mortgagee immediately. Mortgagor hereby represents and
warrants that to the best of its knowledge:
(a) there are no pending or threatened actions, suits, claims, legal
proceedings or any other proceedings based on Environmental Conditions,
Environmental Noncompliance or Permitting Noncompliance at the Mortgaged
Property, or any part thereof, or otherwise arising from the activities of
Mortgagor or any other Person at the Mortgaged Property involving Hazardous
Materials, including proceedings under any Environmental Laws based on the
off-site transportation, treatment, storage, recycling or disposal of
Hazardous Materials generated by Mortgagor or any other Person;
(b) there are no conditions, facilities, procedures or any other facts or
circumstances at the Mortgaged Property which constitute Environmental
Noncompliance or Permitting Noncompliance;
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(c) there are no structures, improvements, equipment, activities,
fixtures or facilities on the Mortgaged Property which are constructed with,
use or otherwise contain asbestos-containing construction materials in
violation of applicable law. For the purposes of this Subsection 3.19(c): (1)
"asbestos " means fibrous forms of various hydrated minerals, including
chrysotile (fibrous serpentine), crocidolite (fibrous reibecktite), amosite
(fibrous cummingtonite-grunerite), fibrous tremolite, fibrous actinolite, and
fibrous anthophyllite; (2) "asbestos-containing materials" means any
manufactured construction material which contains more than one-tenth (1 / IO)
of one percent (1 %) asbestos by weight;
(d) no portion of the Mortgaged Property, activities, or facilities
thereon uses Hazardous Materials in violation of applicable law or
equipment containing polychlorinated biphenyls;
(e) there are no processes, facilities, operations, equipment or any
other activities on the Mortgaged Property which currently result in the
release or threatened release of Hazardous Materials into the environment, or
which otherwise contribute to Environmental Conditions, except to the extent
that such releases or threatened releases do not constitute a condition of
Environmental Noncompliance, and the Project is being designed and constructed
so that upon completion there will be no condition of Environmental
Noncompliance; and
(f) there are no underground storage tanks, or underground piping
associated with tanks, used for the management of Hazardous Materials at the
Mortgaged Property which do not have a full secondary containment system in
place, or are not otherwise installed in accordance with applicable law, and
there are no abandoned underground storage tanks at the Mortgaged Property
which have not been either abandoned in place or removed pursuant to a permit
issued by a Governmental Authority.
3.20 COVENANTS REGARDING HAZARDOUS MATERIALS.
(a) COMPLIANCE REGARDING HAZARDOUS MATERIALS. Mortgagor shall comply, and
shall use commercially reasonable efforts to cause all tenants and any
other Persons who may come upon the Mortgaged Property to comply, with
all Environmental Laws. Mortgagor also has complied and shall comply
with the recommendations of any qualified environmental engineer or other
expert which apply or pertain to the Mortgaged Property to the extent
required to effect compliance with all Environmental Laws applicable or
pertaining to the Mortgaged Property.
(b) NOTICES REGARDING HAZARDOUS MATERIALS. Mortgagor shall promptly
notify Mortgagee if it knows, suspects or believes (1) that there are or may
be any Hazardous Substance in, on or under the Mortgaged Property, or in the
soil, groundwater or soil vapor on or under the Mortgaged Property, in
violation of Environmental Laws, (2) that Mortgagor or the Mortgaged Property
is likely to be subject to any threatened or pending investigation by any
governmental agency under any law, regulation or ordinance pertaining to any
Hazardous Substance, (3) that there is any condition on any real property
adjoining or in the vicinity of the Mortgaged Property that is likely to cause
the Mortgaged Property or any part thereof to be subject to any restriction on
the ownership, occupancy, transferability or use of the Mortgaged Property
under any Environmental Law, or (4) that any third party has made or
threatened to bring a claim against Mortgagor from any Hazardous Materials.
(c) REMEDIAL WORK. In the event that any investigation, site
monitoring, containment, cleanup, removal, restoration or other remedial work
of any kind or nature (the "REMEDIAL WORK") is reasonably necessary or
required under any applicable, local, state or federal law or regulation, any
judicial order, or by any governmental or nongovernmental entity or Person
because of, or in connection with, the current or future presence, suspected
presence, release or suspected release of a Hazardous Material in or into the
air, soil, groundwater, surface water or soil vapor at, on, about,
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under or within the Mortgaged Property (or any portion thereof), Mortgagor
shall promptly notify Mortgagee thereof and, within thirty (30) days after
written demand for performance thereof by Mortgagee (or such shorter period of
time as may be required under any applicable law, regulation, order or
agreement), commence to perform or cause to be commenced, and thereafter
diligently prosecuted to completion, all such Remedial Work. All Remedial
Work shall be performed by one or more contractors, reasonably selected by
Mortgagor and under the supervision of a consulting engineer nominated by
Mortgagor and approved in advance in writing by Mortgagee (which approval
shall not be unreasonably withheld or delayed). All costs and expenses of
such Remedial Work shall be paid by Mortgagor including, without limitation,
the charges of such contractor(s) and/or the consulting engineer, and
Mortgagor's reasonable attorneys' fees and costs incurred in connection with
monitoring or review of such Remedial Work. In the event Mortgagor, following
notice from Mortgagee shall fail to timely commence, or cause to be commenced,
or fail to diligently prosecute to completion, such Remedial Work, Mortgagee
may, but shall not be required to, cause such Remedial Work to be performed
and all costs and expenses thereof, or incurred in connection therewith,
together with interest thereon at one percent (I %) per annum in excess of the
interest rate on the Notes from the date incurred until paid by Mortgagor,
shall become part of the Obligations secured hereby. Notwithstanding the
foregoing, in the event that any circumstances arise which require immediate
action by Mortgagor, Mortgagor shall be allowed to commence such remediation
work without the prior approval of Mortgagee, provided that such Remedial Work
is performed in compliance with applicable law and provided that Mortgagor
provides the notices and obtains the consents described above within a
reasonable time hereafter.
3.21 SITE VISITS, OBSERVATIONS AND TESTING,.Mortgagee and its agents and
representatives shall have the right at any reasonable time to enter and
visit the
Mortgaged Property for the purpose of observing the Mortgaged Property,
taking and removing soil or groundwater samples, and conducting tests on
any part of the Mortgaged Property. Mortgagee and its agents and
representatives have no duty, however, to visit or observe the Mortgaged
Property or to conduct tests, and no site visit, observation or testing by
Mortgagee shall impose any liability on Mortgagee. In no event shall any site
visit, observation or testing by Mortgagee be a representation that Hazardous
Materials are or are not present in, on or under the Mortgaged Property, or
that there has been or shall be compliance with any law, regulation or
ordinance pertaining to Hazardous Materials or any other applicable Legal
Requirement. Neither Mortgagor nor any other party is entitled to rely on any
site visit, observation or testing by Mortgagee. Mortgagee owes no duty of
care to protect Mortgagor or any other party against, or to inform Mortgagor
or any other party of, any Hazardous Materials or any other adverse condition
affecting the Mortgaged Property; provided, however, that in the event
Mortgagee has actual knowledge of the presence of Hazardous Materials on the
Mortgaged Property, or any other adverse condition affecting the Mortgaged
Property, Mortgagee shall use its best efforts to inform Mortgagor of the
presence of such Hazardous Materials. Mortgagee shall make reasonable efforts
to avoid interfering with Mortgagor's use of the Mortgaged Property in
exercising any rights provided in this Section.
ARTICLE 4
CORPORATE LOAN PROVISIONS
4.1 INTERACTION WITH INDENTURE.
(a) INCORPORATION BY REFERENCE. Any capitalized term used in this Mortgage
without definition, but defined in the Indenture, shall have the same meaning
here as in the Indenture.
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(b) CONFLICTS. Notwithstanding any other provision of this Mortgage,
the terms and provisions of this Mortgage shall be subject and subordinate to
the terms of the Indenture. To the extent that the Indenture provides
Mortgagor with a particular cure or notice period, or establishes any
limitations or conditions on Mortgagee's actions with regard to a particular
set of facts, Mortgagor shall be entitled to the same cure periods and notice
periods, and Mortgagee shall be subject to the same limitations and
conditions, under this Mortgage, as under the Indenture, in place of the cure
periods, notice periods, limitations and conditions provided for under this
Mortgage; provided, however, that such cure periods, notice periods,
limitations and conditions shall not be cumulative as between the Indenture
and this Mortgage. In the event of any conflict or inconsistency between the
provisions of this Mortgage and those of the Indenture, including, without
limitation, any conflicts or inconsistencies in any definitions herein or
therein, the provisions or definitions of the Indenture shall govern.
4.2 OTHERCollateral. This Mortgage is one of a number of security
agreements to secure the debt delivered by or on behalf of Mortgagor pursuant
to the Indenture and the other Loan Documents and securing the Obligations
secured hereunder. All potential junior Lien claimants are placed on notice
that, under any of the Loan Documents or otherwise (such as by separate future
unrecorded agreement between Mortgagor and Mortgagee), other collateral for
the Obligations secured hereunder (i.e., collateral other than the Mortgaged
Property) may, under certain circumstances, be released without a
corresponding reduction in the total principal amount secured by this
Mortgage. Such a release would decrease the amount of collateral securing the
same indebtedness, thereby increasing the burden on the remaining Mortgaged
Property created and continued by this Mortgage. No such release shall impair
the priority of the lien of this Mortgage. By accepting its interest in the
Mortgaged Property, each and every junior Lien claimant shall be deemed to
have acknowledged the possibility of, and consented to, any such release.
Nothing in this paragraph shall impose any obligation upon Mortgagee.
ARTICLE 5
DEFAULTS AND REMEDIES
5.1 EVENT OFDefault. The terms "Default" and "Event of Default,"
wherever used in this Mortgage, shall mean any one or more of the defaults or
events of default listed in Section 6.01 of the Indenture, subject to such
cure rights as may be expressly set forth in the Indenture.
5.2 ACCELERATION OF MATURITY.If a Default or an Event of Default
occurs, Mortgagee may (except that such acceleration shall be automatic if the
Default or Event of Default is caused by a Mortgagor's or any Guarantor's
Bankruptcy), in accordance with Section 6.02 of the Indenture, declare the
Notes and all indebtedness or sums secured hereby, to be due and payable
immediately, and upon such declaration such principal and interest and other
sums shall immediately become due and payable without demand, presentment,
notice or other requirements of any kind (all of which Mortgagor waives)
notwithstanding anything in this Mortgage or any Loan Document or applicable
law to the contrary.
5.3 PROTECTIVEAdvances. If Mortgagor fails to make any payment or
perform any other obligation under the Notes or any other Loan Document, then
without thereby limiting Mortgagee's other rights or remedies, waiving or
releasing any of Mortgagor's obligations, or imposing any obligation on
Mortgagee, Mortgagee may either advance any amount owing or perform any or all
actions that Mortgagee considers necessary or appropriate to cure such
default. All such advances shall constitute "Protective Advances." No sums
advanced or performance rendered by Mortgagee shall cure, or be deemed a
waiver of, any Default or Event of Default.
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5.4 INSTITUTION OF EQUITY PROCEEDINGS. If a Default or an Event of
Default occurs, Mortgagee may institute an action, suit or proceeding in
equity for specific performance of this Mortgage, the Notes or any Loan
Document, all of which shall be specifically enforceable by injunction or
other equitable remedy. Mortgagor waives any defense based on laches or any
applicable statute of limitations.
5.5 MORTGAGEE'S POWER OF ENFORCEMENT.
(a) If a Default or an Event of Default occurs, Mortgagee shall be
entitled, at its option and in its sole and absolute discretion, to prepare
and record on its own behalf, written declaration of default and demand for
sale and written Notice of Breach and Election to Sell (or other statutory
notice) to cause the Mortgaged Property to be sold to satisfy the obligations
hereof.
(b) After the lapse of such time as may then be required by law
following the recordation of said Notice of Breach and Election to Sell, and
notice of sale having been given as then required by law, including compliance
with all applicable Gaming Laws, Mortgagee without demand on Mortgagor, shall
sell the Mortgaged Property or any portion thereof at the time and place fixed
by it in said notice, either as a whole or in separate parcels, and in such
order as it may determine, at public auction to the highest bidder, of cash in
LAWFUL money of the United States payable at the time of sale. Mortgagee may,
for any cause it deems expedient, postpone the sale of all or any portion of
said property until it shall be completed and, in every case, notice of
postponement shall be given by public announcement thereof at the time and
place last appointed for the sale and from time to time thereafter Mortgagee
may postpone such sale by public announcement at the time FIXED by the
preceding postponement. Mortgagee shall execute and deliver to the purchaser
its Deed, Bill of Sale, or other instrument conveying said property so sold,
but without any covenant or warranty, express or implied. The recitals in
such instrument of conveyance of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any Person, including Mortgagee, may bid
at the sale.
(c) After deducting all costs, fees and expenses of Mortgagee and of
this Mortgage, including, without limitation, costs of evidence of title and
reasonable attorneys' fees of Mortgagee in connection with a sale, Mortgagee
shall apply the proceeds of such sale to payment of all sums expended under
the terms hereof not then repaid, with accrued interest at the interest rate
on the Notes then to the payment of all other Obligations then secured hereby
and the remainder, if any, to the Person or Persons legally entitled thereto
as provided by applicable law.
(d) If any Default or Event of Default occurs, Mortgagee may, either with or
without entry or taking possession of the Mortgaged Property, and without
regard
to whether or not the indebtedness and other sums secured hereby shall
be due and without prejudice to the right of Mortgagee thereafter to
bring an action or proceeding to foreclose or any other action for any
default existing at the time such earlier action was commenced, proceed
by any appropriate action or proceeding: (1) to enforce payment of the Notes,
to the extent permitted by law, or the performance of any term hereof or any
other right; (2) to foreclose this Mortgage in any manner provided by law
for the foreclosure of mortgages or deeds of trust on real property or
security agreements concerning personal property and to sell, as an entirety
.or in separate lots or parcels, the Mortgaged Property or any portion
thereof pursuant to the laws of the State of Louisiana or under the judgment
or decree of a court or courts of competent jurisdiction, and
Mortgagee shall be entitled to recover in any such proceeding all costs
and expenses incident
thereto, including reasonable attorneys' fees in such amount as shall be
awarded by the court; (3) to exercise any or all of the rights and remedies
available to it under the Indenture; and (4) to pursue any other remedy
available to it. Mortgagee shall take action either by such proceedings or by
the exercise of its powers with respect to entry or taking possession, or
both, as Mortgagee may determine.
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5.6 MORTGAGEE'S RIGHT TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY
INCOME.
(a) If a Default or an Event of Default occurs, (i) Mortgagor, upon
demand of Mortgagee, shall forthwith surrender to Mortgagee the actual
possession and, if and to the extent permitted by law, Mortgagee itself, or
such officers or agents as it may appoint, may enter and take possession of
all the Mortgaged Property, without liability for trespass, damages or
otherwise, and may exclude Mortgagor and its agents and employees wholly
therefrom and may have joint access with Mortgagor to the books, papers and
accounts of Mortgagor; and (ii) Mortgagor shall pay monthly in advance to
Mortgagee on Mortgagee's entry into possession, or to any receiver appointed
to collect the Rents, all Rents then due and payable.
(b) If Mortgagor shall for any reason fail to surrender or deliver
the Mortgaged Property or any part thereof after Mortgagee's demand, Mortgagee
may obtain a judgment or decree conferring on Mortgagee the right to immediate
possession or requiring Mortgagor to deliver immediate possession of all or
part of such property to Mortgagee and Mortgagor hereby specifically consents
to the entry of such judgment or decree. Mortgagor shall pay to Mortgagee,
upon demand, all costs and expenses of obtaining such judgment or decree and
reasonable compensation to Mortgagee, their attorneys and agents, and all such
costs, expenses and compensation shall, until paid, be secured by the lien of
this Mortgage.
(c) Upon every such entering upon or taking of possession, Mortgagee
may hold, store, use, operate, manage and control the Mortgaged Property and
conduct the business thereof, and, from time to time in its sole and absolute
discretion and without being under any duty to so act:
(i) make all necessary and proper maintenance, repairs, renewals,
replacements, additions, betterments and improvements thereto and thereon and
purchase or otherwise acquire additional fixtures, personalty and other
property;
(ii) insure or keep the Mortgaged Property insured;
(iii) manage and operate the Mortgaged Property and exercise all the rights
and powers of Mortgagor in their name or otherwise with respect to the same;
(iv) enter into agreements with others to exercise the powers herein
granted Mortgagee, all as Mortgagee from time to time may determine; and,
subject to the absolute assignment of the Space Leases and Rents to Mortgagee,
Mortgagee may collect and receive all the Rents, including those past due as
well as those accruing thereafter (and in connection therewith, further
reference is made hereby to Section 3.12 hereof); and shall apply the monies
so received by Mortgagee in such priority as Mortgagee may determine to (1)
the payment of interest and principal due and payable on the Notes; (2) the
deposits for taxes and assessments and insurance premiums due; (3) the cost of
insurance, taxes, assessments and other proper charges upon the Mortgaged
Property or any part thereof; (4) the compensation, expenses and disbursements
of the agents, attorneys and other representatives of Mortgagee; and (5) any
other charges or costs required to be paid by Mortgagor under the terms
hereof; or
(v) rent or sublet the Mortgaged Property or any portion thereof for any
purpose permitted by this Mortgage.
Mortgagee shall surrender possession of the Mortgaged Property to Mortgagor
only when
all that is due upon such interest and principal, tax and insurance deposits,
and all amounts under any of
28
the terms of the Indenture or this Mortgage, shall have been paid and all
defaults made good. The SAME right of taking possession, however, shall exist
if any subsequent Event of Default shall occur and be continuing.
5.7 SPACE LEASES.Mortgagee is authorized to foreclose this Mortgage
subject to the rights, if any, of any tenants of the Mortgaged Property, and
the failure to make any such tenants parties defendant to any such foreclosure
proceedings and to foreclose their rights shall not be, nor be asserted by
Mortgagor to be, a defense to any proceedings instituted by Mortgagee to
collect the sums secured hereby or to collect any deficiency remaining unpaid
after the foreclosure sale of the Mortgaged Property, or any portion thereof.
Unless otherwise agreed by Mortgagee in writing, all Space Leases executed
subsequent to the date hereof, or any part thereof, shall be subordinate and
inferior to the lien of this Mortgage; provided, however, that (i) Mortgagee
may be required to execute a non-disturbance and attorney agreement in
connection with certain lease transactions in form and substance satisfactory
to Mortgagee; and (ii) from time to time Mortgagee may execute and record
among the conveyance records of the jurisdiction where this Mortgage is
recorded, subordination statements with respect to such of said Space Leases
as Mortgagee may designate in its sole discretion, whereby the Space Leases so
designated by Mortgagee shall be made superior to the lien of this Mortgage
for the term set forth in such subordination statement. From and after the
recordation of such subordination statements, and for the respective periods
as may be set forth therein, the Space Leases therein referred to shall be
superior to the lien of this Mortgage and shall not be affected by any
foreclosure hereof. All such Space Leases shall contain a provision to the
effect that Mortgagor and Space Lessee recognize the right of Mortgagee to
elect and to effect such subordination of this Mortgage and each of them
consents thereto.
5.8 PURCHASE BY MORTGAGEE.Upon any foreclosure sale (whether judicial or
nonjudicial), Mortgagee may bid for and purchase the property subject to
such sale and, upon compliance with the terms of sale, may hold, retain
and possess and dispose of such property in its own absolute right
without further accountability.
5.9 WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND
REDEMPTION LAWS.Mortgagor agrees to the FULL extent permitted by law that if
a Default or an Event of Default occurs, neither Mortgagor nor anyone claiming
through or under it shall or will set up, claim or seek to take advantage of
any appraisement, valuation, stay, extension or redemption laws now or
hereafter in force, including without limitation, the benefit of appraisement
as provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and
2724 and all other laws conferring the same, the demand and three (3) days
delay accorded by Louisiana Code of Civil Procedure Articles 2639 and 2721,
the notice of seizure required by Louisiana Code of Civil Procedure Articles
2293 and 2721, the three (3) days delay provided by Louisiana Code of Civil
Procedure Articles 2331 and 2722, and the benefits of the other provisions of
Louisiana Code of Civil Procedure Articles 233t, 2722 and 2723 not
specifically mentioned above, in order to prevent or hinder the enforcement or
foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or
any portion thereof or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereof, and Mortgagor for
itself and all who may at any time claim through or under it, hereby waives,
to the full extent that it may lawfully so do, the benefit of all such laws,
and any and all right to have the assets comprising the Mortgaged Property
marshalled upon any foreclosure of the lien hereof and agrees that Mortgagee
or any court having jurisdiction to foreclose such lien may sell the Mortgaged
Property in part or as an entirety.
5.10 SUITS TO PROTECT THE MORTGAGED PROPERTY.Mortgagee shall have
the power and authority to institute and maintain any suits and proceedings as
Mortgagee, in its sole and absolute discretion, may deem advisable (a) to
prevent any impairment of the Mortgaged Property by any acts which may be
unlawful or any violation of this Mortgage, (b) to preserve or protect its
interest in the Mortgaged
29
Property, or (c) to restrain the enforcement of or compliance with any
legislation or other Legal Requirement that may be unconstitutional or
otherwise invalid, if the enforcement of or compliance with such enactment,
rule or order might impair the security hereunder or be prejudicial to
Mortgagee's interest.
5.11 PROOFS OF CLAIM. In the case of any receivership, Insolvency,
Bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings affecting Mortgagor, any Affiliate or any guarantor,
co-maker or endorser of any of Mortgagor's obligations, its creditors or its
property, Mortgagee, to the extent permitted by law, shall be entitled to file
such proofs of claim or other documents as it may deem be necessary or
advisable in order to have its claims allowed in such proceedings for the
entire amount due and payable by Mortgagor under the Notes or any other Loan
Document, at the date of the institution of such proceedings, and for any
additional amounts which may become due and payable by Mortgagor after such
date.
5.12 MORTGAGORto Pay THENotes ONAny Default INPayment; Application
of Monies by Mortgagee.
(a) In case of a foreclosure sale of all or any part of the Mortgaged
Property and of the application of the proceeds of sale to the payment of the
sums secured hereby, Mortgagee shall be entitled to enforce payment from
Mortgagor of any additional amounts then remaining due and unpaid and to
recover judgment against Mortgagor for any portion thereof remaining unpaid,
with interest at the interest rate on the Notes.
(b) Mortgagor hereby agrees to the extent permitted by law, that no
recovery of any such judgment by Mortgagee or other action by Mortgagee and no
attachment or levy of any execution upon any of the Mortgaged Property or any
other property shall in any way affect the Lien and security interest of this
Mortgage upon the Mortgaged Property or any part thereof or any Lien, rights,
powers or remedies of Mortgagee hereunder, but such Lien, rights, powers and
remedies shall continue unimpaired as before.
(c) Any monies collected or received by Mortgagee under this Section 5.12
shall be first applied to the payment of compensation, expenses and
disbursements
of the agents, attorneys and other representatives of Mortgagee, and the
balance remaining shall be applied to the payment of amounts due and
unpaid under the Notes.
(D) The provisions of this Section shall not be deemed to limit or
otherwise modify the provisions of any guaranty of the indebtedness
evidenced by the Notes.
5.13 DELAY OR OMISSION, NOWaiver. No delay or omission of
Mortgagee or Noteholder to exercise any right, power or remedy upon any
Default or Event of Default shall exhaust or impair any such right, power or
remedy or shall be construed to waive any such Default or Event of Default or
to constitute acquiescence therein. Every right, power and remedy given to
Mortgagee whether contained herein or in the Indenture or otherwise available
to Mortgagee may be exercised from time to time and as often as may be deemed
expedient by Mortgagee.
5.14 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER.No waiver of any
Default or Event of Default hereunder shall extend to or affect any subsequent
or any other Default or Event of Default then existing, or impair any rights,
powers or remedies consequent thereon. If Mortgagee or a majority of
Noteholders, to the extent applicable under the Indenture, (a) grants
forbearance or an extension of time for the payment of any sums secured
hereby; (b) takes other or additional security for the payment
30
thereof; (c) waives or does not exercise any right granted in the Notes, the
Indenture, this Mortgage or any other Loan Document; (d) releases any part of
the Mortgaged Property from the lien or security interest of this Mortgage or
any other instrument securing the Notes; (e) consents to the filing of any
map, plat or replat of the Land; (f) consents to the granting of any servitude
or easement on the Land; or (g) makes or consents to any agreement changing
the terms of this Mortgage or any Loan Document subordinating the lien or any
charge hereof, no such act or omission shall release, discharge, modify,
change or affect the original liability under the Notes, this Mortgage or any
other Loan Document or otherwise of Mortgagor, or any subsequent purchaser of
the Mortgaged Property or any part thereof or any maker, co-signer, surety or
guarantor. No such act or omission shall preclude Mortgagee from exercising
any right, power or privilege herein granted or intended to be granted in case
of any Default or Event of Default then existing or of any subsequent Default
or Event of Default, nor, except as otherwise expressly provided in an
instrument or instruments executed by Mortgagee, shall the lien or security
interest of this Mortgage be altered thereby, except to the extent expressly
provided in any releases, maps, easements or subordinations described in
clause (d), (e), (f) or (g) above of this Section 5.14. In the event of the
sale or transfer by operation of law or otherwise of all or any part of the
Mortgaged Property, Mortgagee, without notice to any Person, firm or
corporation, is hereby authorized and empowered to deal with any such vendee
or transferee with reference to the Mortgaged Property or the indebtedness
secured hereby, or with reference to any of the terms or conditions hereof, as
fully and to the same extent as it might deal with the original parties hereto
and without in any way releasing or discharging any of the liabilities or
undertakings hereunder, or waiving its right to declare such sale or transfer
a Default or an Event of Default as provided herein. Notwithstanding anything
to the contrary contained in this Mortgage or any Loan Document, (i) in the
case of any non-monetary Default or Event of Default, Mortgagee may continue
to accept payments due hereunder without thereby waiving the existence of such
or any other Default or Event of Default and (ii) in the case of any monetary
Default or Event of Default, Mortgagee may accept partial payments of any sums
due hereunder without thereby waiving the existence of such Default or Event
of Default if the partial payment is not sufficient to completely cure such
Default or Event of Default.
5.15 DISCONTINUANCE OF PROCEEDINGS; POSITION OF PARTIES RESTORED.If
Mortgagee shall have proceeded to enforce any right or remedy under this
Mortgage by foreclosure, entry of judgment or otherwise and such proceedings
shall have been discontinued or abandoned for any reason, or such proceedings
shall have resulted in a final determination adverse to Mortgagee, then and in
every such case Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of
Mortgagee shall continue as if no such proceedings had occurred or had been
taken.
5.16 REMEDIES CUMULATIVE.No right, power or remedy, including
without limitation remedies with respect to any security for the Notes,
conferred upon or reserved to Mortgagee by the Guarantees, this Mortgage or
any other Loan Document is exclusive of any other right, power or remedy, but
each and every such right, power and remedy shall be cumulative and concurrent
and shall be in addition to any other right, power and remedy given hereunder
or under any Loan Document, now or hereafter existing at law, in equity or by
statute, and Mortgagee shall be entitled to resort to such rights, powers,
remedies or security as Mortgagee shall in its sole and absolute discretion
deem advisable. The rights and remedies of Mortgagee upon the occurrence of
one or more defaults by Mortgagor may be exercised by Mortgagee, in the sole
discretion of Mortgagee, either alternatively, concurrently, or consecutively
in any order. The exercise by Mortgagee of any one or more of such rights and
remedies shall not be construed to be an election of remedies nor a waiver of
any other rights and remedies Mortgagee might have unless, and limited to the
extent that, Mortgagee shall so elect. Without limiting the generality of the
foregoing, to the extent that this Mortgage or any other Loan Document covers
the
31
real property and personal property, Mortgagee may, in the sole discretion of
Mortgagee, either alternatively, concurrently, or consecutively in any order:
(a) Proceed as to both the real property, the personal property and
other
collateral in accordance with Mortgagee's rights and remedies in respect to
the real
property; or
(b) Proceed as to the real property in accordance with Mortgagee's
rights and remedies in respect to the real property and proceed as to the
personal property and other collateral in accordance with Mortgagee's rights
and remedies in respect to the personal property and other collateral.
