-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PyFO9P6BDiETewHTKo3uSqjiX2sjEebwlExG8YJmOlkbXahLvczK3vMcBe9iGEtR oAazQ1Kmc1x1TqVO3w6yCw== 0000891105-96-000008.txt : 19960529 0000891105-96-000008.hdr.sgml : 19960529 ACCESSION NUMBER: 0000891105-96-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960513 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960528 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASINO MAGIC CORP CENTRAL INDEX KEY: 0000891105 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 640817483 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20712 FILM NUMBER: 96573126 BUSINESS ADDRESS: STREET 1: 711 CASINO MAGIC DR CITY: BAY ST LOUIS STATE: MS ZIP: 39520 BUSINESS PHONE: 6014679257 MAIL ADDRESS: STREET 1: PO BOX 3150 CITY: BAY ST LOUIS STATE: MS ZIP: 39521 8-K 1 ============================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 13, 1996 -------------- CASINO MAGIC CORP. ------------------------ (Exact name of registrant as specified in its charter) MINNESOTA 0-20712 64-0817483 ----------------- ------------- ---------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 711 CASINO MAGIC DRIVE, BAY ST. LOUIS, MS 39520 ------------------------------------------------- (Address of principal executive offices) (Zip Code) (601) 467-9257 ------------------ (Registrant's telephone number, including area code) NOT APPLICABLE ------------------ (Former name, former address and former fiscal year, if changed since last report) ============================================================================ ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. GENERAL On May 13, 1996, a wholly-owned subsidiary of Casino Magic Corp. (the "Company"), Jefferson Casino Corp., a Louisiana corporation ("Jefferson"), acquired 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 was changed to Casino Magic of Louisiana, Corp. For the purpose of the discussion hereunder, Casino Magic of Louisiana, Corp. will be referred to as "Crescent City". Crescent City was a wholly-owned subsidiary of Capital Gaming International., Inc. Crescent City obtained a gaming license from the State of Louisiana and began gaming operations on a riverboat in mid-May 1995. The riverboat was docked on the Mississippi River at New Orleans, Louisiana. On July 26, 1995 Crescent City ceased gaming operations and sought protection from its creditors by filing a petition under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Louisiana (Case No. 95-12735(TMB)). A plan of reorganization (the "Plan") was developed, and was confirmed by the U.S. Bankruptcy Court on April 29, 1996. The purchase of the outstanding capital stock of Crescent City by Jefferson was effected as part of the Plan. In addition, the purchase obligation was contingent upon the receipt of the approvals of the Louisiana State Police and the Louisiana Gaming Commission of the change of ownership of Crescent City to Jefferson, and the relocation of the gaming license site from New Orleans to Bossier City, Louisiana. All such approvals were obtained by April 30, 1996. The original agreement to acquire Crescent City was entered into by Jefferson and C-M of Louisiana, Inc., the latter being another wholly-owned subsidiary of the Company. 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 "Bossier Property"). Another wholly-owned subsidiary of the Company, Coastal Land of Florida, Inc., held a 99-year lease on the Bossier Property. The Company 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 establish gaming operations at the Bossier 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. As a result, when the acquisition of Crescent City was completed, Jefferson held all ownership interests in the Bossier Property, and all of the capital stock of Crescent City. When the acquisition of Crescent City was effected, Crescent City's assets included the Crescent City Queen, a three deck self-powered riverboat upon which Crescent City had conducted its gaming operations, Crescent City's gaming license and the furniture, fixtures and gaming equipment located on the Crescent City Queen. The Crescent City Queen is 450 feet long and 100 feet wide, and has 88,000 square feet of space, approximately 30,000 of which is currently devoted to gaming activities. Gaming is conducted on the first and second decks, which have approximately 18 foot interior ceilings. The Crescent City Queen has a lobby area, restaurants, bars and -2- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (CONTINUED). entertainment facilities, a complete surveillance system, and other ancillary and administrative facilities. The gaming equipment on the Crescent City Queen consists of approximately 1150 slot machines and 60 table games. Crescent City had no employees at the time of the acquisition. PURCHASE PRICE In effecting the purchase of Crescent City, Jefferson paid $15,000,000 in cash, and caused Crescent City to issue $35,000,000 in 11-1/2% Senior Secured Notes (the "Notes"). The $15,000,000 was provided by the Company to Jefferson from cash on hand. The cash and Notes were distributed in accordance with the Plan to satisfy obligations to the creditors of Crescent City. Upon the acquisition, aside from the issuance of the Notes, the only liability of Crescent City was approximately $6,500,000 owed to two creditors that supplied slot machines and other gaming equipment which is located on the Crescent City Queen and in which the two creditors had a security interest. As part of the Plan, Jefferson guaranteed the payment of the $6,500,000 amount. NOTES AND INDENTURE The Notes were issued under an Indenture dated May 13, 1996 (the "Indenture"), between Crescent City as the Issuer, Jefferson as the Guarantor and First Trust National Association, St. Paul, Minnesota, as the "Indenture Trustee." The Indenture Trustee also acts as the "Paying Agent" and registrar for the Notes. The Notes accrue interest at the rate of 11- 1/2% 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 the Company's casino in Bossier City opens for gaming operations. The Notes will also come due as a result of an adverse state action as defined in the Indenture. Interest is payable quarterly on the 15th day following each fiscal quarter of the Company. The Notes are collateralized by a first security interest in the Crescent City Queen which is evidenced by a ship's mortgage, a first security interest in substantially all other assets of Crescent City, except for furniture, fixtures and equipment on hand as of the date of the Indenture, and cash arising from operations. The Notes are guaranteed by Jefferson, and Jefferson's guarantee is secured by a first security interest in the Bossier Property evidenced by a mortgage, the outstanding capital stock of Crescent City and substantially all other assets of Jefferson, except for cash received as equity contributions from the Company and as the proceeds from specified indebtedness. So long as neither Crescent City nor Jefferson is in default under the Indenture, Crescent City is permitted under the Indenture to sell or lease the Crescent City Queen, and utilize the proceeds thereof to acquire, lease or construct a substitute boat which can be used in Bossier City. In addition, Crescent City may use any excess proceeds received from such sale to make capital improvements to the substitute boat or the Bossier Property. If a substitute boat is not acquired or leased by Crescent City, or construction of a substitute boat is not commenced within 90 days after the Crescent City Queen is sold or leased, the proceeds from such sale or lease will be deemed to be Excess Cash Flow (as described below) distributable in partial redemption of the Notes. -3- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (CONTINUED). After the principal balance of the Notes equals or is less than $17,500,000, all security interests in the property of Crescent City and Jefferson will be released, except for a ship's mortgage on the Crescent City Queen or any substitute boat used by Crescent City at the Bossier Property. On a quarterly basis, along with each quarterly interest payment, Crescent City must deliver to the Indenture Trustee the "Excess Cash Flow" of Crescent City and Jefferson generated during the fiscal quarter which precedes the fiscal quarter for which the interest payment is being made. The requirement to deliver Excess Cash flow ends on the second quarterly interest payment date which follows the date the aggregate principal amount of the Notes has been reduced to $17,500,000. Excess Cash Flow is defined under the Indenture, and in general, includes the positive cash flow of Crescent City combined with a portion of the cash flow of Jefferson, less certain permitted capital expenditures, scheduled principal payments on identified debt (including the Notes), and an aggregate of $5,000,000 (subject to specified reductions). The Indenture Trustee is required to distribute the Excess Cash Flow held by the Indenture Trustee on a pro rata basis to each of the holders of the Notes upon presentment of each such Note to the Indenture Trustee. Such distributions are to be made along with regularly scheduled interest payments, so long as the aggregate Excess Cash Flow to be paid on any interest payment date exceeds $100,000. Upon notice to the holders of the Notes establishing a redemption date at least 30 days, but not more than 45 days, after the providing of such notice, Crescent City may fully or partially redeem all or a portion of the Notes. If funds sufficient to effect such redemption are deposited with the Paying agent as prescribed in the Indenture, Notes (or the portion thereof) called for redemption will cease to bear interest. Any Note called for redemption must be submitted to the Paying Agent in order for the holder thereof to receive the redemption payment. Notes may also be called for redemption as ordered by any agency or other authority of the United States, any foreign country in which Crescent City is conducting business, any tribal government, any state or other political subdivision, having jurisdiction relating to a gaming license, or where, in the Judgment of the Board of Directors of Crescent City, Crescent City's ability to obtain or retain a gaming license would be impaired because the holder or holders of the Notes fails to obtain a finding of suitability or other qualification under applicable gaming laws, after having been required to do so by applicable gaming authorities. Notes redeemed within one year following the Commencement Date are redeemable at face value. Notes redeemed during the second and third years following the Commencement Date require the payment of a premium over the face amount of the Notes. The premium increases linearly over that two year period from 0% to 20%, prorated daily over the 730 day period. Notwithstanding the foregoing, Notes redeemed as the result of the failure of the holder thereof to obtain a finding of suitability, as discussed above, will only be redeemed at face value without the payment of any premium. Notes paid at maturity carry no premium. -4- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (CONTINUED). Crescent City and Jefferson are obligated to maintain adequate comprehensive general liability insurance, and insurance covering any loss sustained as a result of damage to or destruction of the Crescent City Queen or any boat acquired in substitution thereof. Crescent City is required annually to obtain an opinion of legal counsel that all necessary actions have been taken to maintain the perfection of all security interests in the collateral for the Notes, and a certificate of an officer of Crescent City as to whether Crescent City and Jefferson have observed and fulfilled their obligations under the Indenture. Crescent City is also required to provide the holders of the Notes with consolidated quarterly and annual financial statements of Crescent City and Jefferson. Under the Indenture, neither Crescent City nor Jefferson will be permitted to incur any indebtedness until after the aggregate principal amount under the Note equals or is less than $17,500,000, except for certain specified indebtedness, including non-recourse indebtedness incurred in the acquisition of furniture, fixtures or equipment to be used in the operation of the Bossier City casino, and indebtedness the proceeds of which are used to acquire a substitute boat. FUTURE PLANS AND EVENTS The Company plans to cause Crescent City to open a gaming facility at the Bossier Property under its transferred Louisiana gaming license using the Casino Magic trade name. Under the license in Bossier City, gaming may be conducted on a boat which remains dockside. The Bossier Property is adjacent to an interchange which provides access from and to Interstate Highway 20, and which is approximately 160 miles east of Dallas, Texas. The Company believes that a substantial majority of its customers will come from the Dallas/Fort Worth metropolitan area. Because the Crescent City Queen is too wide to be used in Bossier City, the Company will be required to obtain a smaller gaming boat. The Company plans to sell or exchange the Crescent City Queen for a suitable boat, or to obtain sufficient financing to acquire a new boat, and retain the Crescent City Queen for use on the Ohio River in Crawford County, Indiana, where the Company is attempting to obtain a gaming license. There is no assurance that the additional financing will be available, or whether the Company will obtain a license to engage in gaming operations in Crawford County, Indiana. The Company anticipates that a determination as to whether it will receive a gaming license for Crawford County, Indiana, will be made in July 1996. In addition to the investments made in the Bossier Property and in the acquisition of Crescent City, the Company estimates that it will cost approximately $15,000,000 to develop and open a gaming casino at Bossier City. This amount includes the construction of a land-based facility which would serve as the entrance to the dockside gaming casino, contain -5- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (CONTINUED). entertainment facilities, storage facilities and administrative offices, and provide both surface and ramp parking for 1,500 cars. The Company anticipates that the Bossier City casino will have approximately 1,000 slot machines and 60 table games. Future development plans include construction of a 400-room hotel with approximately 60,000 square feet of entertainment and convention space at a cost of $45,000,000. All development is contingent upon obtaining adequate capital. A portion of such capital may be supplied by a partner in the Bossier City gaming operation. There is no assurance that such capital will be available, or that a suitable partner will be found. Referenda are scheduled to be held on November 11, 1996 in all Louisiana parishes where gaming is being conducted, to determine if certain forms of gaming should be allowed to continue in each of those parishes. There is no assurance that a gaming referendum in the parish where the Company intends to conduct its Bossier City operations will permit gaming to continue. If the voters in the referendum determine to discontinue riverboat gaming in Bossier City, the Crescent City gaming license would not be renewable, and will terminate in approximately four years and 10 months after gaming operations are commenced. Under that circumstance, the Company will not engage in the planned construction of a hotel and convention center at the Bossier Property. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of businesses acquired. Based on Rule 11-01(d) of Regulation S-X and its guidance in evaluating if a "business" has been acquired, the Company has determined that this transaction has not resulted in the acquisition of a "business". Thus, it is not required that financial statements for Crescent City or pro forma financial information, as generally required pursuant to Article 11 of Regulation S-X, be included in this Form 8-K. (b) Pro forma financial information. See Item 7.(a) above. (c) Exhibits 2.1. Second Amended Chapter 11 Plan of Reorganization of Crescent City Capital Development Corporation. In Re: Crescent City Capital Development Corporation, Case No. 95-12735 (TMB) in the United States Bankruptcy Court for the Eastern District of Louisiana filed on March 15, 1996. 2.2. Order Confirming Plan. In Re: Crescent City Capital Development Corporation, Case No. 95-12735 (TMB) in the United States Bankruptcy Court for the Eastern District of Louisiana docketed on April 29, 1996. -6- 4. Indenture dated as of May 13, 1996, $35,000,000 11-1/2% Senior Secured Notes due 1999. 10.1.(1) Stock Purchase Agreement by and between Casino Magic Corp., Jefferson Casino Corporation, C-M of Louisiana, Inc., Capital Gaming International, Inc. and Crescent City Capital Development Corporation dated February 21, 1996. 10.2. Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances by C-M of Louisiana, Inc. dated May 11, 1996. 10.3. Amendment of Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances by Jefferson Casino and First National Association, as Indenture Trustee dated May 13, 1996. 10.4. Pledge and Security Agreement dated as of May 13, 1996 among Casino Magic of Louisiana, Corp. and Jefferson Casino Corporation, as Grantors and First National Association, as Agent for the Benefit of the Holders of 11-1/2% Senior Secured Notes due 1999. 10.5. First Preferred Ship Mortgage dated May 13, 1996 recorded with the National Vessel Documentation Center in Book 96-25 Page/Inst 90. Received by the USCG MS @ New Orleans 96 May 13 PM 3:52. 10.6. Assumption Agreement dated May 13, 1996 entered into among Casino Magic Corp., Jefferson Casino Corp., Capital Gaming International, Inc. and Crescent City Capital Development Corp. 10.7. Promissory Note for the sum of $1,975,000 dated May 13, 1996. -------------------- (1) Incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CASINO MAGIC CORP. Registrant Date: May 24, 1996 /s/ JAMES E. ERNST ---------------- ------------------------------------- James E. Ernst, President and Chief Executive Officer Date: May 24, 1996 /s/ JAY S. OSMAN ---------------- ------------------------------------- Jay S. Osman, Chief Financial Officer and Treasurer (principal financial and accounting officer) -7- EX-2.1 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF LOUISIANA In re ) ) CRESCENT CITY CAPITAL ) Case No. 95-12735 (TMB) DEVELOPMENT CORPORATION, ) ) (Chapter 11) Debtor. ) SECOND AMENDED CHAPTER 11 PLAN OF REORGANIZATION OF CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION BRONFIN & HELLER, LLC Jan M. Hayden (La. Bar #6672) Robyn J. Spalter (La. Bar #21116) 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130- 6101 (504) 568-1888 Attorneys for Debtor Dated: March 15, 1996 IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF LOUISIANA In re ) ) CRESCENT CITY CAPITAL ) Case No. 95-12735 (TMB) DEVELOPMENT CORPORATION, ) ) (Chapter 11) Debtor. ) SECOND AMENDED CHAPTER 11 PLAN OF REORGANIZATION OF CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION The Debtor, Crescent City Capital Development Corporation ("Debtor" or "Crescent City") proposes the following plan of reorganization pursuant to chapter 11 of the Bankruptcy Code. This plan amends and supersedes all prior plans proposed by the Debtor in this case. ARTICLE I DEFINITIONS A. Defined Terms. As used herein, all terms shall have the meanings as defined in the United States Bankruptcy Code except as specifically modified herein or if such meaning shall be wholly inconsistent with the use of such term in this plan. The following terms shall have the respective meanings specified below (such meaning to be equally applicable to both the singular and the plural, and masculine and feminine forms of the terms defined): 1.1. Administrative Reserve means the reserve to be established and maintained by Liquidating Trust in a segregated interest-bearing account with a major money center bank into which Liquidating Trust will, from time to time, deposit Cash to, among other things, fund the operating expenses of Liquidating Trust, as provided in Article VI(A) of the Plan. 1.2. Allowance Date means the date on which a Claim becomes an Allowed Claim. 1.3. Amended By-Laws means the by-laws of Reorganized Crescent City, as amended and restated as of the Effective Date, which shall be a Plan Document. 1.4. Amended Certificate of Incorporation means the certificate of incorporation of Reorganized Crescent City, as amended and restated as of the Effective Date, which shall be a Plan Document. 1.5. Avoidance Action Recoveries means any recoveries by the Debtor or Liquidating Trust of money, property, or other value of any kind whatsoever (including reduction or disallowance of a claim amount), on account of rights of recovery held by the Debtor under 11 U.S.C. Section 547 and applies to rights of recovery of transfers made directly by any affiliates of the debtor, including but not limited to River City Joint Venture. 1.6. Avoidance Action Rights means any rights of recovery by the Debtor or Liquidating Trust of money, property, or other value of any kind whatsoever (including reduction or disallowance of a claim amount), on account of rights of recovery, held by Debtor, under 11 U.S.C. Section 547 and applies to rights of recovery of preferential transfers made directly by the debtor and by any affiliate of the debtor, including but not limited to River City Joint Venture. 1.7. Bally & IGT Claims means all Claims of Bally Gaming, Inc. and International Game Technology Corp. or their respective successors, assigns, affiliates or agents arising in connection with the acquisition by the Debtor of certain slot machines and other coin-operated gaming devices to be operated on the Riverboat. 1.8. Bankruptcy Court means the United States Bankruptcy Court for the Eastern District of Louisiana having jurisdiction over the Reorganization Case and, to the extent of any reference made pursuant to 28 U.S.C. Sec. 157, the unit of such District Court pursuant to 28 U.S.C. Sec. 151. 1.9. Bankruptcy Case means that case entitled In re Crescent City Capital Development Corporation currently pending in the Eastern District Court of Louisiana and bearing case no. 95-12735(TMB). 1.10. Bondholder means the holder of a Secured Note or, in the alternative, the duly authorized agent of such holder. 1.11. Bondholder Claim means the claim filed by the Indenture Trustee, on behalf of all Bondholders, for all amounts due under the Debtor's guarantee of amounts due under the Indenture, which Claim shall, upon the Effective Date, be deemed an Allowed Claim for $142 million. 1.12. Business Day means any day other than Saturday, Sunday or "legal holiday" as such term is defined in Bankruptcy Rule 9006(a). 1.13. Cash means lawful currency of the United States of America. 1.14. Cash Distribution Date means (a) the forty fifth (45th) day after the Effective Date, and (b) the twentieth (20th) day after the end of the first full fiscal quarter after the Effective Date and the twentieth (20th) day after the end of each fiscal quarter thereafter, subject, however, to the limitations set forth in Article VIII(A)(4) and any other provisions of the Plan. 1.15. CGII means Capital Gaming International, Inc., a New Jersey corporation and the Debtor's parent corporation. 1.16. CGII Claim means all Claims (other than DIP Financing Claims or other Administrative Claims) against the Debtor held by CGII. 1.17. Closing means the closing of the transaction contemplated by the Magic Agreement. 1.18. Commencement Date means July 26, 1995, the date on which an involuntary Reorganization Case was commenced against the Debtor. 1.19. Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on its docket. 1.20. Convenience Claim means any General Unsecured Claim against the Debtor that is equal to or less than $5,000, or those Claims in excess of $5,000 as to which the holder thereof elects, in writing on its ballot to accept or reject the Plan or otherwise in writing on or before the Effective Date, to reduce such Claim to $5,000 in accordance with Article III(E)(Class 3A)(4) concerning treatment of General Unsecured Claims. For purposes of defining a Convenience Claim and qualifying for the treatment afforded holders of Convenience Claims, all General Unsecured Claims of a single holder shall be aggregated, deemed, and treated as a single Claim; provided, however, those holders of General Unsecured Claims who acquired such General Unsecured Claims from different entities shall have their General Unsecured Claims aggregated only to the extent such Claims would have been aggregated in the hands of the original holder. 1.21. Creditors' Committee means the Statutory Committee of Unsecured Creditors appointed in the Bankruptcy Case pursuant to Section 1102(a) of the Bankruptcy Code, as presently or hereafter constituted. 1.22. Debtor means Crescent City Capital Development Corp., a Louisiana corporation. 1.23. DIP Financing Claims means all Administrative Claims arising in connection with money borrowed or credit incurred by the Debtor under Sec. 364 of the Bankruptcy Code from CGII, Purchaser, Mirage or any other Person. 1.24. Disputed Claim means a Claim (or portion thereof) as to which: (a) a proof of Claim has been filed, or deemed filed, under applicable law or order of the Bankruptcy Court, with the Bankruptcy Court; (b) an objection has been timely filed; and (c) such objection has not been: (i) withdrawn, (ii) overruled or denied in whole by a Final Order, or (iii) granted in whole or part by a Final Order: provided, however, the Bankruptcy Court may estimate a Disputed Claim for purposes of allowance pursuant to Section 502(c) of the Bankruptcy Code; provided also however, that any claim expressly allowed under this Plan cannot be a Disputed Claim or the subject of an objection. For purposes of the Plan, a Claim shall be considered a Disputed Claim to the extent it is disputed if: (x) before the time that an objection has been or may be filed, the amount of the Claim specified in the Proof of Claim exceeds the amount of any corresponding Claim scheduled by the Debtor in the Schedules: (y) there is a dispute as to classification of the Claim; or (z) the Claim is unliquidated. 1.25. Disputed Claims Reserve means the reserve established pursuant to Article VI(B) in an amount equal to the sum of (i) the aggregate of all Disputed Designated Administrative Claims, Disputed Priority Claims, Disputed Priority Tax Claims, and Disputed Secured Claims, (ii) the amount of Cash that would have been distributable, from time to time, under the Plan on account of Disputed General Unsecured Claims and Convenience Claims had such Claims been Allowed Claims, and (iii) any net earnings in respect thereof. 1.26. Effective Date means the date that the Plan is consummated which shall be simultaneous with the Closing. 1.27. Fee Request means any Administrative Claim for compensation or reimbursement of expenses pursuant to Sections 327, 328, 329, 330, 331, or 503(b) of the Bankruptcy Code in connection with an application made to the Bankruptcy Court in the Bankruptcy Case. 1.28. Final Order means an order or judgment of the Bankruptcy Court or other court of competent jurisdiction which may hear appeals from the Bankruptcy Court which having not been reversed, modified or amended, and not being stayed, and the time to appeal from which or to seek review or rehearing or petition for certiorari from which having expired without an appeal or application for review or rehearing having been filed, has become final and is in full force and effect. 1.29. General Unsecured Claim means any Allowed Claim against the Debtor, other than a Bondholder Claim, Secured Claim, Administrative Claim, Priority Claim, Priority Tax Claim, CGII Claim, Subordinated Unsecured Claim or Convenience Claim. 1.30. Grand Palais means Grand Palais Riverboat, Inc., a Louisiana corporation. 1.31. Indenture means the Indenture governing the Secured Notes, dated February 17, 1994, as amended, between CGII, as issuer, the guarantors thereunder, and the Indenture Trustee. 1.32. Indenture Trustee means First Trust National Association, as indenture trustee under the Indenture, and any successor or assign thereof. 1.33. Institutional Note Holders' Steering Committee means that committee consisting of Bondholders who hold a substantial principal amount of the Secured Notes and have filed, in this case, a statement pursuant to Bankruptcy Rule 2019(a). 1.34. Interest means, except as expressly otherwise specified in the Plan, the interest or interest equivalent payable on any Claim calculated as provided for in any agreement concerning such Claim which contains an enforceable provision for the payment of interest, or, in the absence of any such provision, at the Legal Rate. 1.35. Legal Rate means the rate of interest on outstanding judgments of the courts of the State of Louisiana as prescribed by Louisiana Civil Code article 2924. 1.36. License means the gaming license issued by the Louisiana State Gaming Commission on or about April 4, 1994 in favor of the Debtor. 1.37. Liquidating Trustees means the Persons selected by the Creditors' Committee and approved by the Bankruptcy Court who shall be the co-trustees of Liquidating Trust. 1.38. Liquidating Trust means Crescent City Liquidating Trust, a New Jersey trust or trust of such state as the Debtor and the Unsecured Creditors Committee shall select, which shall be established as of the Effective Date, for the single purpose of implementing and administering the Plan in accordance with Section 1142(a) of the Bankruptcy Code. 1.39. Magic Agreement means the Agreement by and between CGII, the Debtor, Casino Magic Corporation, Jefferson Casino Corporation and C-M of Louisiana, Inc., dated February 21, 1996, pursuant to which Casino Magic Corporation, through Jefferson Casino Corporation or another of its wholly owned subsidiaries to which the Agreement is assigned, has agreed to purchase the New Common Stock in conjunction with the consummation of the Plan, a copy of which is attached hereto as Exhibit "1". 1.40. Magic Cash Consideration, is estimated to be $15,000,000.00, less the Magic Deferred Cash. 1.41. Magic Closing Cash means Magic Cash Consideration less the balance of principal and interest due Magic at closing on the Magic DIP Financing Claim, estimated at $1,000,000.00, and to be retained by Magic from the Magic Cash Consideration and applied to pay its DIP Financing Claim. 1.42. Magic Consideration means the Magic Cash Consideration, the Magic Non-cash Consideration, and the Magic Deferred Cash. 1.43. Magic Deferred Cash means the Cash, in the amount of $500,000.00, to be held in escrow, pursuant to the Magic Agreement, for a period of one (1) year after Closing as security for the Debtor's and CGII's indemnities under the Magic Agreement, and which, upon the expiration of the one (1) year escrow period, the amount in the escrow, if any, will be disbursed to CGII in accordance with Paragraph 3 of the Magic Agreement and this Plan. 1.44. Magic DIP Financing Claim shall mean that Claim of Purchaser arising out of money borrowed or credit incurred by Debtor under Sec.364 of the Bankruptcy Code. 1.45. Magic Non-Cash Consideration means all non-cash consideration to be delivered to, or for the benefit of, the Debtor pursuant to the Magic Agreement, including without limitation, Magic's obligation to assume or otherwise satisfy the Bally and IGT Claims (up to an aggregate total not to exceed $6,500,000.00) and the Magic Notes. 1.46. Magic Notes means the $35,000,000.00 of notes which shall be issued by Reorganized Crescent City and guaranteed by Jefferson Casino Corporation and C-M of Louisiana, Inc., each a wholly owned subsidiary of Casino Magic Corporation, under the Mirage Indenture. 1.47. Mirage shall mean Mirage Resorts, Inc. or any of its affiliates, subsidiaries, related entities, successors and assigns, and their respective officers, directors and/or agents. 1.48. Mirage Agreement shall mean the Agreement among CGII, the Debtor and Mirage pursuant to which Mirage was to purchase the New Common Stock, and which Agreement formed the basis for Debtor's First Amended Plan of Reorganization. 1.49. Mirage Claim means any and all claims which the Debtor or debtor in possession may have, whether arising prior to or after the filing of the petition for relief herein against Mirage, including but not limited to any rights of setoff or defenses to the payments of any claims asserted by Mirage against Debtor or its property. 1.50. Magic Indenture shall mean the Indenture governing the Magic Notes, dated as of the Effective Date, between Reorganized Crescent City, as issuer, and the guarantors, thereunder, in substantially the same form as attached hereto as Exhibit "2". 1.51. Mirage Recovery shall mean any and all monies recovered, paid, credited, set off or otherwise received by the Debtor , debtor-in-possession or the Liquidating Trust on behalf of the Mirage Claim. 1.52. Net Cash Proceeds means only those Net Proceeds received in Cash. 1.53. Net Proceeds means all Cash and other property received upon the sale, exchange or other disposition of any property, less all direct and indirect costs incurred in connection with such disposition, including, without limitation, fees, commissions, legal fees and expenses. 1.54. New Common Stock means all authorized common stock of Reorganized Crescent City to be issued on the Effective Date to the Purchaser (which shall constitute all the outstanding equity interests in Reorganized Crescent City), pursuant to the Restated Certificate of Incorporation and Article V(A) and XV of the Plan. 1.55. Plan means this plan under chapter 11 of the Bankruptcy Code, as the same may be altered, amended, or modified from time to time. 1.56. Plan Document(s) means the document(s) that aid in effecting the Plan and that are specifically identified herein as Plan Documents or which, in the view of the Debtor, become necessary or appropriate to effectuate the Plan, which documents, to the extent feasible, shall be filed on or prior to the Confirmation Hearing. 1.57. Priority Claim means any Claim to the extent entitled to priority in payment under Sections 507(a)(2)-(7) or 507(a)(9) of the Bankruptcy Code. 1.58. Priority Tax Claim means any Claim to the extent entitled to priority in payment under Section 507(a)(8) of the Bankruptcy Code. 1.59. Pro Rata means a number (expressed as a percentage) equal to the proportion that an Allowed Claim in a particular Class bears to the aggregate amount of Allowed Claims in such Class as of the date of determination. Solely for the purpose of calculating the amount to be distributed to holders of Allowed General Unsecured Claims and reserved for the holders of Disputed General Unsecured Claims on a Cash Distribution Date, Liquidating Trust shall treat each Disputed General Unsecured Claim as an Allowed Claim in the amount of such Disputed General Unsecured Claim unless such of Disputed General Unsecured Claims have been estimated by the Bankruptcy Court. 1.60. Purchaser means Casino Magic Corporation, through Jefferson Casino Corporation or another of its wholly owned subsidiaries to which the Magic Agreement is assigned. 1.61. Reallocation Date means the tenth (10) Business Day prior to any Cash Distribution Date. 1.62. Reorganized Crescent City means the Debtor from and after the Effective Date. 1.63. Residual Property means all of the property of the Debtor's estate immediately prior to Closing, other than the Riverboat Assets. "Residual Property" includes, without limitation, the Debtor's interest in the River City JV or property previously owned or held by River City JV, all avoidance actions specified in Article V(G) and other causes of action, claims of the Debtor against Grand Palais and its affiliates, all contract rights of the Debtor including its rights under the Magic Agreement, the Mirage Claim and the Mirage Recovery, provided however, Residual Property does not include the Magic Consideration, which shall be treated in accordance with the Plan. 1.64. Riverboat means the M/V Crescent City Queen, the riverboat owned by the Debtor. 1.65. Riverboat Assets means, collectively, the Riverboat, the License, certain slot machines and other coin-operated gaming devices acquired by the Debtor from Bally Gaming, Inc. and International Game Technology Corp., and such other items of personal property used in connection with the operation of the Riverboat as may be agreed upon between the Debtor and the Purchaser, and as evidenced on the inventory list attached to the Magic Agreement as Exhibit "1", specifically excepting (i) any equipment licensing or other agreements provided by Gaming Systems International and (ii) the Crescent City Capital Escrow, as hereinafter defined, all monies therein and all proceeds (in whatever form) thereof. 1.66. River City JV means the River City Joint Venture, a Louisiana general partnership, comprised of the Debtor and Grand Palais, each as general partner. 1.67. Schedules means the schedules of assets and liabilities filed by the Debtor with the Bankruptcy Court in accordance with Section 521(1) of the Bankruptcy Code, as amended from time to time. 1.68. Secured Notes means, collectively, the 111/2 Secured Notes due 2001, issued by CGII pursuant to the Indenture. 1.69. Settlement Amount means the difference, in Cash, between the Magic Closing Cash and $6,750,000.00 plus the difference, in Magic Notes, between the Magic Notes and $28,000,000 of Magic Notes; the Settlement Amount is to be paid by the Indenture Trustee from the Magic Consideration to the Liquidating Trust. 1.70. Subordinated Unsecured Claim means: (a) an unsecured Claim against the Debtor, proof of which is tardily filed under Section 501(a) of the Bankruptcy Code; (b) any Claim against the Debtor whether a Secured Claim or Unsecured Claim, for any fine, penalty or forfeiture, or for multiple exemplary or punitive damages to the extent such fine, penalty, forfeiture, or damages are not compensation for actual pecuniary loss suffered by the holder of such Claim; (c) any Claim against the Debtor arising from rescission of a purchase or sale of a security of the Debtor or of an affiliate of the Debtor, for damages arising from the purchase or sale of such security, or for reimbursement or contribution allowed under Section 502 of the Bankruptcy Code on account of such a Claim; and (d) any Claim against the Debtor subordinated under Section 510 of the Bankruptcy Code or under other applicable law to General Unsecured Claims by order of the Bankruptcy Court. 1.71. Total [ ] Claims means, with respect to a particular Class of Claims, the aggregate dollar amount of (a) all Allowed Claims, plus (b) the Face Amount of all Disputed Claims, in such Class. 1.72. Voting Deadline means the date by which holders of impaired Claims receiving distributions under the Plan must vote to accept or reject the Plan. B. Other Terms. The words "herein," "hereof," "hereto," "hereunder," and others of similar inference refer to the Plan as a whole and not to any particular section, subsection, or clause contained in the Plan unless otherwise specified herein. A term used herein or elsewhere in the Plan that is not defined herein shall have the meaning ascribed to that term, if any, in the Bankruptcy Code or Bankruptcy Rules. The word "including" shall mean including, without limitation. The headings in the Plan are only for convenience of reference and shall not limit or otherwise affect the provisions of the Plan. C. Exhibits. All exhibits to the Plan are incorporated into and are a part of the Plan as if set forth in full herein. ARTICLE II GENERAL DESCRIPTION OF THE PLAN A. The Plan Generally. Under the Plan, the Debtor will sell the Riverboat Assets (by reissuing its common stock) to the Purchaser for the Magic Consideration. The Magic Closing Cash and the Magic Notes will be paid to the Indenture Trustee, on behalf of the Bondholders, who claims a perfected security interest in such proceeds. Upon receipt of the Magic Closing Cash and the Magic Notes, the Indenture Trustee shall pay the Settlement Amount to Liquidating Trust in accordance with Article II(B)(1) below, to be distributed as provided herein. In addition, all of the Residual Property will be transferred to Liquidating Trust and liquidated or otherwise disposed of for the benefit of Debtor's Class 3A Creditors in accordance with the terms of the Plan. B. Payment of Settlement Amount. 1. Payment of Magic Closing Cash. Upon receipt of the Magic Closing Cash, the Indenture Trustee, on behalf of the Bondholders, shall retain the sum of $6,750,000.00 for distribution to Bondholders pursuant to the terms of the Indenture and shall pay the remaining balance of the Magic Closing Cash (estimated to be $6,750,000.00 less any amount by which the total balance of principal and interest due to pay Magic's DIP Financing Claims and/or any other DIP Financing Claims, excluding the DIP Financing Claim of Mirage, in full, exceeds $1,000,000.00) to Liquidating Trust to be distributed and/or reserved for Disputed Claims in accordance with the terms of this Plan. 2. Payment of Magic Notes. Upon receipt of the Magic Notes, the Indenture Trustee, on behalf of the Bondholders, shall retain $28,000,000.00 of the Magic Notes, for distribution to the Bondholders in accord with the Indenture and shall assign the remaining $7,000,000.00 of Magic Notes to the Liquidating Trust in accordance with the terms of this Plan. ARTICLE III CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS A. Summary. The categories of Claims and Equity Interests listed below classify Claims and Equity Interests for all purposes, including voting, confirmation, and distribution pursuant to the Plan. CLASS STATUS Class 1: Bondholder Claim Impaired - entitled to vote Class 2: Secured Claims Impaired - entitled to vote Class 3A: General Unsecured Claims Impaired - entitled to vote Class 3B: Convenience Claims Impaired - entitled to vote Class 3C: CGII Claims Impaired - entitled to vote Class 4: Subordinated Unsecured Claims Impaired - deemed to reject Class 5: Common Stock Impaired - deemed to reject Class 6: Mirage Administrative/ Secured Claim Unimpaired - not entitled to vote B. Administrative Claims. Subject to the applicable bar date provisions contained in Article X(B), each holder of an Allowed Administrative Claim shall be paid on account of such Claim in full, in Cash, from the Liquidating Trust, on the later of: (a) the Effective Date (or as soon thereafter as practicable), or (b) the first Cash Distribution Date immediately following the date on which such Administrative Claim becomes an Allowed Claim, except to the extent that the holder of an Allowed Administrative Claim agrees to a different treatment; provided, however, that Administrative Claims that are Allowed Claims representing obligations incurred in the ordinary course of business by the Debtor will be paid by Liquidating Trust when due in the ordinary course of business; and, provided further, however, that Administrative Claims for payment of compensation or reimbursement of expenses pursuant to Sections 330, 331 and 503(b) of the Bankruptcy Code shall be paid within (3) Business Days of the entry of an order by the Bankruptcy Court authorizing the payment of such fees and expenses. Payments to the holders of the Administrative Claims shall be made from the Net Cash Proceeds of one or more of the following sources, in the following order of priority; the Settlement Amount and the Residual Property. C. Priority Claims. Each holder of an Allowed Priority Claim shall be paid on account of such Claim in full, in Cash, from the Liquidating Trust, on the later of (a) the Effective Date (or as soon thereafter as is practicable), or (b) the first Cash Distribution Date immediately following the date on which such Priority Claim becomes an Allowed Claim, or, alternatively, upon such other terms as may be agreed upon by and between the holder of such Claim and the Debtor or Liquidating Trust, as the case may be. Payments to the holders of the Priority Claims shall be made from the Net Cash Proceeds of one or more of the following sources, in the following order of priority; the Settlement Amount and the Residual Property. D. Priority Tax Claims. Each holder of an Allowed Priority Tax Claim shall be paid on account of such Claim in full, in Cash, from the Liquidating Trust, on the later of (a) the Effective Date (or as soon thereafter as is practicable), or (b) the first Cash Distribution Date immediately following the date on which such Priority Tax Claim becomes an Allowed Claim, or, alternatively, upon such other terms as may be agreed upon by and between the holder of such Claim and the Debtor or Liquidating Trust, as the case may be. Payments to the holders of the Priority Tax Claims shall be made from the Net Cash Proceeds of one or more of the following sources, in the following order of priority, the Settlement Amount and the Residual Property. E. Classification and Treatment. The Allowed Claims against, and Equity Interests in, the Debtor, other than Administrative Claims, Priority Claims, and Priority Tax Claims, shall be classified and receive the treatment specified below. Class 1: 1. Classification: Class 1 consists of the Bondholder Claim. 2. Allowance of Bondholder Claim: On the Effective Date, the Bondholder Claim shall be deemed an Allowed Class 1 Claim in the amount of $142 million. The Bondholder Claim shall not, after the Effective Date, be subject to, or the subject of, any objection, claim, counterclaim, set off, defense, action or proceeding by the Debtor, Reorganized Crescent City, any statutory committee, or any other party in interest, whether in law or equity. To the extent any such objection, action or proceeding is pending on or after the Effective Date, such action, objection or proceeding shall be deemed withdrawn and the Bondholders may take such steps as they deem appropriate to cause the Bankruptcy Court's records to reflect such withdrawal (including, without limitation, seeking ex parte relief). 3. Treatment: As provided in Article II(B) of the Plan, upon receipt of the Magic Closing Cash and the Magic Notes, the Indenture Trustee, on behalf of the Bondholders, shall retain (i) Cash, in the amount of $6,750,000.00 and (ii) $28,000,000.00 of Magic Notes, all, and both, free and clear of any and all liens, claims, privileges and encumbrances held or asserted by any person other than the Indenture Trustee, for distribution to the Bondholders pursuant to the terms of the Indenture, and the Indenture Trustee shall immediately (i) pay the remaining balance of the Magic Closing Cash (estimated to be $6,750,000.00, less any amount by which the total balance of principal and interest due to pay Magic's DIP Financing Claims in full exceeds $1,000,000.00) and (ii) assign the remaining Magic Notes, in the amount of $7,000,000, to Liquidating Trust for distribution and/or application in accordance with this Plan. The Indenture Trustee shall retain the sum of $7,250,000.00 in Magic Closing Cash and $28,000,000.00 in Magic Notes, to be paid to Class 1 Claimants in accordance with the terms of the Indenture. Additionally, any amounts to be paid to CGII from the Magic Deferred Cash, as provided in this Plan, shall be subject to the security interest of the Indenture Trustee. Any amounts to be paid to CGII from the Magic Deferred Cash, shall be deposited by Purchaser in a segregated interest bearing account designated by the Indenture Trustee at First Bank National Association, subject in all respects to all of the first priority liens and security interests of the Indenture Trustee, without any further action, and shall not be disbursed absent the mutual consent of CGII and the Indenture Trustee, or by an order of a court of competent jurisdiction. Other than as set forth herein, the Class 1 claimants (including the Indenture Trustee, the Bondholders, and anyone deriving or claiming rights under the Secured Notes, the Indenture, or any security therefore), shall not be entitled to participate as a Class 2, 3A or 3B Claimant under this Plan on account of such claim. 4. Release of Defenses: As of the Effective Date, the Debtor, Debtor in Possession, Liquidating Trust, all Creditors and equity security holders of the Debtor shall release and waive: (i) all defenses to allowance of the Bondholder Claim in the Bankruptcy Case, and (ii) all claims and causes of action, if any, against the Bondholders or the Indenture Trustee based upon or related to the Debtor's execution of its guarantee of CGII's obligations under the Indenture, or based upon any payments made to the Indenture Trustee by the Debtor. Nothing herein shall constitute a waiver of any defenses to the allowance of the claim of the Bondholders or the Indenture Trustee against CGII in any other bankruptcy proceeding. Except with respect to the Debtor, nothing in this Plan shall impair or otherwise affect any rights, liens, claims, or interests of the Indenture Trustee or any Bondholder under the Notes, the Indenture, or any related documents, including, but not limited to, any rights, liens, claims or interests against CGII or any guarantor of CGII's obligations. 5. Voting: Class 1 is Impaired by the Plan and the holder of Claims in Class 1 are entitled to vote to accept or reject the Plan. Class 2: Secured Claims 1. Classification: Class 2 consists of secured claims. 2. Determination of Allowed Secured Claim: Prior to the Effective Date, the Debtor may seek and obtain a determination of the Allowed Secured Claim of any Creditor asserting a Secured Claim pursuant to the Bankruptcy Code and the Bankruptcy Rules. 