If Mortgagee should elect to proceed as to both the real property, the
personal property and other collateral in accordance with Mortgagee's
rights and remedies in respect to real property:
(a) All the real property and all the personal property and
other
collateral may be sold, in the manner and at the time and place provided in
this Mortgage or in any other Loan Document, as the case may be, in one
lot, or in separate lots consisting of any combination or combinations of
the real property, the personal property and other collateral, as
Mortgagee may elect, in the sole discretion of Mortgagee; and
(b) Mortgagor acknowledges and agrees that a disposition of the
personal property and other collateral in accordance with Mortgagee's rights
and remedies in respect to real property, as herein above provided, is a
commercially reasonable disposition of the collateral.
If Mortgagee should elect to proceed as to the personal property and
other collateral in accordance with Mortgagee's rights and remedies in respect
to personal property and other collateral, Mortgagee shall have all the rights
and remedies conferred on a secured party by any Loan document relating
thereto or otherwise by applicable law.
5.17 INTEREST AFTER EVENTof Default. If a Default an Event of
Default shall have occurred and is continuing, all sums outstanding and unpaid
under the Notes and this Mortgage shall bear interest at one percent (I %) per
annum in excess of the interest rate on the Notes until such Default or Event
of Default has been cured. Mortgagor's obligation to pay such interest shall
be secured by this Mortgage.
5.18 FORECLOSURE;Expenses OF LITIGATION.If Mortgagee forecloses,
reasonable attorneys' fees for services in the supervision of said foreclosure
proceeding shall be allowed to Mortgagee as part of the foreclosure costs. In
the event of foreclosure of the lien hereof, there shall be allowed and
included as additional indebtedness all reasonable expenditures and expenses
which may be paid or incurred by or on behalf of Mortgagee for attorneys'
fees, appraiser's fees, outlays for documentary and expert evidence,
stenographers' charges, publication costs, and costs (which may be estimated
as to items to be expended after foreclosure sale or entry of the decree) of
procuring all such abstracts of title, title searches and examinations, title
insurance policies and guarantees, and similar data and assurances with
respect to title as Mortgagee may deem reasonably advisable either to
prosecute such suit or to evidence to a bidder at any sale which may be had
pursuant to such decree the true condition of the title to or the value of the
Mortgaged Property or any portion thereof. All expenditures and expenses of
the nature in this section mentioned, and such expenses and fees as may be
incurred in the protection of the Mortgaged Property and the maintenance of
the lien and security interest of this Mortgage, including the fees of any
attorney employed by Mortgagee in any litigation or proceeding affecting this
Mortgage or any Loan Document, the Mortgaged Property or any portion thereof,
including, without limitation, civil, probate, appellate and bankruptcy
proceedings, or in preparation for the commencement or defense of any
32
proceeding or threatened suit or proceeding, shall be immediately due and
payable by Mortgagor, with interest thereon at the interest rate on the Notes,
and shall be secured by this Mortgage. Mortgagee waives its right to any
statutory fee in connection with any judicial or nonjudicial foreclosure of
the lien hereof and agrees to accept a reasonable fee for such services.
5.19 DEFICIENCY JUDGMENTS.If after foreclosure of this Mortgage or
Mortgagee's sale hereunder, there shall remain any deficiency with respect to
any amounts payable under the Notes or hereunder or any amounts secured
hereby, and Mortgagee shall institute any proceedings to recover such
deficiency or deficiencies, all such amounts shall continue to bear interest
at one percent (I %) per annum in excess of the interest rate on the Notes.
Mortgagor waives any defense to Mortgagee's recovery against Mortgagor of any
deficiency after any foreclosure sale of the Mortgaged Property. Mortgagor
expressly waives any defense or benefits that may be derived from any statute
granting Mortgagor any defense to any such recovery by Mortgagee. In
addition, Mortgagee shall be entitled to recovery of all of their reasonable
costs and expenditures (including without limitation any court imposed costs)
in connection with such proceedings, including their reasonable attorneys'
fees, appraisal fees and the other costs, fees and expenditures referred to in
Section 5.18 above. This provision shall survive any foreclosure or sale of
the Mortgaged Property, any portion thereof and/or the extinguishment of the
lien hereof.
5.20 WAIVER OFJury TRIAL.TO THE FULLEST EXTENT PERMITTED BY LAW,
MORTGAGEE AND MORTGAGOR EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THE NOTES, THIS MORTGAGE OR ANY
OTHER LOAN DOCUMENT. ANY SUCH DISPUTES SHALL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
5.21 EXCULPATION OF MORTGAGEE.The acceptance by Mortgagee of the
assignment contained herein with all of the rights, powers, privileges and
authority created hereby shall not, prior to entry upon and taking possession
of the Mortgaged Property by Mortgagee, be deemed or construed to make
Mortgagee a "mortgagee in possession"; nor thereafter or at any time or in any
event obligate Mortgagee to appear in or defend any action or proceeding
relating to the Space Leases, the Rents or the Mortgaged Property, or to take
any action hereunder or to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability under any Space Lease or to
assume any obligation or responsibility for any security deposits or other
deposits except to the extent such deposits are actually received by
Mortgagee, nor shall Mortgagee, prior to such entry and taking, be liable in
any way for any injury or damage to person or property sustained by any Person
in or about the Mortgaged Property.
5.22 CONFESSION OF JUDGMENT.Solely for purposes of executory
process under Louisiana law, Mortgagor does hereby acknowledge the Obligations
and CONFESS JUDGMENT in favor of Mortgagee for the FULL amount of the
Obligations.
5.23 SET-OFF. Upon the occurrence of any Default or Event of
Default, Mortgagee shall have the right to set-off any funds of Mortgagor in
the possession of Mortgagee or any third party depository for the benefit of
Mortgagee against any amounts then due by Mortgagor to Mortgagee pursuant to
the Mortgage.
5.24 KEEPER.In the event the Mortgaged Property, or any part
thereof, is seized as an incident to an action for the recognition or
enforcement of this Mortgage by executory process, ordinary process,
sequestration, writ of fieri facias or otherwise, Mortgagor and the Mortgagee
agree that the court
33
issuing any such order shall, if petitioned for by Mortgagee, direct the
applicable sheriff to appoint as a keeper of the Mortgaged Property, the
Mortgagee or any agent designated by Mortgagee or any person named by
Mortgagee at the time such seizure is effected. This designation is pursuant
to Louisiana Revised Statutes 9:5136 through 5140.2, inclusive, as the same
may be amended, and the Mortgagee shall be entitled to all the rights and
benefits afforded thereunder. It is hereby agreed that the keeper shall be
entitled to receive as compensation, in excess of its reasonable costs and
expenses incurred in the administration or preservation of the Mortgaged
Property, an amount equal to $250.00 per day, which shall be payable monthly
on the first day of each month and shall be included as Obligations secured by
this Mortgage. The designation of keeper made herein shall not be deemed to
require the Mortgagee to provoke the appointment of such a keeper.
5.25 AUTHENTIC EVIDENCE.Any and all declarations of facts made by
authentic act before a notary public in the presence of two (2) witnesses by a
person declaring that such facts lie within his knowledge, shall constitute
authentic evidence of such facts for the purpose of executory process.
Mortgagor specifically agrees that such an affidavit by a representative of
Mortgagee as to the existence, amount, terms and maturity of the Obligations
secured hereunder and of a Default or an Event of Default thereunder shall
constitute authentic evidence of such facts for the purpose of executory
process.
ARTICLE 6
MISCELLANEOUS PROVISIONS
6.1 HEIRS, SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES.Whenever one
of the parties hereto is named or referred to herein, the heirs, successors
and assigns of such party shall be included, and subject to the limitations
set forth in Section 3. 10, all covenants and agreements contained in this
Mortgage, by or on behalf of Mortgagor or Mortgagee shall bind and inure to
the benefit of its heirs, successors and assigns, whether so expressed or not.
6.2 AddressesFOR NOTICES, Etc. Any notice, report, demand or
other instrument authorized or required to be given or furnished under this
Mortgage to Mortgagor or Mortgagee shall be deemed given or furnished (i) when
addressed to the party intended to receive the same, at the address of such
party set forth below, and delivered at such address or (ii) three (3) days
after the same is deposited in the United States mail as first class certified
mail, return receipt requested, postage paid, whether or not the same is
actually received by such party:
Mortgagee: First Union Bank of Connecticut 10 State Street Square
Hartford, Connecticut 06103-3698
Attn: Corporate Trust Administration
Ph: (203) 247-1353
Fax: (860) 247-1356
34
With copies to: Brian Christaldi, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue
12th Floor
New York, New York 10022
Ph: (212) 836-7447
Fax: (212) 836-7152
Mortgagor: Casino Magic of Louisiana, Corp. 1701 Old Minden Road Bossier
City, Louisiana 71111
Attn: Robert A. Callaway, Esq.
Ph: (318) 746-0711
Fax: (318) 746-0853
6.3 CHANGE OF NOTICE ADDRESS.Any person may change the address to
which any such notice, report, demand or other instrument is to be delivered
or mailed to that Person, by furnishing written notice of such change to the
other party, but no such notice of change shall be effective unless and until
received by such other party.
6.4 HEADINGS.The headings of the articles, sections, paragraphs and
subdivisions of this Mortgage are for convenience of reference only, are not
to be considered a part hereof, and shall not limit or expand or otherwise
affect any of the terms hereof.
6.5 INVALID PROVISIONS TO AFFECT NOOthers. In the event that any
of the covenants, agreements, terms or provisions contained herein or in the
Notes, the Indenture or any other Loan Document shall be invalid, illegal or
unenforceable in any respect, the validity of the lien hereof and the
remaining covenants, agreements, terms or provisions contained herein or in
the Notes, the Indenture, the Guarantees or any other Loan Document shall be
in no way affected, prejudiced or disturbed thereby. To the extent permitted
by law, Mortgagor waives any provision of law which renders any provision
hereof prohibited or unenforceable in any respect.
6.6 CHANGES AND PRIORITY OVER INTERVENING LIENS.Neither this
Mortgage nor any term hereof may be changed, waived, discharged or terminated
orally, or by any action or inaction, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement hereafter made by Mortgagor and
Mortgagee relating to this Mortgage shall be superior to the rights of the
holder of any intervening lien or encumbrance.
6.7 ESTOPPEL CERTIFICATES.Within ten (10) Business Days after
Mortgagee's written request, Mortgagor shall from time to time execute a
certificate, in recordable form (an "ESTOPPEL CERTIFICATE"), stating,
except to the extent it would be inaccurate to so state: (a) the current
amount of the Obligations secured hereunder and all elements thereof,
including principal, interest, and all other elements; (b) Mortgagor has no
defense, offset, claim, counterclaim,
right of recoupment, deduction, or reduction against any of the Obligations
secured hereunder; (c) none of the Loan Documents have been amended, whether
orally or in writing; (d) Mortgagor has no claims against Mortgagee of any
kind; (e) any Power of Attorney granted to Mortgagee is in FULL force and
effect; and (f) such other matters relating to this Mortgage, any Loan
Documents and the relationship of Mortgagor and Mortgagee, as Mortgagee shall
request. In addition, the Estoppel Certificate shall set forth the reasons
why it would be inaccurate to make any of the foregoing assurances ("a"
through "f").
35
6.8 GOVERNING! LAW.This Mortgage shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the State of
Louisiana, without regard to its choice of law provisions.
6.9 REQUIRED Notices. Mortgagor shall notify Mortgagee promptly of
the occurrence of any of the following and shall immediately provide Mortgagee
a copy of the notice or documents referred to: (i) receipt of notice from any
Governmental Authority relating to all or any material part of the Mortgaged
Property if such notice relates to a default or act, omission or circumstance
which would result in a default after notice or passage of time or both; (ii)
receipt of any notice from any tenant leasing all or any material portion of
the Mortgaged Property if such notice relates to a default or act, omission or
circumstance which would result in a default after notice or passage of time
or both; (iii) receipt of notice from the holder of any Permitted Lien
relating to a default or act, omission or circumstance which would result in a
default after notice or passage of time or both; (iv) the commencement of any
proceedings or the entry of any judgment, decree or order materially affecting
all or any portion of the Mortgaged Property or which involve the potential
liability of Mortgagor or its Affiliates in an amount in excess of $10,000,000
(other than for personal injury actions and related property damage suits
which have been acknowledged by the insurer to be covered by such insurance);
or (v) commencement of any judicial or administrative proceedings or the entry
of any judgment, decree or order by or against or otherwise affecting
Mortgagor or any Affiliate of Mortgagor, a material portion of the Mortgaged
Property or any other action by any creditor or lessor thereof as a result of
any default under the terms of any Space Lease.
6.10 ATTORNEYS'Fees. Without limiting any other provision
contained herein, Mortgagor agrees to pay all costs of Mortgagee incurred in
connection with the enforcement of this Mortgage or the taking of this
Mortgage as security for the repayment of the Notes, including without
limitation all reasonable attorneys' fees whether or not suit is commenced,
and including, without limitation, fees incurred in connection with any
probate, appellate, bankruptcy, deficiency or any other litigation
proceedings, all of which sums shall be secured hereby.
6.11 LATE CHARGES.By accepting payment of any sum secured hereby
after its due date, Mortgagee does not waive its right to collect any late
charge thereon or interest thereon at the interest rate on the Notes, if so
provided, not then paid or its right either to require prompt payment when due
of all other sums so secured or to declare default for failure to pay any
amounts not so paid.
6.12 COST OF ACCOUNTING!.Mortgagor shall pay to Mortgagee, for and
on account of the preparation and rendition of any accounting, which Mortgagor
may be entitled to require under any law or statute now or hereafter providing
therefor, the reasonable costs thereof.
6.13 RIGHT OF ENTRV.Subject to compliance with applicable Gaming
Laws, Mortgagee may at any reasonable time or times make or cause to be made
entry upon and inspections of the Mortgaged Property or any part thereof in
Person or by agent; provided that Mortgagee shall use its best efforts not to
interfere with Mortgagor's operations on the Property.
6.14 CORRECTIONS.Mortgagor shall, upon request of Mortgagee,
promptly correct any defect, error or omission which may be discovered in the
contents of this Mortgage or in the execution or acknowledgement hereof, and
shall execute, acknowledge and deliver, such further instruments and do such
further acts as may be necessary or as may be reasonably requested by
Mortgagee to carry out more effectively the purposes of this Mortgage, to
subject to the lien and security interest hereby created any of Mortgagor's
properties, rights or interest covered or intended to be covered hereby, and
to perfect and maintain such lien and security interest.
36
6.15 PRESCRIPTION.To the fullest extent allowed by the law, the
right to plead, use or assert any statute of limitations or defense of
prescription as a plea or defense or bar of any kind, or for any purpose, to
any debt, demand or obligation secured or to be secured hereby, or to any
complaint or other pleading or proceeding filed, instituted or maintained for
the purpose of enforcing this Mortgage or any rights hereunder, is hereby
waived by Mortgagor.
6.16 SUBROGATION.Should the proceeds of the loan made by Mortgagee to
Mortgagor,
repayment of which is hereby secured, or any part thereof, or any amount
paid out or advanced by
Mortgagee, be used directly or indirectly to pay off, discharge, or
satisfy, in whole or in part, any prior
or superior lien or encumbrance upon the Mortgaged Property, or any part
thereof, then, as additional security hereunder, Mortgagee shall be subrogated
to any and all rights, superior titles, liens, and equities owned or claimed
by any owner or holder of said outstanding liens, charges, and indebtedness,
however remote, regardless of whether said liens, charges, and indebtedness
are acquired by assignment or have been released of record by the holder
thereof upon payment.
6.17 JOINT AND SEVERAL LIABILITY . All obligations of Mortgagor
hereunder, if more than one, are joint and several (i.e., solidary). Recourse
for deficiency after sale hereunder may be had against the property of
Mortgagor, without, however, creating a present or other lien or charge
thereon.
6.18 CONTEXT.In this Mortgage, whenever the context so requires, the
neuter includes the masculine and feminine, and the singular including the
plural, and vice versa.
6.19 TIME. Time is of the essence of each and every term, covenant
and condition hereof. Unless otherwise specified herein, any reference to
"days" in this Mortgage shall be deemed to mean "calendar days."
6.20 INTERPRETATION.As used in this Mortgage unless the context
clearly requires otherwise: The terms "herein" or "hereunder" and similar
terms without reference to a particular section shall refer to the entire
Mortgage and not just to the section in which such terms appear; the term
"lien" shall also mean a security interest, and the term "security interest"
shall also mean a lien.
6.21 AMENDMENTS.This Mortgage cannot be waived, changed, discharged
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or termination is
sought and only as permitted by the provisions of the Indenture.
6.22 RELEASE OF MORTGAGED PROPERTY. If pursuant to Section 4.09 of
the Indenture, Mortgagor is permitted to encumber the Casino Magic-Bossier
City Hotel, that portion of the Land upon which the Casino Magic-Bossier City
Hotel is located, or any portion thereof, then, upon the satisfaction of any
and all conditions set forth in such Section and Section 10.03 of the
Indenture, Mortgagee shall execute and deliver any instruments necessary or
appropriate to effectuate or confirm any such encumbrance, free from the lien
of this Mortgage, but in any event in form and substance satisfactory to
Mortgagee.
6.23 GAMING LAWS AND REGULATIONS.Mortgagor and Mortgagee
acknowledge that, to the extent required under applicable law, the
consummation of the transactions contemplated hereby and the exercise of
remedies hereunder may be subject to the Louisiana Riverboat Economic
Development and Gaming Control Act, La. R. S. 4:50 1, et @., the Louisiana
Gaming Control Law, La. R. S. 27:1-3, 1 126, 31 and 32, and the regulations
promulgated pursuant to each such law, all as amended from time to time.
Mortgagor and Mortgagee further acknowledge that the Gaming License held by
Mortgagor is not part of the collateral of this Mortgage and that, under the
above described legislation and rules
37
promulgated thereunder, the Mortgagee may be precluded from or otherwise
limited in taking possession of or selling the collateral of this Mortgage
under the Defaults and Remedies provisions of this Mortgage. Mortgagor and
Mortgagee also acknowledge that due to various legal restrictions, including,
without limitation, licensing of operators of gaining facilities and prior
approval of the sale or disposition of assets of a licensed gaming operation,
the sale of collateral may be denied by Gaming Authorities or delayed pending
Gaming Authority approval.
ARTICLE 7
POWER OF ATTORNEY
7.1 GRANT of Power. Mortgagor irrevocably appoints Mortgagee and
any successor thereto as its attorney-in-fact, with full power and authority,
including the power of substitution, exercisable only during the continuance
of a Default or an Event of Default to act for Mortgagor in its name, place
and stead as hereinafter provided:
(a) Possession and Completion. To take possession of the Land and
the Project, remove all employees, contractors and agents of Mortgagor
therefrom, complete or attempt to complete the work of construction of the
Project, and market, sell or lease the Land and the Project.
(b) PLANS. To make such additions, changes and corrections in the
current Plans as may be necessary or desirable, in Mortgagee's reasonable
discretion, or as it deems proper to complete the restoration of the Project.
(c) Employment of Others. To employ such contractors,
subcontractors, suppliers, architects, inspectors, consultants, property
managers and other agents as Mortgagee, in its discretion, deems proper for
the restoration of the Project, for the protection or clearance of title to
the Land or for the protection of Mortgagee's interests with respect thereto.
(d) SECURITY GUARDS.To employ watchmen to protect the Land and the
Project from injury.
(e) COMPROMISE Claims. To pay, settle or compromise all bills and
claims then existing or thereafter arising against Mortgagor, which Mortgagee,
in its discretion, deems proper for the protection or clearance of title to
the Land or for the protection of Mortgagee's interests with respect thereto.
(f) LEGAL PROCEEDINGS.To prosecute and defend all actions and proceedings
in connection with the Land or the Project.
(g) OTHER ACTS.To execute, acknowledge and deliver all other
instruments and documents in the name of Mortgagor that are necessary or
desirable, to exercise Mortgagor's rights under all contracts concerning the
Land or the Project, including, without limitation, under any Space Leases,
and to do all other acts with respect to the Land or the Project that
Mortgagor might do on its own behalf, as Mortgagee, in its reasonable
discretion, deems proper.
38
THIS DONE AND PASSED, in multiple originals, on the day and in the month and
year herein above first written, in the presence of the undersigned witnesses
who hereunto sign their names with Mortgagor and me, Notary, after due reading
the whole.
WITNESSES:
MORTGAGOR:
CASINO MAGIC OF LOUISIANA, CORP.
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President, General
Council
/s/ Veronica Caban
NOTARY PUBLIC
39
EXHIBIT "A"
RESOLUTIONS OF MORTGAGOR AUTHORIZING TRANSACTION
A-1
EXHIBIT "B"
DESCRIPTION OF THE LAND
B-1
TABLE OF CONTENTS
PAGE
ARTICLE I PURPOSES; DEFINITIONS 2
1.1 Purposes 2
1.2 Definitions 2
1.3 Undefined Terms 11
1.4 Amendment of Defined Instruments 11
ARTICLE 2 LIENS AND SECURITY INTEREST 11
2.1 Hypothecation 11
ARTICLE 3 COVENANTS OF MORTGAGOR 14
3.1 Performance of Loan Documents 14
3.2 General Representations, Covenants and Warranties 14
3.3 Compliance with Legal Requirements 15
3.4 Taxes 15
3.5 Insurance 15
3.6 Condemnation 17
3.7 Care of Mortgaged Property 17
3.8 Space Leases 18
3.9 Further Encumbrance 19
3.10 Partial Releases of Mortgaged Property 20
3.11 Further Assurances 20
3.12 Assignment of Rents 21
3.13 Expenses 21
3.14 Mortgagee's Cure of Mortgagor's Default 22
3.15 Compliance with Permitted Lien Agreements 22
3.16 Defense of Actions 22
3.17 Subsidiaries and Affiliates 23
3.18 Title Insurance 23
3.19 Representations and Warranties Regarding Hazardous Materials 23
3.20 Covenants Regarding Hazardous Materials 24
3.21 Site Visits, Observations and Testing 25
ARTICLE 4 CORPORATE LOAN PROVISIONS 25
4.1 Interaction with Indenture 25
4.2 Other Collateral 26
ARTICLE 5 DEFAULTS AND REMEDIES 26
5.1 Event of Default 26
5.2 Acceleration of Maturity 26
5.3 Protective Advances 26
5.4 Institution of Equity Proceedings 27
i
Page
5.5 Mortgagee's Power of Enforcement 27
5.6 Mortgagee's Right to Enter and Take Possession, Operate and Apply
Income 28
5.7 Space Leases 29
5.8 Purchase by Mortgagee 29
5.9 Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws
29
5.10 Suits to Protect the Mortgaged Property 29
5.11 Proofs of Claim 30
5.12 Mortgagor to Pay the Notes on Any Default in Payment; Application of
Monies by Mortgagee 30
5.13 Delay or Omission; No Waiver 30
5.14 No Waiver of One Default to Affect Another 30
5.15 Discontinuance of Proceedings; Position of Parties Restored 31
5.16 Remedies Cumulative 31
5.17 Interest After Event of Default 32
5.18 Foreclosure; Expenses of Litigation 32
5.19 Deficiency Judgments 33
5.20 Waiver of Jury Trial 33
5.21 Exculpation of Mortgagee 33
5.22 Confession of Judgment 33
5.23 Set-Off 33
5.24 Keeper 33
5.25 Authentic Evidence 34
ARTICLE 6 MISCELLANEOUS PROVISION 34
6.1 Heirs, Successors and Assigns Included in Parties 34
6.2 Addresses for Notices, Etc 34
6.3 Change of Notice Address 35
6.4 Headings 35
6.5 Invalid Provisions to Affect No Others 35
6.6 Changes and Priority Over Intervening Liens 35
6.7 Estoppel Certificates 35
6.8 Governing Law 36
6.9 Required Notices 36
6.10 Attorneys' Fees 36
6.11 Late Charges 36
6.12 Cost of Accounting 36
6.13 Right of Entry 36
6.14 Corrections 36
6.15 Prescription 37
6.16 Subrogation 37
6.17 Joint and Several Liability 37
6.18 Context 37
6.19 Time 37
6.20 Interpretation 37
6.21 Amendments 37
6.22 Release of Mortgaged Property 37
6.23 Gaming Laws and Regulations 37
ii
Page
ARTICLE 7 POWER OF ATTORNEY 38
7.1 Grant of Power 38
(a) Possession and Completion 38
(b) Plans 38
(c) Employment of Others 38
(d) Security Guards 38
(e) Compromise Claims 38
(f) Legal Proceedings 38
(g) Other Acts 38
EXHIBIT A RESOLUTIONS OF MORTGAGOR AUTHORIZING TRANSACTION
EXHIBIT B FEE LAND DESCRIPTION
iii
CASINO MAGIC OF LOUISIANA, CORP.
$115,000,000 13% First Mortgage Notes due 2003
With Contingent Interest
PURCHASE AGREEMENT
August 16, 1996
WASSERSTEIN PERELLA SECURITIES, INC.
JEFFERIES & COMPANY, INC.
DEUTSCHE MORGAN GRENFELL/C.J. LAWRENCE INC.
c/o Wasserstein Perella Securities, Inc. 1999 Avenue of the Stars, Suite
2950 Los Angeles, California 90067
Ladies and Gentlemen:
Casino Magic of Louisiana, Corp., a Louisiana corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to Wasserstein Perella Securities, Inc., Jefferies & Company,
Inc. and Deutsche Morgan Grenfell/C. J. Lawrence Inc. (each, individually, an
"Initial Purchaser" and collectively, the "Initial Purchasers") an
aggregate principal amount of $115,000,000 of its 13 % Series A First Mortgage
Notes due 2003 With Contingent Interest (the "Series A Notes").
The Series A Notes and the Series B Notes (as defined below) (the Series
A Notes and the Series B Notes being collectively referred to herein as the
"Notes") will be issued pursuant to an Indenture (the "Indenture") to be dated
as of the Closing Date (as defined below) among the Company, Jefferson Casino
Corporation (the "Guarantor") and First Union Bank of Connecticut, as trustee
(the "Trustee"). The Notes will be unconditionally guaranteed by the
Guarantor on a senior secured basis pursuant to the terms of the Indenture
(the "Guarantee"). The obligations under the Notes and the Guarantees will be
secured by security interests in or pledges of (the "Security Interests")
certain assets (the "Collateral") as set forth in the Offering Memorandum (as
defined below). As used herein, the term "Notes" shall include the Guarantees
whenever the context permits.
1. Issuance of Securities
The Company proposes to issue and sell to the Initial Purchasers an aggregate
of $115,000,000 principal amount of Series A Notes pursuant to the Indenture.
The Series A Notes will be offered and sold to the Initial Purchasers pursuant
to an exemption or exemptions from the registration requirements under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
prepared a preliminary offering memorandum dated August 2, 1996 (the
"Preliminary Offering Memorandum") and a final offering memorandum dated the
date hereof (the "Offering Memorandum") relating to the Company, the
Guarantor, the Series A Notes and the Guarantee.