3. Treatment: Except as provided in Article V(A) of the Plan, as to each Allowed Secured Claim and in complete satisfaction of such Claim, at the Debtor's option, either: (i) (A) any default, other than of the kind specified in Section 365(b)(2) of the Bankruptcy Code, shall be cured, provided that any accrued and unpaid interest, if any, which the Debtor may be obligated to pay with respect to such default shall be simple interest at the contract rate and not at any default rate of interest; (B) the maturity of such Claim shall be reinstated as the maturity existed before any default; (C) the holder of such Claim shall be compensated for any damage incurred as a result of any reasonable reliance by the holder on any provision that entitled the holder to accelerate maturity of such Claim; and (D) the other legal, equitable, or contractual rights to which the Claim entitles the holder shall not otherwise be altered; provided, however, that as to any Allowed Secured Claim which is a nonrecourse claim and exceeds the value of the collateral securing the Claim, the collateral may be sold at a sale at which the holder of such Claim has an opportunity to bid; (ii) on the Effective Date or such other date as may be agreed upon by the Debtor or Liquidating Trust, as the case may be, and the holder of such Allowed Secured Claim, the Debtor or Liquidating Trust, as the case may be, shall abandon the collateral securing such Claim to the holder thereof in full satisfaction and release of such Claim. The Claim held by Jones Casino Supplies, Inc. ("Jones") shall be partially satisfied, based upon and in consideration of the sale free and clear of all liens and other interests pursuant to 11 U.S.C. 363(f), to Jones Casino Supplies, Inc., of the slot machines and other gaming equipment manufactured by Sigma Games, Inc. ("Sigma"), and Advance Cart Technology, Inc. ("ACT") for a total credit of $204,754.67 ($156, 387.20 for Sigma equipment and $48,367.47 for ACT equipment), to be applied in reduction of the total Secured Claim of Jones Casino Supplies, Inc. In the alternative, a partial credit shall be granted following the abandonment of the slot machines and other equipment and supplies manufactured by Sigma and ACT to Jones to allow it to foreclose its security interest, and based upon the Court's determination as to the amount of the secured portion of the Jones Claims, and the security interest and liens held by Jones shall be preserved and retained by Jones pending the Court's determination and the foreclosure; or (iii) the holder of such Claim shall be paid, on account of such Allowed Secured Claim: (a) in full, in cash, after the later of (i) the Effective Date or (ii) the first Cash Distribution Date after the date such Secured Claim becomes an Allowed Claim; or, if applicable, (b) upon such other terms as may be agreed to between the Debtor or Liquidating Trust, as the case may be, and the holder of such Allowed Secured Claim; provided, however, that as to the Bally & IGT claims, upon such other terms as may be agreed to between Reorganized Crescent City or the Purchaser, as the case may be, and the respective holders of the Bally & IGT Claims. The security interest of Bally and IGT shall survive confirmation until such claims are paid. The security interests of any other secured claimant, shall be preserved and retained, to survive confirmation, in either the specific collateral itself, provided said collateral is not part of the Riverboat Assets, or preserved and attaching to the proceeds that constitute the Settlement Amount and/or the Residual Property, if the collateral is sold free and clear of liens and interests, until paid. (iv) Any Allowed Class 2 Claim found by Final Order to be secured by a lien against any of the Riverboat Assets to be transferred to Purchaser and to be senior to the lien securing the Class 1 Claims affecting the Riverboat Property shall be paid in cash on the Effective Date or at such later date as such determination is made by Final Order. Payments to the holders of any such Class 2 Claims shall be made from the Net Cash Proceeds of one or more of the following sources, in the following order of priority; the Settlement Amount and the Residual Property. Any creditor determined by final order to have an allowed Class 2 Secured Claim shall be paid to the extent of the value of its collateral, with the creditor retaining its security interest and lien, either as to the specific collateral, provided said collateral is not part of the Riverboat Assets, or preserved and attaching to the proceeds only that constitute the Settlement Amount and the Residual Property, until the court's determination and payment, and shall have an unsecured claim for any deficiency which shall then be recognized, and the creditor paid its pro-rata distribution or share of the Settlement Amount as set forth below, for the Class 3 Allowed General Unsecured Claims; provided however, that notwithstanding anything contained in the Plan (including specifically, without limitation, subsection 3(iii) and subsection 3(iv) hereof), the rights, if any, of the Board of Commissioners of the Port of New Orleans (the "Board") under that certain escrow agreement between the Board and the Debtor and the lien or security interest, if any, in favor of the Board, pursuant to the Escrow Agreement and/or Bert Infrastructure Reimbursement Agreement (as amended) between the parties, including without limitation, any valid, perfected and unavoidable lien or security interest the Board has on or in that certain escrow account numbered 785-1061190 at the First National Bank of Commerce, denominated as "Crescent City Capital Escrow" and all monies therein and all proceeds (in whatever form) thereof, shall survive confirmation. 4. Voting: Class 2 is impaired by the Plan and each holder of a Claim in Class 2 shall be entitled to vote to accept or reject the Plan. Class 3A: General Unsecured Claims 1. Classification: Class 3A consists of Allowed General Unsecured Claims. 2. Treatment: Each holder of an Allowed General Unsecured Claim shall receive its Pro Rata share of the remainder of the Net Cash Proceeds of the Settlement Amount, on account of their beneficial interests in the Liquidating Trust, after payment or reserve for all (i) Administrative Claims, (ii) Priority Claims, (iii) Priority Tax Claims (iv) Allowed Class 3B Claims, (v) Allowed Class 2 Claims found to be secured by a lien on any of the Riverboat Assets and superior to the lien of the Class 1 Claimant, and (vi) establishment of a reserve for payment of operating expenses of Liquidating Trust (which initial reserve is not to exceed $1,000,000.00). In addition to distributions from the Settlement Amount, Class 3A Claimants shall receive Pro Rata distributions from all Net Cash Proceeds generated from the Residual Property. However, there will be no distribution of the Net Cash Proceeds generated from the Residual Property unless and until all payments and/or reserves required under this paragraph have been made. 3. Voting: Class 3A is impaired and the holders of Claims in Class 3A are entitled to vote to accept or reject the Plan. 4. Election To Be Treated As Holder Of Convenience Claim: On or before the Voting Deadline, any holder of an Allowed General Unsecured Claim may elect (by election on the ballot to be sent to all holders of Allowed General Unsecured Claims, or thereafter until the Effective Date, by other written election in form and substance satisfactory to the Debtor) to voluntarily reduce its Claim to $5,000, and receive the same treatment as holders of Claims in Class 3B. 5. Claims With Recourse to Insurance Coverage: To the extent the holder of any General Unsecured Claim has recourse to any liability insurance policy covering tort claims issued to or for the benefit of the Debtor, the holder of such Claim must first, to the satisfaction of the Liquidating Trustees, use its best efforts to collect its Allowed Claims from the insurance carrier. Such collection will reduce the amount of such holder's Allowed Claim by the amount of any payment received from such insurance carrier. Any remaining unpaid portion of such Allowed General Unsecured Claim will be treated under the other provisions applicable to Allowed General Unsecured Claims. In the event the Liquidating Trustees determine that the holder of any such Claim has not used its best efforts to collect the proceeds of such insurance coverage, such Claim shall be treated as a Disputed Claim until the Liquidating Trustees determine that such best efforts have been made. Class 3B: Convenience Claims 1. Classification: Class 3B consists of Convenience Claims. 2. Treatment: Each holder of an Allowed Convenience Claim shall be paid forty (40%) percent of the Allowed amount of such Claim, in Cash, on the later of (a) the Effective Date (or as soon thereafter as is practicable), or (b) the first Cash Distribution Date immediately following the date on which such Convenience Claim becomes an Allowed Convenience Claim. 3. Voting: Class 3B is impaired and the holders of Claims in Class 3B are entitled to vote to accept or reject the Plan. Class 3C: CGII Claim 1. Classification: Class 3C consists of the CGII Claim. 2. Treatment: On the Effective Date, the Class 3C Claim shall be allowed in the amount of $5,000,000 and the holder of the Class 3C Claim shall receive on account of such Claim, the Magic Deferred Cash pursuant to the Magic Agreement. The payment of the Magic Deferred Cash shall be subject to the security interest of the Indenture Trustee. Any amounts of the Magic Deferred Cash to be paid to CGII, pursuant to this Plan and the Magic Agreement, shall be deposited by Purchaser in a segregated interest bearing account at First Bank National Association, subject in all respects to all of the first priority liens and interests of the Indenture Trustee, without any further action, and shall not be disbursed absent the mutual consent of CGII and the Indenture Trustee, or by an order of a court of competent jurisdiction. 3. Voting: Class 3C is impaired and the Holder of Claims in Class 3C is entitled to vote to accept or reject the Plan. Class 4: Subordinated Unsecured Claims 1. Classification: Class 4 consists of Subordinated Unsecured Claims. 2. Treatment: Holders of Subordinated Unsecured Claims shall receive no distribution under the Plan. There shall be a presumption that excusable neglect does not exist in respect of those Claims. 3. Voting: Class 4 is impaired and is deemed to reject the Plan. Class 5: Equity Interests 1. Classification: Class 5 consists of all Equity Interests. 2. Treatment: Holders of Equity Interests shall receive no distribution under the Plan. All Equity Interests will be canceled and rendered void and of no further force or effect on the Effective Date. 3. Voting: Class 5 is impaired and is deemed to reject the Plan. Class 6: Mirage Administrative/Secured Claim 1. Classification: Class 6 consists of the Mirage Administrative/Secured Claim. 2. Treatment: Pending resolution of Debtor's objection to Mirage's DIP Financing Claim, the entire sum of $2,000,000.00, plus the estimated amount of accrued and/or accruing interest for a period of one (1) year after Closing shall be reserved by the Liquidating Trust for the benefit of Mirage. Upon entry of a Final Order allowing the claim of Mirage, a sum equal to the Allowed Claim shall be distributed to Mirage. The balance, if any, shall then be available for distribution to members of other classes of creditors, other than Class 1. Upon entry of a Final Order disallowing the claim of Mirage the entire sum reserved shall be available for distribution to members of other classes of creditors, other than Class 1. 3. Voting: Class 6 is unimpaired and is deemed to have accepted the Plan. ARTICLE IV ACCEPTANCE OR REJECTION OF THE PLAN 1. Voting Classes. Each holder of an Allowed Claim in Classes 1, 2, 3A, 3B and 3C shall be entitled to vote to accept or reject the Plan, unless otherwise ordered by the Court. 2. Deemed Rejection of the Plan. Classes 4 and 5 shall receive no distribution under the Plan and, therefore, are deemed to reject the Plan. The Debtor hereby requests that the Court confirm the Plan over such rejections in accordance with subsection 1129(b) of the Bankruptcy Code. 3. Deemed Acceptance of Plan. Class 6 is unimpaired under the Plan, and, therefore, is deemed to accept the Plan, and thus, will not receive a ballot to vote on the Plan. 4. Confirmability of the Plan. The confirmation requirements of Section 1129 of the Bankruptcy Code must be satisfied with respect to the Debtor and the Plan. If the Bankruptcy Court determines that any provisions of the Plan are prohibited by the Bankruptcy Code, or render the Plan unconfirmable under Section 1129 of the Bankruptcy Code, the Debtor reserves the right to sever such provisions from the Plan, and to request that the Plan, as so modified, be confirmed. 5. Nonconsensual Confirmation. In the event that any of Classes reject the Plan, the Debtor reserves the right to request that the Court confirm the Plan over such rejection in accordance with Section 1129(b) of the Bankruptcy Code. 6. Controversy Concerning Impairment. In the event of a controversy as to whether any Class of Claims or Equity Interests is Impaired under the Plan, the Bankruptcy Court will, after notice and a hearing prior to the Confirmation Date, determine such controversy. ARTICLE V MEANS OF IMPLEMENTATION OF THE PLAN A. Closing of the Magic Agreement. On the Effective Date, Purchaser shall pay the Magic Closing Cash and Magic Notes to the Indenture Trustee for the benefit of the Bondholders, and Purchaser shall receive in exchange therefor 100% of the outstanding shares of New Common Stock of Reorganized Crescent City, as of the Effective Date. Immediately upon receipt of the Magic Closing Cash and Magic Notes, and after deducting the sum of $7,250,000.00 from the Magic Closing Cash and $28,000,000.00 from the Magic Notes, for distribution to Bondholders in accordance with the terms of the Indenture, the Indenture Trustee shall pay the Settlement Amount to the Liquidating Trust. At Closing, Purchaser or Reorganized Crescent City shall assume or shall otherwise satisfy the Bally & IGT Claims, without any cost or expense to the Debtor or Liquidating Trust. B. Cancellation of Equity Interests. On and as of the Effective Date, all Equity Interests, including, without limitation, unexercised rights to acquire shares of stock of the Debtor by way of option, warrant or other legal or contractual rights, shall be automatically canceled and deemed to be void. C. Liquidation of the Assets. On the Effective Date, (a) all of the Residual Property shall be transferred to Liquidating Trust, (b) each holder of an Allowed Claim, to the extent such Claim is not satisfied on the Effective Date, shall receive from Liquidating Trust (or such other party specifically identified) the distributions provided in Article III of the Plan, and (c) Liquidating Trust shall be managed by the Liquidating Trustees in good faith so as to maximize the value of Liquidating Trust's property through the orderly liquidation of such property in a commercially reasonable manner under the continuing supervision of the Bankruptcy Court, as provided by this Plan. D. Corporate Governance and Management of Reorganized Crescent City; Vesting of Assets and Discharge; Capitalization of Reorganized Crescent City; Action Necessary for Riverboat Gaming Commission Approvals. 1. Corporate Governance of Reorganized Crescent City: On and after the Effective Date, the Debtor shall continue in existence as Reorganized Crescent City, a Louisiana corporation governed by the provisions of the Amended Certificate of Incorporation, the Amended By-laws, and Louisiana General Corporation Law. 2. Management of Reorganized Crescent City: On and after the Effective Date, the operation of Reorganized Crescent City shall become the responsibility of its board of directors and management. 3. Vesting of Assets and Discharge: On and after the Effective Date, Reorganized Crescent City may operate its businesses and may use, acquire, and dispose of its property without supervisions or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than as expressly provided herein. The Riverboat Assets shall vest in Reorganized Crescent City free and clear of the claims, liens, charges, encumbrances and interests, except as otherwise provided herein. Except as otherwise provided herein, including the Magic Agreement on and after the Effective Date, Reorganized Crescent City shall not be liable for and shall be discharged from any and all Claims against the Debtor, and all Equity Interests in the Debtor shall be canceled. E. Establishment and Management of Liquidating Trust. 1. Upon confirmation hereof, and effective upon the Effective Date, the three (3) persons identified by the Creditors' Committee prior to the conclusion of the Confirmation Hearing, shall be appointed to act as Co- Liquidating Trustees (the "Liquidating Trustees") of and to administer the Liquidating Trust hereinafter created and to liquidate assets for the benefit of the creditors of the Debtor's estate. The selections of the persons to serve as Liquidating Trustees shall be subject to approval of the Bankruptcy Court. Vacancies occurring after the original appointments shall be governed by the Liquidating Trust documents. The Liquidating Trustees shall be deemed to be the authorized representatives of the Estate for the purpose of and consummation of the Plan pursuant to Sections 1103 and 1123(b)(3)(B) and other applicable sections of the Bankruptcy Code. 2. The Liquidating Trustees shall manage and govern the Liquidating Trust by majority rule. 3. The Debtor hereby declares and establishes a Liquidating Trust, as defined by Treas. Reg. Sec. 301.7701-4(d), (the "Liquidating Trust") for the benefit of the creditors of the Debtor. The Liquidating Trust is organized for the primary purpose of receiving, liquidating, and distributing the cash, claims, and property transferred to the Liquidating Trust (the "Liquidating Trust Property") in accordance with the provisions of this Plan as promptly as is reasonably possible, with no objective to carry on or conduct a for-profit trade or business. Upon transfer of the Liquidating Trust Property to the Liquidating Trust, the Debtor shall retain no interest in the Liquidating Trust Property. 4. The Liquidating Trust Property will be transferred to the Liquidating Trust for the benefit of the creditors. The transfer shall be treated as a transfer to creditors to the extent that the creditors are beneficiaries of the Liquidating Trust. The transfer will be treated as a deemed transfer by the beneficiary-creditors to the Liquidating Trust. The beneficiaries- creditors of the Liquidating Trust will be treated as the grantors and deemed owners of the Liquidating Trust. 5. The Liquidating Trust Property must be consistently valued by the Liquidating Trustees and the beneficiary-creditors and said valuation must be used for all federal income tax purposes. 6. The Liquidating Trustees must file returns for the Liquidating Trust as a grantor trust pursuant to Sec. 1.671-4(a) of the Income Tax Regulations. 7. The Liquidating Trustees' powers shall be limited to recovering, preserving and protecting the Liquidating Trust Property, liquidating the Liquidating Trust Property as promptly as is reasonably possible and distributing all income and proceeds from the liquidation of Liquidating Trust Property in accordance with the terms of the Plan as promptly as is reasonably possible. Except as otherwise inconsistent with the provisions of this Plan, in the exercise of such powers, the Liquidating Trustees, on behalf of the Liquidating Trust, shall be authorized to (i) avoid or recover transfers (including fraudulent conveyances or preferential transfers) of the Debtor's property as may be permitted by Sections 542 through 553 of the Bankruptcy Code or applicable state law, (ii) pursue all claims and causes of action arising from the prepetition activities of the Debtor, whether arising by statute or common law and whether arising under the laws of the United States of America, Louisiana, or any other state having jurisdiction over any claim or controversy pertaining to the Debtor, and whether maintainable against third parties, Affiliates or Insiders of the Debtor,(iii) defend claims, causes of action and other litigation that may adversely affect or impact the Liquidating Trust Property,(iv) contest Claims, (v) file, litigate to final judgment, settle, or withdraw objections to Claims, and (vi) exercise offsets against Claims. All activities of the Liquidating Trustees shall be reasonably necessary to, and consistent with, the accomplishment of the purpose of the Liquidating Trust as set forth in this Plan. The Liquidating Trustees shall make continuing efforts to liquidate and distribute proceeds from the liquidation of Liquidating Trust Property, shall make timely distributions pursuant to the provisions hereof, and shall not unduly prolong the duration of the Liquidating Trust. 8. The Liquidating Trustees shall have full and complete authority to do and perform all acts, to execute all documents and to make all payments and disbursements of funds necessary to carry out the purpose of the Liquidating Trust as set forth in this Plan. The Liquidating Trustees shall make distributions of proceeds from the liquidation of Liquidating Trust Property and income from investments in accordance with this Plan. 9. Any party dealing with the Liquidating Trustees in relation to the Liquidating Trust Property or any part thereof, including, but not limited to, any party to whom Liquidating Trust Property or any part thereof shall be conveyed or contracted to be sold by the Liquidating Trustees, shall not be obligated in any way (i) to see to the application of any purchase money, (ii) to see that the provisions of this Plan or the terms of the Liquidating Trust have been complied with, or (iii) to inquire into any limitation or restriction on the power or authority of the Liquidating Trustees. The power of the Liquidating Trustees to act or otherwise deal with the Liquidating Trust Property shall be absolute as to any party dealing with the Liquidating Trustees in any manner whatsoever in relation to the Liquidating Trust Property. 10. All costs, expenses, and obligations incurred by the Liquidating Trustees in administering this Liquidating Trust or in any manner reasonably connected, incidental or related thereto shall be a charge against the Liquidating Trust Property. The Liquidating Trustees may approve and direct the payment thereof or the retention by the Liquidating Trustees of adequate reserves for such payment prior to making distributions to creditors pursuant to this Plan. 11. The Liquidating Trustees shall keep or cause to be kept books containing a description of all property constituting Liquidating Trust Property and an accounting of receipts and disbursements, which shall be open to inspection by creditor-beneficiaries at reasonable times upon written request to the Liquidating Trustees or their counsel. The Liquidating Trustees shall file with the Bankruptcy Court semi-annually (or more often if deemed appropriate by the Liquidating Trustees) a statement of receipts and disbursements for the Liquidating Trust. The Liquidating Trustees shall establish and maintain separate accounts (including bank accounts) for the receipt and expenditure of funds derived from the Settlement Amount, the Administrative, Priority and Disputed Claims Reserve and the Residual Property. The Liquidating Trustees, in their discretion, may advance funds from the Settlement Amount Account for the purpose of investigating, commencing litigation, or otherwise enhancing the value of the claims and property to be deposited in the other accounts but such advance(s) shall be considered loans and shall promptly be repaid from the first available funds in such other accounts. 12. No recourse shall ever be had, directly or indirectly, against the Liquidating Trustees or any Representatives of the Liquidating Trustees (including without limitation, the employers of the Liquidating Trustees), or against any employee of the Liquidating Trustees, whether by legal or equitable proceedings, by virtue of any statute or otherwise, or by reason of the creation of any indebtedness by the Liquidating Trustees under this Liquidating Trust for any purpose authorized by this Liquidating Trust, it being expressly understood and agreed that all liabilities, contracts and agreements of the Liquidating Trustees, whether in writing or otherwise, under this Liquidating Trust shall be enforceable only against and be satisfied only out of the Liquidating Trust Property or shall be evidence only of a right of payment out of the Liquidating Trust Property, as the case may be. Nothing herein shall constitute a waiver of claims for intentional torts, embezzlement or other fraudulent activity. Every undertaking, contract, covenant or agreement entered into in writing by the Liquidating Trustees, their Representatives, shall provide expressly against the personal liability of the Liquidating Trustees, their Representatives and employees. 13. The Liquidating Trustees shall receive no compensation for their services but shall be entitled to reimbursement for all expenses incurred by them in the performance of their duties as trustees, which expenses shall be a charge against and paid out of the Liquidating Trust Property, in accordance with the terms of this Plan. The reimbursement of expenses to the Liquidating Trustees and reimbursement of expenses and compensation of professionals employed by the Liquidating Trustees shall constitute a first priority expense of the Liquidating Trust. 14. The Liquidating Trustees shall be relieved of any and all duties, restrictions or liabilities imposed upon Liquidating Trustees by applicable laws of the governing state, including the provisions of the trust laws of the governing state as in effect, in the governing state, on the Effective Date and as it may thereafter be amended, so that the Liquidating Trustees shall be liable only for acts of self-dealing or bad faith, or intentionally adverse acts or reckless indifference to the interests of the creditors of the Debtor. The fact that any act or failure to act of the Liquidating Trustees was advised by an attorney acting as attorney for the Liquidating Trust or the Liquidating Trustees shall be conclusive evidence of the Liquidating Trustees' good faith in performing or failing to perform such act. 15. The Liquidating Trust shall be effective as of the Effective Date and shall remain and continue in full force and effect until the Liquidating Trust Property has been wholly converted to cash, all costs, expenses and obligations incurred in administering this Liquidating Trust have been fully paid and discharged and all remaining income, proceeds and assets of the Liquidating Trust Property have been distributed as herein set forth. Notwithstanding the above, the Liquidating Trust created herein shall terminate within(3) years from the Effective Date or within such further time as is reasonably necessary to accomplish full liquidation and disbursement; provided, however, in no event shall this Liquidating Trust extend beyond five (5) years from the Effective Date. 16. Subject to approval of the Bankruptcy Court, the Liquidating Trustees may engage attorneys, accountants and agents to advise or assist the Liquidating Trustees in the administration of the Liquidating Trust and to represent the Liquidating Trustees in all matters relating to the Liquidating Trust. The Liquidating Trustees shall pay the reasonable fees, charges and expenses of such attorneys and accountants who provide services after the Effective Date as a priority expense of the Liquidating Trust, in accordance with the terms this Plan. Subject to the availability of sufficient funds in the Administrative Reserve, the fees and expenses of such professionals and agents shall be paid upon the monthly submission of bills to Liquidating Trust. If no written objection to payment is received within five (5) Business Days following delivery of any bill, the bill shall be paid by Liquidating Trust. If there is a dispute as to the amount of any bill, such dispute shall be submitted to the Bankruptcy Court for a determination of the reasonableness of such bill. Subject to the availability of sufficient funds in the Administrative Reserve, the uncontested portion of each bill shall be paid within ten (10) Business Days after its delivery. As provided infra, to the extent funds are or become available, fees and expenses of professionals and others involved in investigating, recovering, or liquidating Residual Property shall be paid from such recoveries. To the extent that contingent fee litigation is desirable or necessary, the Liquidating Trustees are authorized to hire counsel to pursue such litigation at a reasonable contingent fee. The Liquidating Trust, which shall succeed to the Debtor's interest in the property transferred to it pursuant to this Plan, shall constitute a successor in interest to the Debtor. Accordingly, upon the Effective Date, the Liquidating Trustees, on behalf of the Liquidating Trust, shall become the owner and holder, of all privileges (including the attorney-client privilege) owned or held by the Debtor, whether owned or held by the Debtor individually or jointly and whether concerning pre-petition Date or post- petition Date matters. 17. This Liquidating Trust shall be administered and governed by the laws of the State of New Jersey or such other state (the "governing state") as the Debtor and the Creditors' Committee shall select, which shall be established as of the Effective Date, and any questions arising hereunder shall be resolved and determined in accordance with the laws of the governing state, without regard to principles of conflicts of law. 18. On the Effective Date, (a) the filing by Liquidating Trust of its Trust Articles which shall be a Plan Document shall be deemed authorized and approved in all respects, and (b) the appointment of the Liquidating Trustees by the Bankruptcy Court in the Confirmation Order, and the other matters provided under the Plan concerning the structure of Liquidating Trust or action by Liquidating Trust, shall be deemed to have occurred and shall be in effect without any requirement of further action or order of the Bankruptcy Court. On the Effective Date, (a) the filing by Reorganized Crescent City of the Amended Certificate of Incorporation and the adoption of the Amended By- laws shall be deemed authorized and approved in all respects, and (b) to the extent identified by the Purchaser on such date, the appointment of the directors and officers of Reorganized Crescent City, and the other matters provided under the Plan concerning the corporate structure of Reorganized Crescent City, or corporate action by Reorganized Crescent City or corporate action by Reorganized Crescent City, shall be deemed to have occurred and shall be in effect from and after the such time without any requirement of further action or order of the Bankruptcy Court. The Directors and officers of the Debtors will be deemed to have resigned as of the Effective Date. F. Commission Approvals. 1. Corporate Governance of Reorganized Crescent City: On and after the Effective Date, the Debtor shall continue in existence as Reorganized Crescent City, a Louisiana corporation governed by the provisions of the Amended Certificate of Incorporation, the Amended By-laws, and Louisiana General Corporation Law. 2. Management of Reorganized Crescent City: On and after the Effective Date, the operation of Reorganized Crescent City shall become the responsibility of its Board of Directors and management. 3. Vesting of Assets and Discharge: On and after the Effective Date, Reorganized Crescent City may operate its businesses and may use, acquire, and dispose of its property without supervisions or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than as expressly provided herein. The Riverboat Assets shall vest in Reorganized Crescent City free and clear of the claims, liens, charges, encumbrances and interests, except as otherwise provided herein. Except as otherwise provided herein, on and after the Effective Date, Reorganized Crescent City shall not be liable for and shall be discharged from any and all Claims against the Debtor, and all Equity Interests in the Debtor shall be canceled. 4. Action Necessary for Riverboat Gaming Commission Approvals: On and after the Confirmation Date, Purchaser and the Debtor shall take all reasonable steps necessary to obtain any and all authorizations, certifications and operating authorities and any other like permits necessary for Reorganized Crescent City to start operations on, or on the earliest date possible after the Effective Date. H. Assignment of Causes of Action. On the Effective Date, except as otherwise provided herein, all rights, claims, and causes of action pursuant to: (a) Sections 541, 542, 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code; and (b) all other claims and causes of action of the Debtor against any Person as of the Effective Date including but not limited to the Mirage Claim and any right to the Mirage Recovery, shall be preserved and become property of Liquidating Trust. On the Effective Date, Liquidating Trust shall be deemed the representative of the Estate under Section 1123(b) of the Bankruptcy Code and will be authorized and shall have the power to commence and prosecute any and all causes of action which could have been asserted by the Estate. Liquidating Trust may pursue such causes of action in the Bankruptcy Court and may retain such counsel, accountants or other Persons as Liquidating Trust deems necessary in connection therewith or in connection with liquidation of the Residual Property or performance of the responsibilities of Liquidating Trust and the Liquidating Agent. All recoveries, if any, received from or in respect of the causes of action (whether by settlement, judgment or otherwise) shall become the property of Liquidating Trust to be distributed pursuant to the terms of the Plan. The costs and expenses, including legal fees and disbursements, incurred in connection with the prosecution of such causes of action, shall be paid by Liquidating Trust without necessity of approval by the Bankruptcy Court. From and after the Effective Date, Liquidating Trust shall litigate any avoidance or recovery actions and any other causes of action or rights to payments of claims that belong to the Debtor that may be pending on the Effective Date or instituted by Liquidating Trust after the Effective Date. I. Waiver of Subordination. The distributions under the Plan take into account the relative priorities of the Claims in each Class in connection with any contractual subordination provisions relating thereto. ARTICLE VI ESTABLISHMENT OF RESERVES A. Administrative Reserve. 1. Creation of Administrative Reserve: On the Effective Date, Liquidating Trust shall establish an interest bearing account with a major money center bank in an amount necessary to create and maintain the Administrative Reserve, as same shall be determined by the Debtor at the Confirmation Hearing and approved by the Bankruptcy Court. The money in the Administrative Reserve shall be used to fund (i) the continuing administration of Liquidating Trust, including the administration of Claims, and the filing and prosecutions of objections thereto, (ii) the payment of taxes for which the Liquidating Trust is liable, (iii) the maintenance of insurance policies, (iv) the enforcement and prosecution of claims of or claims assigned to the Liquidating Trust in conjunction with the marshaling of the Residual Property, (vi) the liquidation by conversion to Cash or other methods of the remaining Residual Property, and (vii) the payment of the actual fees and expenses incurred in connection with all of the above- described activities. The Administrative Reserve shall not be used to fund the operations or pay any expenses of Reorganized Crescent City. 2. Maintenance of the Administrative Reserve: Liquidating Trust shall maintain sufficient Cash in the Administrative Reserve as it in good faith deems necessary to ensure the continued funding of the activities described in Subsection 1 of this Article VI(E) of the Plan. 3. Investment of the Administrative Reserve: Liquidating Trust shall be permitted, from time to time, to invest all or a portion of the Cash in the Administrative Reserve in United States Treasury Bills, interest-bearing certificates of deposit, tax exempt securities, or investments permitted by Section 345 of the Bankruptcy Code, using prudent efforts to enhance the rates of interest without inordinate credit risks or interest rate risks. All interest earned on such Cash shall be held by Liquidating Trust and (i) kept in the Administrative Reserve and utilized to fund the operation of Liquidating Trust, and, to the extent of any excess, (ii) transferred to an available cash reserve for distribution in accordance with the Plan. 4. Distribution of the Administrative Reserve: After completion by Liquidating Trust of all tasks remaining to liquidate fully its assets and distribute the proceeds therefrom in accordance with the Plan, including the payment of all charges and taxes related thereto, any amounts remaining in the Administrative Reserve will be distributed to Class 3A Claimants. B. The Disputed Claims Reserve. 1. Creation of the Disputed Claims Reserve: On or before the first (1st) Cash Distribution Date, Liquidating Trust shall establish a segregated interest-bearing account with a major money center bank. On the first (1st) Cash Distribution Date and each subsequent Cash Distribution Date, from the Settlement Amount or the Net Cash Proceeds attributable to the Residual Property, as applicable, Liquidating Trust shall deposit into such account, or otherwise reserve, an amount of Cash and/or Magic Notes sufficient to pay all Disputed Administrative Claims, Disputed Priority Claims, Disputed Priority Tax Claims, Disputed Secured Claims, Disputed Convenience Claims and Disputed General Unsecured Claims that would have been distributable on account of such Claims had such Claims been Allowed Claims on the relevant date. The reserve shall be based upon the amount ordered by the Court in accordance with the Court's authority to estimate contingent and/or unliquidated claims under 11 U.S.C. Sec.502(c) or, if no estimate has been made, the amount of the Claims, as filed. 2. Claims With Recourse to Insurance Coverage: All Allowed General Unsecured Claims with recourse to insurance coverage policies of the Debtor covering tort claims shall be deemed Disputed Claims in their Face Amount or as otherwise ordered by the Court, and Cash and/or Magic Notes shall be set aside in the Disputed Claims Reserve on the first (1st) Cash Distribution Date to account for such Claims. Upon receipt of notice that any such Claim has been satisfied in whole, or in part, by the Debtor's insurance policies, Liquidating Trust will reduce the amount on deposit in the Disputed Claims Reserve by an amount equal to the amount allocable to the Claim or portion thereof so satisfied. Upon receipt of notice that a Claim entitled to coverage under an insurance policy of the Debtor is not satisfied, in whole, or in part, under such policy, within sixty (60) days of the Effective Date, and such Claim is not disputed in whole or in part by Liquidating Trust, Liquidating Trust shall distribute to the holder of such Claim, Cash set aside in the Disputed Claims Reserve on account of that portion of such Claim that has not been satisfied by coverage under an insurance policy. 3. Payment of Expenses of the Disputed Claims Reserve: Liquidating Trust shall pay, or cause to be paid, out of the funds held in the Disputed Claims Reserve, all expenses of the Disputed Claims Reserve, including any tax imposed by any governmental unit on the income generated by the funds held in the Disputed Claims Reserve. Liquidating Trust shall also file or cause to be filed any tax or information returns related to the Disputed Claims Reserve that are required by any governmental unit. 4. Investment of Disputed Claims Reserve: Liquidating Trust shall be permitted, from time to time, to invest all or a portion of the Cash in the Disputed Claims Reserve in United States Treasury Bills, interest-bearing certificates of deposit, tax exempt securities, or investments permitted by Section 345 of the Bankruptcy Code, using prudent efforts to enhance the rates of interest without inordinate credit risks or interest rate risks. All interest earned on such Cash shall be held by Liquidating Trust and, after satisfaction of any expenses incurred in connection with the maintenance of the Disputed Claims Reserve, distributed in accordance with the Plan. 5. Excess Funds: If, on any Reallocation Date, Liquidating Trust determines there are excess funds on deposit in the Disputed Claims Reserve, such excess funds (including any interest earned thereon) will be released from the Disputed Claims Reserve and deposited in the Available Cash Reserve and distributed to Class 3A Claimants in accordance with this Plan. ARTICLE VII PROVISIONS FOR TREATMENT OF DISPUTED AND CONTINGENT CLAIMS A. Objections to Claims. Unless another date is established by the Bankruptcy Court, all objections to Claims that were filed prior to the Effective Date shall be filed and served on the holders of such Claims by the sixtieth (60th) after the Effective Date, or such date as extended by the Court. If any objection has not been filed to a proof of Claim or a scheduled Claim by the objection bar date, the Claim to which the proof of claim or scheduled Claim relates shall be treated as an Allowed Claim if such Claim has not been Allowed or Disallowed earlier. After the Effective Date, except as to objections to claims filed by persons other than the Debtor, only the Liquidating Trustees shall have the authority to prosecute, settle, compromise, withdraw or litigate to judgment objections to Claims and counterclaims, all of which shall be prosecuted in the Bankruptcy Court. B. Payments and Distributions on Disputed Claims. Notwithstanding any provision in the Plan to the contrary, no payments or distributions will be made with respect to a Disputed Claim until the resolution of such dispute by settlement or Final Order. On the first Cash Distribution Date that is at least forty-five (45) days after a Disputed Claim becomes an Allowed Claim, the holder of such Allowed Claim will receive all distributions, including its share of the net earnings of the Disputed Claims Reserve, to which such holder is then entitled under the Plan. Notwithstanding the foregoing, any Person who holds both an Allowed Claim(s) and a Disputed Claim(s) will receive the appropriate payment or distribution on the Allowed Claim(s), although no payment or distribution will be made on the Disputed Claim(s) until such dispute is resolved by settlement or Final Order. C. Disputed General Unsecured Claims. 1. Estimation: For purposes of effectuating the reserve provisions of Article VI of the Plan and the allocations and distributions to holders of Allowed General Unsecured Claims, the Bankruptcy Court will, on or prior to the Confirmation Date, pursuant to Section 502 of the Bankruptcy Code, fix or liquidate the amount of any Contingent General Unsecured Claim not otherwise treated in the Plan, in which event the amount so fixed or liquidated will be deemed the Allowed amount of such Claim for purposes of this Plan, or, in lieu thereof, the Bankruptcy Court will determine the maximum contingent amount for such Claim, which amount will be the maximum amount in which such Claim ultimately may be Allowed under this Plan, if such Claim is Allowed in whole or in part. The right of a Creditor under Section 502(j) of the Bankruptcy Code to obtain reconsideration of a Claim that has been estimated can only be exercised within thirty (30) days after the Effective Date. Thereafter, no Claims that have been estimated for the purpose of allowance may be reconsidered. 2. Distributions Upon Allowance: To the extent a Disputed General Unsecured Claim becomes an Allowed Claim, on the next succeeding Cash Distribution Date that is at least forty-five (45) days after a Disputed Claim becomes an Allowed Claim, there will be distributed to the holder of such Allowed Claim out of the Disputed Claims Reserve, in accordance with the applicable provisions of this Plan, the amount of Cash on deposit in the Disputed Claims Reserve allocable to the Claim so Allowed, plus its share of the net earnings of the Disputed Claims Reserve. ARTICLE VIII DISTRIBUTIONS UNDER THE PLAN B. Distributions. 1. On the Effective Date, or as soon thereafter as is reasonably practicable, distributions of Cash shall be made by Liquidating Trust in accordance with the relevant provisions of Article III hereof, on account of Allowed Administrative Claims, Allowed Priority Claims, Allowed Priority Tax Claims, and Allowed Secured Claims that are entitled to a Cash payment under the Plan. 2. On the first (1st) Cash Distribution Date, or as soon thereafter as is reasonably practicable, distributions of Cash shall be made by Liquidating Trust in accordance with the relevant provisions of Article II hereof, on account of Allowed Convenience Claims and Allowed General Unsecured Claims; and 3. Subsequent distributions of (a) Net Cash Proceeds of the Residual Property, and (b) previously undistributed Cash to the holders of Allowed General Unsecured Claims, may be made if, on any Cash Distribution Date (excluding the first (1st) Cash Distribution Date), the Liquidating Trustees, in their discretion, determine that Liquidating Trust has accumulated sufficient funds to justify a distribution. 4. On each Reallocation Date, the Liquidating Trustees will determine the amount of Cash to be distributed on account of previously Allowed Claims and Disputed Claims that have become, in whole or in part, Allowed Claims. The Liquidating Trustees shall, if appropriate, make distributions from the Disputed Claims Reserve on each Cash Distribution Date. 5. Fractional cents will not be distributed and shall revert to Liquidating Trust. B. Method of Payment. Payments to be made by Liquidating Trust pursuant to the Plan will be made by check drawn on a domestic bank or, if in excess of $1,000,000, by wire transfer of next day available funds. C. Amendment of Plan. The Plan may be amended by the Debtor before, and the Liquidating Trustees after, the Effective Date as provided in Section 1127 of the Bankruptcy Code. D. Implementation. The Debtor and Liquidating Trust, as the case may be, will be authorized to take all necessary steps, and perform all necessary acts, to consummate the terms and conditions of the Plan. E. Method of Distributions Under the Plan. All distributions of Cash and other property shall be made by the Liquidating Trustees pursuant to the Plan on the Effective Date or applicable Cash Distribution Date, as the case may be, or as soon thereafter as is practicable (a) at the addresses set forth in the proofs of claim filed by such holders; (b) at the addresses set forth in any written notices of address change delivered to the Debtor or Liquidating Trust after the date on which any related proof of claim was filed; or (c) at the address reflected in the Schedules if no proof of claim has been filed and Liquidating Trust has not received a written notice of a change of address. F. Undeliverable Distributions. 2. Distributions Held by Liquidating Trust: If the distribution to any holder of an Allowed Claim is returned as undeliverable, no further distributions shall be made to such holder unless and until the Liquidating Trustees is notified in writing by such holder of the holder's current address at which time all previously missed distributions shall be mailed to such holder. Undeliverable distributions shall belong to Liquidating Trust and be held in the account from which such distribution was made (e.g., the Settlement Amount account, the Residual Property account, etc.). 3. After Distributions Become Deliverable: On each Cash Distribution Date, Liquidating Trust shall make all distributions that have become deliverable since the immediately prior Cash Distribution Date. Distributions from the Disputed Claims Reserve shall be made in all instances as soon as practicable after the same become deliverable. 4. Failure to Claim Undeliverable Distributions: Any holder of an Allowed Claim that does not assert a claim pursuant to the Plan for an undeliverable distribution within two (2) years after the Distribution Date shall have its Claim for such undeliverable distribution discharged and shall be forever barred from asserting any such claim for an undeliverable distribution. In such case, any Cash held for distribution on account of such Claims for undeliverable distributions shall be redeposited into the Administrative Reserve for distribution to holders of Allowed Class 3A Claims on the next Cash Distribution Date after such distributions become undeliverable pursuant to the terms hereof. Nothing contained in the Plan shall require Liquidating Trust to attempt to locate any holder of an Allowed Claim. Checks issued in respect of distributions to the holders of Allowed Claims shall be null and void if not cashed within 90 days of the date of issuance thereof. Requests for the reissuance of any check shall be made directly to Liquidating Trust by the holder of the Allowed Claim with respect to which such check was originally issued. Any Claim in respect of such a check voided shall be made on or before the sixth (6th) month anniversary of the issuance of such check. After such date, all Claims in respect of a check voided pursuant to this Subsection shall be discharged and forever barred. ARTICLE IX EXECUTORY CONTRACTS AND UNEXPIRED LEASES B. Rejection of Executory Contracts and Unexpired Leases. On the Confirmation Date (but subject to the occurrence of the Effective Date), all executory contracts or unexpired leases that exist between the Debtor and any Person, that have not been assumed or rejected by order of the Bankruptcy Court or which are not the subject of a motion to assume or reject pending on the Confirmation Date, will be deemed rejected in accordance with the provisions and requirements of Section 365 of the Bankruptcy Code. Entry of the Confirmation Order by the Clerk of the Court shall constitute an order approving such rejections pursuant to Section 365(a) of the Bankruptcy Code. C. Claims Based on Rejection of Executory Contracts or Unexpired Leases. All proofs of claim with respect to Claims arising from the rejection of executory contracts or unexpired leases must be filed with the Bankruptcy Court no later than twenty-five (25) days after the Confirmation Date. Any Claims not filed within such time will be forever barred from assertion against the Debtor, the Estate and its property, Liquidating Trust, or the Disputed Claims Reserve. Unless otherwise ordered by the Bankruptcy Court, all such Claims arising from the rejection of executory contracts or unexpired leases will be, and will be treated as Class 3A, General Unsecured Claims or Class 3B Convenience Claims or Class 4 Subordinated Claims as the case may be. ARTICLE X ADMINISTRATIVE PROVISIONS A. Retention of Jurisdiction. The Bankruptcy Court will retain and have exclusive jurisdiction on and after the Confirmation Date for the following purposes: 1. to hear and determine objections to Administrative Claims or Proofs of Claims whenever filed both before and after the Confirmation Date, including any objections to the classification of any Claim and to allow or disallow any Disputed Claim, in whole or in part; 2. to hear and determine any and all motions to estimate Claims regardless of whether the Claim is the subject of a pending objection, a pending appeal or otherwise; 3. to hear and determine any and all pending applications for the rejection or assumption of executory contracts or unexpired leases to which a Debtor is a party or with respect to which a Debtor may be liable and to hear and determine, and, if need be, to liquidate, any and all Claims arising therefrom; 4. to enforce the provisions of the Plan and to enforce any proposed amendments thereto; 5. to ensure that distributions, if any, to holders of Allowed Claims are accomplished as provided herein; 6. to determine any and all applications, adversary proceedings and contested or litigated matters that may be pending on the Effective Date or commenced thereafter; 7. to consider any modifications of the Plan, to cure any defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court, including, without limitation, the Confirmation Order; 8. to hear and determine all controversies, suits and disputes that may arise in connection with the interpretation, implementation or enforcement of the Plan, the Estate's obligations, releases under the Plan, or any Claim asserted against any representative of the Estate or its agents; 9. to hear and determine all controversies concerning the Magic Agreement. 