The Initial Purchasers have advised the Company and the Guarantor that
the Initial Purchasers will make offers (the "exempt Resales") of the Series
A Notes on the terms set forth in the Offering Memorandum, as amended or
supplemented, solely to persons whom the Initial Purchasers reasonably believe
to be "qualified institutional buyers, " as defined in Rule 144A under the
Securities Act ("QIBs"), and to a limited number of other "accredited
investors," as defined in Rule 501(a) under Regulation D of the Securities Act
that execute Annex A to the Offering Memorandum (each, an "Accredited
Investor"). The QlBs and the Accredited Investors are referred to herein as
the "Eligible Purchasers. "
Holders (including subsequent transferees) of the Series A Notes will be
entitled to certain registration rights provided under a registration rights
agreement (the "Registration Rights Agreement")to be dated as of the Closing
Date among the Company, the Guarantor and the Initial Purchasers, in
substantially the form of Exhibit A hereto. Pursuant to the Registration
Rights Agreement, the Company and the Guarantor will agree to file with the
Securities and Exchange Commission (the "Commission"), under the
circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") relating to the
13% Series B First Mortgage Notes due 2003 With Contingent Interest (the
"Series B Notes") to be offered in exchange for the Series A Notes (the
"Exchange Offer") and (ii) under certain circumstances set forth in the
Registration Rights Agreement, a shelf registration statement pursuant to Rule
415 under the Securities Act (the "Shelf Registration Statement") relating
to the resale by certain holders of the Series A Notes, and to use its best
efforts to cause such registration statements to be declared effective and
consummate the Exchange Offer. The Notes are or will be secured obligations
and the Company and the Guarantor will enter into security agreements,
mortgages, pledge agreements, a disbursement agreement, environmental
indemnifications and certain other collateral assignment agreements
(collectively, the "Collateral Documents") dated as of the Closing Date in
favor of the Trustee that will provide for the grant of Security Interests in
the Collateral to the Trustee for the benefit of the holders of the Notes.
The Security Interests will secure the payment and performance when due of all
the respective obligations of the Company and the Guarantor under the
Indenture, the Notes and the Collateral Documents. This Agreement, the Notes,
the Indenture, the Registration Rights Agreement, the Guarantee and the
Collateral Documents are hereinafter referred to collectively as the
"Transaction Documents."
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTOR
The Company and the Guarantor, jointly and severally, represent and warrant
to, and agree with, the Initial Purchasers that as of the date hereof (except
as otherwise expressly provided):
a. The Preliminary Offering Memorandum as of its date does not, and
the Offering Memorandum as of its date and the date hereof does not and as of
the Closing Date will not, and any supplement or amendment thereto will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation and warranty is made in this subsection (a)
with respect to any information contained in or omitted from the Preliminary
Offering Memorandum and the Offering Memorandum (or any amendment thereof or
supplement thereto) made in reliance upon and in conformity with information
relating to the Initial Purchasers (as set forth in Section 8(b) hereof)
furnished in writing to the Company by the Initial
Purchasers expressly for use therein. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Securities Act, has been issued and no proceeding for that purpose has
been commenced or is pending or, to the knowledge of the Company and the
Guarantor, is contemplated.
b. Arthur Andersen LLP are independent public accountants with
respect to the Company and the Guarantor as required by the Securities Act and
the rules and regulations thereunder. Except as set forth in the Offering
Memorandum, the historical consolidated financial statements of the Company
and the Guarantor, together with the notes thereto, forming part of the
Preliminary Offering Memorandum and the Offering Memorandum (and any amendment
or supplement thereto) comply as to form with the requirements applicable to
financial statements required to be included in registration statements on
Form S-1 under the Securities Act and present fairly the financial position
and cash flows of the Company and the Guarantor at the date and for the period
indicated. Such consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the period presented except as stated therein.
Except as set forth in the Offering Memorandum, the financial and statistical
information and data included in the Offering Memorandum, historical and pro
forma, are accurately presented and prepared on a basis consistent with the
relevant financial statements, historical and pro forma, and the books and
records of the Company and the Guarantor, as applicable. The forward-looking
statements contained in the Offering Memorandum are based upon good faith
estimates and assumptions believed by the Company and the Guarantor to be
reasonable at the time made.
c. Subsequent to the respective dates as of which information is
given in the Offering Memorandum, except as set forth therein, (i) there has
not been, singly or in the aggregate, any material adverse change or
development which might reasonably be expected to result in any material
adverse change in the business, properties, operations, condition (financial
or other) or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, (ii) neither the Company nor
the Guarantor has incurred or undertaken any liabilities or obligations,
direct or contingent, which are material, individually or in the aggregate, to
the Company or the Guarantor, as the case may be, nor entered into any
transaction not in the ordinary course of business and (iii) there has not
been any material change in the Company's or the Guarantor's capital stock or
any material increase in long-term or short-term indebtedness of the Company
or the Guarantor or any dividend or distribution of any kind declared, paid or
made by the Company or the Guarantor on any class of its capital stock (any
such event referred to in clauses (i), (ii) or (iii), a "Material Adverse
Change").
d. Each of the Company and the Guarantor has all requisite corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Offering Memorandum and to execute, deliver
and perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby, including without limitation, the corporate
power and authority to issue, sell and deliver the Notes and the Guarantee.
e. None of (i) the execution, delivery, and performance of this
Agreement and each of the other Transaction Documents by the Company and the
Guarantor, to the extent it is a party thereto, (ii) the issuance, sale or
delivery of the Notes and the Guarantee, or (iii) the consummation of the
transactions contemplated hereby and thereby will (A) conflict with or result
in a breach of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both,
would constitute a default) under, or, except as provided in the Collateral
Documents, result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or the Guarantor
pursuant to, any agreement, indenture, note, instrument, franchise, license or
permit to which the Company, the Guarantor or Casino Magic Corp. ("Casino
Magic") is a party or by which their respective properties or assets may be
bound or (B) violate or conflict with any judgment, decree, order, statute,
rule or regulation of any court or any public, governmental or regulatory
agency or body applicable to the Company, the Guarantor or Casino Magic or any
of their respective properties or assets. The execution, delivery and
performance of this Agreement and the other Transaction Documents by the
Company and the Guarantor, to the extent it is a party thereto, and the
consummation of the transactions contemplated hereby and thereby, as described
in the Offering Memorandum, do not and will not violate or conflict with any
provision of the charter or bylaws, as amended or restated, of the Company or
the Guarantor as currently in effect. No consent, waiver, approval,
authorization, order, registration, filing, qualification, license or permit
of or with any court or any public, governmental or regulatory agency or body,
or any other person, is required for the execution, delivery and performance
of this Agreement, the other Transaction Documents or the consummation of the
transactions contemplated hereby and thereby, including the issuance, sale and
delivery of the Notes (including the Guarantee) to be issued, sold and
delivered by the Company and the Guarantor hereunder except such consents,
waiver, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Notes
by the Initial Purchasers, or as may be required under applicable gaming laws,
all of which either shall have been made and obtained on the Closing Date (and
copies of which have been delivered to the Initial Purchasers) or shall have
no bearing on the validity and enforceability of this Agreement, the other
Transaction Documents and the Notes, except for such filings, qualifications,
orders and approvals as may in the future be required under the Registration
Rights Agreement.
f. The Company had, as of June 30, 1996, an authorized and
outstanding capitalization as set forth in the Offering Memorandum and the
capital of the Company conforms in all material respect to the description
thereof contained in the Offering Memorandum prior to and after giving pro
forma effect to the consummation of the offering of the Notes and the
application of the net proceeds therefrom and the related transactions on the
terms described in the Offering Memorandum.
g. Each of the Company and the Guarantor is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified or licensed to do business as a foreign
corporation in good standing in all jurisdictions in which it owns or leases
property or in which the conduct of its business makes such qualification or
license necessary.
h. Each of the Company, the Guarantor and Casino Magic has such
permits, licenses, franchises, certificates, consents, orders, qualifications,
approvals, registrations and authorizations ("Permits") of and from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts and
other tribunals as are necessary to own, lease and operate its respective
properties and to conduct its business in the manner described in the
Preliminary Offering Memorandum and the Offering Memorandum, except as set
forth in the Offering Memorandum and except for Permits which the Company
would not customarily possess at the date hereof but which will be obtained in
the ordinary course as development continues of Casino Magic-Bossier City (as
defined in the Offering Memorandum), and no such Permit contains, or will upon
issue contain, a materially burdensome restriction not adequately disclosed in
the Offering Memorandum. Except as set forth in the immediately preceding
sentence, all such Permits are in full force and effect, and each of the
Company, the Guarantor and Casino Magic has fulfilled and performed all of its
material obligations with respect to such Permits. No event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination by the issuer thereof or which results in any other material
impairment of the rights of the holder of any such Permits. The Company, the
Guarantor and Casino Magic have no reason to believe that any governmental
body or agency is considering limiting, suspending or revoking any such
Permit.
i. There is (i) no action, suit, proceeding or investigation pending
or, to the best knowledge of the Company and the Guarantor, threatened to
which the Company or the Guarantor is a party or to which any property of the
Company or the Guarantor is subject in any court or before any governmental
authority, arbitration board or tribunal, foreign or domestic, (ii) to the
best knowledge of the Company and the Guarantor, no statute, rule, regulation
or order that has been enacted, adopted or issued by any government agency
since the date of the consolidated financial statements included in the
Offering Memorandum or (iii) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent jurisdiction
to which the Company or the Guarantor, or any of their respective business,
assets or property, is subject, which might in any such case reasonably be
expected to have a material adverse effect on (A) the business, properties,
operations, condition (financial or other) or results of operations of such
person, or (B) the issuance and sale of the Notes or the Guarantee or the
consummation of the transactions contemplated by this Agreement or any of the
other Transaction Agreements, including without limitation the perfection or
priority of any security interest in the Collateral (a "Material Adverse
Effect"), and there is no such action seeking to restrain, enjoin, prevent
the consummation of or otherwise challenge this Agreement or any of the other
Transaction Documents or the transactions contemplated hereby or thereby.
There is no contract or document that is material to the business of the
Company or the Guarantor that would be required to be described in the
Preliminary Offering Memorandum and the Offering Memorandum if the Preliminary
Offering Memorandum and Offering Memorandum were Registration Statements on
Form S-1 under the Act that is not so described therein.
j. None of the Company, the Guarantor or any of their respective
affiliates (i) has taken or will take, directly or indirectly, any action
designed to cause or result in, or which constitutes or which might reasonably
be expected to constitute, the stabilization or manipulation of the price of
any security of the Company or the Guarantor to facilitate the sale or resale
of the Notes or (ii) since the date of the Preliminary Offering Memorandum (A)
sold, bid for, purchased or paid any person any compensation for soliciting
purchases of, any of the Notes (including the Guarantee) or (B) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company or the Guarantor.
k. Neither the Company nor the Guarantor is (i) an "investment
company" or a company "controlled" by an investment company within the meaning
of the Investment Company Act of 1940, as amended, (ii) a "holding company" or
a "subsidiary company" of a holding company or an "affiliate" thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or
(iii) subject to regulation under the Federal Power Act or any federal or
state statute or regulation limiting its ability to incur indebtedness for
borrowed money, except as disclosed in the Offering Memorandum.
l. Assuming (a) the accuracy of the Initial Purchasers'
representations and warranties set forth in Section 3 of this Agreement and
the compliance by the Initial Purchaser with the procedures set forth in
Section 4 of this Agreement and (b) that the purchasers who buy the Series A
Notes in the Exempt Resales are either QIBs or Accredited Investors, the offer
and sale of the Series A Notes (including the Guarantee) to the Initial
Purchasers as contemplated hereby and the Exempt Resales are exempt from the
registration requirements of the Securities Act and the qualification
requirements under the Trust Indenture Act. No form of general solicitation
or general advertising was used by the Company, the Guarantor or any of their
representatives (although no representation or warranty is made as to actions
taken by the Initial Purchasers and their representatives) in connection with
the offer and sale of any of the Series A Notes (including the Guarantee) or
in connection with Exempt Resales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Series A Notes
have been issued and sold by the Company or the Guarantor within the six month
period immediately prior to the date hereof.
m. None of the Company, the Guarantor, or any of their respective
affiliates (as defined in Rule 501(b) under the Securities Act) or any person
authorized to act on their respective behalf (excluding the Initial
Purchasers, as to which no representation is made) has sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of any security (as
such ten-n is defined in the Securities Act) of the Company in a manner which
would require registration under the Securities Act.
n. The Series A Notes are eligible for resale pursuant to Rule 144A
under the Securities Act and, when issued, will not be of the same class as
securities listed on a national securities exchange registered under Section 6
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
quoted in a U.S. automated inter-dealer quotation system.
o. Neither the Company nor the Guarantor has any material liabilities
or obligations absolute, accrued, contingent or otherwise, ("Liabilities"),
except (i) as reflected or reserved against in the consolidated balance sheet
of the Company and the Guarantor as of June 30, 1996, and not heretofore
discharged, (ii) as specifically disclosed or specifically contemplated in the
Offering Memorandum or (iii) liabilities incurred in the ordinary course of
business since June 30, 1996. Casino Magic has no material liabilities except
as reflected or reserved against in the consolidated balance sheet of Casino
Magic as of June 30, 1996 included in Casino Magic's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1996 or incurred in the ordinary
course of business since June 30, 1996.
p. None of the Company, the Guarantor or Casino Magic is in violation
of its respective charter or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust or other contract, lease or other
instrument to which any of them is a party or by which any of them or any of
their respective properties are bound except where such default would not,
singly or in the aggregate, have a Material Adverse Effect. There does not
exist any state of facts which constitutes an event of default on the part of
the Company, the Guarantor or Casino Magic as defined in such documents or
which, with notice or lapse of time or both, would constitute such an event of
default.
q. Each of the Company, the Guarantor and Casino Magic is in
compliance, and has complied in all material respects, at all times during its
existence, and all transactions involving the issuance, offer, placement and
sale, pursuant to the terms of the Transaction Documents, of the Notes comply,
in all material respects, with all applicable federal, state and local
statutes, codes, ordinances, rules and regulations of the United States and
all other countries and subdivisions thereof (the "Laws"), except where the
failure to so comply would not, singly or in the aggregate, have a Material
Adverse Effect on the Company, the Guarantor or Casino Magic. None of the
Company, the Guarantor or Casino
Magic has received notice within the past three (3) years of any violations of
any Laws.
r. The Company and the Guarantor are each in compliance with any and
all Laws relating to the environment or health and safety, except where the
failure to so comply would not, singly or in the aggregate, have a Material
Adverse Effect on the Company or the Guarantor. There exists no fact, and no
event has occurred, which has or is reasonably likely to result in material
liability (including, without limitation, alleged or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damages, personal injuries or penalties) of the
Company or the Guarantor arising out of, based on or resulting from the
presence or release into the environment of any hazardous material (including,
without limitation, any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, waste or substance regulated under or within the
meaning of any Law) or any violation of any Law relating to the environment.
s. This Agreement has been duly and validly authorized, executed and
delivered by the Company and the Guarantor and is a valid and binding
obligation of the Company and the Guarantor, enforceable against the Company
and the Guarantor in accordance with its terms except as such enforcement may
be subject to or limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally, (ii) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding in
equity or at law) and (iii) with respect to any rights to indemnification or
contribution, federal securities laws.
t. The Series A Notes have been duly and validly authorized by the
Company, the Guarantee endorsed on the Series A Notes have been duly and
validly authorized by the Guarantor, and the Series A Notes (including the
Guarantee endorsed thereon), when authenticated by the Trustee and issued,
sold and delivered in accordance with this Agreement and the Indenture, will
have been duly and validly executed, authenticated, issued and delivered and
will constitute legally valid and binding obligations of the Company and the
Guarantor, enforceable against the Company and the Guarantor in accordance
with their terms and entitled to the benefits provided by the Indenture except
as such enforcement may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights and remedies generally and (ii)
general principles of equity (regardless of whether such enforcement may be
sought in a proceeding in equity or at law). The Series A Notes and the
Guarantee endorsed thereon, when executed, authenticated, issued and delivered
as provided in the Indenture, will conform to the description thereof
contained in the Offering Memorandum.
u. The Series B Notes have been duly and validly authorized for
issuance by the Company, the Guarantee endorsed on the Series B Notes have
been duly and validly authorized by the Guarantor, and the Series B Notes
(including the Guarantee endorsed thereon), when authenticated by the Trustee
and issued and delivered in accordance with the Exchange Offer and the
Indenture, will have been duly and validly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Company and
the Guarantor, enforceable against the Company and the Guarantor in accordance
with their terms and entitled to the benefits provided by the Indenture except
as such enforcement may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights and remedies generally and (ii)
general principles of equity (regardless of whether such enforcement may be
sought in a proceeding in equity or at law). The Series B Notes and the
Guarantee endorsed thereon, when executed, authenticated, issued and delivered
as provided in the Indenture and Exchange Offer will conform to the
description thereof contained in the Offering Memorandum.
v. When issued, the Notes and the Guarantee will rank pari passu
in right of
payment with all of the Company's and the Guarantor's other unsubordinated
indebtedness, respectively.
w. The Indenture has been duly and validly authorized by the Company
and the Guarantor, and the Indenture, when executed and delivered by the
Company, the Guarantor and the Trustee, will constitute a valid and binding
obligation of the Company and the Guarantor, enforceable against the Company
and the Guarantor in accordance with its terms, except as such enforcement may
be subject to or limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding in
equity or at law). The Indenture, when executed and delivered by the Company,
the Guarantor and the Trustee, will conform to the description thereof
contained in the Offering Memorandum.
x. The Registration Rights Agreement has been duly and validly
authorized by the Company and the Guarantor, and the Registration Rights
Agreement, when executed and delivered by the Company, the Guarantor and the
Initial Purchasers, will constitute a legally valid and binding obligation of
the Company and the Guarantor, enforceable against the Company and the
Guarantor in accordance with its terms, except as such enforcement may be
subject to or limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally, (ii) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding in
equity or at law) and (iii) with respect to any rights to indemnification or
contribution, federal securities laws. The Registration Rights Agreement,
when executed and delivered by the Company, the Guarantor and the Initial
Purchasers, will conform to the description thereof contained in the Offering
Memorandum.
y. Each of the Collateral Documents to be executed by the Company or
the Guarantor (to the extent it is a party thereto) has been duly and validly
authorized by the Company and the Guarantor, as the case may be, and the
Collateral Documents, when executed and delivered by the Company, the
Guarantor, and the other parties thereto, will constitute a legally valid and
binding obligation of the Company and the Guarantor, enforceable against the
Company and the Guarantor, as the case may be, except as such enforcement may
be subject to or limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding in
equity or at law). The Collateral Documents, when executed and delivered by
the parties thereto. will conform to the descriptions thereof contained in the
Offering Memorandum.
z. All of the outstanding shares of capital stock in the Company and the
Guarantor are duly and validly authorized and issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued and are not now in violation of or
subject to any preemptive rights. Neither the Company nor the Guarantor has
outstanding any options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of capital
stock or any such options, rights, convertible securities or obligations. The
Guarantor owns 100% of the outstanding capital stock of the Company, which,
upon payment of the outstanding aggregate principal amount of the Company's 11
1/2 % senior secured notes due 1999 on the Closing Date, will be free and
clear of any security interest, claim, lien, encumbrance, transfer restriction
or limitation on voting rights. The Company has no subsidiaries and the
Guarantor has no subsidiaries other than the Company.
aa. No preemptive rights or other rights to subscribe for or purchase
securities exist with respect to the issuance and sale of the Notes by the
Company pursuant to this Agreement. No security holder of the Company has any
right which has not been satisfied or waived to require the Company to
register the sale of any securities owned by such security holder under the
Securities Act, except as contemplated by the Registration Rights Agreement.
bb. Each of the Company and the Guarantor has good and marketable
title to all the properties and assets reflected in the financial statements
in the Preliminary Offering Memorandum and the Offering Memorandum or
elsewhere in the Preliminary Offering Memorandum or the Offering Memorandum as
owned by it, which, upon payment of the outstanding aggregate principal amount
of the Company's 11 1/2% senior secured notes due 1999 on the Closing Date,
will be free and clear of all liens, except as described in the Preliminary
Offering Memorandum and the Offering Memorandum. All material leases to which
the Company is, or on the Closing Date will be, a party are valid and binding
and in full force and effect and no default by the Company, or to the
knowledge of the Company, by any other party thereto, has occurred or is
continuing thereunder and the Company enjoys peaceful and undisturbed
possession under all such leases as to which it is a party as lessee. Except
as disclosed in the Offering Memorandum, the Company owns or leases, or has
commitments for the construction of, all such properties as are necessary to
its operations as contemplated in the Offering Memorandum.
cc. The Company and the Guarantor own, possess or currently have the
right to use the trademarks, service marks, trade names, patent rights,
copyrights, licenses, inventions, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) (collectively, "Intellectual Property") presently
employed by them in connection with, or necessary for the conduct of, the
businesses now operated by them or to be operated by them as contemplated in
the Offering Memorandum, and neither the Company nor the Guarantor has
received any notice of, or is otherwise aware of, any infringement of, or
conflict with, asserted rights of others with respect to the foregoing.
dd. Each of the Company and the Guarantor has timely filed all
necessary federal, state and foreign income and franchise tax returns and all
material taxes, including without limitation, withholding taxes, penalties and
interest, assessments fees and other charges due or claimed to be due, have
been paid; all such tax returns were correct and complete in all material
respects when so filed; and neither the Company nor the Guarantor has any
knowledge of any tax deficiency which has been asserted or threatened against
the Company or the Guarantor.
ee. Each of the Company and the Guarantor maintains insurance
covering the properties, operations, personnel and business, including without
limitation, comprehensive general liability, property and casualty and
business interruption insurance, and builders risk coverage insurance is in
effect with respect to Casino Magic-Bossier City, in each case on such terms
and in the amounts as are customarily carried by similar businesses against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect on the
date hereof and on the Closing Date, except for insurance which the Company
would not customarily possess at the date hereof but which will be obtained in
the ordinary course as development continues of Casino Magic-Bossier City.
ff. None of the Company, the Guarantor, Casino Magic or any affiliate
or representative acting on the behalf of any of them has at any time (i) made
any unlawful contribution to any candidate for office, or failed to disclose
fully any contribution in violation of law or (ii) made any payment to any
federal, state or local governmental officer or official, or other person
charged with similar public or quasi-public duties, or customers or suppliers
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
gg. No action has been taken and no law, statute, rule or regulation
or order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Notes or the Guarantee, prevents or
suspends the use of any Preliminary Offering Memorandum or the Offering
Memorandum, or suspends the sale of the Notes in any jurisdiction referred to
in Section 5(e) hereof; no injunction, restraining order or other order or
relief of any nature by a federal or state court or other tribunal of
competent jurisdiction has been issued with respect to the Company that would
prevent or suspend the issuance or sale of the Notes or the use of any
Preliminary Offering Memorandum or the Offering Memorandum in any jurisdiction
referred to in Section 5(e) hereof; no action, suit or proceeding is pending
or threatened against or affecting the Company or the Guarantor before any
court or arbitrator or any governmental body, agency or official, domestic or
foreign, which, if adversely determined, would materially interfere with or
adversely affect the issuance of the Notes or the Guarantee or in any manner
draw into question the validity of the Transaction Documents, the Notes or the
Guarantee; and every request of any securities authority or agency of any
jurisdiction for additional information (to be included in the Offering
Memorandum or otherwise) has been complied with.
hh. All roads, easements and rights of way necessary for the full
utilization of and access to the vessel to be operated by the Company and the
conduct of its business have been completed or the necessary steps have been
taken by the Company to assure the complete construction and installation
thereof as contemplated in the Offering Memorandum. By the scheduled
commencement date of casino operations at Casino Magic-Bossier City in
September of 1996, Casino Magic-Bossier City will have unlimited access of
ingress and egress to publicly dedicated streets. All utility services
necessary for the operation of the business of the Company will be available
at the scheduled time for commencement of operation of the vessel to be
operated by the Company and, to the best knowledge of the Company, there are
no conditions that would inhibit or impair any utility services necessary for
the operation of the business of the Company from providing appropriate
utility services to the Company and Casino Magic-Bossier City.
ii. The Initial Purchasers have been furnished with a copy of the
material plans and specifications for the construction of the improvements at
Casino Magic-Bossier City and other necessary capital expenditures. Such
plans and specifications are satisfactory to the Company. The anticipated
cost of such improvements (including interest, legal, architectural,
engineering, planning, zoning and other similar costs) does not exceed the
amount set forth under the caption "Use of Proceeds" in the Offering
Memorandum. The Company is not aware of any material defects in such
improvements.
jj. Set forth on Exhibit B hereto is a description of the employee
pension, welfare or benefit plans with respect to which the Company or any
corporation considered an affiliate of the Company within the meaning of
Section 407(d)(7) of ERISA is a party in interest or disqualified person. The
execution and delivery of this Agreement, the other Transaction Documents and
the sale of the Series A Notes to be purchased by the Eligible Purchasers will
not involve any non-exempt prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986.
The representations made in the preceding sentence are made in reliance upon
and subject to the accuracy of, and compliance with, the representations and
covenants made or deemed made by the Initial Purchasers as set forth in the
Offering Memorandum under the caption "Notice to Investors."
kk. Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
ll. Each of the Company and the Guarantor does not intend to, nor
does it believe that it will, incur debts beyond its ability to pay such debts
as they mature. Immediately after the consummation of the transactions
contemplated by the Transaction Documents, the fair value and present fair
saleable value of the assets of each of the Company and the Guarantor will
exceed the sum of its respective Liabilities and neither the Company nor the
Guarantor will be, after giving effect to the execution, delivery and
performance of the Transaction Documents, to the extent each is a party
thereto, and the consummation of the transactions contemplated thereby, (i)
left with unreasonably small capital with which to carry on its business as it
is proposed to be conducted or (ii) unable to pay its debts (contingent or
otherwise) as they mature.
mm. Each of the Company and the Guarantor 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 accountability for assets; (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.
nn. None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes (including the issuance of the
Guarantee), the application of the proceeds from the issuance and sale of the
Notes and the consummation of the transactions contemplated thereby by the
Company as set forth in the Offering Memorandum, will violate Regulations G,
T, U or X promulgated by the Board of Governors of the Federal Reserve System.
oo. Other than this Agreement, there are no contracts, agreements or
understandings between or among the Company or the Guarantor, on the one hand,
and any other person, on the other hand, that could give rise to a valid claim
against the Company, the Guarantor or the Initial Purchasers for a brokerage
commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Notes (including the Guarantee).
pp. Each certificate signed by any officer of the Company or the
Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers on or prior to the Closing Date shall be deemed to be a
representation and warranty by Company or such Guarantor to the Initial
Purchasers as to the matters covered thereby.
qq. No statement, representation, warranty or covenant made by the
Company or the Guarantor in any of the Transaction Documents or made in any
certificate or document required by this Agreement to be delivered to the
Initial Purchasers was or will be, when made, inaccurate, untrue or incorrect
in any material respect.
rr. By the scheduled commencement date of casino operations at Casino
Magic Bossier City in September of 1996, appropriate signage will be
constructed, in accordance with all applicable governmental rules and
regulations, and erected within 100 feet of the off-ramp of Traffic St.
located on Interstate Highway 20, advertising Casino Magic-Bossier City. Such
signage shall be of a size and type equivalent to other signage for casinos in
the Bossier City/Shreveport, Louisiana area of similar size and scope as
Casino Magic-Bossier City.
ss. The vessel "Mary's Prize" (the "Bossier Riverboat") is a
"Riverboat" as that term is defined in the Louisiana Riverboat Economic
Development and Gaming Control Act, La. R.S. 4:504, and is otherwise fully
suitable for the Company's intended purposes of utilizing the same in the
Company's casino operations at Casino Magic-Bossier City, as set forth in the
Offering Memorandum. The Bossier Riverboat has the specifications set forth
in the Offering Memorandum. The Company has obtained or will obtain all
licenses, permits, consents and approvals necessary for the relocation of the
Bossier Riverboat from its present location at Morgan City, Louisiana to the
intended site (including, without limitation, licenses, permits, consents and
approval from, as applicable, the Louisiana Gaming Control Board, the Gaming
Enforcement Division of the Louisiana State Police and the U.S. Coast Guard)
so as to enable the Bossier Riverboat to be present at Casino Magic-Bossier
City for the commencement of gaming operations in September of 1996,
including, without limitation, licenses, permits, consents and approvals from
the Louisiana Gaming Control Board, the Gaming Enforcement Division of the
Louisiana State Police, the U.S. Coast Guard, Bossier Parish, the City of
Bossier, Caddo Parish, the City of Shreveport and any other governmental
entity which has authority over the operation or location or condition of the
Bossier Riverboat, or over the conduct of gaming operations thereon.