10. to hear and determine all controversies concerning the Mirage Agreement, the Mirage DIP Financing Claims and any other claims and/or dispute asserted by or against Mirage; 11. to enter such orders in aid of execution of the Plan to the extent authorized by Section 1142 of the Bankruptcy Code, including such orders aiding or promoting the transfer of the economic or ownership interest of the Debtor, but not to the extent that such orders are in regard to matters within the sole jurisdiction of police or regulatory authorities; 12. to determine such other matters as may be set forth in the Confirmation Order or as may arise in connection with the Plan (including, without limitation, Article XIII thereof) or the Confirmation Order or their implementation; 13. to hear and determine all controversies, suits and disputes that may arise with respect to the Residual Property; 14. to enforce all orders, judgments, injunctions and rulings entered in connection with the Reorganization Case; 15. to determine any and all applications for allowance of compensation and reimbursement of expenses and any other fees and expenses authorized to be paid or reimbursed under the Bankruptcy Code or the Plan; 16. to hear and determine all proceedings to recover all assets of the Debtor and property of the estate, wherever located, including any causes of action under Sections 544 through 551 and 553(b) of the Bankruptcy Code, and any other causes of action or rights to payment of Claims, that belong to the Debtor, that may be pending on the Confirmation Date or that may be instituted at any time by Liquidating Trust thereafter; 17. to hear and determine any disputes between the Liquidating Trustees and Liquidating Trust or with respect to either of them; 18. to hear and determine matters concerning state, local and federal taxes in accordance with Sections 346, 505 and 1146 of the Bankruptcy Code; 19. to approve the retention of professionals by Liquidating Trust and to approve all requests for payment of fees and expenses by such professionals; 20. to hear any other matter as to which jurisdiction is not inconsistent with the Bankruptcy Code; and 21. to enter a final decree or decrees closing the Reorganization Case. B. Bar Date For Filing Claims Pursuant to Section 503(b) of the Bankruptcy Code. 2. Administrative Claims Generally: Subject to further order of the Bankruptcy Court, all applications for payment of Administrative Claims (other than Administrative Claims that constitute Fee Requests) pursuant to Section 503(b) of the Bankruptcy Code shall be filed with the Bankruptcy Court within five (5) Business Days after the Effective Date. Any requests for payment of such Administrative Claims not so scheduled by the Debtor or filed within such time period shall be discharged and forever barred except as otherwise may be ordered by the Bankruptcy Court. 3. Fee Requests: A. All Fee Requests must be filed with the Bankruptcy Court within forty- five (45) days after the Effective Date. Objections to such Fee Requests may be filed by any party in interest within the later of sixty (60) days after the Effective Date and sixty (60) days after such Fee Request is filed with the Bankruptcy Court. B. On or prior to the Confirmation Date, each Person that has sought or will seek to file a Fee Request shall deliver to the Debtor an estimate of the aggregate fees and expenses through the Effective Date which shall be requested by such Person (including, if applicable, any amount previously requested and subject to holdback). Any such estimate shall be binding on such Person and such Person shall not apply for fees and expenses accruing during the Reorganization Case in excess of such estimate; provided, however, that such estimate shall not be binding unless the Confirmation Order is entered within ten (10) Business Days of the scheduled Confirmation hearing. ARTICLE XI CONDITIONS TO CONFIRMATION AND EFFECTIVE DATE OF THE PLAN A. Conditions to Entry of Confirmation Order. The Plan shall not be confirmed unless the following conditions have been satisfied or waived as specified in Article XI(C): 1. The Magic Closing Cash is estimated to be sufficient to pay the Liquidating Trust the Settlement Amount of no less than $6,000,000.00; B. Conditions to Effective Date. The Effective Date of the Plan shall not occur unless and until the following conditions shall have been satisfied: 1. Entry of Confirmation Order in a form and substance satisfactory to the Debtor, Purchaser, the Institutional Note Holders' Steering Committee and the Creditors' Committee; 2. At Closing, Purchaser has assumed or otherwise satisfied or arranged to satisfy the Bally & IGT Claims as provided in V(A) of the Plan; 3. The Confirmation Order shall have been entered; 4. The Confirmation Order shall not be currently stayed; and 5 The Closing has occurred or will occur simultaneously. C. Waiver of Conditions. 1. Article XI(A)(1) may be waived by unanimous consent of the Creditors' Committee, without regard to abstentions. 3. Article XI(B)(2) may be waived by the Creditors' Committee. ARTICLE XII EFFECTS OF CONFIRMATION A. Binding Effect/Injunction. 1. Except as otherwise expressly provided in the Plan, on and after the Effective Date, the terms of the Plan shall bind all holders of Claims and Equity Interests, whether or not they accept the Plan. 2. Except as otherwise expressly provided in Section 1141 of the Bankruptcy Code or this Plan, the distributions made pursuant to the Plan will be in full and final satisfaction, settlement, release and discharge as against the Debtor or any of its assets or properties, of any debt that arose before the Confirmation Date and any debt of a kind specified in Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code and all Claims and interests of any nature, including, without limitation, any interest accrued thereon from and after the Petition Date, whether or not (i) a proof of Claim or interest based on such debt, obligation or interest is filed or deemed filed under Section 501 of the Bankruptcy Code, (ii) such Claim or interest is Allowed under Section 502 of the Bankruptcy Code, or (iii) the holder of such Claim or interest has accepted the Plan. 3. Except as set forth herein, on and after the Effective Date, every holder of a Claim or Equity Interest shall be precluded and permanently enjoined from asserting against the Debtor, Liquidating Trust (in connection with is organization, and operations), and the Liquidating Trustees (in their capacity as such), and Reorganized Crescent City, their respective officers, directors, professionals and agents or their respective assets or properties, any further claim based on any document, instrument, judgment, award, order, act, omission, transaction or other activity of any kind or nature that occurred prior to the Confirmation Date. Said injunction shall not be construed to enjoin any action by a Creditor or Bondholder against the Debtor, Liquidating Trust, the Liquidating Trustees, Reorganized Crescent City, their respective officers, directors, professionals and agents which is personal to such person or entity, and which is not derivative of the rights of the Debtor. Nothing contained herein shall prevent the Louisiana Department of Revenue and Taxation ("LDRT") from pursuing any corporate officers/directors of the Debtor, pursuant to LSA- R.S. 47:1561.1, but only with respect to claims filed in the Bankruptcy Case. B. Rights of Action. Any rights or causes of action accruing to the Debtor shall become assets of Liquidating Trust. Liquidating Trust may pursue those rights or causes of action as appropriate as set forth in Article V(G) of the Plan, in accordance with what is in the best interests, and for the benefit of, those Creditors that will receive distributions from the Residual Property. It is expressly understood that the Liquidating Trustees may, in their discretion and by majority vote, settle or resolve any avoidance action claim by agreeing to permit the transferee to make an appropriate reduction in its claim(s) so as to give credit for the amount otherwise recoverable from future distributions pursuant to this Plan. C. Committees. The Creditors' Committee shall continue in existence until the Effective Date, to exercise those powers and perform those duties specified in Section 1103 of the Bankruptcy Code, and shall perform such other duties as it may have been assigned by the Bankruptcy Court. On the Effective Date, the Creditors' Committee shall be dissolved and their members shall be deemed released of all their duties, responsibilities and obligations in connection with the Bankruptcy Case. Upon dissolution of the Creditors' Committee, each member of the Creditors' Committee and its counsel shall be deemed released from liability by the Debtor and any creditor entitled to receive a distribution under this Plan, and shall be indemnified by Liquidating Trust from any liability to any creditor, the debtor, purchaser, equity security holder, the Reorganized Debtor or party in interest for any act taken in furtherance of its duties as a member of the Creditors' Committee or its counsel, as applicable. D. Full and Final Satisfaction. The payments and distributions which are required to be made by the Debtor or Liquidating Trust under this Plan shall be in full and final satisfaction, settlement, release and discharge of all Claims against and Interests in the Debtor. A holder of an Allowed Claim may not receive a distribution on account of such Allowed Claim equal to an amount greater than the full amount (including interest to the extent provided in the Plan) of such Allowed Claim. E. Post-Confirmation Effect of Evidences of Claims or Interests. Except as otherwise provided in the Plan, effective upon the Effective Date, all notes, certificates and other evidences of Claims or Interests shall represent only the right to participate in distributions under the Plan. F. Continuation of Injunctions and Stays. Unless otherwise provided, all injunctions, liens or stays: (a) ordered in the Reorganization Case pursuant to Sections 105 and 362 of the Bankruptcy Code or otherwise or in existence on the Petition Date, and (b) extant immediately prior to the Confirmation Date shall remain in full force and effect until the Effective Date. ARTICLE XIII RELEASE AND EXCULPATION A. Release. Except for the obligations created by the Plan, for good and valuable consideration, including, without limitation, the benefits of the Plan, the promises and obligations of the Debtor, Reorganized Crescent City, the Bondholders, CGII and the Purchaser and the efforts and contributions of the officers and directors of the Debtor in bringing about the confirmation and consummation of the Plan, and to permit the effective and expeditious reorganization of the Debtor, on the Effective Date, the Debtor, shall be deemed to have unconditionally waived and released any and all rights, Claims, liabilities and causes of action with respect to those matters directly relating to Crescent City, against Reorganized Crescent City, the Bondholders, the Indenture Trustee, CGII, the Institutional Note Holders' Steering Committee, the Creditors' Committee, the Purchaser, and except with respect to CGII, their respective members, officers, directors, agents and attorneys, as well as the Debtor's officers, directors, agents and attorneys who served in such capacities at any time during the Bankruptcy Case (collectively the "Releasees"); provided however, that (a) Purchaser shall not be released from its obligations under the Magic Agreement to pay the Magic Deferred Cash, and (b) the releases granted in favor of the Committees shall release Committee members only in their capacity as such and not in their capacity as individual creditors. Any claim or cause of action a Creditor or Bondholder has against any Releasee which is personal to such Releasee, and which is not derivative of the rights of the Debtor, shall not be affected by the releases granted hereunder. Except with respect to the Debtor, nothing in this Plan shall impair or otherwise affect any rights, liens, claims, or interests of the Indenture Trustee or any Bondholder under the Notes, the Indenture, or any related documents, including, but not limited to, any rights, liens, claims or interests against CGII or any guarantor of CGII's obligations. ARTICLE XIV MISCELLANEOUS PROVISIONS A. Payment Dates. Whenever any payment to be made or action to be taken under the Plan is due to be made or taken on a day other than a Business Day, such payment will instead be made (without Interest for such delay) or action will instead be taken on the next Business Day. B. [INTENTIONALLY LEFT OUT] C. Governing Law. Unless a rule or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of Louisiana shall govern the construction and implementation of the Plan and any agreements, documents and instruments executed in connection with the Plan. D. Binding Effect. The rights, duties and obligations of any person or entity named or referred to in the Plan shall be binding upon and shall inure to the benefit of, such person or entity and their respective successors and assigns. E. Filing or Execution of Additional Documents. Except as otherwise provided in the Plan, on or before substantial consummation of the Plan, the Debtor will file with the Bankruptcy Court or execute, as appropriate, such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. F. Payment of Statutory Fees. All fees payable pursuant to Section 1930 of title 28, United States Codes, as determined by the Bankruptcy Court at the hearing pursuant to Section 1128 of the Bankruptcy Code, shall be paid on or before the Effective Date. G. Revocation and Modification of Plan and Related Documents. The Debtor reserves the right, in accordance with the Bankruptcy Code, to amend or modify the Plan and related Plan Documents in any manner or revoke the Plan in its entirety prior to the entry of the Confirmation Order. After entry of the Confirmation Order, the Debtor may: (a) amend or modify the Plan and related Plan Documents in accordance with, and to the extent permitted by, Section 1127(b) of the Bankruptcy Code; or (b) remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. In the event the Plan is confirmed but cannot be consummated, the Confirmation Order shall be revoked and upon such revocation, the terms of the Plan shall not be binding on or enforceable by any Person. H. Notices. Any notice required or permitted under the Plan shall be in writing and served either by (i) certified mail, return receipt requested, postage pre-paid, (ii) hand delivery, or (iii) reputable overnight delivery service, freight prepaid, addressed to the following parties: If to the Debtor: Crescent City Capital Development Corp. Bayport One, Suite 250 8025 Black Horse Pike W. Atlantic City, New Jersey 08232 Attn: President with a copy to: Bronfin & Heller, LLC 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130 Attn: Jan. M. Hayden, Esq. If to Liquidating Trust: with a copy to: I. Construction. The rules of construction set forth in Section 102 of the Bankruptcy Code shall apply to the construction of the Plan. J. Section Headings. The section headings contained in the Plan are for convenience and reference purposes only and will not affect in any way the meaning or interpretation of the Plan. K. Offer of Compromise. The Compromise embodied in this Plan shall not be deemed to be an admission of liability of the Debtor, the Debtor-in- Possession or Liquidating Trust, and shall not be admissible in any proceeding or action, other than one to enforce the provisions of this Plan, against the Debtor, as a debtor and debtor-in-possession, or the Indenture Trustee or Bondholders. ARTICLE XV TRANSACTION WITH PURCHASER A. Notwithstanding any provision to the contrary contained in the Plan, the provisions of this Article shall govern the performance and effect of the consummation of the Magic Agreement in lieu of any other provision in the Plan which may conflict with this Article. B. Upon the payment to the Indenture Trustee of the Magic Closing Cash and the Magic Notes as provided in Article II(A), Purchaser shall be discharged from any further liability to the Debtor for the payment of said sum, not including the Magic Deferred Cash. The breach by the Indenture Trustee of any of its obligations under the Plan including but not limited to making specified disbursements shall not affect Purchaser in any manner, and Purchaser shall be entitled to full performance (including specific performance) by the Debtor under the Plan and the Magic Agreement. C. The obligations to assume or satisfy the claims of Bally, IGT or any other vendor as provided in Paragraph 4 of the Magic Agreement shall not exceed an aggregate amount of $6,500,000.00. D. All conditions to Closing as defined in Paragraph 5 of the Magic Agreement must either be satisfied or waived in writing by Purchaser prior to the Closing occurring. E. All obligations of Purchaser under the Magic Agreement and the Plan shall be governed by applicable federal law and the law of the State of Louisiana. F. The Liquidating Trust shall be responsible for all claims, obligations, liabilities, liens or taxes which arise or accrue prior to the Effective Date. Neither Purchaser nor the Reorganized Crescent City shall be liable or in any manner responsible for those claims, obligations, liabilities, liens or taxes which arise or accrue prior to the Effective Date. All parties pursuant to section 1141 will be enjoined from asserting any such claims, obligations, liabilities, liens or taxes against the Reorganized Crescent City or the Purchaser, and the Reorganized Crescent City shall be discharged from all such claims, obligations, liabilities, liens or taxes. Except as otherwise provided herein, all Riverboat Assets of the Reorganized Crescent City shall be revested in the Reorganized Crescent City free and clear of all liens and/or encumbrances of any manner whatsoever. G. Taxes and Section 338(h)(10) Election. All of the tax benefits and tax obligations of Debtor arising prior to the Effective Date shall be for the account of the Debtor and shall be satisfied, discharged or otherwise provided for by the Liquidating Trust. The Liquidating Trust or CGII will be responsible for filing all federal, state and local tax returns through all relevant time periods until the Effective Date. Purchaser will co- operate with CGII and the Liquidating Trust to file Form 8023, to effectuate the election by the Debtor and CGII under section 338(g) and 338(h)(10) of the Internal Revenue Code. 1. With respect to the sale of the Shares, if so requested by the Debtor upon notice to Purchaser prior to the Closing Date, Debtor and Purchaser shall jointly make a Section 339(h)(10) Election (as hereinafter defined) in accordance with applicable laws and under any comparable provision of state or local law for which a separate election is permissible and as set forth herein. The Purchaser shall take all necessary steps to properly make a Section 338(g) Election (as hereinafter defined) in connection with the Section 338(h)(10) Election in accordance with applicable laws and under any comparable provision of state or local law for which a separate election is permissible. The Purchaser and Debtor agree to cooperate in good faith with each other in the preparation and timely filing of any tax returns required to be filed in connection with the making of such an election, including the exchange of information and the joint preparation and filing of Form 8023 and related schedules. 2. The Debtor shall be responsible for the preparation and filing of all Section 388 Forms (as hereinafter defined) in accordance with applicable tax laws and the terms of this Agreement and shall deliver such Section 338 Forms to Purchaser at least 30 days prior to the date such Section 338 Forms are required to be filed. Purchaser shall execute and deliver to the Debtor such documents or forms (including executed Section 338 Forms) as are requested and are required by any laws in order to properly complete the Section 338 Forms at least 20 days prior to the date such Section 338 Forms are required to be filed. 3. The Purchase Price, liabilities of the Companies and other relevant items shall be allocated in accordance with Section 338(b)(5) of the Code and the Treasury Regulations thereunder. 4. "Section 338 Forms" means all returns, documents, statements, and other forms that are required to be submitted to any federal, state or local taxing authority in connection with a Section 338(g) Election or a Section 338(h)(10) Election. Section 338 Forms shall include, without limitation, any "statement of section 338 election" and IRS Form 8023 (together with any schedules or attachments thereto) that are required pursuant to Treas. Regs. Section 1.338-1 or Treas. Regs. Section 1.338(h)(10)-1 or any successor provisions. 5. "Section 338(g) Election" means an election described in Section 338(g) of the Code in connection with an election under Section 338(h)(10) of the Code with respect to the acquisition of Shares pursuant to this Agreement. Section 338(g) Election shall include any corresponding election under any other relevant tax laws (e.g., state laws) for which a separate election is permissible with respect to the Purchaser's acquisition of Shares pursuant to this Agreement. 6. "Section 338(h)(10) Election" means an election described in Section 338(h)(10) of the Code with respect to the Purchaser's acquisition of Shares pursuant to this Agreement. Section 338(h)(10) Election shall include any corresponding election under any other relevant tax laws (e.g., state laws for which a separate election is permissible with respect to the Purchaser's acquisition of Shares pursuant to this Agreement. 