Each of the Company and the Guarantor acknowledges that the Initial
Purchasers and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Section 8 hereof, counsel to each of the Company and
the Guarantor and counsel to the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations and hereby consents to
such reliance.
3. PURCHASE, SALE AND DELIVERY OF THE NOTES
a. On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to each Initial Purchaser and each
Initial Purchaser agrees to purchase, severally and not jointly, from the
Company the Notes in the respective principal amounts set forth opposite their
names on Schedule I hereto at a purchase price of 100% of their principal
amount, plus accrued interest, if any.
b. Payment of the purchase price for, and delivery of, the Notes
shall be made at the offices of Latham & Watkins, 885 Third Avenue, New York,
New York 10022 at 12:00 p.m. (New York City time) on August 22, 1996 or such
other time and date as shall be mutually agreed between the Company and the
Initial Purchasers (such time and date of such payment and delivery being
herein called the "Closing Date"). At or prior to the Closing Date, the
Company shall execute and deliver for authentication one or more certificates
in global or definitive form for the Notes in such denominations and
registered in such names as the Initial Purchasers request upon notice to the
Company at least two business days prior to the Closing Date. Against such
delivery of the Notes, the Initial Purchasers shall pay or cause to be paid to
the Company the purchase price for the Notes. Payment shall be made to the
Company by wire transfer of immediately available funds to an account
designated by the Company.
c. Each of the Initial Purchasers hereby each represents, warrants
and covenants with respect to itself to the Company and the Guarantor that:
(i) it is either a QIB or an Accredited Investor, with such knowledge
and experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes;
(ii) it (A) is not acquiring the Series A Notes with a view to any
distribution thereof that would violate the Securities Act or the securities
laws of any state of the United States or any other applicable jurisdiction
and (B) will be reoffering and reselling the Series A Notes only to QlBs in
reliance on the exemption from the registration requirements of the Securities
Act provided by Rule 144A and to a limited number of Accredited Investors that
execute and deliver a letter containing certain representations and agreements
in the form attached as Annex A to the Offering Memorandum;
(iii) no form of general solicitation or general advertising has been
or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Series A Notes, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising;
(iv) it will otherwise act in accordance with the terms and
conditions set forth in this Agreement and in the Offering Memorandum in
connection with the placement of the Notes contemplated hereby; and
(v) it understands that the Company and, for purposes of the opinions
to be delivered to the Initial Purchasers pursuant to Section 7 hereof,
counsel to the Company and counsel to the Initial Purchasers will rely upon
the accuracy and truth of the foregoing representations and hereby consents to
such reliance.
4. SUBSEQUENT OFFERS AND RESALES OF THE NOTES
The Initial Purchasers and the Company hereby establish and agree to
observe the following procedures in connection with the offer and resale by
the Initial Purchasers of the Notes:
a. In connection with the Exempt Resales, the Initial Purchasers will
solicit offers to buy the Series A Notes only from, and will offer to sell the
Series A Notes only to Eligible Purchasers. The Initial Purchasers (i) will
offer to sell the Series A Notes only to, and will solicit offers to buy the
Series A Notes only from (A) QIB's who in purchasing such Series A Notes will
be deemed to have represented and agreed that they are purchasing the Series A
Notes for their own accounts or accounts with respect to which they exercise
sole investment discretion and that they or such accounts are QlBs and (B)
Accredited Investors who make the representations contained in, and execute
and return to such Initial Purchaser, a certificate in the form of Annex A
attached to the Offering Memorandum and (ii) that such QlBs and Accredited
Investors will acknowledge and agree that such Series A Notes will not have
been registered under the Act and may be resold, pledged or otherwise
transferred only (A)(1) inside the United States to a person whom the seller
reasonably believes is a QIB in a transaction meeting the requirements of Rule
144A, or in a transaction meeting the requirements of Rule 144 under the
Securities Act, or in accordance with another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel if
the Company or the Guarantor so requests), (2) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, (3) to the Company, or (4) pursuant to an effective
registration statement under the Securities Act, and (B) in each case, in
accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction and (iii) that such QIBs and
Accredited Investors will acknowledge and agree that the holder will, and each
subsequent holder is required to, notify any purchaser of the security
evidenced thereby of the resale restrictions set forth in (ii) above.
b. The Series A Notes will be offered by the Initial Purchasers only
by approaching prospective purchasers on an individual basis. No general
solicitation or general advertising (as such terms are used in Regulation D
under the Securities Act) will be used in connection with the offering of the
Series A Notes.
c. The transfer restrictions and the other provisions set forth in
the Indenture, including the legend required thereby, shall apply to the
Series A Notes except as otherwise agreed by the Company and the Initial
Purchasers. Following the sale of the Series A Notes by the Initial
Purchasers to Eligible Purchasers pursuant to the terms hereof, the Initial
Purchasers shall not be liable or responsible to the Company for any losses,
damages or liabilities suffered or incurred by the Company, including any
losses, damages or liabilities under the Securities Act, arising from or
relating to any subsequent resale or transfer of any Series A Notes.
d. The Initial Purchasers will deliver to each purchaser of the
Series A Notes from the Initial Purchasers, in connection with its original
distribution of the Series A Notes, a copy of the Offering Memorandum, as
amended and supplemented, if applicable, at the date of such delivery.
e. In connection with its original distribution of the Series A
Notes, the Company agrees that, prior to any offer or resale of the Series A
Notes by the Initial Purchasers, the Initial Purchasers and Counsel for the
Initial Purchasers shall have the right to make reasonable due diligence
inquiries into the business of the Company. The Company also agrees to
provide answers to questions from each prospective Eligible Purchaser
concerning the Company (to the extent that such information can be made
available to prospective Eligible Purchasers without unreasonable effort or
expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the Series A
Notes, as provided in the Offering Memorandum.
5. COVENANTS OF THE COMPANY AND THE GUARANTOR
Each of the Company and the Guarantor, jointly and severally, covenants
and agrees with the Initial Purchasers as follows:
a. To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) after it receives
notice of the issuance by any state securities commission, of any stop order
suspending the qualification or exemption from qualification of any Notes for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purpose by any state securities commission or other regulatory authority
and (ii) during the time in which the Offering Memorandum is required to be
delivered in connection with Exempt Resales, of the happening of any event
that makes any statement of a material fact made in the Preliminary Offering
Memorandum, as then amended or supplemented, or the Offering Memorandum, as
then amended or supplemented, untrue or that requires the making of any
additions to or changes in the Preliminary Offering Memorandum, as then
amended or supplemented, or the Offering Memorandum in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. Each of the Company and the Guarantor shall use its
best efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Notes (including the Guarantee) under any
state securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption of any Notes under any state securities or Blue Sky
laws, each of the Company and the Guarantor shall use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.
b. To promptly deliver to the Initial Purchasers such number of
copies of the Offering Memorandum and all amendments of and supplements
thereto as the Initial Purchasers may reasonably request. The Company and the
Guarantor consents to the use of the Preliminary Offering Memorandum up to the
time at which the Offering Memorandum is available and the Offering
Memorandum, and any amendments and supplements thereto, by the Initial
Purchasers in connection with Exempt Resales.
c. Not to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum prior to the Closing Date unless the Initial
Purchasers shall previously have been advised thereof and shall have consented
to or not have reasonably objected thereto in writing within a reasonable time
after being furnished a copy thereof. Each of the Company and the Guarantor
shall promptly prepare, upon the Initial Purchasers' request, any amendment or
supplement to the Offering Memorandum that the Initial Purchasers believe
reasonably necessary or advisable in connection with Exempt Resales.
d. If, after the date hereof and prior to consummation of any Exempt
Resale, any event shall occur as a result of which, in the judgment of either
the Company or the Guarantor or in the reasonable judgment of counsel to the
Initial Purchasers, it becomes necessary to amend or supplement the
Preliminary Offering Memorandum (prior to the availability of the Offering
Memorandum) or Offering Memorandum in order to make the statements therein, in
the light of the circumstances existing when such Preliminary Offering
Memorandum or Offering Memorandum is delivered to an Eligible Purchaser which
is a prospective purchaser, not misleading, or if it is necessary to amend or
supplement the Preliminary Offering Memorandum (prior to the availability of
the Offering Memorandum) or Offering Memorandum to comply with applicable law,
(i) to notify the Initial Purchasers and (ii) forthwith to prepare an
appropriate amendment or supplement to such Preliminary Offering Memorandum or
Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Preliminary Offering Memorandum or
Offering Memorandum will comply with applicable law.
e. The Company and the Guarantor will endeavor in good faith, in
cooperation with the Initial Purchasers, to qualify the Notes for offering and
sale under the securities laws relating to the offering or sale of the Notes
in such jurisdictions as the Initial Purchasers may designate and to maintain
such qualification in effect for so long as required for the distribution
thereof; except that in no event shall the Company and the Guarantor be
obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process.
f. The Company will apply the proceeds from the sale of the Series A
Notes as set forth under the caption "Use of Proceeds" in the Offering
Memorandum, subject to such procedural modifications that are permitted under
the Cash Collateral and Disbursement Agreement (as defined in the Indenture).
The Company will comply with the provisions of the Collateral Documents
concerning disbursement of funds.
g. Each of the Company and the Guarantor will use its best efforts to
cause the Notes to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") market securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc., relating to trading in the PORTAL market.
h. The Company and the Guarantor will comply with all of the
agreements (to the extent each of the Company and the Guarantor is a party
thereto) set forth in the Registration Rights Agreement, the Indenture, the
Collateral Documents and in the representation letter of the Company to The
Depository Trust Company ("DTC") relating to the approval of the Notes by
DTC for "book-entry" transfer.
i. During the period of 90 days from the date hereof, the Company
will not, withoutprior written consent of the Initial Purchasers or as
permitted in the Indenture, issue, sell, offer or contract to sell, grant any
option for the sale of, or otherwise dispose of, directly or indirectly, any
debt securities in any such case for cash, other than the Company's sale of
Notes hereunder.
j. None of the Company, the Guarantor, their respective affiliates
(as defined in Rule 501(b) of the Securities Act) or any person acting on
their behalf (other than the Initial Purchasers and their affiliates) will (i)
distribute prior to the Closing Date any offering material in connection with
the offering or sale of the Notes other than the Preliminary Offering
Memorandum and the Offering Memorandum and any amendments and supplements to
the Offering Memorandum prepared in compliance with Section 5(c) hereof or
(ii) solicit any offer to buy or offer or sell the Notes by means of any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
k. None of the Company, the Guarantor or any of their respective
affiliates (as defined in Rule 501(b) of the Securities Act) or any person
acting on their behalf will offer, sell or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) of the
Company in a manner that would require the registration of the Series A Notes
under the Securities Act.
1. During the period from the Closing Date to three years after the
Closing Date, the Company will not, and will not permit any of its
"affiliates" (as defined in Rule 144 under the Securities Act) to, resell any
of the Notes that have been reacquired by them, except for Notes purchased by
the Company or any of its affiliates and resold in a transaction registered
under the Securities Act or are exempt from such registration requirements
under the Securities Act.
m. Each of the Company and the Guarantor will, so long as the Notes
are outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, either (i) file reports and other
information with the Commission under Section 13 or 15(d) of the Exchange Act,
or (ii) in the event it is not subject to Section 13 or 15(d) of the Exchange
Act, make available to holders of the Notes and prospective purchasers of the
Notes designated by such holders, upon request of such prospective purchasers,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resales
of the Notes.
n. Each of the Company and the Guarantor will use its best efforts to
cause the Notes to be eligible for clearance and settlement through the DTC.
o. Each of the Notes will bear the legend contained in "Notice to
Investors" in the Offering Memorandum for the time period and upon the other
terms stated therein, except after such Note is resold pursuant to a
registration statement effective under the Securities Act.
p. To cause the Exchange Offer to be made in accordance with and
subject to the terms set forth in the Registration Rights Agreement.
q. Not to insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any usury law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of
the Indenture.
r. Not to (i) take, directly or indirectly, any action designed to
cause or result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company or the Guarantor to facilitate the sale or resale of
any of the Series A Notes or (ii) sell, bid for, purchase or pay anyone other
than the Initial Purchasers any compensation for soliciting purchases of, any
of the Series A Notes or pay or agree to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
6. PAYMENT OF EXPENSES
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement becomes effective or is terminated, the Company
and the Guarantor hereby agree, jointly and severally, to pay all costs,
expenses, fees and taxes incident to and in connection with this Agreement and
the transactions contemplated hereby and by the other Transaction Documents,
including without limitation all costs, expenses, fees and taxes relating to:
(i) preparing, printing, duplicating, filing and distributing the Preliminary
Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements and exhibits) and any amendments or
supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel and up to $85,000 of the fees and expenses
of the Initial Purchasers' Counsel), (ii) preparing, printing (including,
without limitation, word processing and duplication costs) and delivery of
this Agreement, the other Transaction Documents and all agreements, memoranda,
correspondence and other documents prepared and delivered in connection
herewith and with the Exempt Resales, (iii) the issuance, transfer and
delivery of the Notes to the Initial Purchasers, including any transfer or
other taxes payable thereon, (iv) the qualification of the Notes under state
or foreign securities or Blue Sky laws, including the costs of printing and
mailing a preliminary and final "Blue Sky Memorandum" and the fees of counsel
for the Initial Purchasers and such counsel's disbursements and expenses in
relation thereto, (v) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with the Exempt
Resales, (vi) the preparation of certificates for the Notes (including,
without limitation, the printing or engraving thereof), (vii) all expenses and
listing fees in connection with the application for quotation of the Notes in
the National Association of Securities Dealers, Inc. Automated Quotation
System - PORTAL ("PORTAL"), (ix) all fees and expenses (including fees and
expenses of counsel) of the Company and the Guarantor in connection with
approval of the Notes by DTC for "book-entry" transfer, (x) the performance by
the Company and the Guarantor of their other obligations under this Agreement
and the other Transaction Documents, (xi) rating the Notes by rating agencies,
(xi) the fees and expenses of the Trustee and its counsel pursuant to the
Indenture and (xii) the fees and expenses of the Disbursement Agent (as
defined in the Indenture) pursuant to the Cash Collateral and Disbursement
Agreement (as defined in the Indenture).
7. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS
The obligations of the Initial Purchasers to purchase and pay for the
Notes as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company and the Guarantor herein
contained, as of the date hereof and as of the Closing Date, to the absence
from any certificates, opinions, written statements or letters furnished to
the Initial Purchasers or to Latham & Watkins ("Initial Purchasers'
Counsel") pursuant to this Section 7 of any misstatement or omission, to the
performance by each of the Company and the Guarantor of its obligations
hereunder, and to the following additional conditions:
a. At the Closing Date the Initial Purchasers shall have received the
opinion (in form and substance satisfactory to the Initial Purchasers and
Initial Purchasers' Counsel) of Akin, Gump, Strauss Hauer & Feld, L.L.P.,
counsel for the Company and the Guarantor, addressed to the Initial Purchasers
and dated the Closing Date, substantially to the effect set forth in Exhibit C
hereto. In providing such opinion, such counsel shall opine as to the federal
laws of the United States and the laws of the State of New York.
b. At the Closing Date the Initial Purchasers shall have received the
opinion (in formand substance satisfactory to the Initial Purchasers and
Initial Purchasers' Counsel) of Hoffman Sutterfield Ensenat, counsel for the
Company and the Guarantor, addressed to the Initial Purchasers and dated the
Closing Date, substantially to the effect set forth in Exhibit D hereto. In
providing such opinion, such counsel shall opine as to the federal laws of the
United States and the laws of the State of Louisiana.
c. All proceedings taken in connection with the sale of the Notes as
herein contemplated shall be satisfactory in form and substance to the Initial
Purchasers and to Initial Purchasers' Counsel, and the Initial Purchasers
shall have received from said Initial Purchasers' Counsel a favorable opinion,
dated the Closing Date with respect to the issuance and sale of the Notes, the
Offering Memorandum and such other related matters as the Initial Purchasers
may reasonably require, and the Company shall have furnished to Initial
Purchasers' Counsel such documents as they request for the purpose of enabling
them to pass upon such matters. At the Closing Date, the Initial Purchasers
shall have received from Phelps Dunbar, L.L.P. a favorable opinion dated the
Closing Date with respect to the Bossier Riverboat Mortgage (as defined in the
Indenture) and the Crescent City Riverboat Mortgage (as defined in the
Indenture) and the remaining term of the Company's Louisiana gaming license in
the event the voters in the Louisiana Referendum (as defined in the Offering
Memorandum) do not approve the continuation of riverboat gaming in Bossier
Parish or Caddo Parish, Louisiana.
d. At the Closing Date the Initial Purchasers shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company and the Guarantor, dated the Closing Date, to the effect that (i) as
of the date hereof and as of the Closing Date, the representations and
warranties of the Company and the Guarantor set forth in Section 2 hereof are
accurate, (ii) as of the Closing Date, the obligations of the Company to be
performed hereunder on or prior thereto have been duly performed, (iii)
subsequent to the respective dates as of which information is given in the
Offering Memorandum, the Company has not sustained any material loss or
interference with its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, and there has not been
any Material Adverse Change, or any development involving a prospective
Material Adverse Change, (iv) each signer of such certificate has examined the
Offering Memorandum and that (A) as of the date of such certificate, the
Offering Memorandum does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (B) since the date of the Offering
Memorandum no event has occurred as a result of which it is necessary to amend
or supplement the Offering Memorandum in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading
and (v) no action shall have been taken and, to the best knowledge of each of
the Company and the Guarantor, no statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency which would,
as of the Closing Date, have a Material Adverse Effect; no action, suit or
proceeding shall have been commenced and be pending against or affecting or,
to the best knowledge of each of the Company and the Guarantor, threatened
against, the Company or the Guarantor, before any court or arbitrator or any
governmental body, agency or official that, if adversely determined, would
result in a Material Adverse Effect; and no stop order preventing the use of
the Offering Memorandum, or any amendment or supplement thereto or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act shall have been
issued.
e. At the time this Agreement is executed and at the Closing Date,
you shall have received a comfort letter from Arthur Andersen, LLP,
independent accountants for the Company, dated, respectively, as of the date
of this Agreement and as of the Closing Date, addressed to the Initial
Purchasers in form and substance satisfactory to the Initial Purchasers.
f. Prior to the Closing Date, the Company shall have furnished to the
Initial Purchasers or the Initial Purchasers' Counsel such further
information, certificates and documents as the Initial Purchasers or the
Initial Purchasers' Counsel may reasonably request.
g. At the Closing Date, the Notes shall have been approved for
quotation in the PORTAL market.
h. The Company, to the extent applicable, the Guarantor and each of
the other parties thereto shall have executed and delivered the Transaction
Documents and the Initial Purchasers shall have received fully executed copies
thereof. The Transaction Documents shall be in full force and effect. The
Company shall have received the requisite governmental and regulatory approval
in connection with each of the Transaction Documents and the transactions
contemplated by the Offering Memorandum to be completed on or before the
Closing Date.
i. The Initial Purchasers shall have received (i) certificates of the
Secretaries of the Company and the Guarantor, dated the Closing Date and in
form and substance satisfactory to the Initial Purchasers, certifying as true,
accurate and complete, the by-laws, resolutions with respect to the
transactions contemplated herein and incumbency of certain officers; and (ii)
certified Certificates or Articles of Incorporation issued as of a recent date
by the Secretary of State of the state of incorporation of the Company and the
Guarantor; and (iii) appropriate certificates of qualification to do business
and of good standing, issued on a recent date by the Secretary of State of
each jurisdiction, if any, in which the failure of the Company or the
Guarantor, as the case may be, to be qualified to do business would have a
Material Adverse Effect.
j. On the Closing Date, the Initial Purchasers shall have received
certificates of solvency, giving effect to the offering of the Series A Notes
contemplated hereby, signed by the chief executive officer and chief financial
officer of each of the Company and the Guarantor substantially in the form
previously approved by the Initial Purchasers.
k. Counsel for the Initial Purchasers shall have been furnished with
such documents as are necessary to confirm that there are no liens against any
of the personal or real property of the Company or the Guarantor unless such
liens are permitted under the Indenture or have otherwise been approved by the
Initial Purchasers.
1. The Trustee shall have received (i) a certificate of insurance
demonstrating insurance coverage of types, in amounts, with insurers and with
other terms required by the terms of the Transaction Documents, (ii) executed
copies of each UCC-I financing statement signed y t Company and the Guarantor,
naming the Trustee as secured party and filed in such jurisdictions as the
Initial Purchasers may reasonably require, and (iii) to the extent required by
the Transaction Documents, the original stock certificates, promissory notes
and other instruments pledged to the Trustee pursuant to the Transaction
Documents, together with undated stock powers or endorsements duly executed in
blank in connection therewith.
m. All documents and agreements shall have been filed, and other
actions shall have been taken, as may be required to perfect the Security
Interests of the Trustee in the Collateral of the Company and the Guarantor,
and to accord the Trustee the priorities over other creditors of either the
Company or the Guarantor as contemplated by the Offering Memorandum and the
Transaction Documents.
n. The Trustee shall have received irrevocable commitments for title
insurance from Louisiana Title Company, in a form and substance reasonably
satisfactory to the Initial Purchasers, subject only to Liens permitted under
the Indenture.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
the Initial Purchasers' Counsel pursuant to this Section 7 shall not be
reasonably satisfactory in form and substance to the Initial Purchasers and to
the Initial Purchasers' Counsel, all obligations of the Initial Purchasers
hereunder may be canceled by you at, or at any time prior to, the Closing
Date. Notice or such cancellation shall be given to the Company in writing,
or by telephone, telex or telegraph, confirmed in writing.
8. INDEMNIFICATION
a. The Company and the Guarantor, jointly and severally, agree to
indemnify and hold harmless each of the Initial Purchasers, each person, if
any, who controls any of the Initial Purchasers within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act and the
respective officers, directors, partners, employees, representatives and
agents of any Initial Purchaser or controlling person, against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(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
Offering Memorandum or the Preliminary Offering Memorandum 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
not misleading or arise out of or are based upon any inaccuracy in the
representations and warranties of the Company contained herein or any failure
of the Company to perform its obligations hereunder or under applicable law;
and will reimburse the Initial Purchasers and each such controlling person for
any legal and other expenses as such expenses are reasonably incurred by the
Initial Purchasers or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Initial Purchasers expressly for use therein; and provided, further, that this
indemnity agreement with respect to the Preliminary Offering Memorandum shall
not inure to the benefit of any Initial Purchaser from whom the person
asserting any such losses, liabilities, claims, damages or expenses purchased
Notes, or any person controlling the Initial Purchasers, if a copy of the
Offering Memorandum (as then amended or supplemented if the Company shall have
furnished any such amendments or supplements thereto) was not sent or given by
or on behalf of the Initial Purchaser to such person at or prior to the
written confirmation of the sale of such Notes to such person and if the
Offering Memorandum (as so amended or supplemented) would have corrected the
defect giving rise to such loss, liability, claim, damage or expense. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including under this Agreement.
b. The Initial Purchasers agree to indemnify and hold harmless each
of the Company, the Guarantor, the officers and the directors of the Company,
the Guarantor and each other person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), jointly or
severally, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (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 Offering Memorandum or the Preliminary Offering
Memorandum, or in any amendment 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
not misleading, in each case to the extent, but only to the extent, that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchasers
expressly for use therein and will reimburse the Company, the Guarantor, or
any such director, officer, or controlling person for any legal and other
expense reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that in no case shall any Initial Purchaser be
liable or responsible for any amount in excess of the selling concession
applicable to the Notes purchased by the such Initial Purchaser hereunder.
This indemnity will be in addition to any liability which the Initial
Purchasers may otherwise have, including under this Agreement. The Company
and the Guarantor acknowledge that the statements set forth in the first
paragraph under the caption "Plan of Distribution" in the Offering Memorandum
constitutes the only information furnished in writing by or on behalf of the
Initial Purchasers expressly for use in the Offering Memorandum or amendment
thereof or supplement thereto, as the case may be.
c. Promptly after receipt by an indemnified party, under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party, under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party, promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized
in writing by one of the indemnifying parties in connection with the defense
of such action, (ii) the indemnifying parties shall not have employed counsel
to take charge of the defense of such action within a reasonable time after
notice of commencement of the action, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available
to it or them which are different from or additional to those available to one
or all of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties) in any of which events such fees and expenses
shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above shall only be liable for
the legal expenses of one counsel (and any local counsel) for all indemnified
parties and that all such fees and expenses of counsel shall be reimbursed as
they are incurred. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent; provided,
however, that such consent was not unreasonably withheld.
9. CONTRIBUTION
In order to provide for contribution in circumstances in which the
indemnification provided for in Section 8 hereof is for any reason held by a
court to be unavailable to any indemnifying party, the Company, the Guarantor
and the Initial Purchasers shall contribute to the aggregate losses, claims,
damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting in
the case of losses, claims, damages, liabilities and expenses suffered by the
Company any contribution received by the Company from persons other than the
Initial Purchasers, who may also be liable for contribution, including persons
who control the Company within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, officers and managers of the Company) as
incurred to which the Company, the Guarantor and one or more of the Initial
Purchasers may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company, and the Guarantor, on the one
hand, and the Initial Purchasers, on the other hand, from the offering of the
Notes or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 5 hereof, in such proportion as
is appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company and the Guarantor, on the one hand, and
the Initial Purchasers, on the other hand, in connection with the statements
or omissions or inaccuracies in the representations and warranties herein
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantor, on the one hand, and each Initial
Purchaser, on the other hand, shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (net of selling concessions but
before deducting expenses) received by the Company and (y) the selling
concessions received by such Initial Purchaser, respectively. The relative
fault of the Company and each Initial Purchaser 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 or the inaccurate or the alleged inaccurate representation or
warranty relates to information supplied by the Company and the Guarantor, on
the one hand, or any such Initial Purchaser, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantor and
the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 9, (i) in no case shall any Initial Purchaser be liable or
responsible for any amount in excess of the selling concession applicable to
the Notes purchased by such Initial Purchaser hereunder and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 9, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at
which the Notes sold hereunder and distributed to the public were offered to
the public exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 9,
each person, if any, who controls any of the Initial Purchasers within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act shall have the same rights to contribution as such Initial Purchaser, and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, each officer and
each manager of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 9. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made against another party or
parties, notify each party or parties from whom contribution may be sought,
but the omission to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 9 or otherwise. No party shall be liable
for contribution with respect to any action or claim settled without its
consent; provided, however, that such consent was not unreasonably withheld.
10. DEFAULT BY THE INITIAL PURCHASERS
If any Initial Purchaser shall fail at the Closing Date to purchase the
Notes it is obligated to purchase under this Agreement, then this Agreement
shall terminate subject to the provisions of Section 11 hereof. Nothing in
this Section shall relieve such defaulting Initial Purchaser from its
liability to reimburse the Company for its costs, expenses and damages
resulting from such Initial Purchaser's default.
11. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS
All representations and warranties, covenants and agreements of the
Initial Purchasers, the Company and the Guarantor contained in this Agreement,
including the agreements contained in Section 6, the indemnity agreements
contained in Section 8 and the contribution agreements contained in Section 9,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchasers or any
controlling person thereof or on behalf of the Company, any of its officers
and managers or any controlling person thereof, and shall survive delivery of
and payment for the Notes to and by the Initial Purchasers. The
representations contained in Sections 2 and 3(c) and the agreements contained
in Sections 6, 8, 9 and 12(c) hereof shall survive the termination of this
Agreement, including termination pursuant to Section 10 or 12 hereof.
12. TERMINATION
a. The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date, without liability on the
Initial Purchasers' part to the Company and the Guarantor, if (i) any domestic
or international event or act or occurrence has materially disrupted, or in
your opinion will in the immediate future materially disrupt, the United
States or international securities markets; (ii) if trading on the New York
Stock Exchange or the Nasdaq Stock Market shall have been suspended or
materially limited; (iii) if a banking moratorium has been declared by any
United States federal or New York State authority or if any new restriction
materially adversely affecting the sale of the Notes shall have become
effective; (iv) (A) if the United States becomes engaged in hostilities or
there is an escalation of hostilities involving the United States or there is
a declaration of a national emergency or war by the United States (B) if there
shall have been such change in political, financial or economic conditions if
the effect of any such event in (A) or (B) in your judgment makes it
impracticable or inadvisable to proceed with the offering, sale and delivery
of the Notes on the terms contemplated by the Offering Memorandum; (v) any
condition of the obligations of the Initial Purchasers hereunder as provided
in Section 7 is not fulfilled when and as required in any material respect;
(vi) any Material Adverse Change or any development involving a prospective
Material Adverse Change shall have occurred since the respective dates as of
which information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, prospects, net worth or
results of operations of the Company whether or not arising in the ordinary
course of business other than as set forth in the Offering Memorandum; (vii)
any downgrading shall have occurred in the rating of the Company's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Securities Act or any such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its ruling of any of the debt
securities of the Company; (viii) there has been an enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company, or (ix) if any action has been taken by
any federal, state, local or foreign government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States and would make it impracticable
or inadvisable to market the Series A Notes.
24
b. Any notice of termination pursuant to this Section 12 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
c. If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 10 hereof), or if the
sale of the Notes provided for herein is not consummated because any condition
to the obligations of the Initial Purchasers set forth herein is not satisfied
or because of any refusal, inability or failure on the part of the Company or
the Guarantor to perform any agreement herein or comply with any provision
hereof, the Company or the Guarantor will, subject to demand by you, reimburse
the Initial Purchasers for all out-of-pocket expenses (including the fees and
expenses of their counsel), incurred by the Initial Purchasers in connection
herewith.
13. NOTICE
All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and, if sent to the Initial Purchasers,
shall be mailed, delivered, or telexed or telegraphed and confirmed in
writing, to Wasserstein Perella Securities, Inc., 31 West 52nd Street, New
York, New York 10019-6163, Attention: Andrew Schupak; if sent to the Company,
shall be mailed, delivered, or telegraphed and confirmed in writing to the
Company, 711 Casino Magic Drive, Bay St. Louis, Mississippi 39520, Attention:
Chief Financial Officer.
14. Parties
This Agreement shall inure solely to the benefit of, and shall be binding
upon, the Initial Purchasers, the Company and the Guarantor and the
controlling persons, directors, managers, officers, employees and agents
referred to in Section 8 and 9, and their respective successors and assigns,
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement
or any provision herein contained. The term "successors and assigns" shall
not include a purchaser, in its capacity as such, of Notes from any of the
Initial Purchasers.
15. 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.
16. SEVERABILITY
Any determination that any provision of this Agreement may be, or is,
unenforceable shall not affect the enforceability of the remainder of this
Agreement.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, but without regard to principles of conflicts
of law.
[SIGNATURES ON FOLLOWING PAGE]
25
If the foregoing correctly sets forth the understanding between you and
the Company and the Guarantor, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
CASINO MAGIC OF LOUISIANA, CORP.
By: /s/ James E. Ernst
Name: James E. Ernst
Title: President, Casino Magic Corp.
JEFFERSON CASINO CORPORATION
By: /s/ James E. Ernst
Name: James E. Ernst
Title: President, Casino Magic Corp.
Accepted as of the date first above written
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ John M. Donovan
JEFFERIES & COMPANY, INC.
By: /s/ Steve D. Croxton
DEUTSCHE MORGAN GRENFELL/C. J. LAWRENCE INC.
By: Harry C. Hagerty
SCHEDULE 1
Initial Purchasers Principal Amount
Wasserstein Perella Securities, Inc. $
72,450,000
Jefferies & Company, Inc. 34,500,000
Deutsche Morgan Grenfell/C. J. Lawrence Inc.
8,050,000
$ 115,000,000
COLLATERAL ASSIGNMENT
THIS COLLATERAL ASSIGNMENT (the "ASSIGNMENT") is made as of August 22,
1996, by and among CASINO MAGIC OF LOUISIANA, CORP., a Louisiana corporation
(the "COMPANY"), in favor of FIRST UNION BANK OF CONNECTICUT, a Connecticut
banking corporation, as trustee for the benefit of the holders of the Notes
(in such capacity, the "TRUSTEE").
RECITALS
A. NOTES. Pursuant to that certain Indenture dated as of August 22,
1996, by and among the Company, as issuer, Jefferson Casino Corporation, a
Louisiana corporation, as guarantor, and the Trustee, as trustee (the
"INDENTURE"), the Company has issued $115,000,000 principal amount of 13%
First Mortgage Notes due 2003 With Contingent Interest (the "Series A Notes,"
and together with any Series B Notes issued in exchange therefor, the
"NOTES").
B. PURPOSE.The parties have entered into this Assignment to
evidence the Company's collateral assignment for security of certain contracts
and documents related to the construction and operation of Casino
Magic-Bossier City. Capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Indenture.
Agreement
NOW, THEREFORE, in consideration of the foregoing premises and in order to
induce the
holders of the Notes to purchase the Notes, the Company agrees as follows:
1. ASSIGNMENT.As security for the due and punctual payment and
performance of all indebtedness and obligations of the Company, now or
hereafter due under the Indenture, the Notes or any Collateral Documents,
whether or not arising after the commencement of a proceeding under Bankruptcy
Law (including post-petition interest) and whether or not recovery of any such
obligation or liability may be barred by a statute of limitations or
prescriptive period or such obligation or liability may otherwise be
unenforceable (collectively, the "OBLIGATIONS"), from the Company to the
Trustee, as trustee for the holders of the Notes under the Indenture, the
Company hereby assigns and transfers to the Trustee and hereby grants to the
Trustee a security interest in all of the Company's right, title and interest,
whether now existing or hereafter arising and whether now owned or hereafter
acquired, in and to (a) all contracts, including without limitation,
construction contracts and architectural design, engineering and development
contracts and agreements, subcontracts, service agreements, supply agreements
and other such contracts and agreements between the Company and other persons,
and all amendments, modifications, additions and changes thereto, related to
Casino Magic-Bossier City, (b) all plans, specifications, working drawings,
shop drawings, surveys and other such documents, and all amendments,
modifications, additions and changes thereto, related to Casino Magic-Bossier
City, (c) the Management Agreement, (d) all other contracts, agreements,
documents and instruments now existing or hereafter arising related to Casino
Magic-Bossier City, including without limitation, any and all construction,
architectural and engineering contracts, plans and specifications, drawings,
and surveys, bonds, permits, licenses and other governmental approvals
(collectively, the "CONTRACTS AND DOCUMENTS"), and (e) all proceeds of the
foregoing. Notwithstanding the foregoing, the Contracts and Documents shall
not include any license, permit or other approval of or by any Governmental
Authority to the extent that, under the terms and conditions of such approval
or under applicable law, it cannot be subjected to a Lien in favor of the
Trustee without the approval of the relevant Governmental Authority, to the
extent that such
approval has not been obtained (collectively, the "EXCLUDED Assets"); provided
further, that (I) any such Excluded Asset now or hereafter acquired by the
Company shall automatically become part of the Contracts and Documents when
and to the extent it may subsequently be made subject to such a lien and/or
such approval has been obtained and (ii) proceeds of any Excluded Assets, such
as Gaming Licenses, shall nevertheless be subject to the assignment hereunder.
The Contracts and Documents include, without limitation, those certain
contracts and agreements described in Exhibit "A" attached hereto.
2. RIGHTS OF THE COMPANY.This Assignment is an absolute assignment
for security purposes only. Accordingly, notwithstanding anything to the
contrary set forth herein, the Company is hereby granted a license and shall
retain all rights with respect to the Contracts and Documents, including
without limitation, the right to enforce all rights of the Company thereunder,
except during a period when a "Default" or an "Event of Default" (as such
terms are defined in the Indenture) has occurred and is continuing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.The Company
represents and warrants to the Trustee (a) that it has not assigned or granted
a security interest in any of the Contracts and Documents or the proceeds
thereof to anyone other than the Trustee, and (b) that it is not in default
and that no event has occurred that with notice or lapse of time or both would
constitute a default by the Company, or to its knowledge any other party,
under any of the Contracts and Documents.
4. COVENANTS OF THECOMPANY. The Company covenants and agrees in
favor of the Trustee (a) that it will not further assign, encumber or suffer
the assignment or encumbrance of any of the Contracts and Documents or the
proceeds thereof without the prior written consent of the Trustee pursuant to
or as expressly permitted under the Indenture, (b) that it will faithfully
abide by, perform and discharge each and every obligation, covenant and
agreement of the Company under the Contracts and Documents, (c) that it will
not modify, amend, supplement or in any way join in the release or discharge
of any obligations or rights of the Company under any of the Contracts and
Documents in any material way unless (i) such change is commercially
reasonable, as certified by the Company to the Independent Construction
Consultant, and (ii) the Independent Construction Consultant under the Cash
Collateral and Disbursement Agreement consents to such change in writing, and
(d) that it will not perform any work pursuant to any change order or
directive unless the same is issued and executed in accordance with the terms
and conditions of the applicable Contract or Document.
5. LIMITATION OF TRUSTEE'S OBLIGATIONS. Nothing in this Assignment
shall constitute an assumption of any obligation by the Trustee under the
Contracts and Documents. The Company shall continue to be liable for all
obligations thereunder and hereby agrees to perform all such obligations, to
comply with all terms and conditions of the Contracts and Documents, and to
take such steps as may be necessary or appropriate to secure performance by
all other parties thereto. The Company shall defend, indemnify and hold the
Trustee harmless from and against all losses, costs, liabilities and expenses,
including attorneys' fees, arising from or related to any failure by the
Company to perform any obligation of the Company under any of the Contracts
and Documents, such indemnity and hold harmless agreement to survive the
payment and performance of the Obligations.
6. CURE BY TRUSTEE. At any time upon and during the continuation of a
Default or an Event of Default, the Trustee shall have the right, but shall
have no obligation, to take all actions that the Trustee may determine to be
necessary or appropriate to cure any default under any of the Contracts and
Documents and to protect the rights of the Company or the Trustee thereunder,
and may do so in the Trustee's name, in the name of the Company or otherwise.
If any such action taken by the Trustee shall prove to be inadequate or
invalid in whole or in part, the Trustee shall not incur any liability on
account thereof, and the Company hereby agrees to defend, indemnify and hold
the Trustee harmless from and against all losses, costs, liabilities and
expenses, including reasonable attorneys' fees, which the Trustee may incur or
to which it may become subject in exercising any of its rights under this
Assignment, except for those arising from the gross negligence or willful
misconduct of the Trustee, such indemnity and hold harmless agreement to
survive the payment and performance of the Obligations.
7. RIGHTS AND REMEDIES.
(a) Upon the occurrence of a Default or an Event of Default under the
Indenture irrespective of whether a notice of default has been given with
respect to such Default or Event of Default (unless required by the Indenture
or any other Collateral Document), and with or without bringing any action or
proceeding, the Trustee may, at its option, succeed to and proceed to enforce
all of the rights, interests and remedies of the Company under the Contracts
and Documents, amend, modify, cancel, terminate or replace the same, reassign
the Company's right, title and interest therein to any other person, and
exercise any and all other rights of the Company under the Contracts and
Documents, either in person or through an agent, receiver or keeper, without
further notice to or consent by the Company, and without regard to the
adequacy of security for the Obligations or the availability of any other
remedies. The exercise of any of the foregoing rights or remedies shall not
cure or waive any Default under the Indenture, or waive, modify or affect any
notice of default thereunder, or invalidate any act done pursuant to any such
notice. In addition to the rights and remedies of the Trustee as set forth in
this Assignment, the Trustee shall be entitled to the benefit of all other
rights and remedies set forth in the Indenture, at law or in equity.
(b) The provisions of this Subparagraph 7(b) shall, without limiting the
generality of any other provision of this Assignment, be applicable in the
event any foreclosure shall take place in Louisiana on any right, title or
interest of the Company in and to the Contracts and Documents or any proceeds
thereof or, in connection with any foreclosure hereunder, Louisiana law shall
otherwise be applicable. Trustee, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity
to foreclose this Assignment and sell its right, title and interest to the
Contracts and Documents and the proceeds, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction. For the
purposes of Louisiana executory process procedures, the Company does hereby
acknowledge the Obligations and confess judgment in favor of Trustee for the
FULL amount of such Obligations. The Company does by these presents consent
and agree that upon the occurrence of a Default or Event of Default under the
Indenture it shall be lawful for Trustee to cause all of its right, title and
interest to the Contract and Documents and the proceeds, or any portion
thereof, to be seized and sold under executory or ordinary process, at
Trustee's sole option, without appraisement, appraisement being hereby
expressly waived, to the highest bidder, and otherwise exercise the rights,
powers and remedies afforded herein and under applicable Louisiana law. Any
and all declarations of fact made by authentic act before a Notary Public in
the presence of two (2) witnesses by a person declaring that such facts lie
within his knowledge shall constitute authentic evidence of such facts for the
purpose of executory process. The Company hereby waives in favor of Trustee:
(a) the benefit of appraisement as provided in Louisiana Code of Civil
Procedure Articles 2332, 2336, 2723 and 2724, and all other laws conferring
the same; (b) the demand and three (3) days delay accorded by Louisiana Code
of Civil Procedure Articles 2639 and 2721; (c) the notice of seizure required
by Louisiana Code of Civil Procedure Articles 2293 and 2721; (d) the three (3)
days delay provided by Louisiana Code of Civil Procedure Articles 2331, 2722;
and (e) benefit of the other provisions of Louisiana Code of Civil Procedure
Articles 2331, 2722 and 2723 not specifically mentioned above. In the event
the Company's right, title or interest in and to the Contracts and Documents
or any proceeds thereof, or any part thereof, is seized as an incident to an
action for the recognition or enforcement of this assignment by executory
process, ordinary process, sequestration, writ of fieri facias, or otherwise,
the Company and Trustee agree that the court issuing any such order shall, if
petitioned for by Trustee, direct the applicable sheriff or marshal to appoint
as a keeper of the Company's right, title or interest in and to the Contracts
and Documents and the proceeds, if applicable, Trustee or any agent designated
by Trustee or any Person named by Trustee at the time such seizure is
effected. This designation is pursuant to Louisiana Revised Statutes
9:5136-9:5140.2 and Trustee shall be entitled to all the rights and benefits
afforded thereunder as the same may be amended. It is hereby agreed that the
keeper shall be entitled to receive as compensation, in excess of its
reasonable costs and expenses incurred in the administration or preservation
of the Company's right, title or interest in and to the Contracts and
Documents and the proceeds, an amount equal to $250.00 per day payable on a
monthly basis. The designation of keeper made herein shall not be deemed to
require Trustee to provoke the appointment of such a keeper.
8. ADDITIONAL INSTRUMENTS. With respect to both existing and future
Contracts and Documents, the Company hereby agrees to execute and deliver such
additional assignments and other documents as the Trustee may reasonably
request in order to implement the purpose and intent of this Assignment.
9. MISCELLANEOUS. This Assignment shall inure to the BENEFIT of and
be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns. In any action or proceeding arising
from or related to this Assignment, the prevailing party shall be entitled to
recover its reasonable costs and attorneys' fees. The reference to
"attorneys' fees" in this Paragraph and in all other places in this Assignment
shall include without limitation such reasonable amounts as may then be
charged by the Trustee for legal services furnished by attorneys in the employ
of the Trustee, at rates not exceeding those that would be charged by outside
attorneys for comparable services. This Assignment shall be governed by the
laws of the State of Louisiana.
10. GAMING LAWS AND REGULATIONS.The Company acknowledges that, to
the extent required under applicable law, the consummation of the transactions
contemplated hereby and the exercise of remedies hereunder may be subject to
the Louisiana Riverboat Economic Development and Gaming Control Act, La. R.S.
4:501, et seq, and the Louisiana Gaming Control Law, La. R.S. 27:1-3,
11-26, 31 and 32, and the regulations promulgated pursuant to each such law,
all as amended from time to time. The parties hereto further acknowledge that
the Gaming License held by the Company is not part of the collateral of this
Assignment and that, under the above described legislation and rules
promulgated thereunder, the Trustee may be precluded from or otherwise limited
in taking possession of or in selling the collateral of this Assignment under
the Defaults and Remedies provisions of this Assignment. The parties hereto
also acknowledge that due to various legal restrictions, including, without
limitation, licensing of operators of gaming facilities and prior approval of
the sale or disposition of assets of a licensed gaining operation, the sale of
collateral may be denied by Gaming Authorities or delayed pending Gaming
Authority Approval.
11. CONFLICTS WITH INDENTURE.Notwithstanding any other provision of this
Assignment, the terms and provisions of this Assignment shall be subject and
subordinate to the terms of the Indenture. To the extent that the Indenture
provides the Company with a particular cure or notice period, or establishes
any limitations or conditions on Trustee's actions with regard to a particular
set of facts, the Company shall be entitled to the same cure periods and
notice periods, and Trustee shall be subject to the same limitations and
conditions in place of the cure periods, notice periods, limitations and
conditions provided for under the Indenture; provided, however, such cure
periods, notice periods, limitations and conditions shall not be cumulative as
between the Indenture and this Assignment. In the event of any conflict or
provisions of this Assignment and those of the Indenture, including without
limitation, any conflicts or inconsistencies in any definitions herein or
therein, the provisions or definitions of the Indenture shall govern.
IN WITNESS WHEREOF, the Company has executed this Assignment as of the date
first above
COMPANY:
CASINO MAGIC OF LOUISIANA, CORP., a Louisiana
corporation
By: /s/ Robert A. Callaway
Name: Robert A. Callaway
Title: Executive Vice President and General Council
ACKNOWLEDGED AND AGREED
FIRST UNION BANK OF CONNECTICUT, a Connecticut banking corporation, as trustee
for the benefit of the holders of the Notes
By: /s/ W. Jeffrey Kramer
Name: W. Jeffrey Kramer
Title:Vice President
S-1
EXHIBIT "A"
CONTRACTS AND DOCUMENTS
1 . Standard Form of Agreement Between Owner and Contractor dated June 12,
1996, by and between Casino Magic of Louisiana, Corp., as successor in
interest to Casino Magic Corp., and W. S. Bellows Construction
Corporation.
2. Standard Form of Agreement Between Owner and Architect dated June 18,
1996, by and between Casino Magic Corp. of Louisiana, and Kuhlmann Design
Group, Inc.
3. Management Agreement dated August 21, 1996, by and among Casino Magic
Corp., Casino Magic of Louisiana, Corp., and Casino Magic Management Services,
Inc.
4. Letter Agreement dated July 26, 1996, by and between Service Marine
Industries, Inc. and Casino Magic of Louisiana, Corp., as successor in
interest to Casino Magic, Corp.
5. Contract for demolition and removal services dated August 7, 1996, by
and between Bird & Son and Casino Magic of Louisiana, Corp., as successor in
interest to Casino Magic, Corp.
6. Contract for fill and compaction work dated June 3, 1996, by and
between Max Foote Construction Company and Casino Magic of Louisiana, Corp.,
as successor in interest to Casino Magic Corp.
A-1
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") is made effective as of
August 21, 1996 (the "Effective Date"), by and between CASINO MAGIC MANAGEMENT
SERVICES, CORP., a Minnesota corporation ("Manager") , CASINO MAGIC OF
LOUISIANA, CORP., a Louisiana corporation ("Owner"), and CASINO MAGIC CORP., a
Minnesota corporation ("Casino Magic").
RECITALS
A. Owner is developing a new dockside riverboat casino and
entertainment complex, Casino Magic-Bossier City, on a 23-acre site in Bossier
City, Louisiana, in connection with which owner intends to conduct its casino
operations on the recently constructed Bossier Riverboat and to provide a
37,000 square foot entertainment pavilion for land-based activities, including
gaming, entertainment, dining, hotel and/or related activities as may
currently or hereafter be permitted by law.
B. Casino Magic desires to grant a license to Owner for the usage of
the "Casino Magic" service mark and trade name in connection with the Bossier
Riverboat, the Facilities and related amenities.
C . Owner desires to have Manager manage its business, and Manager
desires to manage owner's business, all upon the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, Owner and Manager agree as follows:
1. DEFINITIONS AND REFERENCES.
1.1 Definitions. As used herein, the following terms shall have the
respective meanings indicated below:
(a) "Annual Plan" means the Annual Plan to be prepared by Manager and
approved by owner in accordance with the provisions of Section 6.2 hereof.
(b) "Bossier Riverboat" means a recently constructed riverboat to be
owned by Owner and operated from a permanent dockside mooring in Bossier City,
Louisiana. The Bossier Riverboat may offer the public gaming, food and
beverage, retail merchandise, entertainment, hotel and/or related activities.
(c) "Casino Magic-Bossier City" means the dockside riverboat casino
and entertainment complex to be opened and operated by Owner in Bossier City,
Louisiana.
(d) "Business" means all of the business operations of owner.
(e) "Commencement Date" means the date upon which owner first opens
the Bossier Riverboat to the public for business, which date shall be
confirmed in writing by owner and Manager.
(f) "Compensation" means the direct salaries and wages paid to, or
accrued for the benefit of, any executive or other employee, including,
without limitation, employer's contributions under F.I.C.A., unemployment
compensation or other employment taxes, pension fund contributions, worker's
compensation, group life, accident, health and other insurance premiums,
profit sharing and retirement plans, disability and other similar benefits.
(g) "Facilities" means the land-based portion of the Business with
such gaming, entertainment, dining, hotel (if any) and related activities as
may be currently or hereafter permitted by law-
(h) "Indenture" means that certain Indenture to be dated as of August
22, 1996, with Owner as Issuer, Jefferson Casino Corporation as Guarantor and
First Union Bank of Connecticut as Trustee, regarding $115,000,000 13'6 First
Mortgage Notes Due 2003 With Contingent Interest, Series A and Series B.
(i) "Notes" means the 13% First Mortgage Notes Due 2003 With Contingent
Interest issued by owner under the terms of the Indenture.
2. SCOPE OF AGREEMENT, RESPONSIBILITIES.
2.1 Authority of Owner's Board of Directors. The Board of
Directors of owner shall determine the general policy with respect to the
strategic planning of the Business and such matters as are customarily or as a
matter of Louisiana corporation or gaming law reserved for decision by a Board
of Directors.
2.2 Authority of Manager. Subject to the foregoing general
authority of owner's Board of Directors, and subject to the terms of this
Agreement, Manager shall exclusively supervise and direct the management and
operation of the Day-to-day-day activities of the Business for the account of
Owner. Manager shall have the authority and responsibility to: (i) determine
operating policy, standards of operation, quality of service, the maintenance
and physical appearance of the Bossier Riverboat and the Facilities and any
other matters affecting operations and maintenance; (ii) supervise and direct
all phases of advertising, sales and promotion for the Business; and (iii)
carry-out all programs contemplated by the Annual Plan. Owner agrees that it
shall cooperate with Manager in every reasonable and proper way to permit and
assist Manager to carry out its duties hereunder and comply with all
conditions or restrictions, if any, placed upon manager by any gaming
authority.
2.3 Duties and Obligations of Manager. Manager shall take all
actions which may be reasonably necessary or appropriate in connection with
the authority granted to it in accordance with the provisions of this
Agreement. Manager shall devote to its responsibilities hereunder such time
as may be reasonably necessary for the proper performance of all duties
hereunder. The standard of performance by Manager in managing the Business
shall be measured by what a reasonably prudent person would do consistent with
good business practices and policies. An organization chart detailing the
supervisory and management positions and personnel to be provided by Manager
to Owner is attached hereto as Exhibit "A. 11
2.4 Consultation with owner. Notwithstanding the foregoing,
manager shall at all times apprise owner, including the Board of Directors, of
all operating policies. Manager agrees to consult with owner as frequently as
Owner shall reasonably request to review operating policies and other matters
referenced to herein. Owner shall, at all times, have the right to enter the
Bossier Riverboat for the purpose of inspecting same and reviewing the
operations. Owner agrees that it and its representatives will, at no time,
act in a manner which deviates from the authority granted to Manager.
3. CONDITIONS PRECEDENT TO IMPLEMENTATION OF AGREEMENT. Owner and
Manager shall apply for and maintain any and all licenses and approvals
required in order to implement the provisions of this Agreement. This
Agreement is contingent upon the receipt of all such licenses and approvals.
4. TERM. The term of this Agreement shall continue until August 21,
2006,
unless sooner terminated as hereinafter set forth.
5. PRE-COMMENCEMENT DATE RESPONSIBILITIES.
5.1 Owner's Responsibilities. Owner, without cost or expense to
Manager, shall design, acquire, construct, and equip the Bossier Riverboat as
well as the Facilities, including, but not limited to, a dock or mooring
facility for the Bossier Riverboat, an entertainment pavilion and related
parking. All expenses and fees incident thereto shall be paid by Owner.
5.2 Manager's Responsibilities. From the date of this Agreement to
the Commencement Date (and thereafter as Owner may reasonably request) ,
Manager shall assist owner in designing, acquiring, constructing and equipping
all assets to be used by owner in the operation of the Business. manager
shall, at owner's expense, also be responsible for the development and
implementation of all preopening activities.
6. OPERATION OF THE BUSINESS:
6.1 Permits. Manager and Owner shall timely apply for, obtain and
maintain all licenses and permits required to operate the Business.
6.2 Annual Plan.
6.2.1 Preparation. With such cooperation and assistance of Owner
as Manager may request, Manager shall prepare for Owner's review and approval
not less than 90 days in advance of each fiscal year an Annual Plan for the
Business that includes without limitation:
(a) a forecast comprised of an estimated income and expenses by month
for the coming fiscal year;
(b) an estimated cash flow projection by month, and anestimate as to
the amount of funds needed for working capital requirements;
(c) a budget covering estimated expenditures for capital improvements;
(d) an annual marketing plan; and
(e) an organizational chart listing all employees names, position and
compensation (including key employees whether employees of Owner or charged to
Owner).
Manager shall not be deemed to have made any guarantee or warranty in
connection with the results of performance set forth in the Annual Plan since
the parties acknowledge that the Annual Plan is intended to set forth
objectives and goals based upon Manager's best judgment of the facts and
circumstances known by Manager at the time of preparation.
6.2.2 Owner's Review and Approval. The Annual Plan will be subject
to the approval of the Board of Directors, which approval will not be
unreasonably withheld or delayed. Owner shall approve or disapprove the
Annual Plan within 60 days after submission to Owner. If Owner fails to
provide written notice to Manager of any specific objections to a proposed
Annual Plan within such 60-day period, such Annual Plan shall be deemed to
have been approved byowner as submitted. In the event Owner disapproves or
raises any objections to the proposed Annual Plan or any revisions thereto,
Owner and Manager agree to cooperate with each other in good faith to resolve
the dispute. owner agrees in a manner that is consistent with the Annual Plan
to provide the funds necessary to operate the Business.
6.2.3 Compliance. Manager shall use all reasonable efforts to
comply with the Annual Plan and shall not deviate in any substantial respect
therefrom. In the event Manager encounters circumstances which require
expenditures not foreseen at the time of preparation of the Annual Plan and
which Manager deems reasonably necessary, Manager may, without Owner's
approval, make or cause to be made on account of Owner, such expenditures.
Manager, without Owner's approval, on a monthly basis with full reporting to
Owner, shall be entitled to increase the total expenses budgeted within the
Annual Plan by a percentage approved annually by the Board of Directors to
cover any expenditures that were underestimated at the time the Annual Plan
was prepared and that are reasonably necessary in Manager's sole discretion,
to carry out the provisions of this Agreement. Manager shall not be entitled
to make any expenditures in excess of the Annual Plan without first obtaining
the prior written approval of Owner, which approval shall not be unreasonably
delayed or withheld. Owner and Manager agree to cooperate with each other in
good faith in resolving disputes. Policy changes not anticipated in the
Annual Plan shall be submitted to Owner for approval, which approval shall not
be unreasonably delayed or withheld.
6.2.4 Specific Matters. The description of specific matters
hereinafter stated are in every respect subject to the prior approval of owner
as part of its approval of the Annual Plan.
6.3 Personnel.
6.3.1 General. Manager, for the account of owner, shall hire,
supervise, direct, discharge and determine terms of employment of all
personnel working for the Business. Manager shall hire on behalf of Owner
such casino managerial and other personnel as are customary in the industry.
The determination of Compensation for all employees shall be part of the
Annual Plan approved by Owner.
6.3.2 Personnel Expenses and Compensation. All employees at the
level of general manager of the Business or below shall be deemed employees of
Owner. More senior management personnel who perform services pursuant to this
Agreement and who are employees of either Manager or Casino Magic or any
affiliates thereof shall be deemed not to be employees of Owner, and Manager
shall be responsible for the Compensation of such persons. Additionally, the
Manager shall be responsible for determining the fitness and qualifications of
all casino employees, subject to Louisiana riverboat gaming licensing
standards.
6.3.3 Professional and Other Specialists. Manager shall have the
right to retain legal counsel and such other professionals, consultants and
specialists as Manager deems necessary or appropriate in connection with the
operation of the Business, and all such fees and expenses payable to third
parties (other than Manager or its affiliates) shall be paid by owner.
6.4 Sales, Marketing and Advertising. Manager shall advertise and
promote the Business for Owner's account and shall institute and supervise a
sales and marketing program and coordinate and cooperate with tour programs
marketed by public carriers, travel agents and government tourist departments
when Manager deems the same to be advisable. Manager, in its sole discretion,
may cause participation in sales and promotional campaigns and activities
involving complimentary passage, food and beverages to travel agents, tourist
officials and airline representatives.
6.5 Other Services Provided by Manager. other services, such as
data processing, reservation system, internal audit, etc., may be provided by
Manager to Owner at an additional cost or contracted for separately.
6.6 Maintenance and Repairs. Owner shall be responsible for
maintaining the property utilized in the Business in good repair and
condition. To implement owner's responsibility, Manager shall, on behalf of
Owner, and at Owner's expense, make or cause to be made all repairs,
replacements, corrections and maintenance items as shall be required in the
normal and ordinary course of operation of the Business.
6.7 Capital Expenditures. owner recognizes the necessity of capital
improvements and shall expend such amount for capital improvements as shall be
required in the normal and ordinary course of operation of the Business in
conformity with the amounts approved as part of the Annual Plan.
6.8 Reimbursement. In addition to the Compensation provided in
Article 9, manager shall be entitled to be reimbursed for the reasonable
travel and entertainment expenses of all officers and employees of Manager
incurred in performing its duties hereunder in connection with any phase of
the operation of the Business. Manager shall be entitled to make all
reimbursements authorized under this Section 6.8, or under any other
provision of this Agreement, provided that all such reimbursements shall be
made in a manner which is consistent with the provisions of the Annual Plan or
as otherwise agreed with Owner.
7. FISCAL MATTERS.
7.1 Accounting Matters and Fiscal Periods.
7.1.1 Books and Records. Manager shall cause employees of Owner to
maintain, at Owner's expense, full and complete books of account and such
other records as are necessary to reflect the operation of the Business. Such
books and records shall be maintained in accordance with generally accepted
accounting principles, on a calendar year basis, at Owner's offices in Bossier
City, Louisiana. Manager shall also prepare and file for owner, at Owner's
expense, all information and/or tax returns which may be required by any
governmental authorities.
7.1.2 Reports to Owner. Manager, at Owner's expense, shall deliver
or cause to be delivered to Owner monthly f financial statements together with
monthly cash flows and monthly comparison of operational income and expenses
versus the Annual Plan.
7.1.3 Owner's Right to Audit. Owner reserves the right upon
reasonable prior notice, to perform any and all additional audit tests
relating to the Business where accounting books and records are kept.
7.2 Bank Accounts. Owner shall establish accounts that are
necessary for the operation of the Business. Gross revenues from operations
shall be deposited in the bank accounts, and the Owner shall pay out of the
bank accounts, to the extent of the funds therein, all of its operating
expenses and other amounts as directed by manager.
8. TITLE; OTHER MATTERS.
8.1 Covenant of Title. Owner shall enable Manager to peaceably
and quietly operate the Business in accordance with the terms of this
Agreement.
8.2 Proprietary Information. All specifically identifiable
information developed by Manager for Owner shall be the property of both
Manager and owner. All existing information of Manager previously developed
by Manager at Manager's expense, including without limitation, all customer
lists, gaming and marketing strategies and other similar information, shall be
the property of Manager and not owner, and neither owner nor any of its
affiliates or successors may use such proprietary information without the
consent of Manager, which consent shall not be unreasonably withheld. The
parties agree that the proprietary information referenced in this Section
8.2 does not include information which is clearly available in the public
domain.
8.3 Outside Activities of Parties. This Agreement shall be limited
to, the purposes set forth herein, and nothing in this Agreement, whether by
implication or otherwise, shall be construed to extend the relationship of the
parties beyond such purposes. Each party acknowledges that the other party
and its respective affiliates are or may hereafter become interested, directly
or indirectly, by ownership, contract, agency or otherwise, in business
opportunities which are not within the purpose of this Agreement and which may
compete with or otherwise affect all or some aspects of the Business.
However, Manager agrees that it will not compete in any riverboat gaming
activities, within a 200-mile radius of the location of the Business during
the term of this Agreement, excluding the cities of Lake Charles, Louisiana
and Vicksburg, Mississippi.
9. COMPENSATION OF MANAGER.
9.1 In consideration for (i) the license of the "Casino Magic" name
pursuant to Article 10 hereof and (ii) the services provided pursuant to this
Agreement, Owner shall pay Manager a management fee equal to 10t of Adjusted
Consolidated Cash Flow (as defined in the Indenture) . The payment of
management fees will commence at such time as Business is operating (as
defined in the Indenture).
9.2 The management fee shall become due and payable 10 days after the
end of each month to the extent that Owner's Fixed Charge Coverage Ratio (as
defined in the Indenture) is at least 1.5 to 1.0 after giving effect to such
payment.
9.3 If the management fee cannot be paid, the management fee shall
accrue; provided, however, in the event that the voters in the Louisiana
Referendum do not approve the continuation of riverboat gaming in Bossier
Parish and Caddo Parish, Louisiana (or if the voters in the Louisiana
Referendum disapprove the continuation of riverboat gaming in one but not the
other of Bossier Parish or Caddo Parish, Louisiana until owner has obtained a
determination that the outcome of the Louisiana Referendum does not limit its
ability to conduct riverboat gaming operations at Casino Magic-Bossier City),
the Company shall not, directly or indirectly, pay any Management Fee to
Casino Magic or any of its affiliates. In such event, Manager shall still
have the obligation to provide management services to Owner.
9.4 No management fee will be payable if a default or event of
defaulthas occurred and is continuing under the Indenture. In the event of a
bankruptcy, reorganization, insolvency, dissolution or other winding-up of
owner, payment of the management fee shall be subordinated to the prior
payment in full in cash of all obligations under the Indenture and the Notes.
10. LICENSE.
10.1 Owner hereby acknowledges that Casino Magic is the sole owner of
all right, title and interest in and to the service mark and trade name
"Casino Magic" as used in connection with the business of gaming facilities
and related amenities, and that Owner's rights to use the aforesaid service
mark and trade name derive solely from and are limited to this Article 10.
10.2 Casino Magic hereby grants to Owner the non-exclusive license to
use "Casino Magic" as a service mark and as part of its trade name solely in
connection with the business of gaming facilities and related amenities.
Owner agrees not to use said name and mark in any other business. Owner's
rights hereunder shall extend only to operations in the cities of Bossier
City, Louisiana and Shreveport, Louisiana and to the promotion and marketing
of Owner's gaming activities in a manner generally consistent with the
marketing and promotional activities of Casino Magic and its other
subsidiaries. All use of "Casino Magic" as a service mark and as part of its
trade name shall inure to the benefit of Casino Magic.
10.3 Casino Magic shall have the right to control the nature and
quality of all services of which the "Casino Magic" name and mark is used
hereunder. Casino Magic has the right to inspect and evaluate the services
produced in thebusiness operated by Owner and has approved its nature and
quality. owner agrees that said services shall be maintained at this same
level of quality and grants to Casino Magic the right, at reasonable times, to
inspect its services and business as desired by Casino Magic to assure that
said quality is maintained. Owner also agrees to inform Casino Magic in
writing of any complaints received by it concerning the quality of services
sold or offered under the "Casino Magic" name or mark.
10.4 Owner agrees to display and use the "Casino Magic" name and mark
only in the manner authorized by Casino Magic and approved by Casino Magic.
If Owner desires to make any change in said display and use, it shall first
submit such change to Casino Magic for its prior approval.
10.5 Owner will not register or attempt to register "Casino Magic" as
any part of its own name or marks, and will cooperate fully as requested by
Casino Magic in connection with any registration by Casino Magic of said mark.
10.6 Owner will promptly inform Casino Magic of any infringement of
the "Casino Magic" name or mark or of any protest by others to Owner
concerning its use of the name and mark, and will cooperate fully with Casino
Magic in connection with any litigation, administrative proceedings, or
protests which Casino Magic deems desirable in connection with the protection
of or maintenance of rights to make decisions concerning the initiation,
defense, compromise or settlement of any action involving the name or mark.
10.7 If Casino Magic should determine that owner is in breach of this
Article 10 and the services sold or offered under the "Casino Magic" name
and mark hereunder are deficient and are not of satisfactory quality in the
sole discretion of Casino Magic, it shall so inform owner in writing,
whereupon owner shall have 30 days within which to cure said breach and
deficiency. If Owner does not cure said breach and deficiency within that
time to the satisfaction of Casino Magic, its right to use the "Casino Magic"
name and mark shall forthwith terminate notwithstanding the term of this
license.
10.8 If Owner files a petition in bankruptcy or is adjudicated a
bankrupt, if a petition in bankruptcy is filed against owner, if it becomes
insolvent or makes an assignment for the benefit of creditors or any
arrangements pursuant to any bankruptcy law, if owner discontinues its
business or a receiver is appointed for it or its business, the license
granted hereunder shall terminate, and all use of the "Casino Magic" name and
mark shall cease.
10.9 Unless earlier terminated pursuant to a breach of this Article
10 as set forth in Section 10.7 or Section 10.8, Owner's license to use the
"Casino Magic" name and mark hereunder shall remain in effect during the term
hereof. After the expiration of this Agreement the license shall
automatically renew on an annual basis unless terminated by Casino Magic with
30 days notice for breach of any of the terms of this Article 10.
10.10 Upon termination of owner's rights to use the "Casino Magic"
name and mark for any reason hereunder, owner shall immediately take steps to
effect a change of its trade marks, service marks, trade names and assumed
names so as to remove from it the words "Casino Magic" or any confusingly
similar mark or terms.
10.11 Owner may not assign, sublicense or otherwise transfer any of
its rights under this Article 10 to any third party without the prior
written consent of Casino Magic, which consent may be arbitrarily withheld.
11. INSURANCE.
11.1 Coverage. Owner, for the benefit of both owner and Manager,
shall maintain adequate insurance during the term of this Agreement. The type
and amount of coverage shall be approved by Manager.
11.2 Policies and Endorsements.
11.2.1 Policies. All insurance coverage provided for hereunder
shall be effected by policies issued by insurance companies with sound and
adequate financial responsibility. Either party shall be entitled to object
to an insurance company. owner shall deliver to Manager duplicate copies of
the insurance policies or certificates of insurance with respect to all of the
policies of insurance so procured, including existing, additional and renewal
policies, and in the case of insurance about to expire, shall deliver
duplicate copies of the insurance policies or insurance certificates with
respect to the renewal policies to the other party not less than 30 days prior
to the respective dates of expiration.
11.2.2 Endorsement. All insurance shall, to the extent
obtainable, have attached thereto:
(a) an endorsement that such policy shall not be canceled ox
materially changed without at least 30 days' prior written notice to Owner and
Manager; and
(b) an endorsement to the effect that no act or omission of Owner or
Manager shall affect the obligation of the insurer to pay the full amount of
any loss sustained.
11.2.3 Named Insureds. All policies of insurance shall be carried
in the names of Owner and Manager. All liability policies shall name Owner
and Manager, and in each case any affiliates which either may specify, and
their respective directors, officers, agents, employees, and members of the
Board of Directors, as additional insureds.
12. INDEMNIFICATION.
12.1 Indemnification. Manager agrees to indemnify and hold owner
harmless from any loss, liability, claim, demand, legal proceeding or cost
(including attorneys' fees, costs, expenses and other charges) which is not
covered by insurance proceeds and which owner may sustain, incur or assume as
a result of, or relative to, any allegation, claim, civil or criminal action,
proceeding, charge or prosecution, including but not limited to, injuries to
persons or damage to property or the Business or any matters arising out of
the employment or Compensation of employees or former employees of Manager
(collectively "Claims") which may be alleged, made, instituted or maintained
against Manager or Owner, jointly or severally, arising out of or based upon
the management, operation, condition or use of the Business; the performance
or non-performance of the Agreement by Manager, its agents or employees only
to the extent in each case that any such liability results from the gross
negligence or willful misconduct of Manager.
12.2 Related Matters.
12.2.1 Procedures. Manager shall reimburse Owner for any legal
fees and costs, including attorneys, fees and other litigation expenses,
incurred by Owner in respect to which indemnity is granted hereunder. If
Claims are asserted or threatened, or if any action or suit is commenced or
threatened with respect thereto, for which indemnity may be sought against
Manager hereunder, Owner shall notify Manager in writing within 30 days after
Owner shall have had actual knowledge of the threat, assertion or commencement
of the Claims, which notice shall specify in reasonable detail the matter for
which indemnity may be sought. Manager shall have the right, upon notice to
owner given within 30 days of its receipt of owner's notice, to take primary
responsibility for the prosecution, defense or settlement of such matter and
payment of expenses in connection therewith. owner shall provide, without cost
to Manager, all relevant records and information reasonably required by
manager for such prosecution, defense or settlement and shall cooperate with
Manager to the fullest extent possible. Owner, at Owner's sole cost and
expense, shall have the right to employ its own counsel in any such matter
with respect to which Manager has elected to take primary responsibility for
prosecution, defense or settlement.
12.2.2 Indemnified Parties. The indemnities contained in this
Article 12 shall run to the benefit of both owner and its affiliates, and
its directors, officers, shareholders and employees.
12.2.3 Survival. The provisions of this Article 12 shall survive
any cancellation, termination or expiration of this Agreement and shall remain
in full force and effect until such time as the applicable statute of
limitation shall cut off all claims which are subject to the provisions of
this Article 12.
13. DEFAULT AND TERMINATION.
13.1 Events of Default.
13.1.1 Manager. It shall be an event of default under this
Agreement (an "Event of Default") if Manager (a "Defaulting Party") fails to
perform or materially comply with any of the covenants, agreements, terms or
conditions contained in this Agreement applicable to Manager and such failure
continues for a period of 30 days after written notice thereof from owner (a
"Non-Defaulting Party") specifying in detail the nature of such failure, or,
if such failure is of a nature that it cannot, with due diligence and good
faith to cure the same and thereafter to prosecute the curing of such failure
to completion with due diligence within 90 days thereafter.
13.1.2 Owner. It shall also be an Event of Default if owner (a
"Defaulting Party") (a) fails to make any monetary payment required under this
Agreement on or before the due date and such failure continues for five
business days after written notice from Manager (a "Non-Defaulting Party")
specifying such failure, (b) fails to pay the entire management fee for a
period of six consecutive months, or (c) fails to perform or materially comply
with any of the other covenants, agreements, terms or conditions contained in
this Agreement applicable to owner (other than monetary payments) and such
failure continues for a period of 30 days after written notice thereof from
Manager to Owner specifying in detail the nature of such failure, owner will
be in default under this Agreement. Notwithstanding the foregoing, failure to
pay any management fee which is not permitted to be paid under the Indenture
will not be a default under this Agreement.
13.2 Termination.
13.2.1 General. If an Event of Default occurs and has not been
cured, this Agreement shall terminate at the election of the Non-Defaulting
Party. Notice of termination pursuant to this Article 13 may be given by the
Non-Defaulting Party to the Defaulting Party at any time prior to the curing
of such Event of Default, and such termination shall be effective as of the
date specified in such notice of termination, which date shall be not less
than 60 nor more than 120 days after the date of such notice. Notwithstanding
the foregoing, if the Event of Default pertains to the payments of money,
Manager may cease the discharge of its responsibilities hereunder effective
upon the expiration of the 30-day notice referenced in Section 13.1 hereof.
Manager shall receive all funds due to it at the time of Termination.
13.2.2 Termination. In addition to the foregoing, this
Agreement shall terminate upon any of the following events:
(a) The mutual agreement of the parties; or
(b) The inability of either party to receive or maintain the licenses
necessary to perform its obligations hereunder; or
(c) Manager:
(i) applies for or consents to the appointment of, or taking possession
by, a receiver, custodian, trustee, liquidator or other similar official of
all of its assets;
(ii) makes a general assignment for the benefit of creditors;
(iii) is adjudicated a bankrupt or insolvent or has an order for relief
entered with respect thereto; or
(iv) files a voluntary petition, commences a voluntary case under the
federal bankruptcy laws as now or hereafter constituted or files a petition or
an answer seeking reorganization or any arrangement with creditors or takes
advantage of any bankruptcy, reorganization, insolvency, readjustment of
debts, dissolution or liquidation law or statute.
(d) The occurrence of an Event of Default under this Article 13 and
the expiration of the time to cure such Event of Default; or
(e) The consummation of a condemnation of substantially all of the
Bossier Riverboat and Facilities.
13.2.3 Waiver. The waiver of any one Event of Default shall not
be construed as the waiver of any other Event of Default.
13.3 Remedies Cumulative. Except as herein provided to the
contrary, the termination of this Agreement by the Non-Defaulting Party upon
an Event of Default shall be without prejudice to any right the Non-Defaulting
Party may have to damages, injunctions, specific performance or other legal or
equitable remedies by reason of any breach, default or noncompliance by the
Defaulting Party with such Defaulting Party's covenants, obligations and
agreements hereunder.
14. NOTICES.
14.1 Notices. Every notice, demand, consent, approval or other
document or instrument required or permitted to be served upon any of the
parties hereto shall be in writing and shall be deemed to have been duly
served on the day of mailing, and shall be sent by (i) registered or certified
United States Mail, postage prepaid, return receipt requested, (ii) overnight
courier such as Federal Express, (iii) telecopy (with original to follow by
United States Mail) , or (iv) hand delivery addressed to the respective
parties at the addresses or telecopy numbers stated below:
If to Manager: Casino Magic Management Services, Inc.
Attn: President
711 Casino Magic Drive
Bay St. Louis, Mississippi 39520
If to Owner: Casino Magic of Louisiana, Corp.Attn: President
1701 Old Minden Road
Bossier City, Louisiana 71111
If to Casino Magic:
Casino Magic Corp.
Attn: President
711 Casino Magic Drive
Day St. Louis, Mississippi 39520
or to such other address as Manager, owner or Casino Magic may have specified
in a notice duly given as required herein to the other parties.
15. RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS.
15.1 Relationship. None of the Manager, Owner or Casino Magic
shall be construed as joint venturers or partners of each other by reason of
this Agreement and none shall have the power to bind or obligate the other
except as specifically authorized and set forth in this Agreement.
Nevertheless, Manager is granted such authority and powers as may be
reasonably-necessary for it to carry out the provisions of this Agreement.
This Agreement, either alone or in conjunction with any other documents, shall
not be deemed to constitute or create a lease of all or any portion of the
managed aspects of Business.
15.2 Contractual Authority. Subject to the limitations thereon set
forth in this Agreement, and in conformity with the Annual Plan, manager is
authorized to make, enter into and perform in the name of, for the account of,
on behalf of and at the expense of Owner any contracts and agreements
(including, but not limited to bank accounts) which are reasonably necessary
and appropriate to carry out and place in effect the terms and conditions of
this Agreement. Copies of all executed contracts shall be immediately
conformed and furnished to owner.
15.3 Further Actions. Owner and Manager agree to execute all
contracts, agreements and documents and to take all actions necessary to
comply with the provisions of this Agreement and the intent hereof.
16. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Louisiana. If any of the terms and
provisions hereof shall be held invalid or unenforceable for any reason, such
validity or unenforceability shall in no event affect any of the other terms
or provisions hereof, all such other terms and provisions to be held valid and
enforceable to the fullest extent permitted by law; provided, however, that in
the event any material part of owner's obligations under this Agreement shall
be declared invalid or unenforceable, Manager shall have the option to
terminate this Agreement.
17. MISCELLANEOUS.
17.1 Successors and Assigns. Manager shall not assign the whole or
any portion of this Agreement or any payments due Manager hereunder, without
owner's consent, which consent will not be unreasonably withheld. No
prohibited assignment, whether voluntary or involuntary, by operation of law,
under legal process or proceedings, by receivership, in bankruptcy or
otherwise, shall be valid or effective. owner shall not assign the whole or
any portion of this Agreement, except to an affiliate without Manager's
consent, except as collateral for any financing obtained in connection with
the development and or operation of the Business. If the Agreement is
assigned to an affiliate, Manager shall continue to be responsible under this
Agreement.
17.2 Force Majeure. If at any time it becomes necessary in
Manager' s or Owner's reasonable opinion to cease operation of all or part of
the Business to protect the Business or the health, safety or welfare of
guests or employees to the Business for reasons of force majeure, such as, but
not limited to, weather, river conditions, acts of war, insurrection, civil
strife and commotion, labor unrest, contagious illness, catastrophic events,
or acts of God, then in such event Manager or owner may close and cease
operations of all or part of the Business, reopening and commencing operation
when Manager and Owner determine in good faith that such may be done without
jeopardy to the Business, its guests and employees. Neither party shall be
liable for failure to perform any obligation hereunder (other than to pay
money) when prevented by any force majeure cause not reasonably within the
control of such party, such as strike, lockout, breakdown, accident, order or
regulation of or by any governmental authority, failure of supply or
inability, by the exercise of reasonable diligence, to obtain supplies, parts
or employees necessary to perform such obligation to which such force majeure
applies shall be extended for a period of time equivalent to the delay from
such cause.
17.3 Authorization. Owner, Manager and Casino Magic represent to
the other that it has full power and authority to execute this Agreement and
to be bound by and perform the terms hereof. On request, each party shall
furnish the other evidence of such authority.
17.4 Interest. Any amount payable to a party hereunder which shall
not be paid when due, shall accrue interest at the prime rate then in effect
as published in the Wall Street Journal.
17.5 Entire Agreement; Amendments. This Agreement sets forth the
entire and only agreement or understanding between Owner, Manager and Casino
Magic relating to the subject matter hereof and supersedes and cancels all
previous agreements, negotiations, commitments and representations in respect
hereof among them. Owner has not relied on any projection of earnings,
statements as to the possibility of future success or other similar matters
which may have been prepared by Manager or Owner, or any of their respective
affiliates, and understands that no guaranty is made or implied by Manager or
its affiliates as to the cost or the future financial success of the
operations being managed hereunder. This Agreement may not be amended in any
respect except by an instrument in writing signed by the Owner, Manager and
Casino Magic.
17.6 Survival of Covenants. Any covenant, term or provision of
this Agreement which, in order to be effective, must survive the termination
of this Agreement, shall survive any such termination.
17.7 No Waiver. No waiver by either party of a breach by the other
party of any of the terms, covenants or conditions of this Agreement, shall be
construed or held to be a waiver of any succeeding or preceding breach of the
same or any other term, covenant or condition herein contained. No waiver of
any default of either party hereunder shall be implied from any omission by
the other party to take any action on account of such default if such default
persists or is repeated, and no express waiver shall affect default other than
as specified in said waiver.
17.8 Compliance. In performing its obligations under this
Agreement, Manager shall comply with all present and future laws, ordinances
and all rules and regulations, requirements and orders of all governmental
authorities and shall obtain all licenses and permits required to perform such
obligations and shall file all returns and reports lawfully required of
Manager in connection with its duties hereunder, including, but not limited
to, income tax withholding returns, Federal Unemployment Tax Act and worker's
compensation returns and reports, sales and use tax returns (and shall timely
pay all contributions, taxes, costs and other amounts due thereunder) . All of
the foregoing returns and reports shall be maintained as a part of the books
and records of Manager.
17.9 Headings. The headings hereunder are used for convenience
only and shall not affect the construction or interpretation of any provision
hereof.
17.10 Counterparts. For the convenience of the parties hereto,
this Agreement may be executed in several original counterparts, each of which
shall be deemed an original for all purposes and all such counterparts shall
constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date and year first above written.
CASINO MAGIC MANAGEMENT SERVICES, CORP.
By: /s/ Robert A. Callaway
Name: ROBERT A. CALLAWAY
Its: Vice President/General Counsel and Secretary
CASINO MAGIC OF LOUISIANA, CORP.
By: /s/ JayS. Osman
Name: JAY S. OSMAN
Its: Executive Vice President, Chief Financial
Officer and Treasurer
CASINO MAGIC CORP.
By: /s/ Jay S. Osman
Name: JAY S. OSMAN
Its: Executive Vice President, Chief Financial
Officer and Treasurer
TAX ALLOCATION AGREEMENT
TAX ALLOCATION AGREEMENT effective as of September , 1993
among
Casino Magic Corp. ("Casino Magic"), Mardi Gras Casino Corp. ("Bay St.
Louis"), Biloxi
Casino Corp. ("Biloxi"), and Casino Magic Finance Corp. ("Finance')
Atlantic-Pacific Corp.
("Atlantic"), Bay St. Louis Corp. ("BSL"), Delta Casino Corp. ("Delta"),
Gulfport Casino
Corp. ("Gulfport"), Casino Advertising Inc. ("Advertising"), Mobile Casino
Corp.
("Mobile"), Alabama Corporation ("Alabama"), St. Louis Casino Corp. ("St.
Louis") and Casino Magic Management Services Corp. ("CMMS"). Each of Bay St.
Louis, Biloxi, Atlantic, BSL, Delta, Gulfport, Advertising, Finance, Mobile,
Alabama, St. Louis and CMMS (and any future direct or indirect subsidiaries of
Casino Magic) is referred to herein as a "Subsidiary," and all are
collectively referred to as the "Subsidiaries."
Casino Magic and the Subsidiaries are members of an affiliated group of
corporations (collectively, the "Group"), as such group is defined in
Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code"), of
which Casino Magic is the common parent, and file consolidated federal income
tax returns. In addition, Casino Magic and the Subsidiaries may be eligible
to file consolidated or combined state or local income or franchise tax
returns. Casino Magic and the Subsidiaries desire to allocate the benefits
and burdens that arise from carryforwards and carrybacks, capital loss
carryforwards, and carrybacks, investment tax credit carryforwards and
carrybacks and similar such items) if it were filing its federal income tax
returns separately for that Tax Year and had filed separate tax returns for
all other periods (including, without limitation, all periods prior to the
date hereof). in computing its federal income taxes, each Subsidiary shall
assume that it has made the elections, taken the deductions and credits and
adopted
the methods of reporting income and expense that the Subsidiary actually made,
took and adopted on its federal income tax returns filed with the Group's
federal income tax returns.
A Subsidiary's share of the Group's tax liability shall equal the Group
tax liability multiplied by a fraction, the numerator of which is the separate
taxable income of the Subsidiary, and the denominator of which is the sum of
the positive separate taxable incomes of all the Group members. The separate
taxable income of a Group member is determined under Treas. Reg. 1.1502-12,
but adjusted to take into account consolidated items attributable to the
member. If the Subsidiary's separate taxable income is zero or less, its
share of the Group's tax liability shall be zero.
1.03. Estimated Taxes. Payments due pursuant to Section 1.02 shall
be made on an estimated basis, calculated, to the extent not inconsistent with
Section 1.02, in accordance with the conventions used by Casino Magic to
compute its estimated tax. Estimated payments shall be made prior to the due
date of the corresponding estimated payments of Casino Magic. Casino Magic
shall calculate the amount payable by the Subsidiaries pursuant to this
Section 1.03 and shall provide the Subsidiaries with at least 10 days notice
of any payments due. The difference, if any, between the liability of the
Subsidiaries to Casino Magic for any Tax Year, computed in accordance with
Section 1.02 hereof, and the estimated payments made by the Subsidiaries to
Casino Magic pursuant to this Section 1.03 shall be paid by the Subsidiaries
or Casino Magic, as the case may be, prior to the date of filing of the
consolidated federal income tax returns of the Group for the Tax Year. Casino
Magic shall calculate the amount of the payment to or from the Subsidiaries
and, if any amount is payable by the Subsidiaries to Casino Magic, shall
provide the Subsidiaries with at least I 0 days notice of the amount due.
1.04. Refunds. If on the basis of the computation made by the
Subsidiaries in accordance with Section 1.02 hereof, any of the Subsidiaries
would have been entitled to a refund of federal income taxes for any Tax Year,
Casino Magic shall pay the Subsidiary the amount of that refund at the time
the income tax return for the Tax Year is filed. For example, if the
Subsidiary has a net operating loss that, on a separate return basis, it could
carry back and be entitled to a refund, Parent shall pay it the amount of the
refund even if no refund was actually received from the Internal Revenue
Service because no taxes were paid in a prior year because of Casino Magic
losses. Conversely, if the Subsidiary has a net operating loss that, on a
separate return basis, it could not carry back but would have to carry
forward, it shall not be entitled to a refund until it could, on a separate
return basis, use the carryforward even if, as a result of Casino Magic's
income, the Group in fact carried back the loss and obtained a refund.
Notwithstanding the foregoing, the Subsidiary shall not be entitled to any
refund in excess of the amounts it has paid pursuant to Section
1.02 hereof, as modified by Section 1.05 hereof.
1.05. Redeterminations. In the event of any adjustment to the tax
return of the Group as filed (by reason of an amended return, claim for refund
or an audit by the Internal Revenue Service), the liability of Casino Magic
and the Subsidiaries shall be redetermined to give effect to any such
adjustment as if it had been made as part of the original computation of tax
liability. Payments between Casino Magic and the Subsidiaries shall be made
to reflect the results of this redetermination. The payments shall be made
promptly before any corresponding payments to the Internal Revenue Service or
promptly after the receipt of any refund from the Internal Revenue Service.
Any payments shall include interest and penalties equal to the amount actually
paid to, or received from, the Internal
Revenue Service with respect to the redetermination of tax liabilities.
Casino Magic shall calculate the amounts of any payments and shall give the
Subsidiaries at least 10 days notice of any amounts payable by the
Subsidiaries.
1.06. State and Local Taxes. If Casino Magic, the Subsidiaries, or any
of them, are
eligible, but not required, to file consolidated or combined state or
local income or
franchise tax returns, Casino Magic shall determine, in its sole
discretion, whether to file
any such return. If Casino Magic or the Subsidiaries, or any of them, file
consolidated or combined state or local income or franchise tax returns, each
of the Subsidiaries shall pay to Casino Magic (or a designee of Casino Magic)
with respect to each tax year of each group filing a consolidated or combined
return of which the Subsidiary is a member, an amount equal to the lesser of
(i) the Subsidiary's share of the Group's consolidated state and local tax
liability and (ii) the amount of state or local income or franchise tax that
the Subsidiary would pay as a separate corporation for the tax year. Casino
Magic (or a designee of Casino Magic) shall pay to the Subsidiary with respect
to each tax year of each group filing a consolidated or combined return of
which the Subsidiary is a member the amount of any refunds the Subsidiary
would have received from any state or local authority were it a separate
corporation for that tax year. The computations of these amounts, their
payments, any refunds, all elections, and any adjustments shall be treated
analogously to the treatment of federal income taxes in Sections 1.02 through
1.06 above.
1.07. Indemnification. Casino Magic shall indemnify the Subsidiaries
for any federal, state or local tax liability of Casino Magic, whether imposed
pursuant to Treas. Reg. 1.1502-6, any state or local counterparts to that
provision or otherwise. Any
indemnification payments are to be made on an after-tax basis within ten days
of the Subsidiary notifying Casino Magic of its liability.
1.08. New Group Members. If at any time Casino Magic or a
Subsidiary acquires or creates one or more subsidiary corporations that are,
under Section 1504 of the Code, includable corporations of the Group, each
such subsidiary corporation shall be subject to this Agreement and all
references herein to a "Subsidiary," the "Subsidiaries" and to the "Group"
shall include such subsidiary corporation as if it had been an original
signatory hereto. Such subsidiary corporations shall be considered as
"Subsidiaries" and as a part of the "Group" for all purposes hereof. The
members of the Group covenant that they will require any such subsidiary
corporation to sign a document whereby such subsidiary corporation will be
liable under all provisions of this Agreement.
1.09. Information. The Subsidiaries shall provide Casino Magic with
any information Casino Magic may need in connection with Casino Magic's
federal, income tax return and with any state or local income or franchise
tax, consolidated or combined returns. Casino Magic shall prepare, or have
prepared, the federal consolidated income tax return and any state or local
consolidated or combined income or franchise tax returns. Casino Magic and
the Subsidiaries shall cooperate with each other in the preparation of all
federal, state or local income tax returns.
1.10. Audits. Casino Magic shall act as the Subsidiaries' agent in
the event of any audit of Casino Magic's federal consolidated income tax
return and any state or local consolidated or combined income or franchise tax
returns and in any administrative or judicial proceedings with respect to
THOSE returns. Casino Magic and the Subsidiaries shall cooperate with each
other in such audits, administrative or judicial proceedings.
Section 2. Miscellaneous
2.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only
if delivered personally or by facsimile transmission or mailed (first class
postage prepaid) to the parties at the following addresses:
If to Casino Magic:
Casino Magic Corp.
711 Casino Magic Drive
Bay St. Louis, Miss. 39520
Attn: Joseph A. Anderson Chief Financial Officer
with a copy to:
Frommelt & Eide, Ltd.
200 Second Avenue South
Minneapolis, Minnesota 55402
Attn: Roger H. Frommelt, Esq.
If to Bay St. Louis:
Mardi Gras Casino Corp.
711 Casino Magic Drive
Bay St. Louis, Miss. 39520
Attn: Joseph A. Anderson Chief Financial Officer
If to Biloxi:
Biloxi Casino Corp.
711 Casino Magic Drive
Bay St. Louis, Miss. 39520
Attn: Joseph A. Anderson Chief Financial Officer
If to Finance:
Casino Magic Finance Corp.
711 Casino Magic Drive
Bay St. Louis, Miss. 39520
Attn: Joseph A. Anderson Chief Financial Officer
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt. Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
party hereto.
2.02 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire
agreement between the parties hereto with respect to the subject matter
hereof.
2.03 Expenses. Each party will pay its own costs and expenses
incurred in connection with the negotiation, execution and closing of this
Agreement and the transactions contemplated hereby.
2.04 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of the
parties hereto. Casino Magic and each Subsidiary shall, cause each of their
respective subsidiaries (including any future subsidiaries) to become a party
to this Agreement by executing a counterpart to this Agreement.
2.05 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other person.
2.06 No Assignment; Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of each other party hereto and any
attempt to do so will be void.
2.07 Headings. The headings used in this Agreement have been inserted
for
convenience of reference only and do not define or limit the provisions
hereof.
2.08 Invalid Provisions. If any provision of this Agreement is held to
be illegal,
invalid or unenforceable under any present or future law, (a) such provision
will be fully severable, (b) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
2.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a
contract executed and performed in such State, without giving effect to the
Conflicts of laws principles thereof.
2.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
DATED: October 14, 1993. CASINO MAGIC CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive
Officer
DATED: October 14, 1993. MARDI GRAS CASINO CORP.
By:/s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. BILOXI CASINO CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. CASINO MAGIC FINANCE CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. ATLANTIC PACIFIC CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive OFFICER
DATED: October 14, 1993. BAY ST. LOUIS CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. DELTA CASINO CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. GULFPORT CASINO CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. CASINO ADVERTISING INC.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. MOBILE CASINO CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993. ST. LOUIS CASINO CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive Officer
DATED: October 14, 1993 CASINO MAGIC MANAGEMENT
SERVICES CORP.
By: /s/ MARLIN F. TORGUSON
Its: President and Chief Executive OFFICER
Organizational Chart of Jefferson Casino Corpoation and Subsidiaries
Parent Corporation Jefferson Casino Corporation
Subsidiary Casino Magic of Louisiana Corp.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
New Orleans, Louisiana
October , 1996
SECURITIES AND EXCHANGE COMMISSION
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)__________
First Union Bank OF Connecticut
(Exact name of trustee as specified in its charter)
Connecticut State Bank
(Jurisdiction of incorporation or organization if not a U.S. national bank)
06-0547320
(I.R.S. Employer Identification No.)
10 State House Square, Hartford, Connecticut 06103-3698
(Address of trustee's principal executive offices) (zip code)
W. Jeffrey Kramer, Vice President
10 State House Square, Hartford, Connecticut 06103-3698
(860) 247-1353
(Name, address and telephone number of agent for service of process)
Casino Magic of Louisiana, Corp.
(Exact name of obligor as specified in its charter)
Louisiana 64-0878110
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
and, as guarantor,
Jefferson Casino Corporation
(Exact name of obligor as specified in its charter)
Louisiana 72-1310739
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1701 Old Minden Road, Bossier City, Louisiana 71111
(Address of principal executive offices) (zip code)
13% Series B First Mortgage Notes due 2003
and
Guarantees of the Jefferson Casino Corporation
(Title of indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Connecticut Commissioner of Banking, 262 Constitution Plaza,
Hartford, Connecticut 06115
Board of Governors of the Federal Reserve System, Washington,
D.C.
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 have been omitted
pursuant
to General Instruction B.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this statement of eligibility
and qualification.
1. A copy of the articles of association of the trustee as now in
effect.
2. A copy of the certificate of authority to commence business.
3. Not Applicable. Authorization of the trustee to exercise corporate
trust powers is contained in articles of association.
4. A copy of the bylaws of the trustee as now in effect.
5. Not Applicable.
6. Consent of trustee required by Section 32 1 (b) of the Trust
Indenture Act of 1939.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Act of 1939, the trustee, First
Union Bank of Connecticut, a Connecticut State-chartered bank, incorporated
and existing under the laws of the State of Connecticut, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Hartford and State of
Connecticut on the 16th day of October, 1996
FIRST UNION BANK OF CONNECTICUT
By: /s/ W. JEFFREY KRAMER
W. Jeffrey Kramer
Its: Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF INCORPORATION
OF
FIRST UNION BANK OF CONNECTICUT
AS AMENDED AND RESTATED JANUARY 1, 1996
FIRST: The name of the corporation is FIRST UNION BANK OF CONNECTICUT.
SECOND: The nature of the business to be transacted, or the purposes to
be promoted or carried out by the corporation are as follows:
To transact a general banking business as a state bank and trust company
and, in the conduct of such business, to engage in any lawful act or activity
for Connecticut and to possess and exercise all the powers and privileges
granted by The Banking Law of Connecticut or by any other law of Connecticut,
together with any powers incidental thereto, so far as such powers and
privileges are necessary or convenient to the conduct, promotion or attainment
of the business or purposes of the corporation, including. without limiting
the generality of the foregoing, the power to:
(a) Receive deposits, including deposits of public funds or money held
in a fiduciary capacity;
(b) Receive for safekeeping or otherwise all kinds of personal
property;
(c) Act as trustee, receiver, executor or administrator or as guardian
or conservator of the estate, but not of the person, of any
person;
(d) Act as trustee agent or registrar of stocks and bonds;
(e) Act as agent, fiscal agent or trustee for any corporation, for
holders of bonds, notes or other securities or for the state or
any political subdivision thereof or taxing district therein;
(f) Lend money with or without security and issue letters of credit
for any lawful purpose;
(g) Borrow money and pledge assets therefor;
(h) Conduct a safe deposit business as permitted by applicable law;
and
(i) Invest its assets in investment securities as permitted by
applicable law.
To transact such business and to exercise all rights, privileges, powers
and franchises possessed by any entity with which the corporation or a
predecessor of the corporation has merged or consolidated.
THIRD: The principal office of the corporation is located in the city of
Stamford, State of Connecticut.
FOURTH: The total number of shares of capital stock which the
corporation shall have authority to issue is six million (6,000,000) common
shares, and the par value of each such share is Five Dollars ($5.00),
amounting in the aggregate to thirty million dollars ($30,000,000), which
shares shall be transferable according to such rules as may be established by
the Board of Directors of the corporation.
FIFTH: (a) the name, address and business of each incorporator of
the corporation are as follows:
Name Address Business
Union Trust Company Church and Elm Streets Bank and Trust
New Haven, Connecticut 06505 Company
Union Trust Company 180 Fairfield Avenue Bank and Trust
Bridgeport, Connecticut 06904 Company
(b) the name, address and occupation of each prospective
initial director of the corporation are as follows:
Name Address Business
Carl Bennett Greenbriar Lane Chairman andPresident,
Stamford, Connecticut 06903 Caldor, Inc.
Allan Bromley 35 Tokeneke Drive Henry Ford H Professor
North Haven, Connecticut 06473 and Director of A. W.
Wright Nuclear Structure
Laboratory Yale
University
Gino P. Giusti 236 West Haviland Lane President and Director,
Stamford, Connecticut 06903 Texasgulf Inc.
J. Robert Gunther Uncas Circle - Sachems Head Chairman and President
Guilford, Connecticut 06437 George Schmitt & Co.,
Inc.
Eric R. Hansen 31 Arrowhead Way Vice President of
Darien, Connecticut 06820 Northeast
Bancorp, Inc. and
President of Union
Trust Company
Robert W. Harcke 8 Point Road Chairman, Universal
Niantic, Connecticut 06357 Wire Products, Inc.
John M. Henske 104 Beachside Avenue Chairman and Chief
Green Farms, Connecticut 06436 Executive Officer
Olin Corporation
Robert E. Ix Walsh Lane Chairman and Chief
Greenwich, Connecticut 06830 Executive Officer,
Cadbury
Schweppes U.S.A. Inc.
O. Haydn Owens, Jr. 410 North Cedar Road Vice President, The
Fairfield, Connecticut 06430 Southern New England
Telephone Co.
Kenneth A. Randall 13 Valley Road President, The
New Canaan, Connecticut 06840 Conference Board,
Inc.
Thomas F. Richardson Marchant Road Chairman and
West Redding, Connecticut 06896 President
Northeast Bancorp,
Inc. and
Chairman and Chief
Executive
Officer, Union Trust
Company
Audrey M. Sargent 18 Wepawaug Road None
Woodbridge, Connecticut 06525
Theodore F. Talmage 11406 Lost Tree Way Retired
North Palm Beach, Florida 33403
Henry H. Townshend, Jr. 709 Townsend Avenue Retired
New Haven, Connecticut 06512
Paul E. Waggoner Vineyard Point Road Director, The
Guilford, Connecticut 06437 Connecticut
Agricultural
Experiment Station
A. Porter Waterman Parsonage Road President, Weepor
Greenwich, Connecticut 06830 Corporation
Howard R. Weckerley 17 Cove Road Retired
River Hills Plantation
Clover, South Carolina 29170
SIXTH: (A) Indemnification of Directors
The corporation shall, to the fullest extent permitted by applicable banking,
corporate and other law and regulations, indemnify any person who is or was a
director of the corporation from and against any and all expenses, liabilities
or other losses arising in connection with any action, suit, appeal or other
proceeding, by reason of the fact that such person is or was serving as a
director of the corporation and may, to the fullest extent permitted by
applicable banking, corporate and other law and regulation, advance monies to
such persons for expenses incurred in defending any such action, suit, appeal
or other proceeding on such terms as the corporation's Board of Directors
shall determine. The corporation may purchase insurance for the purpose of
indemnifying such persons and/or reimbursing the corporation upon payment of
indemnification to such persons to the extent that indemnification is
authorized by the preceding sentences, except that insurance coverage shall
not be available in connection with a formal order by a court or judicial or
governmental body assessing civil money penalties against such person or in
the event that such coverage would be prohibited by applicable banking,
corporate and other law or regulations.
(B) Indemnification of Officers, Employees and Agents
The corporation shall indemnify any person who is or was an officer, employee
or agent of the corporation or who is or was a director, general partner,
trustee or principal of another entity serving as such at the request of the
corporation from and against any and all expenses, liabilities or other losses
arising in connection with any action, suit, appeal or other proceeding, by
reason of the fact that such person is or was serving as an officer, employee
or agent of the corporation or as a director of another entity at the request
of the corporation to the extent authorized by the corporate policy of the
corporation, as adopted and modified from time to time by the shareholder of
the corporation, except to the extent that such indemnification would be
prohibited by applicable banking, corporate and other law or regulation. The
corporation may advance monies to such persons for expenses incurred in
defending any such action, suit, appeal or other proceeding in accordance with
the corporate policy of the corporation, as adopted and modified from time to
time by the shareholder of the corporation, except to the extent that such
advancement would be prohibited by applicable banking, corporate and other law
regulation. The corporation may purchase insurance for the purpose of
indemnifying such persons and/or reimbursing the corporation upon payment of
indemnification to such person to the extent that indemnification is
authorized by the preceding sentence, except that insurance coverage shall not
be available in connection with a formal order by a court or judicial or
governmental body assessing civil money penalties against such person or in
the event that such coverage would be prohibited by applicable banking,
corporate and other law or regulation.
<PAGE>
EXHIBIT 4
ED AND RESTATED BYLAWS
OF
FIRST UNION BANK OF CONNECTICUT (EFF. 1/1/96)
(formerly FIRST FIDELITY BANK;
formerly UNION TRUST COMPANY)
Stamford, Connecticut
As Adopted October 12, 1993
ARTICLE I
MEETINGS OF STOCKHOLDERS
ANNUAL MEETING
1. The Annual Meeting of the stockholders of the Company shall be held on
such
date between February 1 and April 1 in each year as the Board of Directors
shall designate and at such hour as shall be specified in the notice of
such
meeting. The Annual Meeting shall be held at the principal office of the
Company in the Town of New Haven, or such other place within or without
the
State of Connecticut as the Board of Directors may designate.
SPECIAL MEETINGS
2. A special meeting of the stockholders shall be called when ordered by a
majority of the Board of Directors or the Chief Executive Officer or when
requested in writing by the holders of record of not less than one-tenth
of
the capital stock issued and outstanding.
NOTICE OF MEETINGS
3. Written notice of each stockholders' meeting stating the time, place and
purpose or purposes of the meeting, shall be mailed to each stockholder
entitled to vote at such meeting at his address as shown on the books of
the
Company at least ten (10) days before the date of said meeting.
QUORUM
4. At all meetings of the stockholders there shall be present, either in
person
or by proxy, stockholders representing a majority of the capital stock of
the Company issued and outstanding, in order to constitute a quorum for
the
election of directors or the transaction of other business. In the
absence
of a quorum, a majority in interest of the stockholders present in person
or by proxy may adjourn the meeting from time to time, without further
notice, until a quorum shall attend, and thereupon any business may be
transacted which might have been transacted at the meeting originally
called.
VOTING
5. At all meetings of the stockholders, each stockholder shall be entitled to
vote, in person or by proxy, one vote for each share of stock standing in
his name on the books of the Company on the record date set for such
meeting.
ARTICLE 11
DIRECTORS
GENERAL POWERS
1. The property, affairs and business of the Company shall be managed and
controlled by its Board of Directors, which may exercise all of the
corporate powers of the Company except such as are by law, the Articles
of Incorporation of the Company or the Bylaws expressly conferred upon or
reserved to the stockholders.
NUMBER, TERM OF OFFICE AND QUALIFICATIONS
2. The number of directors of the Company shall be not less than nine (9)
nor more than twenty-five (25). They shall be elected at the Annual
Meeting and shall hold office for one (1) year and until their successors
are duly elected and qualified.
VACANCIES
3. In case of any vacancy among the directors from any cause, the remaining
directors at any regular or special meeting may elect a successor to hold
office until the next Annual Meeting of the stockholders and until his
successor is duly elected and qualified.
ORGANIZATION MEETING OF THE BOARD OF DIRECTORS
4. The Board of Directors at their first meeting after the Annual Meeting of
the stockholders shall elect or appoint officers at or above the level of
senior vice president to serve during, the ensuing year.
REGULAR MEETINGS
5. Regular meetings of the Board of Directors shall be held at least
quarterly on such days and time as the Board of Directors may from time
to time determine. No notice of such regular meetings need be given.
SPECIAL MEETINGS
6. Special meetings of the Board of Directors shall be called when ordered
by the Chief Executive Officer or when requested in writing by any five
directors, at such time and place as may be designated in such order or
request, and the Secretary of the Company shall give reasonable notice
thereof to each director either by mail, telegraph ' facsimile, telephone
or in person. A waiver of notice in writing signed by any director
whether before or after such meeting shall be considered equivalent to
proper notice to such director.
QUORUM
7. A majority of the number of directors serving at the time shall
constitute a quorum at any meeting.
COMPENSATION OF DIRECTORS
8. All directors who are not also officers of the Company or any of its
affiliates shall be entitled to a reasonable fee for attendance at
meetings of the Board and of Committees of the Board, such fee to be
fixed from time to time by a resolution of the Board of Directors or of
the Executive Committee.
TERM OF DIRECTORS
9. No person who shall have attained the age of 70 years as of January first
in any year shall be eligible to be elected a Director or to be re-elected
a Director.
COMMUNICATIONS EQUIPMENT
10. Any or all directors may participate in a meeting of the Board or
committee thereof by means of conference telephone or any means of
communication by which all persons participating, in the meeting are able
to hear each other.
ACTION WITHOUT MEETING
11. Any action required or permitted to be taken by the Board or committee
thereof by law, the Company's Articles of Incorporation, or these Bylaws
may be taken without a meeting, if, prior or subsequent to the action,
all members of the Board or committee shall individually or collectively
consent in writing to the action. Each written consent or consents shall
be filed with the minutes of the proceedings of the Board or committee.
Action by written consent shall have the same force and effect as a
unanimous vote of the directors, for all purposes. Any certificate or
other documents which relates to action so taken shall state that the
action was taken by unanimous written consent of the Board or committee
without a meeting.
ARTICLE III
COMMITTEES
EXECUTIVE COMMITTEE
1. There shall be -an Executive Committee which, when the Board of Directors
is not in session, shall have and may exercise all the powers of the
Board that lawfully may be delegated. The Executive Committee shall meet
at such times as the members shall agree and whenever called by the
Chairman of the committee. The Executive Committee shall consist of such
number of directors, not less than four, as the Board shall from time to
time appoint. A quorum for all meetings of -the Executive Committee
shall be a majority of the members. The Board of Directors may appoint a
Chairman of the Executive Committee; in his absence or if no such
appointment is made, the President of the Company shall be its Chairman.
The Executive Committee shall keep a record of its proceedings which
shall be reported to the Board of Directors at its next regular meeting.
In the event of the absence of any member at a meeting, any other
director may be called to serve in his Place with full power to act.
OTHER COMMITTEES
2. The Board of Directors shall have the power to appoint, or to authorize
the appointment of, such other committees as it may deem advisable, to
determine the powers, duties, authority and functions of such committees,
to provide for the selection of the members thereof and to determine
their term or tenure of service.
ARTICLE IV
OFFICERS
OFFICERS
1. The Board of Directors shall have the power to appoint a Chairman of the
Board, one or more Vice Chairmen of the Board, a Chief Executive Officer,
a President, one or more Executive Vice Presidents, one or more Senior
Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer,
an Auditor, one or more Trust Officers and such other officers as from
time to time may be elected or appointed by the Board of Directors. The
Board may by resolution authorize the President to appoint other officers
with such titles and duties as he may designate. AU officers shall be
subject to removal at any time with or without cause by the affirmative
vote of a majority of the whole Board of Directors. If any office shall
become vacant, the Board of Directors may fill such vacancy. Any officer
may hold more than one office, except as otherwise provided by law.
In its discretion, the Board of Directors may leave unfilled any offices
except those of President, Secretary and Treasurer.
CHIEF EXECUTIVE OFFICER
2. The Board of Directors shall designate who shall be the Chief Executive
Officer of the Company and who shall substitute for him during his
absence or disability. If all of the persons so designated are absent or
disabled, any other senior officer -designated by - the Executive
Committee or by the Board of Directors as such shall be the Chief
Executive Officer. The Chief Executive Officer shall have general charge
of the business of the Company.
POWERS AND DUTIES OF OFFICERS
3.All officers shall perform such duties and possess such powers as shall
pertain to their respective offices, as may be imposed by law, as may be set
forth in these Bylaws, and as may be, from time to time, prescribed by the
Board of Directors or by the Chief Executive Officer.
ARTICLE V
CAPITAL STOCK
1. Transfer of shares shall be made upon the books of the Company by the
holder in person, or by power of attorney, duly executed, witnessed and
filed with the Secretary or other proper officer of the Company, upon
surrender of the certificate or certificates of such shares. In case of
the loss or destruction of a certificate another may be issued in its
place upon proof of loss or destruction which shall be satisfactory to
the Board of Directors.
ARTICLE VI
EMERGENCIES
1. In the event of any emergency caused by enemy action, nuclear disaster or
accident, storm, fire, flood, explosion or other cause (the continuation
of
any such event being referred to herein as a "State of Emergency' declared
by the President of the United States or the person performinG his
functions, Governor of the State or any Federal or State banking
regulatory
agency having Jurisdiction over the Company), of sufficient severity to
prevent the conduct and management of the affairs and business of the
Company as contemplated by these Bylaws other than this paragraph 1, then
during the existence of such State of Emergency,
(a) The requirement of these Bylaws as to notice and place of directors'
meetings shall be waived and the Board of Directors shall have the
power, in the absence or disability of any officer or upon the
refusal of any officer to act, to delegate and prescribe such
officer's powers and duties to any other officer, or to any director;
any powers granted to the Board of Directors pursuant to this
paragraph (a) may be exercised as provided in paragraph (b) below:
(b) Any two or more members of the Executive Committee shall constitute
a quorum of that Committee during such State of Emergency for the
full conduct and management of the affairs and business of the
Company in accordance with the provisions of Article HI of these
Bylaws. In the event that two members of the then incumbent
Executive Committee do not present themselves at the Head Office or
Acting Head Office, and only for the period during which two such
members are not present, an interim committee consisting of all of
the remaining directors present at such office and @g to serve shall
perform the functions of the Executive Committee for the full conduct
and management of the affairs and business of the Company in
accordance with the foregoing provisions of this Section; provided,
however, that no action may be taken by such interim committee
present and voting at a meeting attended by no less than two such
members; and
(c) The business ordinarily conducted at the Head Office or any branch
office of the Company may be relocated elsewhere in suitable
quarters, in addition to or in lieu of its normal location, as may be
designated by the Board of Directors or by the Executive Committee or
by such interim committee as may be conducting the affairs of the
Company pursuant to paragraph (b) above.
Actions taken pursuant to this Section are subject to conformity with any
governmental directives issued during any such State of Emergency. Actions
taken
pursuant to this Section may be ratified at the next annual meeting of
stockholders or at a special meeting called for that purpose; however, failure
to
ratify shall not render any action duly taken pursuant to this Section illegal
or
invalid as against third persons who have acquired rights or incurred
disabilities
in reliance thereon.
2. To the full extent permitted by applicable law, the Company will indemnify
any director, officer or employee of the Company for any actions taken in
good faith by such person during any State of Emergency pursuant to this
Article VI or any resolution adopted in accordance herewith.
ARTICLE VII
CORPORATE SEAL
SEAL
1. The seal, an impression of which appears below, is the seal of the
Company as adopted by the Board of Directors:
[Seal]
The Chairman of the Board, the Vice Chairman, the Chief Executive Officer,
the President, Senior Executive Vice President, Executive Vice President,
Senior Vice President, Vice President, each Assistant Vice President, the
Chief Financial Officer, the Secretary, each Assistant Secretary, each
Trust
Officer, or each Assistant Trust Officer shall have the authority to affix
the corporate seal of this Company and to attest to the same.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
FISCAL YEAR
1. The fiscal year of the Company shall be the calendar year.
EXECUTION OF INSTRUMENTS
2. All agreements, contracts, indentures, mortgages, deeds, conveyances,
transfers, certificates, declarations, receipts, discharges, releases,
satisfactions, settlements, petitions, schedules, accounts, affidavits,
bonds, undertakings, proxies and other instruments or documents may be
signed, executed, acknowledged, verified, delivered or accepted in behalf
of the Company by the Chairman of the Board, or Vice Chairman, or Chief
Executive Officer. or the President, or Senior Executive Vice President,
or
Executive Vice President, or Senior Vice President, or Vice President, or
Assistant Vice President, or Chief Financial Officer, or the Secretary, or
Assistant Secretary, or, if in connection with the exercise of fiduciary
powers of the Company, by any of said officers or by any Trust Officer or
Assistant Trust Officer, to the extent authorized by the corporate policy
of the Company, as adopted and modified from time to time. Any such
instruments may also be executed, acknowledged, verified, delivered, or
accepted in behalf of the Company in such other manner and by such other
officers as the Board may from time to time direct.
VOTING SHARES OF OTHER CORPORATIONS
3. The Chairman, Vice Chairman, or President are authorized to vote,
represent
and exercise on behalf of this Company all rights incident to any and all
shares of ;stock of any other corporation standing in the name of the
Company. The authority granted herein may be exercised by such officers
in
person or by proxy or by power of attorney duly executed by said officer.
ARTICLE IX
AMENDMENTS
1. These Bylaws may be altered, amended, or added to by the stockholders at
any
annual or special meeting or to the extent permitted by law, by the Board
of Directors at any meeting, provided in either case notice thereof has
been
given.
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, in connection with the 13% Series A First Mortgage Note due 2003 of the
Casino Magic of Louisiana, Corp., First Union Bank of Connecticut hereby
consents that reports of examinations of Federal, State, territorial or
district authorities may be furnished by such authorities to the Securities
and
Exchange Commission upon request therefore.
FIRST UNION BANK OF CONNECTICUT
By: /s/ W. JEFFREY KRAMER
W. Jeffrey Kramer
Its: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996, CONSOLIDATED FINANCIAL STATEMENTS OF JEFFERSON CASINO CORPORATION AND ITS
SUBSIDIARY CASINO MAGIC OF LOUISIANA, CORP. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 125070
<PP&E> 53812393
<DEPRECIATION> 0
<TOTAL-ASSETS> 70646160
<CURRENT-LIABILITIES> 4524989
<BONDS> 45195770
0
0
<COMMON> 0
<OTHER-SE> 20925401
<TOTAL-LIABILITY-AND-EQUITY> 70646160
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
LETTER OF TRANSMITTAL
CASINO MAGIC OF LOUISIANA, CORP.
OFFER TO EXCHANGE ITS
13% SERIES B FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT INTEREST FOR
ANY AND ALL OF ITS 13% SERIES A FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT
INTEREST
PURSUANT TO THE PROSPECTUS, DATE ___________, 1996.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON EXPIRATION DATE.
Delivery to: First Union Bank of Connecticut, Exchange Agent
By Mail or By Hand:
10 State Street Square
Hartford, Connecticut 06103-3698
Attention: Corporate Trust Department
By Facsimile:
(860) 247-1356
Confirm by Telephone:
Delivery of this Instrument to an address other than as set forth above,
or transmission of instructions via facsimile other than as set forth above,
will not constitute a valid delivery.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated, 1996 (the "Prospectus"), of Casino Magic of Louisiana,
Corp., a Louisiana corporation (the "Company"), and this Letter of Transmittal
(this "Letter"), which together constitute the Company's offer (the "Exchange
Offer") to exchange an aggregate principal amount at maturity of up to
$115,000,000 of 13% Series B First Mortgage Notes due 2003 with Contingent
Interest (the "Series B Notes") of the Company for a like principal amount of
the issued and outstanding 13% Series A First Mortgage Notes due 2003 with
Contingent Interest (the "Series A Notes") of the Company from the Holders
thereof.
This Letter is to be completed by a Holder of Series A Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Series A Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer Facility" section of the Prospectus.
Holders of Series A Notes whose certificates are not immediately available, or
who are unable to deliver their certificates or confirmation of the book-entry
tender of their Series A Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Series A Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus. See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent. The undersigned has completed the appropriate boxes below
and signed this Letter to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
DESCRIPTION OF 13% SERIES A FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT
INTEREST (Series A Notes)
Name(s) and
Address(es) of Aggregate Principal Amount
Registered Principal Tendered (must be
Holder(s) Amount in integral
(Please fill in, Certificate Represented multiples of
if blank) Number(s) by Certificate(s) $1,000)
- ----------------- ------------ ----------------- -----------------
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
________________________________________Total_________________________________
Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of Series A Notes will be deemed to have tendered the entire
aggregate principal amount represented by the column labeled "Aggregate
Principal Amount Represented by Certificate(s)."
If the space provided above is inadequate, list the certificate numbers
and principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.
The minimum permitted is $1,000 in principal amount of Series A Notes.
All other tenders must be integral multiples of $1,000
SPECIAL PAYMENT INSTRUCTIONS
(See Instruction 5)
To be completed ONLY if certificates for Series A Notes in a principal amount
not tendered or nor purchased, or Series B Notes issued in exchange for Series
A Notes accepted for exchange are to be issued in the name of someone other
than the undersigned.
Issue Certificate to:
Name:
(Please Print)
Address:
(Include Zip Code)
(Tax Identification or Social Security No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 5)
To be completed ONLY if certificates for Series A Notes in a principal amount
not tendered or nor purchased, or Series B Notes issued in exchange for Series
A Notes accepted for exchange are to be sent to someone other than that shown
below.
Mail Certificate to:
Name:
(Please Print)
Address:
(Include Zip Code)
(Tax Identification or Social Security No.)
<PAGE>
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Series A
Notes indicated above. Subject to and effective upon the acceptance for
exchange of the principal amount of Series A Notes tendered in accordance with
this Letter of Transmittal, the undersigned sells, assigns and transfers to,
or upon the order of, the Company all right, title and interest in and to the
Series A Notes tendered hereby. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent its agent and attorney-in-fact
(with full knowledge that the Exchange Agent also acts as the agent of the
Company) with respect to the tendered Series A Notes with full power of
substitution to (i) deliver certificates for such Series A Notes to the
Company and deliver all accompanying evidences of transfer and authenticity
to, or upon the order of, the Company and (ii) present such Series A Notes for
transfer on the books of the Company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Series A Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney
granted in this paragraph shall be deemed irrevocable and coupled with an
interest.
The name(s) and address(es) of the registered Holder(s) should be printed
herein under "Description of 13% Series A First Mortgage Notes Due 2003"
(unless a label setting forth such information appears thereunder), exactly as
they appear on the Series A Notes tendered hereby. The certificate number(s)
and the principal amount of Series A Notes to which this Letter of Transmittal
relates, together with the principal amount of such Series A Notes that the
undersigned wishes to tender, should be indicated in the appropriate boxes
herein under "Description of 13% Series A First Mortgage Notes Due 2003 with
Contingent Interest."
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, exchange, assign and transfer the Series A
Notes tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are acquired
by the Company. The undersigned hereby further represents that any Series B
Notes acquired in exchange for Series A Notes tendered hereby will have been
acquired in the ordinary course of business of the Holder receiving such
Series B Notes, that neither the Holder nor any such other person has an
arrangement with any person to participate in the distribution of such Series
B Notes and that neither the Holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company
or any of its affiliates. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company
to be necessary or desirable to complete the assignment, transfer and purchase
of the Series A Notes tendered hereby.
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Series B Notes. If the undersigned is a broker-dealer that will receive
Series B Notes for its own account in exchange for Series A Notes that were
acquired as a result of market-making activities or other trading activities,
it acknowledges that it will deliver a prospectus in connection with any
resale of such Series B Notes; however, by so acknowledging and by delivering
a prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Series A Notes, when, as and if the Company has
given oral or written notice thereof to the Exchange Agent.
If any tendered Series A Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Series
A Notes will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under
"Special Payment Instructions" as promptly as practicable after the Expiration
Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Series A Notes pursuant to
the procedures described under the caption "The Exchange Offer -- Procedures
for Tendering Series A Notes" in the Prospectus and in the instructions hereto
will constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Payment Instructions," please issue
the certificates representing the Series B Notes issued in exchange for the
Series A Notes accepted for exchange and return any Series A Notes not
tendered or not exchanged in the name(s) of the undersigned. Similarly,
unless otherwise indicated under "Special Delivery Instructions," please send
the certificates representing the Series B Notes issued in exchange for the
Series A Notes accepted for exchange and any certificates for Series A Notes
not tendered or not exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the certificates representing the
Series B Notes issued in exchange for the Series A Notes accepted for exchange
and return any Series A Notes not tendered or not exchanged in the name(s) of,
and send said certificates to, the person(s) so indicated. The undersigned
recognizes that the Company has no obligation pursuant to the "Special Payment
Instructions" and "Special Delivery Instructions" to transfer any Series A
Notes from the name of the registered Holder(s) thereof if the Company does
not accept for exchange any of the Series A Notes so tendered.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
X________________________________________ __________________________, 1996
Signature(s) of Owner Date
X________________________________________ __________________________, 1996
Signature(s) of Owner Date
Area code and Telephone Number _____________________________________________
If a Holder is tendering any Series A Notes, this Letter must be signed
by the registered Holder(s) as the name(s) appear(s) on the certificate(s) for
the Series A Notes or by any person(s) authorized to become registered
Holder(s) by endorsements and documents transmitted herewith. If signature is
by a trustee, executor, administrator, guardian, officer or other person
acting in a fiduciary or representative capacity, please et forth full title.
See Instruction 4.
Name(s)____________________________________________________________________
____________________________________________________________________________
(Please Type or Print)
Capacity:___________________________________________________________________
Address:____________________________________________________________________
____________________________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 4)
Signature(s) Guaranteed by an Eligible Institution:_________________________
(Authorized Signature)
____________________________________________________________________________
(Title)
____________________________________________________________________________
(Name and Firm)
Dated:______________________________________________, 1996
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer of 13%
Series B
First Mortgage Notes due 2003 with Contingent Interest for any and all of
the 13% Series A
First Mortgage Notes due 2003 with Contingent Interest of Casino Magic of
Louisiana, Corp.
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
This letter is to be completed by Holders either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfers set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Series A Notes, or Book-Entry confirmation, as the case
may be, as well as a properly completed and duly executed Letter (or manually
signed facsimile hereof) and any other documents required by this Letter, must
be received by the Exchange Agent by physical delivery or fascsimile at the
address set forth herein on or prior to the Expiration Date, or the tendering
Holder must comply with the guaranteed delivery procedures set forth below.
Holders whose certificates for Series A Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Series A Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through
a firm which is a member of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the
United States (collectively "Eligible Institutions), (ii) prior to the
Expiration Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Letter (of a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the Holder of Series A Notes
and the amount of Series A Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five business days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Series A Notes, or a Book-Entry Confirmation, and any
other documents required by the Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Series A Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter are received by the Exchange Agent within five business days after the
date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Series A Notes and all other
required documents is at the election and risk of the tendering Holders, but
the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Series A Notes are sent by mail, it is suggested that
the mailing be made by overnight or hand delivery services sufficiently in
advance of the Expiration Date to permit delivery to the Exchange Agent prior
to 5:00 P.M., New York City time, on the Expiration Date, No Letter, Notice of
Guaranteed Delivery or Series A Notes should be sent to the Company.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Series A Notes and withdrawal of tendered
Series A Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the right to
waive any defects or irregularities or conditions of tender as to the Exchange
Offer and/or particular Series A Notes. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in this
Letter) shall be final and binding on all parties. Unless waived, any defects
or irregularities in connection with tenders of Series A Notes must be cured
within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Series A
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Series A Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Series A
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders of Series A Notes,
unless otherwise provided in this Letter, as soon as practicable following the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. TENDER BY HOLDER.
Only a Holder of Series A Notes may tender such Series A Notes in the
Exchange Offer. Any beneficial Holder of Series A Notes who is not the
registered Holder and who wishes to tender should arrange with the registered
Holder to execute and deliver this Letter on his or her behalf or must, prior
to completing and executing this Letter and delivering his or her Series A
Notes, either make appropriate arrangements to register ownership of the
Series A Notes in such Holder's name or obtain a properly completed bond power
form the registered Holder.
3. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Series A Notes evidenced by a submitted
certificate are to be tendered, the tendering Holder(s) should fill in the
aggregate principal amount of Series A Notes to be tendered in the box above
entitled "Description of Series A Notes -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Series A Notes
will be sent to such tendering Holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration Date. ALL of
the Series A Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
4. SIGNATURES ON THIS LETTER, BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES
If this Letter is signed by the registered Holder of the Series A Notes
tendered hereby, the signature must correspond exactly with the name as
written on the fact of the certificates without any change whatsoever.
If any tendered Series A Notes are owned by record by two or more joint
owners, all such owners must sign this letter.
If any tendered Series A Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter as there are different registrations of
certificates.
When this letter is signed by the registered Holder or Holders of the
Series A Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Series B
Notes are to be issued, or any untendered Series A Notes are to reissued, to a
person other than the registered Holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signature on such
certificate(s) must be guaranteed by an Eligible Institution.
If this letter is signed by a person other than the registered Holder or
Holders of any certificate specified herein, such certificate(s) must be
endorsed or accompanies by appropriate bond powers, in either case signed
exactly as the name or names of the registered Holder or Holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter 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 indicate when signing, and, unless waived by Company, proper
evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Series A Notes or signatures on bond
powers required by this Instruction 4 must be guaranteed by an Eligible
Institution.
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Series A Notes are tendered; (i) by a registered
Holder of Series A Notes (which term, for purposes of the Exchange Offer,
includes any participant in the Book-Entry Transfer Facility system whose name
appears on a security position listing as the Holder of such Series A Notes)
tendered who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions," on this Letter, or (ii) for
the account of an Eligible Institution.
5. SPECIAL ISSUANCE AND DELIVER INSTRUCTIONS.
Tendering Holders of Series A Notes should indicate in the applicable box
the name and address to which Series B Notes issues pursuant to the Exchange
Offer and/or substitute certificates evidencing Series A Notes not exchanges
are to be issued or sent, if different from the name or address of the person
signing this Letter. In the case of issuance in a different name, the
employer identification or social security number of the person named must
also be indicated. Noteholders tendering Series A Notes by book-entry
transfer may request that Series A Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such noteholder may
designate hereon. If no such instructions are given, such Series A Notes not
exchanged will be returned to the name or address of the person signing this
Letter.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Series A Notes to it or its order pursuant to the Exchange Offer.
If, however, Series B Notes and/or substitute Series A Notes are exchanged are
to be delivered to, or are to be registered or issued in the name of any
person other than the registered Holder of the Series A Notes tendered hereby,
or if tendered Series A Notes are registered in the name of any person other
than the person signing this Letter, or if a transfer tax is imposed for any
reason other than the transfer of Series A Notes to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered Holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payments of such taxes or
exemption therefrom is not submitted herewith, the amount of such transfer
taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Series A Notes specified in this
Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to amend, waive satisfaction of
or modify any or all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Series A Notes, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their
Series A Notes for exchange.
9. MUTILATED, LOST, STOLEN OR DESTROYED SERIES A NOTES.
Any Holder whose Series A Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter, may be directed to
the Exchange Agent at the address and telephone number indicated above.
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR
CASINO MAGIC OF LOUISIANA, CORP.
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Casino Magic of Louisiana, Corp. (the "Company") made
pursuant to the Prospectus, dated, 1996 (the "Prospectus"), if certificates
for Series A Notes of the Company are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Company prior to 5:00
P.M., New York City time, on the Expiration Date of the Exchange Offer. Such
form may be delivered or transmitted by telegram, telex, facsimile
transmission, mail or hand delivery to First Union Bank of Conneticut, (the
"Exchange Agent") as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Series A Notes pursuant to the
Exchange Offer, a completed signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
P.M., New York City time, on the Expiration Date. Capitalized terms not
defined herein are defined in the Prospectus.
Delivery to: First Union Bank of Connecticut, Exchange Agent
By Mail or By Hand:
10 State Street Square
Hartford, Connecticut 06103-3698
Attention: Corporate Trust Department
By Facsimile:
(860) 247-1356
Confirm by Telephone:
Delivery of this Instrument to an address other than as set forth above,
or transmission of instructions via facsimile other than as set forth above,
will not constitute a valid delivery.
<PAGE>
GUARANTEE
The undersigned, a member of a registered national securities exchange,
or a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees that the certificates representing the
principal amount at maturity of Series A Notes tendered hereby in proper form
for transfer, or timely confirmation of the book-entry transfer of such Series
A Notes into the Exchange Agent's account at The Depository Trust Company
pursuant to the procedures set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus, together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantee and any other
documents required by the Letter of Transmittal, will be received by the
Exchange Agent at the address set forth above, no later than five business
days after the date of execution hereof.
Name of Firm Authorized Signature
Address Title
Name:
Zip Code (Please Type or Print)
Area Code and Tel. No. Dated:
NOTE: DO NOT SEND CERTIFICATES FOR Series A Notes WITH THIS FORM,
CERTIFICATES FOR Series A Notes SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount at maturity of Series A Notes set forth below,
pursuant to the guaranteed delivery procedure described in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus.
Principal Amount of Series A Notes Tendered:
$
Certificate Nos. (if available):
If Series A Notes will be
Total Principal Amount Represented by Old delivered by
book-entry Notes Certifcate (s):
tansfer to The Depository
Trust Company,
provide
account number.
$ Account Number
CASINO MAGIC OF LOUISIANA, CORP.
OFFER TO EXCHANGE ITS
13% SERIES B FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT INTEREST
FOR
ANY AND ALL OF ITS 13% SERIES A FIRST MORTGAGE NOTES DUE 2003 WITH
CONTINGENT INTEREST
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Casino Magic of Louisiana, Corp. (the "Company") is offering, upon and
subject to the terms and conditions set forth in the Prospectus, dated, 1996
(the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") its 13% Series B First
Mortgage Notes due 2003 with Contingent Interest (the " Series B Notes") for
any and all of its outstanding 13% Series A First Mortgage Notes due 2003 with
Contingent Interest (the "Series A Notes"). The Exchange Offer is being made
in order to satisfy certain obligations of the Company contained in the
Registration Rights Agreement dated August 22, 1996, among the Company and the
other signatories thereto.
We are requesting that you contact your clients for whom you hold Series
A Notes regarding the Exchange Offer. For your information and for forwarding
to your clients for whom you hold Series A Notes registered in your name or in
the name of your nominee, or who hold Series A Notes registered in their own
names, we are enclosing the following documents:
1. Prospectus dated, 1996;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Series A Notes are not immediately available or time
will not permit all required documents to reach the Exchange Agent prior to
the Expiration date (as defined below) or if the procedure for book-entry
transfers cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Series A 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; and
5. Return envelopes addressed to First Union Bank of Connecticut, the
Exchange Agent for the Series A Notes.
Your prompt action is requested. The Exchange Offer will expire at 5:00
P.M., New York City time, on, 1996, unless extended by the Company (the
"Expiration Date"). The Series A Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time before 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 Series A Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If Holders of Series A Notes wish to tender, but it is impracticable for
them to forward their certificates for Series A 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 effect by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures."
The Company will upon request reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarded the Prospectus and related documents to the
beneficial owners of Series A Notes held by me as nominee or in a fiduciary
capacity, the Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Series A Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.
The terms of the Series B Notes and the Series A Notes are substantially
identical in all material respects, except that the Series B Notes will not
contain terms with respect to transfer restrictions.
Any inquiries you may have with respect to the Exchange offer, or
requests for additional copies of the enclosed materials, should be directed
to First Union Bank of Connecticut, the Exchange Agent for the Series A Notes,
at its address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
Casino Magic of Louisiana, Corp.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
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.
Enclosures
<PAGE>
CASINO MAGIC OF LOUISIANA, CORP.
OFFER TO EXCHANGE ITS
13% FIRST MORTGAGE NOTES SERIES B DUE 2003 WITH CONTINGENT INTEREST
FOR
ANY AND ALL OF ITS 13% FIRST MORTGAGE NOTES DUE 2003 WITH CONTINGENT
INTEREST
To Our Clients:
Enclosed for your consideration are a Prospectus, dated (the
"Prospectus") and a Letter of Transmittal ("Letter of Transmittal") relating
to an offer (the "Exchange Offer") by Casino Magic of Louisiana, Corp. (the
"Company") to exchange its 13% Series B First Mortgage Notes due 2003 with
Contingent Interest (the " Series B Notes") for any and all of its 13% Series
A First Mortgage Notes due 2003 with Contingent Interest (the "Series A
Notes").
This material is being forwarded to you as the beneficial owner of Series
A Notes carried by us in your account but not registered in your name.
Accordingly, we request instructions as to whether you wish us to tender
any or all such Series A Notes held by us for your account pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letters of
Transmittal. We urge you to read these documents carefully before conveying
your instructions to us.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender your Series A 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, unless extended by the Company (the
"Expiration Date"). The Series A Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time before the Expiration Date.
If you wish to have us tender any or all of your Series A Notes on your
behalf, please so instruct us by completing, executing, detaching and
returning to us the attached instruction form. The accompanying copy of the
Letter of Transmittal have been furnished to you for your information only and
may not be used by you to tender your Series A Notes for exchange.
The Exchange Offer is not being made to, nor will tenders be accepted
from Holders of Series A Notes in any jurisdiction in which making of the
Exchange Offer or acceptance thereof would not be in compliance with the laws
of such jurisdiction.
<PAGE>
Instructions
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer with respect to
Series A Notes.
This will instruct you whether to tender the principal amount of the
Series A Notes indicated below held by you for the account of the undersigned
and/or consent to the amendments and waivers, pursuant to the terms and
conditions set forth in the Prospectus and the related Letters of Transmittal.
[Check the appropriate box.]
Box 1 ' Please TENDER $ principal amount of Series A Notes held
by you for my account on the Letter of Transmittal.
Box 2 ' Please do NOT TENDER any Series A Notes at this time.
Date:
Signature(s)
Please type or print name(s) here
Tenders of Old Securities will be accepted only in principal amounts
equal to $1,000 or integral multiples thereof.
<PAGE>
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
PLEASE SIGN HERE
X
X
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
Must be signed by the Holder(s) of Series A Notes as their name(s)
appear(s) on certificates for Series A Notes or on a security position
listing, or by person(s) authorized to become registered Holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in fiduciary or
representative capacity, such person must set forth his or her full title
below.
Please print name(s) and address(es)
Name(s):
Capacity:
Address(es)
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a registered Holder of Series A Notes or
Series B Notes is required to provide the Trustee (as payer) with such
Holder's correct Tax Identification Number ("TIN") on Substitute Form W-9
below or otherwise establish a basis for exemption from backup withholding.
If such Holder is an individual, the TIN is his or her social security number.
If the Trustee is not provided with the correct TIN, a $50 penalty may be
imposed by the Internal Revenue Service, and payments made to such Holder with
respect to the Series A Notes or Series B Notes may be subject to backup
withholding.
Certain Holders (including among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on
Substitute Form W-9. A foreign person may qualify as an exempt recipient by
submitting to the Trustee a properly completed Internal Revenue Service Form
W-8, signed under penalties of perjury, attesting to that Holder's exempt
status. A Form W-8 can be obtained from the Trustee.
If backup withholding applies, the Trustee is required to withhold 20% of
any payments made to the Holder or other payee. Backup withholding is not an
additional Federal income tax. Rather, the Federal income tax liability of
persons 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 from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Series A
Notes or Series B Notes, the Holder is required to provide the Trustee with:
(i) the Holder's correct TIN by completing the form below, certifying that the
TIN provided on Substitute W-9 is correct (or that such Holder is awaiting a
TIN) and that (A) such Holder is exempt from backup withholding, (B) the
Holder has not been notified by the Internal Revenue Service that the Holder
is subject to backup withholding as a result of failure to report all interest
or dividends, or (C) Internal Revenue Service has notified the Holder that the
Holder is no longer subject to backup withholding; and (ii) if applicable, an
adequate basis for exemption.
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PAYER'S NAME:
SUBSTITUTE
Form W-9
Department of the
Treasury--Internal
Revenue Service
Part 1-PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND
DATING.
Social Security Number
or
Employer Identification Number
Part 2--Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because (i) I am exempt from
backup withholding, (ii) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of failure
to report all interest or dividends, or (iii) the IRS has notified me that I
am no longer subject to backup withholding.
Part 3--Awaiting TIN '
Payee's Request for taxpayer
Identification Number ("TIN")
Certificate instructions-- You must cross our Item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you receive another certification from the IRS stating that you are no longer
subject to withholding, do not cross out item (2).
SIGNATURE DATE, 1996
Name (Please Print)
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF
20% OF ANY PAYMENTS MADE TO YOU UNDER THE Series A Notes OR THE Series B Notes
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (a) 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
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within 60
days, 20% of all reportable payments made to me thereafter will be withheld
until I provide a number.
Signature
Date, 1996
Name (Please Print)