7. Purchaser acknowledges that, in the absence of an effective election under Section 338(h)(10) of the Code, CGII will make any otherwise permitted election under Treas. Reg. Sec. 1.1502-20(g) with respect to the Debtor. Purchaser agrees to cooperate with CGII in meeting the requirements of such election, including causing the Debtor to comply with Treas. Regs. Sec. 1.1502-20(g)(5). Dated: New Orleans, Louisiana March 15, 1996 CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION By: /s/ EDWARD M. TRACY ------------------------- Name: Edward M. Tracy Title: President and CEO BRONFIN & HELLER, LLC Counsel to Debtor By: /s/ ROBYN J. SPALTER -------------------------- Jan M. Hayden (Law Bar #6672) Robyn J. Spalter (Law Bar #21116) 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130-6101 (504) 568-1888 EX-2.2 3 UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA IN RE: NO. 95-12735-TMB CHAPTER 11 CRESCENT CITY CAPITAL DEVELOPMENT CORPORATION DEBTOR A REORGANIZATION CASE UNDER CHAPTER 11 OF THE BANKRUPTCY CODE ORDER CONFIRMING PLAN The Second Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code filed by Crescent City Capital Development Corporation ("Debtor" or "Crescent City") on March 15, 1996, having been transmitted to creditors and equity security holders and the First Immaterial Modification to the Second Amended Plan of Reorganization of Crescent City Capital Development Corporation (the "First Immaterial Modification")] having been duly filed; and It having been determined that the First Immaterial Modification is immaterial; and it having been determined after hearing on notice that the requirements for confirmation set forth in 11 USC Sec. l 129(a) have been satisfied and that Reorganized Crescent City, the issuer of the Magic Notes pursuant to the Magic Indenture, and Jefferson Casino Corporation ("JCC") and C-M of Louisiana, Inc. ("CMLI"), the guarantors of the Magic Notes, is each deemed a debtor or successor to the Debtor within the meaning of 11 U.S.C. Sec. 1145(a); (STAMP ON EXHIBIT) I CERTIFY THAT THIS DOCUMENT IS A TRUE COPY OF THE ORIGINAL ON FILE IN THIS COURT /S/ FRANCES STARTY MAY 13, 1996, DEPUTY CLERK UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA All terms which are not defined herein are as defined in the Second Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code as modified by the First Immaterial Modification; ORDERED that the Second Amended Plan of Reorganization filed by Crescent City on March 15, 1996 with First Immaterial Modification is confirmed. A copy of the confirmed Plan and First Immaterial Modification is attached. ORDERED that at the consummation of the Plan the Riverboat Assets, including but not limited to the MN Crescent City Queen, Official Number 1028319, shall be released free and clear of all existing mortgages, liens and/or encumbrances and that each mortgage, lien and other encumbrance attaching to the Riverboat Assets at the time of the consummation of the Plan shall be released as follows: ORDERED that on the Effective Date the Secretary of State of Louisiana shall terminate and place of record such termination statement to fully terminate and erase from its record such termination statement to fully terminate and erase from its records the UCC Financing Statements as more specifically listed hereinbelow: 1. That certain UCC Financing Statement filed on February 11, 1994 under original file number 36-80863 in Orleans Parish, Louisiana, given by debtor, Crescent City Capital Development Corporation in favor of original secured party, First Trust National Association, as Trustee, covering" all of debtor's right, title and interest in all equipment, inventory, accounts, contract rights, general intangibles, deposit accounts, chattel paper, documents and instruments and all proceeds of the foregoing, whether now ... (see original)." 2. That certain UCC Financing Statement filed on February 11, 1994 under original file number 36-80864 in Orleans Parish, Louisiana, given by debtor, Crescent City Capital Development Corporation in favor of original secured party, First Trust National Association, as Trustee, covering "Hull No. 3009, being one (1) Riverboat Gaming Vessel, or Paddlewheel Casino Riverboat, having overall dimensions of 360'x99'xl4'. A description of the additional collateral covered by this financing statement (see original)". 3. That certain UCC Financing Statement filed on February 16, 1995 under original file number 36-91410 in Orleans Parish, Louisiana, given by debtor, Crescent City Capital Development Corporation in favor of original secured party, Gulf Gaming Equipment, Inc., subsequently assigned to Bally Gaming, Inc., covering "see exhibit 'A'. (1) Bally electronic gaming devices; any and all of borrowers present and future electronic gaming devices manufactured or distributed by Bally Gaming, Inc. (see original)." 4. That certain UCC Financing Statement filed on March 6, 1995 under original file number 36-91890 in Orleans Parish, Louisiana, given by debtor, Crescent City Capital Development Corporation in favor of original secured party, Jones Casino Supplies, Inc., covering "debtor's interest in all of the following, whether presently existing or hereafter acquired or arising in which debtor has or hereafter acquires any interest and wherever located (see original)". 5. That certain UCC Financing Statement filed on May 25, 1995 under original file number 09-928872 in Caddo Parish, Louisiana given by debtor, Crescent City Capital Development Corporation in favor of original security party, IGT, covering "debtors interest in the equipment shown on the attached schedule A and the proceeds and proceeds of sale thereof, proceeds of collateral are also covered". ORDERED that on the Effective Date the United States Department of Transportation, U.S. Coast Guard/U.S. National Vessel Documentation Center, 2039 Stonewall Jackson Drive, Failing Waters, West Virginia 25419, shall cancel and erase and place of record such cancellation and erasure to fully cancel and erase from its record the following Preferred Mortgage(s) and/or Claims against that certain MN Crescent City Queen, Official Number 1028319, as more specifically listed hereinbelow: 1. That certain Preferred Mortgage dated March 23, 1995 recorded with the U.S. Coast Guard in Book 9503, page 252 given by Crescent City Capital Development Corporation in favor of First Trust National Association, as Trustee, in the amount of $135,000,000.00. 2. That certain Claim dated June 2, 1995 recorded with the U. S. Coast Guard in Book 9506, page 33 by Grimaldi/C.R. Pittman, Grimaldi Construction, Inc. and C.R. Pittman Construction Co., Inc. in the amount of $11,404,802.00. 3. That certain Claim dated June 5, 1995 recorded with the U. S. Coast Guard in Book 9506, page 65 by BROADMOOR in the amount of $183,321.00. 4. That certain Claim dated June 6, 1995 recorded with the U. S. Coast Guard in Book 9506, page 74 by Arthur D. Darden, Inc. in the amount of $72,235.88. 5. That certain Claim dated June 5, 1995 recorded with the U. S. Coast Guard in Book 9506, page 81 by Imperial Trading Company, Inc. in the amount of $24,058.49. 6. That certain Claim dated June 5, 1995 recorded with the U. S. Coast Guard in Book 9506, page 82 by Delta Diversions, Inc. d/b/a Delta Gaming Company in the amount of $153,041.14. 7. That certain Claim dated June 6, 1995, recorded with the U. S. Coast Guard in Book 9506, page 84 by Midship Marine, Inc. in the amount of $53,664.81. 8. That certain Claim dated June 6, 1995, recorded with the U. S. Coast Guard in Book 9506, page 88 by C. Baxter, Jr. & Assocs. Int'l., Inc. in the amount of $72,405.39. 9. That certain Claim dated June 2, 1995, recorded with the U. S. Coast Guard in Book 9506, page 95 by Richard's Restaurant Supply, Inc. in the amount of $72,850.31. 10. That certain Claim dated June 8, 1995 recorded with the U. S. Coast Guard in Book 9506, page 133 by Crescent City Moving & Storage, Inc. in the amount of $98,482.00. 11. That certain Claim dated June 9, 1995, recorded with the U. S. Coast Guard in Book 9506, page 135 by River Marine Services, Inc. in the amount of $249,721.00. 12. That certain Claim dated June 9, 1995, recorded with the U. S. Coast Guard in Book 9506, page 140 by Limousine Livery, Ltd. in the amount of $1,160,000.00. 13. That certain Claim dated June 9, 1995, recorded with the U. S. Coast Guard in Book 9506, page 144 by Boland Marine & Manufacturing Company, Inc. in the amount of $14,464.64. 14. That certain Claim dated June 9, 1995, recorded with the U. S. Coast Guard in Book 9506, page 156 by Computer Technology Center, A Division of Universal Telephone Company, Inc. in the amount of $36,182.44. 15. That certain Claim dated June 9, 1995, recorded with the U. S. Coast Guard in Book 9506, page 157 by Communicore, Inc. d/b/a MULTICOM in the amount of $345,135.07. 16. That certain Claim dated June 12, 1995, recorded with the U. S. Coast Guard in Book 9506, page 165 by River Parish Disposal, Inc. in the amount of $55,957.50. 17. That certain Claim dated June 12, 1995, recorded with the U. S. Coast Guard in Book 9506, page 168 by Gulf South Systems, Inc. in the amount of $23,639.40. 18. That certain Claim dated June 13, 1995, recorded with the U. S. Coast Guard in Book 9506, page 178 by The Board of Commissioners of the Port of New Orleans, LA in the amount of $110,194.00. 19. That certain Claim dated June 13, 1995, recorded with the U. S. Coast Guard in Book 9506, page 194 by the City of New Orleans in the amount of $437,203.00. 20. That certain Claim dated June 13, 1995, recorded with the U. S. Coast Guard in Book 9506, page 195 by the City of New Orleans in the amount of $126,128.88. 21. That certain Claim dated June 16, 1995, recorded with the U. S. Coast Guard in Book 9506, page 242 by Bravo Special Events Management Company, A Division of Pete Fountain Productions, Inc. in the amount of $164,031.53. 22. That certain Claim dated June 16, 1995, recorded with the U. S. Coast Guard in Book 9506, page 243 by Jones Casino Supplies, Inc. in the amount of $421,859.26. 23. That certain Claim dated June 17, 1995, recorded with the U. S. Coast Guard in Book 9506, page 259 by Ammon & Associates, Inc. in the amount of $16,236.70. 24. That certain Claim dated June 13, 1995, recorded with the U. S. Coast Guard in Book 9506, page 265 by Hotard Coaches, Inc. in the amount of $76,810.00. 25. That certain Claim dated June 15, 1995, recorded with the U. S. Coast Guard in Book 9506, page 271 by Helm Paint & Supply, Inc. in the amount of $2,301.00. 26. That certain Claim dated June 9, 1995, recorded with the U. S. Coast Guard in Book 9506, page 302 by State of Louisiana, Department of Revenue and Taxation in the amount of $4,389,125.00. 27. That certain Claim dated June 22, 1995, recorded with the U. S. Coast Guard in Book 9506, page 313 by City of New Orleans, Bureau of Revenue in the amount of $126,128.88. 28. That certain Claim dated June 28, 1995, recorded with the U. S. Coast Guard in Book 9506, page 339 by International Electronic Protection, Ltd. in the amount of $326,774.64. 29. That certain Claim dated June 14, 1995, recorded with the U. S. Coast Guard in Book 9506, page 341 by Bayou Beouf Electric of Alabama, Inc. in the amount of $92,990.20. 30. That certain Claim dated July 3, 1995, recorded with the U. S. Coast Guard in Book 9507, page 6 by Directions In Design, Inc. in the amount of $326,993.10. 31. That certain Claim dated July 6, 1995, recorded with the U. S. Coast Guard in Book 9507, page 120 by Michael T. Roberts d/b/a MTR Design Service in the amount of $1,295.40. 32. That certain Claim dated July 6, 1995, recorded with the U. S. Coast Guard in Book 9507, page 121 by Consolidated Electrical Distributors, Inc. d/b/a .-ED in the amount of $1,477.72. 33. That certain Claim dated July 12, 1995, recorded with the U. S. Coast Guard in Book 9507, page 124 by City of New Orleans, Bureau of Revenue in the amount of $1,125,979.24. 34. That certain Claim dated July 12, 1995, recorded with the U. S. Coast Guard in Book 9507, page 125 by City of New Orleans, Bureau of Revenue in the amount of $324,167.39. 35. That certain Claim dated July 13, 1995, recorded with the U. S. Coast Guard in Book 9507, page 152 by TCS America, Inc. in the amount of $22,190.00. 36. That certain Claim dated July 14 1995, recorded with the U. S. Coast Guard in Book 9507, page 154 by H.J.M. Machine Shop, Inc. in the amount of $61,471.18. 37. That certain Claim dated July 17, 1995, recorded with the U. S. Coast Guard in Book 9507, page 193 by GDC, Inc. in the amount of $74,978.00. 38. That certain Claim dated July 18, 1995, recorded with the U. S. Coast Guard in Book 9507, page 194 by Priority EMS, Inc. in the amount of $36,864.1 0. 39. That certain Claim dated July 17, 1995, recorded with the U. S. Coast Guard in Book 9507, page 196 by Bender Shipyard, Inc. in the amount of $833,078.91. 40. That certain Claim dated July 17, 1995, recorded with the U. S. Coast Guard in Book 9507, page 219 by Magnolia Marketing Company in the amount of $17,247.60. 41. That certain Claim dated August 2, 1995, recorded with the U. S. Coast Guard in Book 9508, page 41 by Radiofone, Inc. in the amount of $68,015.00. 42. That certain Claim dated August 2, 1995, recorded with the U. S. Coast Guard in Book 9508, page 42 by Partysist, Inc. in the amount of $3,711.50. 43. That certain Claim dated August 8, 1995, recorded with the U. S. Coast Guard in Book 9508, page 44 by Food Art, Inc. in the amount of $19,993.08. 44. That certain Claim dated September 19,1995, recorded with the U. S. Coast Guard in Book 9509, page 74 by D & L Equipment, Inc. in the amount of $1,324.36. 45. That certain Claim dated September 19, 1995, recorded with the U. S. Coast Guard in Book 9509, page 75 by American Machinery Movers, Inc. in the amount of $15,881.00. 46. That certain Claim dated September 20, 1995, recorded with the U. S. Coast Guard in Book 9509, page 89 by New Orleans International Cruise Ship Terminal, Inc. in the amount of $1,600.00. 47. That certain Claim dated November 15, 1995, recorded with the U. S. Coast Guard in Book 95-5, page 734, by Bayou Boeuf Electric of Alabama, Inc. in the amount of $92,990.20. 48. That certain Claim dated December 5, 1995, recorded with the U. S. Coast Guard in Book 95-9, page 381 by American Machinery Movers, Inc. in the amount of $15,881.00 (refers to Book 9509, page 75). ORDERED that on the Effective Date, Sandra M. Hardin, the Clerk of Court and Ex-Officio Recorder of Mortgages for Plaquemines Parish shall cancel from the records of her office the liens, mortgages, security interests, privileges and/or encumbrances more specifically listed hereinbelow: 1. Liens and/or encumbrances in favor of Grinnell Fire Protection Systems Co., a division of Grinnell Corp.: (a) MOB 244, folio 639 Statement of Claim. (b) MOB 244, folio 670 in amount of $46,198.00. (c) MOB 245, folio 11 19 Supplement to Affidavit of Lien. (d) MOB 245, folio 1134 Supplemental in amount of $66,429.21. 2. MOB 247, folio 494 in favor of Bender Shipyard, Inc. in the amount of $833,078.91. ORDERED that on the Effective Date, Michael P. McCrossen, the Recorder of Mortgages for the Parish of Orleans shall cancel from the records of his office the liens, mortgages, security interests, privileges and/or encumbrances more specifically listed hereinbelow: 1. Mortgage Office Instrument No. 309446 in favor of Insulation Sales & Service, Inc. in the amount of $370,809.00. 2. Mortgage Office Instrument No. 309447 in favor of Insulation Sales & Service, Inc. in the amount of $86,487.00. 3. Mortgage Office Instrument No. 310749 in favor of Grinnell Fire Protection Systems Co., a division of Grinnell Corp. in the amount of $66,429.21. 4. Mortgage Office Instrument No. 310750 in favor of Grinnell Fire Protection Systems Co., a division of Grinnell Corp. in the amount of $66,429.21. 5. Mortgage Office Instrument No. 312349 in favor of Broadmoor in the amount of $810,349.00. 6. Mortgage Office Instrument No. 315001 in favor of Lucien T. Vivien & Associates, Inc. in the amount of $9,400.00. 7. Mortgage Office Instrument No. 31501 0 in favor of Lucien (Luciet) T. Vivien & Associates, Inc. in the amount of $24,676.59. B. Mortgage Office Instrument No. 315011 in favor of Lucien T. Vivien & Associates, Inc. in the amount of $5,985.00. 9. Mortgage Office Instrument No. 316714 in favor of The Ellis Company, Inc. in the amount of $42,977.00. 10. Mortgage Office Instrument No. 316838 in favor of Hewitt-Washington & Associates, Architects. 11. Mortgage Office Instrument No. 316873 in favor of Grimaldi/C.R. Pittman, A Joint Venture in the amount of $11,404,802.00. 12. Mortgage Office Instrument No. 316943 in favor of George M. Raymond Company in the amount of $58,353.45. 13. Mortgage Office Instrument No. 316944 in favor of George M. Raymond Company in the amount of $1,000,871.50. 14. Mortgage Office Instrument No. 317015 in favor of Lyons & Hudson Architects, Ltd. in the amount of $216,700.00. 15. Mortgage Office Instrument No. 317157 in favor of Delta Diversions, Inc. d/b/a Delta Gaming Co. in the amount of $153,041.14. 16. Mortgage Office Instrument No. 317158 in favor of Imperial Trading Co., Inc. in the amount of $24,058.49. 17. Mortgage Office Instrument No. 317161 in favor of Gandolfo Kuhn & Associates in the amount of $25,726.00. 18. Mortgage Office Instrument No. 317162 in favor of Morphy Makofsky, Inc. in the amount of $181,347.20. 19. Mortgage Office Instrument No. 317163 in favor of Design Consortium, Ltd. in the amount of $165,494.00. 20. Mortgage Office Instrument No. 317165 in favor of Bender Shipyard, Inc. in the amount of $833,078.91. 21. Mortgage Office Instrument No. 317232 in favor of William A. De La Houssaye, Inc. in the amount of $42,902.57. 22. Mortgage Office Instrument No. 317234 in favor of Searcy Steel Company, Inc./Russellville in the amount of $833,078.91. 23. Mortgage Office Instrument No. 317247 in favor of Technifex, Inc. in the amount of $140,827.00. 24. Mortgage Office Instrument No. 317282 in favor of Burk-Kleinpeter, Inc. in the amount of $102,399.81, 25. Mortgage Office Instrument No. 317287 in favor of the City of New Orleans in the amount of $126,128.88. 26. Mortgage Office Instrument No. 317288 in favor of the City of New Orleans in the amount of $126,128.88. 27. Mortgage Office Instrument No. 317305 in favor of the City of New Orleans in the amount of $437,203.00. 28. Mortgage Office Instrument No. 317308 in favor of the City of New Orleans in the amount of $437,203.00. 29. Mortgage Office Instrument No. 317309 in favor of the City of New Orleans in the amount of $437,203.00. 30. Mortgage Office Instrument No. 31731 0 in favor of the City of New Orleans in the amount of $437,203.00. 31. Mortgage Office Instrument No. 317318 in favor of Hercules Sheet Metal, Inc. in the amount of $388,277.47. 32. Mortgage Office Instrument No. 317341 in favor of Eustis Engineering Company, Inc. in the amount of $27,072.25. 33. Mortgage Office Instrument No. 317395 in favor of the City of New Orleans in the amount of $437,203.00. 34. Mortgage Office Instrument No. 317398 in favor of Balar Associates, Inc. in the amount of $241,077.90. 35. Mortgage Office Instrument No. 317399 in favor of Urban Systems, Inc. in the amount of $20,914.64. 36. Mortgage Office Instrument No. 317414 in favor of Boh Bros. Construction Co., L.L.C. in the amount of $170,627.50. 37. Mortgage Office Instrument No. 317469 in favor of HJM Machine Shop, Inc. in the amount of $123,148.96. 38. Mortgage Office Instrument No. 317574 in favor of the Delta Testing and Inspection, Inc. in the amount of $25,787.35. 39. Mortgage Office Instrument No. 317575 in favor of the Delta Testing and Inspection, Inc. in the amount of $13,710.40. 40. Mortgage Office Instrument No. 317576 in favor of the Delta Testing and Inspection, Inc. in the amount of $4,609.25. 41. Mortgage Office Instrument No. 317577 in favor of the Delta Testing and Inspection, Inc. in the amount of $5,527.12. 42. Mortgage Office Instrument No. 317747 in favor of Reginald Sheffield Smith, Jr. in the amount of $36,097.20. 43. Mortgage Office Instrument No. 317769 in favor of Southern Heater Company, Inc. in the amount of $5,592.73. 44. Mortgage Office Instrument No. 317814 in favor of the State of Louisiana in the amount of $6,422,813.00. 45. Mortgage Office Instrument No. 317815 in favor of the State of Louisiana in the amount of $103,125.00. 46. Mortgage Office Instrument No. 317816 in favor of the State of Louisiana in the amount of $1,524,847.00. 47. Mortgage Office Instrument No. 317818 in favor of the State of Louisiana in the amount of $15,000.00. 48. Mortgage Office Instrument No. 317819 in favor of the State of Louisiana in the amount of $3,180,000.00.00. 49. Mortgage Office Instrument No. 317820 in favor of the State of Louisiana in the amount of $1,175,000.00. 50. Mortgage Office Instrument No. 317821 in favor of the State of Louisiana in the amount of $19,125.00. 51. Mortgage Office Instrument No. 317848 in favor of the Frischertz Electric Company, Inc. in the amount of $1,279,621.50. 52. Mortgage Office Instrument No. 318092 in favor of the City of New Orleans in the amount of $126,128.88. 53. Mortgage Office Instrument No. 318348 in favor of LTH Construction, Inc. in the amount of $733,190.00. 54. Mortgage Office Instrument No. 318445 in favor of Carlo Ditta, Inc. in the amount of $79,375.43. 55. Mortgage Office Instrument No. 318525 in favor of Interior Systems Enterprises, Inc. in the amount of $56,829.91. 56. Mortgage Office Instrument No. 318526 in favor of Interior Systems Enterprises, Inc. in the amount of $56,829.91. 57. Mortgage Office Instrument No. 318759 in favor of Rust Scaffold Rental & Erection, Inc. in the amount of $175,482.45. 58. Mortgage Office Instrument No. 319186 in favor of Interior Systems Enterprises, Inc. in the amount of $111,636.14. 59. Mortgage Office Instrument No. 319196 in favor of Culinary Design and Fixture, Inc. in the amount of $167,343.00. 60. Mortgage Office Instrument No. 319197 in favor of Ammon & Associates, Inc. in the amount of $16,236.70. 61. Mortgage Office Instrument No. 319721 in favor of Grimaldi Construction, Inc. And C. R. Pittman in the amount of $56,829.91. 62. Mortgage Office Instrument No. 319853 in favor of Air-Side Equipment, Inc. in the amount of $8,921.65. 63. Mortgage Office Instrument No. 319884 in favor of Lerch Bates North America, Inc. in the amount of $7,870.96. 64. Mortgage Office Instrument No. 320133 in favor of Midstate Painting & Wallpapering Co., Inc. in the amount of $82,981.49. 65. Mortgage Office Instrument No. 320226 in favor of Rolf Jensen & Associates, Inc. in the amount of $16,115.04. 66. Mortgage Office Instrument No. 320366 in favor of Prime Equipment in the amount of $14,410.75. 67. Mortgage Office Instrument No. 321235 in favor of Primary Electric, Inc. in the amount of $39,461.00. 68. Mortgage Office Instrument No. 321371 in favor of Smith, Nelson & Oatis in the amount of $17,619.14 69. Mortgage Office Instrument No. 321846 in favor of the City of New Orleans in the amount of $1,125,979.24. 70. Mortgage Office Instrument No. 321848 in favor of the City of New Orleans in the amount of $1,125,979.24. 71. Mortgage Office Instrument No. 321850 in favor of the City of New Orleans in the amount of $324,167.39. 72. Mortgage Office Instrument No. 321851 in favor of the City of New Orleans in the amount of $1,125,797.24. 73. Mortgage Office Instrument No. 321852 in favor of the City of New Orleans in the amount of $324,167.39. 74. Mortgage Office Instrument No. 321882 in favor of LTH Construction, Inc. in the amount of $923,341.00. 75. Mortgage Office Instrument No. 321883 in favor of Grimaldi/C.R. Pittman in the amount of $12,251,740.00. 76. Mortgage Office Instrument No. 323303 in favor of the City of New Orleans. 77. Mortgage Office Instrument No. 328833 in favor of Rust Scaffold Rental & Erection, Inc. in the amount of $182,304.23. 78. Mortgage Office Instrument No. 329463 in favor of Culinary Design and Fixture, Inc. 79. Mortgage Office Instrument No. 330088 in favor of The Larson Company in the amount of $326,372.00. ORDERED that if on or before the Effective Date, Bally Gaming, Inc. Is not satisfied or agreement is not reached between Reorganized Crescent City and Bally Gaming, Inc. as to the treatment, payment and securitization of Bally Gaming, Inc.'s Claim, the cancellation of the Bally Gaming, Inc. UCC Financing Statement, referred to herein, shall be ineffective, and the Secretary of State shall not cancel said UCC Financing Statement. ORDERED that the Magic Notes to be issued pursuant to the Magic Indenture are exempt from the registration requirements of the Securities Act of 1933, as amended, and any state or local law requiring registration for the offer or sale of a security or registration or licensing of an issuer of, underwriter of, or broker or dealer in, a security provided in 11 U.S.C. Sec. l 145, except with respect to an entity that is an underwriter as defined in 11 U.S.C. Sec. l 145(b). ORDERED that except as otherwise provided in the Plan, on the Effective Date of the Plan, in accordance with sections 1141(b) and 1141(c) of the Bankruptcy Code, all property of the Debtor's estate which is to be vested in the Reorganized Crescent City is hereby vested in the Reorganized Crescent City free and clear of all claims and interests of creditors and equity security holders of the Debtor and all other property is conveyed in accordance with the terms of the Plan. ORDERED that except as otherwise provided in the Plan, and effective upon the occurrence of the Effective Date of the Plan, in accordance with section 1141(d) of the Bankruptcy Code, Reorganized Crescent City be, and it hereby is, discharged of and from any and all debts and Claims that arose against it before the Effective Date including, without limitation, any debt or Claim of a kind specified in section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (i) a proof of claim based on such a debt is filed or deemed filed under section 501 of the Bankruptcy Code, (ii) such Claim is allowed under section 502 of the Bankruptcy Code, or (iii) the holder of such Claim has accepted the Plan. ORDERED that the commencement or continuation of any action, the employment of process, or any act to collect, recover or offset any debt discharged hereunder as a personal liability of the Reorganized Crescent City, or from property of the Reorganized Crescent City, be, and it hereby is, permanently enjoined, stayed and restrained. ORDERED that this Court's previous order confirming the Debtor's First Amended Plan of Reorganization, entered on January 12, 1996 is hereby revoked. New Orleans, Louisiana, this 29th day of April, 1996. /S/ T. M. BRAHNEY ---------------------------- JUDGE T. M. BRAHNEY UNITED STATES BANKRUPTCY JUDGE EX-4 4 _________________________________________________________________ CASINO MAGIC OF LOUISIANA, CORP. Issuer and THE GUARANTORS NAMED HEREIN and FIRST TRUST NATIONAL ASSOCIATION Trustee ________________________ INDENTURE Dated as of May 13, 1996 ________________________ $35,000,000 11 1/2% Senior Secured Notes due 1999 _________________________________________________________________ Reconciliation and Tie between Trust Indenture Act of 1939 and Indenture dated as of May 13, 1996 TRUST INDENTURE ACT SECTION INDENTURE SECTION S 310(a)(1)............................................................7.10 (a)(2)............................................................7.10 (a)(3)............................................................N.A. (a)(4)............................................................N.A. (a)(5)............................................................7.10 (b)....................................................7.8; 7.10; 13.2 (c)...............................................................N.A. S 311(a)...............................................................7.11 (b)...............................................................7.11 (c)...............................................................N.A. S 312(a)........................................................ .......2.5 (b)...............................................................13.3 (c)...............................................................13.3 S 313(a)................................................................7.6 (b)(1)............................................................N.A. (b)(2).............................................................7.6 (c)..........................................................7.6; 13.2 (d)................................................................7.6 S 314(a)..........................................................5.8; 13.1 (b)................................................................4.2 (c)(1)..................................................2.2; 7.2; 13.4 (c)(2).......................................................7.2; 13.4 (c)(3).............................................................4.2 (d)................................................................4.2 (e)...............................................................13.5 (f)...............................................................N.A. S 315(a)................................................................7.1 (b).....................................................7.5; 7.6; 13.2 (c).............................................................7.1(a) (d).....................................................2.8; 6.12; 7.1 (e)...............................................................6.14 S 316(a)(last sentence).................................................2.9 (a)(1)(A).........................................................6.12 (a)(1)(B).........................................................6.13 (a)(2)............................................................N.A. (b)..........................................................6.13; 6.8 (c)...............................................................Note S 317(a)(1).............................................................6.3 (a)(2).............................................................6.4 (b)................................................................2.4 S 318(a)...............................................................13.1 _______________ This Reconciliation and Tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS Page Article I. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1. Definitions.................................................1 Section 1.2. Incorporation by Reference of TIA..........................24 Section 1.3. Rules of Construction......................................24 Article II. THE NOTES Section 2.1. Form and Dating............................................25 Section 2.2. Execution and Authentication...............................25 Section 2.3. Registrar and Paying Agent.................................26 Section 2.4. Paying Agent to Hold Assets in Trust.......................27 Section 2.5. Noteholder Lists...........................................27 Section 2.6. Transfer and Exchange......................................28 Section 2.7. Replacement Notes..........................................28 Section 2.8. Outstanding Notes..........................................29 Section 2.9. Treasury Notes.............................................29 Section 2.10. Temporary Notes...........................................29 Section 2.11. Cancellation..............................................30 Section 2.12. Defaulted Interest........................................30 Article III. MANDATORY REDUCTION; REDEMPTION Section 3.1. Mandatory Principal Reduction with Excess Cash Flow........31 Section 3.2. Optional Redemption........................................32 Section 3.3. Election to Redeem; Notices to Trustee.....................32 Section 3.4. Selection by Trustee of Notes to be Redeemed...............32 Section 3.5. Notice of Redemption.......................................33 Section 3.6. Effect of Notice of Redemption.............................34 Section 3.7. Deposit of Redemption Price................................34 Section 3.8. Notes Redeemed in Part.....................................35 Section 3.9. Redemption Pursuant to Gaming Laws.........................35 Article IV. SECURITY Section 4.1. Security Interest..........................................35 Section 4.2. Recording; Opinions of Counsel.............................36 Section 4.3. Disposition of Certain Collateral..........................37 Section 4.4. Substitution of Collateral.................................39 Section 4.5. Release Date; Releases of Collateral.......................41 Section 4.6. Certain Other Releases of Collateral.......................42 Section 4.7. Payment of Expenses........................................42 Section 4.8. Suits to Protect the Collateral............................42 Section 4.9. Trustee's Duties...........................................43 Article V. COVENANTS Section 5.1. Payment of Notes...........................................44 Section 5.2. Maintenance of Office or Agency............................44 Section 5.3. Limitation on Restricted Payments..........................45 Section 5.4. Corporate Existence........................................45 Section 5.5. Payment of Taxes and Other Claims..........................45 Section 5.6. Maintenance of Insurance...................................46 Section 5.7. Compliance Certificate: Notice of Default..................46 Section 5.8. Reports....................................................47 Section 5.9. Waiver of Stay, Extension or Usury Laws....................47 Section 5.10. Limitation on Transactions with Affiliates................48 Section 5.11. Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock................................49 Section 5.12. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries....................................50 Section 5.13. Limitation on Liens.......................................51 Section 5.14. Limitation on Lines of Business...........................52 Section 5.15. Limitation on Status as Investment Company................52 Section 5.16. Restrictions on Sale and Issuance of Stock. Prior to the Release Date:.............................................52 Section 5.17. Restrictions on Subsidiaries..............................52 Section 5.18. Restrictions on Investments...............................52 Section 5.19. Restrictions on Capital Expenditures......................52 Section 5.20. Limitation on Sales of Assets and Subsidiary Stock........53 Section 5.21. Limitation on Merger, Sale or Consolidation...............54 Section 5.22. Maintenance of Business...................................54 Article VI. EVENTS OF DEFAULT AND REMEDIES Section 6.1. Events of Default..........................................55 Section 6.2. Rescission and Annulment...................................59 Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee....................................................60 Section 6.4. Trustee May File Proofs of Claim...........................60 Section 6.5. Trustee May Enforce Claims Without Possession of Notes.....61 Section 6.6. Priorities.................................................62 Section 6.7. Limitation on Suits........................................62 Section 6.8. Unconditional Right of Holders to Receive Principal, Premium and Interest.......................................63 Section 6.9. Rights and Remedies Cumulative.............................64 Section 6.10. Delay or Omission Not Waiver..............................64 Section 6.11. Control by Holders........................................64 Section 6.12. Waiver of Past Default....................................65 Section 6.13. Undertaking for Costs.....................................65 Section 6.14. Restoration of Rights and Remedies........................66 Section 6.15. Cash Proceeds from Collateral.............................66 Article VII. TRUSTEE Section 7.1. Duties of Trustee......................................... 66 Section 7.2. Rights of Trustee..........................................68 Section 7.3. Individual Rights of Trustee...............................69 Section 7.4. Trustee's Disclaimer.......................................69 Section 7.5. Notice of Default..........................................70 Section 7.6. Reports by Trustee to Holders..............................70 Section 7.7. Compensation and Indemnity.................................70 Section 7.8. Replacement of Trustee.....................................71 Section 7.9. Successor Trustee by Merger, Etc...........................73 Section 7.10. Eligibility; Disqualification.............................73 Section 7.11. Preferential Collection of Claims Against Company.........73 Article VIII. TERMINATION AND DISCHARGE Section 8.1. Termination of Obligations Upon Cancellation of the Notes..73 Section 8.2. Survival of Certain Obligations............................74 Section 8.3. Acknowledgment of Discharge by Trustee.....................74 Section 8.4. Reinstatement..............................................75 Article IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.1. Supplemental Indentures Without Consent of Holders.........75 Section 9.2. Amendments, Supplemental Indentures and Waivers with Consent of Holders.........................................76 Section 9.3. Compliance with TIA........................................78 Section 9.4. Revocation and Effect of Consents..........................78 Section 9.5. Notation on or Exchange of Notes...........................79 Section 9.6. Trustee to Sign Amendments, Etc............................79 Article X. MEETINGS OF NOTEHOLDERS Section 10.1. Purposes for Which Meetings May Be Called.................80 Section 10.2. Manner of Calling Meetings................................80 Section 10.3. Call of Meetings by Company or Holders....................81 Section 10.4. Who May Attend and Vote at Meetings.......................81 Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment.......................82 Section 10.6. Voting at the Meeting and Record to Be Kept...............83 Section 10.7. Exercise of Rights of Trustee or Noteholders May Not Be Hindered or Delayed by Call of Meeting....................83 Article XI. APPLICATION OF TRUST MONEYS Section 11.1. "Trust Moneys" Defined....................................84 Section 11.2. Withdrawals of Net Awards.................................86 Section 11.3. Withdrawal of Boat Conveyance Proceeds For Purchase or Qualified Lessee Lease of Substitute Boat.................90 Section 11.4. Withdrawal of Boat Conveyance Proceeds For Construction of Qualified Substitute Boat or for Capital Expenditures on such Qualified Substitute Boat.........................94 Section 11.5. Investment of Trust Moneys...............................101 Article XII. GUARANTY Section 12.1. Guaranty.................................................101 Section 12.2. Certain Bankruptcy Events................................103 Article XIII. MISCELLANEOUS Section 13.1. TIA Controls.............................................104 Section 13.2. Notices..................................................104 Section 13.3. Communications by Holders with Other Holders.............105 Section 13.4. Certificate and Opinion as to Conditions Precedent.......105 Section 13.5. Statements Required in Certificate or Opinion............106 Section 13.6. Rules by Trustee, Paying Agent, Registrar................106 Section 13.7. Legal Holidays...........................................106 Section 13.8. Governing Law............................................107 Section 13.9. No Adverse Interpretation of Other Agreements............107 Section 13.10. No Recourse against Others..............................107 Section 13.11. Successors..............................................108 Section 13.12. Duplicate Originals.....................................108 Section 13.13. Severability............................................108 Section 13.14. Table of Contents, Headings, Etc........................108 EXHIBITS Exhibit A -- Form of Note Exhibit B -- Form of Guaranty Exhibit C -- Tax Sharing Treaty Exhibit D -- JCC Real Property Description Exhibit E -- JCC Indebtedness INDENTURE, dated as of May 13, 1996, between Casino Magic of Louisiana, Corp., a Louisiana corporation (the "Company"), the Guarantors referred to below and First Trust National Association, as Trustee. Each party hereto agrees as follows for the benefit of each other party and for the equal and ratable benefit of the Holders of the Company's 11 1/2% Senior Secured Notes due 1999: Article I. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1. DEFINITIONS. "ACCELERATION NOTICE" shall have the meaning specified in Section 6.1. "ADJUSTED RENT OBLIGATIONS" means the obligations of the Company to the lessor under a Qualified Lessee Lease which would be in the nature of "basic rent" or "fixed rent" under a "triple net" lease of Property, which obligations in any event shall not include any amount attributable to the operating expenses of or payment of taxes or insurance on such Substitute Boat subject to such lease. "ADVERSE STATE ACTION" means any administrative, regulatory or judicial act or action of a Governmental Authority of the State of Louisiana the effect of which is to prohibit, or to upon effectiveness prohibit, or to restrict, or to upon effectiveness restrict, the ability of the Company to conduct the business of operating a riverboat casino in Bossier City, Louisiana. "AFFILIATE" means (i) any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, any or any of their respective Subsidiaries, (ii) any spouse, immediate family member, or other relative who has the same principal residence of any person described in clause (i) above, and (iii) any trust in which any person described in clause (i) or (ii) above has a beneficial interest. For purposes of this definition, the term "control" means (a) the power to direct the management and policies of a person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise, or (b) the beneficial ownership of 10% or more of any class of voting Capital Stock of a person (on a fully diluted basis) or of warrants or other rights to acquire such class of Capital Stock (whether or not presently exercisable). "AFFILIATE CONVEYANCE" shall have the meaning specified in Section 5.10. "AFFILIATE TRANSACTION" shall have the meaning specified in Section 5.10. "AGENT" means any Registrar, Paying Agent or co-Registrar. "AGGREGATE EXCESS CASH FLOW" has the meaning set forth in Section 3.1 hereof. "ARCHITECT'S CERTIFICATE" means a certificate of an independent, reputable architect or engineer, licensed in the state in which the applicable Property is located and experienced in the design, construction and operation of the type of the applicable Property. "ASSET SALE" shall have the meaning specified in Section 5.20. "AVERAGE LIFE" means, as of the date of determination, with respect to any security or instrument, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal (or redemption) payment of such security or instrument multiplied by the amount of such principal (or redemption) payment by (ii) the sum of all such principal (or redemption) payments. "BASIC SUB-ACCOUNT" shall have the meaning provided in Section 11.1. "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "BOARD OF DIRECTORS" means, with respect to any person, the Board of Directors of such person or any committee of the Board of Directors of such person authorized, with respect to any particular matter, to exercise the power of the Board of Directors of such person. "BOAT CONVEYANCE PROCEEDS" means Cash received by the Company (i) as consideration for the sale by the Company of the Crescent City Queen Casino, or (ii) as rents, profits, or any other proceeds of a Qualified Lessor Lease. "BOAT CONVEYANCE PROCEEDS SUB-ACCOUNT" shall have the meaning provided in Section 11.1. "BOARD RESOLUTION" means, with respect to any person, a duly adopted resolution of the Board of Directors of such person. "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. "CAPITAL EXPENDITURES" means all expenditures, except interest capitalized during construction, which, in accordance with GAAP, are required to be included in Property, plant and equipment or similar fixed asset account. "CAPITAL STOCK" means, with respect to any corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. "CAPITALIZED LEASE OBLIGATION" means obligations under a lease, entered into on or after the Issue Date, that are required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented as such obligations shall be the capitalized amount of such obligations, as determined in accordance with GAAP. "CASH" means U.S. Legal Tender or U.S. Government Obligations. "CASH EQUIVALENT" means (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that good full faith and credit of the United States of America is pledged in support thereof), (ii) time deposits and certificates of deposit of banks doing business in the States of Louisiana and Minnesota which are not Affiliated with the Company, (iii) time deposits and certificates of deposit of banks, and commercial paper issued by the parent corporation of any domestic commercial bank, of recognized standing having capital and surplus in excess of $500,000,000, and commercial paper issued by others rated at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2 or the equivalent thereof by Moody's Investors Service, Inc. and in each case maturing within one year after the date of acquisition, (iv) investments in money market funds substantially all of whose assets comprise securities of the types described in clauses (i) and (iii) above, and (v) bank accounts maintained by the Grantor or a Guarantor in the ordinary course of its business. "CMLI MORTGAGE" means the Mortgage, Assignment of Leases and Rents, and Security Agreement Securing Future Advances dated as of May 13, 1996 by C-M of Louisiana, Inc., a Louisiana corporation (n/k/a JCC) to the Trustee, as the same may be amended from time to time. "CMLI REAL PROPERTY" means the real Property owned by CMLI in Bossier Parish, Louisiana, described in EXHIBIT D hereto, and all improvements to such real Property existing on or after May 13, 1996. "COLLATERAL" means, subject to Section 4.5 hereof, the Property and assets of the Company and the Property and assets of the Guarantors which are subject to the Liens created by the Collateral Documents, including, but not limited to, the Crescent City Queen Casino, any Qualified Substitute Boat or Substitute Boat, in each case owned by the Company, each Qualified Lessor Lease and Qualified Lessee Lease, the Boat Conveyance Proceeds, all other Property of the Company owned as of the Issue Date or thereafter acquired (other than (i) certain Cash of the Company arising from the gaming operations (or operations incidental or ancillary thereto) of the Company conducted in the ordinary course of business, including, without limitation, the sale of inventory and provision of services in the ordinary course of the Company's gaming business, (ii) Cash of JCC received from Parent Equity Contributions or as proceeds of Indebtedness which JCC may incur under clause (g) of Section 5.11 hereof, and (iii) furniture, fixtures and equipment of the Company (except furniture, fixtures and equipment which the Company acquires after May 13, 1996 (other than that acquired pursuant to Permitted FF&E Financing)), the CMLI Real Property, all the issued Capital Stock of the Company and all other real and personal Property of the Guarantors owned as of May 13, 1996 or thereafter acquired. "COLLATERAL ACCOUNT" shall have the meaning provided in Section 11.1. "COLLATERAL DOCUMENTS" means, collectively, the Security Agreement, the Mortgage, any Other Boat Mortgage, the JCC Mortgage, all agreements relating to the Collateral Account, and all other security agreements, mortgages, deeds of trust, assignments of leases and rents, pledges, collateral assignments or any other instruments evidencing or creating any security interest in favor of the Trustee for the benefit of the Holders in all or any portion of the Property of the Company or any Guarantor, as the same may be modified, amended or supplemented from time to time. "COMMENCEMENT DATE" means the earlier of (i) the date that is 180 days after May 13, 1996 and (ii) the date on which the Company opens a riverboat casino for public gaming play in Bossier City, Louisiana. "COMPANY" means the party named as such in this Indenture until a successor replaces it pursuant to the Indenture and thereafter means such successor. "COMPANY CASH FLOW" means, for any period, the Net Income of the Company for such period adjusted to add thereto, without duplication, the sum of (i) Depreciation and Amortization of the Company for such period, (ii) Fixed Charges, which reduced Net Income, of the Company for such period, and (iii) all cash Income Tax Credit of the Company for such period, and adjusted to subtract therefrom, all cash Income Tax Expense of the Company for such period. "COMPANY COLLATERAL SUB-ACCOUNT" shall have the meaning provided in Section 11.1. "COMPANY ORDER" means a written order or request signed in the name of the Company by its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "COMPANY PAYMENT SUB-ACCOUNT" shall have the meaning provided in Section 11.1. "CONSULTING PROFESSIONAL" means a construction manager or consultant experienced in the gaming business, engaged by the Trustee unless otherwise instructed by Holders holding a majority in principal amount of the Notes outstanding at the time of selection. "CRESCENT CITY QUEEN CASINO" means the New Orleans Riverboat Casino known as the M/V Crescent City Queen with respect to which the Company has a Louisiana Gaming Operator's License. "CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy. "DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default. "DEFINITIVE GAMING OPERATOR'S LICENSE" means a Louisiana Gaming Operator's License issued to the Company and with respect to which no condition or other requirement of any Gaming Law or Gaming Authority to the validity or effectiveness of such license or to the ability of the Company to conduct gaming operations on and operate the New Orleans Riverboat, remains unfulfilled. "DEPRECIATION AND AMORTIZATION" for any person means the total depreciation and amortization for such person and its Subsidiaries, as determined in accordance with GAAP. "DISQUALIFIED CAPITAL STOCK" means, with respect to any person, any Capital Stock other than any common stock with no special rights and no preference, privilege or redemption or repayment provisions. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ESTIMATE" has the meaning assigned to such term in the Collateral Documents. "EVENT OF DEFAULT" shall have the meaning specified in Section 7.1. "EVENT OF LOSS" means, with respect to any Property or asset, any (i) loss, destruction or damage of such Property or asset, or (ii) any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such Property or asset, or confiscation or requisition of the use of such Property or asset. "EXCESS CASH FLOW" means for any fiscal quarter or portion thereof, the amount of the sum of (x) Company Cash Flow (if greater than zero) for such period plus (but not reduced by) (y) Guarantor Cash Flow for such period less the sum of (i) the Cash Fixed Charges, which reduced Net Income, of the Company for such period (but only to the extent such Fixed Charges were not funded by Collateral), (ii) regularly scheduled principal payments on the Notes (but not payments of Excess Cash Flow) during such period, (iii) scheduled principal payments on assumed Existing FF&E Indebtedness and (iv) the cash interest expense of the Guarantors in respect of Indebtedness, all of the proceeds of which have been used to make Permitted Capital Expenditures in respect of the CMLI Real Property (but only to the extent such expense was not funded by Collateral), for such period, that exceeds the sum of (a) Permitted Capital Expenditures other than Capital Expenditures funded with Collateral or with a Parent Equity Contribution (but only to the extent of such Collateral or Parent Equity Contribution), and (b) an amount which for any fiscal quarter shall be in the sole discretion of the Company but which may not for all fiscal quarters of the Company exceed $5 million (less the aggregate amount of any indemnity or other liabilities arising out of a Qualified Sale or Qualified Lessor Lease which have been claimed during or prior to such period under such Qualified Sale or Qualified Lessor Lease, but only to the extent such indemnity or liability has reduced Net Income) in the aggregate. "EXCESS CASH REDEMPTION AMOUNT" for any Interest Payment Date means the amount of the Aggregate Excess Cash Flow to be paid to the Holders on such Interest Payment Date in reduction of the outstanding principal amount of the Notes pursuant to Section 3.1 hereof TIMES a fraction, the numerator of which is 100 and the denominator of which is the sum of (i) 100 plus (ii) the Excess Cash Redemption Premium for such Interest Payment Date. "EXCESS CASH REDEMPTION PREMIUM" means (i) on any Interest Payment Date occurring on or before the first anniversary of the Commencement Date, zero, (ii) on any Interest Payment Date occurring on or after the first anniversary of the Commencement Date but on or before the second anniversary of the Commencement Date, ten percent (10%) TIMES a fraction, the numerator of which is the amount of calendar days having elapsed from and including the day after the first anniversary of the Commencement Date to and including such Interest Payment Date, and the denominator of which is three hundred and sixty-five (365), and (iii) on any Interest Payment Date occurring after the second anniversary of the Commencement Date but before the third anniversary of the Commencement Date, twenty percent (20%) TIMES a fraction, the numerator of which is the amount of calendar days having elapsed from and including the day after the second anniversary of the Commencement Date to and including such Interest Payment Date, and the denominator of which is three hundred and sixty-four (364). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. "EXISTING FF&E FINANCING" means all Indebtedness arising out of the assumption of all claims of Bally Gaming, Inc. and International Game Technology Corp. or their respective successors, assigns, affiliates or agents pursuant to the Stock Purchase Agreement. "FIXED CHARGES" of any person means, for any period, the aggregate amount (without duplication) of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued in accordance with GAAP (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) during such period in respect of all Indebtedness of such person and its Subsidiaries, including (i) original issue discount and non- cash interest payments or accruals on any Indebtedness other than with respect to the Notes, (ii) the interest portion of all deferred payment obligations, calculated in accordance with GAAP, (iii) all commissions, discounts and other fees and charges owed with respect to bankers' acceptance financings and currency and Interest Swap Obligations, in each case to the extent attributable to such period and determined on a consolidated basis in accordance with GAAP, and (b) the rental expense for such period attributable to operating leases of such person and its Subsidiaries. For purposes of this definition, (x) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP and (y) interest expense attributable to any Indebtedness represented by the guaranty by such person or a Subsidiary of such person of an obligation of another person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed. "GAAP" means United States generally accepted accounting principles as in effect on the Issue Date. "GAMING AUTHORITY" means any Governmental Authority with the power to regulate gaming in any Gaming Jurisdiction, and the corresponding Governmental Authorities with responsibility to interpret and enforce the laws and regulations application to gaming in any Gaming Jurisdiction. "GAMING JURISDICTION" means any Federal, state, tribal or local jurisdiction or sovereign nation in which any entity in which the Company has a direct or indirect beneficial, legal or voting interest conducts or intends to conduct casino gaming (including the rendering of management services in respect thereof pursuant to a Native American Casino Management Contract or otherwise). "GAMING LAW" means any law, rule, regulation or ordinance governing gaming activities, including the Louisiana Economic Development and Riverboat Gaming Control Act and the Indian Gaming Regulatory Act, 25 U.S.C. Sec. 2701 et seq., any administrative rules or regulations promulgated thereunder, and any of the corresponding statutes, rules and regulations in each Gaming Jurisdiction. "GAMING LICENSES" means every material license, material franchise or other material authorization on the date of the Indenture or thereafter required to own, lease, operate or otherwise conduct or manage riverboat, dockside or land-based gaming in any Gaming Jurisdiction, and applicable liquor licenses. "GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States or a tribal or foreign government, any sovereign nation where the Company or any Guarantor conducts business (including the rendering of management services in respect thereof pursuant to a Native American Casino Management Contract or otherwise), any state, province or any city or other political subdivision or otherwise and whether now or hereafter in existence, or any officer or official thereof, and any maritime authority. "GUARANTORS" means JCC and any other person who executes and delivers a Guaranty on or after the date hereof. "GUARANTOR CASH FLOW" means, for any period, sixty percent (60%) of the amount of the Net Income for such period, or forty percent (40%) of the amount of the Net Loss for such period, of the Guarantors from the JCC Real Property adjusted to add to such Net Income, without duplication, the sum of (i) Depreciation and Amortization expense of the Guarantors and (ii) Fixed Charges of the Guarantors. "GUARANTOR COLLATERAL SUB-ACCOUNT" shall have the meaning provided in Section 11.1. "GUARANTY" shall have the meaning provided in Section 12.1(a). "HOLDER" or "NOTEHOLDER" means the person in whose name a Note is registered on the Registrar's books. "INCOME TAX CREDIT" of the Company means the total net income tax credits of the Company as determined under the Tax Sharing Treaty. "INCOME TAX EXPENSE" of the Company means the total net income tax expenses of the Company as determined under the Tax Sharing Treaty. "INCUR" shall have the meaning specified in Section 5.11. "INDEBTEDNESS" of any person means, without duplication, (a) all liabilities and obligations, contingent or otherwise, of such person, (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any Property or services, except such as would constitute trade payables to trade creditors in the ordinary course of business; provided that such trade payables that are more than thirty (30) days past their original due date shall constitute Indebtedness if the aggregate amount thereof at any time exceeds $100,000, (iv) evidenced by bankers' acceptances or similar instruments issued or accepted by banks, (v) for the payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement obligation of such person with respect to any letter of credit; (b) all net obligations of such person under Interest Swap Obligations and foreign currency hedges; (c) all liabilities of others of the kind described in the preceding clause (a) or (b) that such person has guaranteed or that is otherwise its legal liability and all obligations to purchase, redeem or acquire any Capital Stock; (d) all obligations secured by a Lien to which the Property or assets (including, without limitation, leasehold interests and any other tangible or intangible Property rights) of such person are subject, whether or not the obligation secured thereby shall have been assumed by or shall otherwise be such person's legal liability, PROVIDED, that the amount of such obligation shall be limited to the lesser of the fair market value of the assets or Property to which such Lien attaches and the amount of the obligation so secured; and (e) any and all deferrals, renewals, extensions, refinancings and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b), (c), or (d) or this clause (e), whether or not between or among the same parties. "INDENTURE" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "INDENTURE OBLIGATIONS" means the obligations of the Company and the Guarantors pursuant to this Indenture and the Notes (and any other obligor hereunder or under the Notes) now or hereafter existing, to pay principal of and premium, if any, and interest on the Notes when due and payable, whether on the Maturity Date or an Interest Payment Date, by acceleration, call for redemption, or otherwise, and interest on the overdue principal and premium, if any, of, and (to the extent lawful) interest, if any, on, the Notes and all other amounts due or to become due in connection with this Indenture, the Notes and the Security Agreement and the Mortgage, including any and all extensions, renewals or other modifications thereof, in whole or in part, and the performance of all other obligations of the Company (and any other obligor hereunder or under the Notes) and the Guarantors, including all costs and expenses incurred by the Trustee or the Holders in the collection or enforcement of any such obligations or realization upon the Collateral or the security of any Mortgage. "INSURANCE PROCEEDS" means the Company's and the Guarantors' interest in and to (a) all proceeds which now or hereafter may be paid under any insurance policies now or hereafter obtained by or on behalf of the Company or any of the Guarantors in connection with the conversion of the Property subject to the Mortgage, the CMLI Mortgage or the Security Agreement into Cash or liquidated claims, together with the interest payable thereon and the right to collect and receive the same, including, but without limiting the generality of the foregoing, proceeds of casualty insurance, title insurance, business interruption insurance and any other insurance now or hereafter maintained with respect to such Property and (b) all amounts attributable to Events of Loss. "INTEREST PAYMENT DATE" means any of the following dates: August 15, 1996, November 15, 1996, February 15, 1997, May 15, 1997, August 15, 1997, November 15, 1997, February 15, 1998, May 15, 1998, August 15, 1998, November 15, 1998, February 15, 1999, May 15, 1999, August 15, 1999 (but only if such date is on or before the third anniversary of the Commencement Date), and November 13, 1999 (but only if such date is on or before the third anniversary of the Commencement Date). "INTEREST SWAP OBLIGATION" means, when used with reference to any person, the obligations of such person pursuant to any arrangement with any other person whereby, directly or indirectly, such person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such person calculated by applying a fixed or a floating rate of interest on the same notional amount. "INVESTMENT" by any person in any other person means (without duplication) (a) the acquisition by such person (whether for cash, Property, services, securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities, including any options or warrants, of such other person or any agreement to make any such acquisition; (b) the making by such person of any deposit with, or advance, loan or other extension of credit to, such other person (including the purchase of Property from another person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such other person) or any commitment to make any such advance, loan or extension (but excluding accounts receivable arising in the ordinary course of business; provided that such receivables that are more than thirty (30) days past their original due date shall constitute Investments if the aggregate amount thereof at any time exceeds $100,000), other than prepaid expenses and deposits with governmental authorities in the ordinary course of business of such person; (c) other than the Guaranties of the Notes, the entering into by such person of any guarantee of, or other credit support or contingent obligation with respect to, Indebtedness or other liability of such other person; or (d) the making of any capital contribution by such person to such other person. "ISSUE DATE" means the date of first issuance of the Notes under the the Second Amended Plan of Reoerganization of Crescent City Casin Development Corporation, dated March 15, 1996. "JCC" means Jefferson Casino Corporation, a Louisiana corporation. "JCC INDEBTEDNESS" means the Indebtedness of JCC identified on Exhibit E hereto. "LEGAL HOLIDAY" shall have the meaning provided in Section 12.7. "LICENSES" means the Certificate of Preliminary Approval, Certificate of Final Approval and Conditional or, as applicable, Definitive Gaming Operator's License. "LIEN" means any mortgage, lien, pledge, charge, security interest, or other encumbrance of any kind, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement and any lease deemed to constitute a security interest, and any option or other agreement to give any security interest). "LOUISIANA GAMING OPERATOR'S LICENSE" means one of the Gaming Licenses to conduct riverboat gaming activities (limited in number to fifteen as of the Issue Date) permitted to be issued pursuant to the provisions of the Louisiana Riverboat Economic Development and Gaming Control Act and Title 42, Part XIII, Chapters 17 and 21 of the Louisiana Administrative Code, and any amendment thereto. "MATURITY DATE," when used with respect to any Note, means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at Stated Maturity, a Redemption Date or by declaration of acceleration, call for redemption or otherwise. "MORTGAGE" means the First Preferred Ship Mortgage dated as of May 13, 1996 from the Company to the Trustee, as the same may be amended from time to time. "NET AWARD" has the meaning assigned to such term in the Collateral Documents. "NET AWARD SUB-ACCOUNT" has the meaning set forth in Section 11.1 hereof. "NET INCOME" of any person or in respect of any asset, for any period, means the total of all gain and loss for such person or in respect of such asset, as determined in accordance with GAAP, excluding from the computation thereof (a) all gain and loss arising from the sale, damage, destruction, condemnation, exchange, or distribution of any or all assets (other than current assets), (b) all revenue and expense from (i) all changes in accounting principles, (ii) all discontinued operations or dispositions thereof, (iii) extraordinary transactions, or (iv) all Qualified Lessor Leases and Qualified Lessee Leases, and (c) expenses to the extent funded from Cash that is Collateral (other than expenses funded by the disposition of Collateral in accordance with Section 4.3(a)(i) hereof). "NET LOSS" shall mean, for any period, Net Income to the extent Net Income as computed for such period is less than zero. "NON-RECOURSE INDEBTEDNESS" means Indebtedness of a person to the extent that under the terms thereof or pursuant to applicable law (i) no personal recourse shall be had against such person for the payment of the principal of or interest or premium on such Indebtedness, and (ii) enforcement of obligations on such Indebtedness is limited only to recourse against interests in Property and assets purchased with the proceeds of the incurrence of such Indebtedness and as to which neither the Company nor any Guarantor provides any credit support or is liable. "NOTEHOLDER" See "HOLDER." "NOTES" means the 11 1/2% Senior Secured Notes due 1999, as amended and supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture. "OFFICER" means, with respect to the Company or any Guarantor, the Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller, or the Secretary or Assistant Secretary of the Company or such Guarantor. "OFFICERS' CERTIFICATE" means, with respect to the Company or any Guarantor, a certificate signed by two Officers of the Company or such Guarantor and otherwise complying with the requirements of Sections 13.4 and 13.5. "OPINION OF COUNSEL" means a written opinion from legal counsel to the Company complying with the requirements of Sections 13.4 and 13.5. Unless otherwise required by this Indenture, the counsel may be in-house counsel to the Company. "OTHER BOAT MORTGAGE" means collectively the mortgages, instruments and agreements delivered by the Company pursuant to Section 4.4(a) and 11.3 sufficient to grant to the Trustee for the benefit of the Holders a valid first priority Lien on any Substitute Boat. "PARENT EQUITY CONTRIBUTION" means Cash payments from JCC to the Company, or from Casino Magic Corp. to either Guarantor, for Capital Stock (other than Disqualified Capital Stock). "PAYING AGENT" shall have the meaning specified in Section 2.3. "PERMITTED CAPITAL EXPENDITURES" means any of the following:(i) Capital Expenditures of the Company or the Guarantor to the extent funded with the proceeds of a Parent Equity Contribution (a) in an amount of up to 25% of the purchase price of furniture, fixtures and equipment the remainder of the purchase price of which is financed with Permitted FF&E Financing pursuant to Section 5.11(b) hereof, or (b) in all other cases, only so long as the Liens of the Trustee under the Collateral Documents attach to the Property acquired or constructed with such Capital Expenditures with the same validity, priority and perfection as the Liens of the Trustee in the Collateral; (ii) Capital Expenditures to the extent funded with Cash which is not Collateral (a) in an amount of up to 25% of the purchase price of furniture, fixtures and equipment the remainder of the purchase price of which is financed with Permitted FF&E Financing incurred pursuant to Section 5.11(b) hereof, or (b) in all other cases, only so long as the Liens of the Trustee under the Collateral Documents attach to the Property acquired or constructed with such Capital Expenditures with the same validity, priority and perfection as the Liens of the Trustee in the Collateral; (iii) Capital Expenditures (other than to purchase furniture, fixtures and equipment the purchase price of which is financed in part with Permitted FF&E Financing incurred pursuant to Section 5.11(b) hereof) to the extent funded with Cash from the Company Collateral Sub-Account, but only in an aggregate amount from the Issue Date which, when added to the aggregate amount from the Issue Date of Capital Expenditures permitted under clause (iv) below, does not exceed $1,000,000; PROVIDED, HOWEVER, that the Liens of the Trustee attach to the Property acquired or constructed with such Capital Expenditures with the same validity, priority and perfection as the Liens of the Trustee in the Collateral used to fund such Capital Expenditures; (iv) Capital Expenditures to the extent funded with Cash from the Company Collateral Sub-Account, in each case in an amount of up to 25% of the purchase price of furniture, fixtures and equipment the remainder of the purchase price of which is financed with Permitted FF&E Financing incurred pursuant to Section 5.11(b) hereof, but only in an aggregate amount from the Issue Date which, when added to the aggregate amount from the Issue Date of Capital Expenditures permitted under clause (iii) above, does not exceed $1,000,000; (v) Capital Expenditures to the extent funded with Boat Conveyance Proceeds; PROVIDED, HOWEVER, that the Liens of the Trustee attach to such Capital Expenditures with the same validity, priority and perfection as the Liens of the Trustee in the Collateral used to fund such Capital Expenditures; PROVIDED, FURTHER, the Company complies in all respects with the provisions of Section 11.4 hereof in making any Capital Expenditures funded with Boat Conveyance Proceeds; and (vi) Capital Expenditures to the extent funded with Net Awards; PROVIDED, HOWEVER, that the Liens of the Trustee attach to such Capital Expenditures with the same validity, priority and perfection as the Liens of the Trustee in the Collateral used to fund such Capital Expenditures; PROVIDED, FURTHER, the Company complies in all respects with the provisions of Section 11.2 hereof in making any Capital Expenditures funded with Net Awards; and (vii) after the Release Date, Capital Expenditures to the extent funded with Cash which is not Collateral. "PERMITTED FF&E FINANCING" means Indebtedness which is Non-recourse Indebtedness to the Company or any of its properties (other than as provided in this definition) that is incurred to finance the acquisition or lease after May 13, 1996 of newly acquired or leased furniture, fixtures or equipment ("FF&E") used directly in the operation of casinos and secured by a first priority Lien on such FF&E which Lien, subject to (i) Liens permitted under Section 5.13 hereof, and (ii) a Lien in favor of the Notes, but only to the extent permitted by the secured lender with respect to such FF&E financing, shall be the only Lien with respect to such FF&E and may be an exclusive Lien or senior, PARI PASSU or junior to the rights of the Trustee under the Collateral Documents. "PERMITTED LIENS" means any of the following: (a) Liens for taxes, assessments or other governmental charges not yet due or which are being contested in good faith and by appropriate proceedings by the Company or a Guarantor if adequate reserves with respect thereto are maintained on the books of the Company or such Guarantor, as the case may be, in accordance with GAAP; (b) statutory Liens of carriers, laborors, warehousemen, mechanics, landlords, materialmen, repairmen or other like Liens (including maritime liens) arising by operation of the law in the ordinary course of business and consistent with industry practices and Liens on deposits made to obtain the release of such Liens if (i)the underlying obligations are not overdue for a period of more than sixty (60) days or (ii) such Liens are being contested in good faith and by appropriate proceedings by the Company or a Guarantor and adequate reserves with respect thereto are maintained on the books of the Company or such Guarantor, as the case may be, in accordance with GAAP; and (c) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business and consistent with industry practices which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or such Guarantor) or interfere with the ordinary conduct of the business of the Company or such Guarantor or any of their Subsidiaries; PROVIDED, that any such Liens are not incurred in connection with any borrowing of money or any commitment to loan any money or to extend any credit. "PERSON" means any individual, limited liability company, corporation, partnership, joint venture, association, joint-venture company, trust, unincorporated organization or government or other agency or political subdivision thereof. "PLANS AND SPECIFICATIONS" means all drawings, plans and specifications prepared by or on behalf of the Company or any of its Subsidiaries, as the same may be amended or supplemented from time to time in good faith by the Board of Directors of the Company or such Guarantor, and, if required by applicable law, submitted to and approved by the building or other relevant department, which describe and show the Crescent City Queen Casino, or, if applicable, another casino and the labor and materials necessary for construction thereof. "PRINCIPAL" of any Indebtedness (including the Notes) means the principal of such Indebtedness plus any applicable premium, if any, on such Indebtedness. "PROPERTY" or "property" means any right or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible, intangible, contingent, indirect or direct. "QUALIFIED LESSEE LEASE" means a lease agreement (which in all respects shall be subject to the provisions of Section 11.3 hereof) pursuant to which the Company is the Lessee of a Substitute Boat or a Qualified Substitute Boat; PROVIDED, HOWEVER, that such lease stipulates that the Company's use and quiet enjoyment of such Substitute Boat or Qualified Substitute Boat during the term of such lease shall not be disturbed so long as the Company does not default under its payment obligations to or for the benefit of the lessor and its successors and assigns under such lease. "QUALIFIED LESSOR LEASE" means a lease by the Company of the Crescent City Queen Casino or a Qualified Substitute Boat owned by the Company pursuant to the terms of which the contract rights, agreements and instruments evidencing the Company's rights and interests with respect to the lease transaction are not subject to any negative pledge or other impairment as to assignability. "QUALIFIED SALE" means a sale, transfer or other conveyance of all of the Company's right, title and interest in the Crescent City Casino Queen pursuant to the terms of which (i) there is no post-closing escrow, retainage or other hold-back of the consideration to be paid to the Company, (ii) the contract rights, agreements and instruments evidencing the Company's rights and interests with respect to the sale are not subject to any negative pledge or other impairment as to assignability, and (iii) the Company shall have no post-closing indemnification or other liabilities to or for the benefit of the purchaser other than liabilities that are not recourse to the Collateral. "QUALIFIED SUBSTITUTE BOAT" means a vessel qualifying under the Louisiana Riverboat Economic and Control Act as a riverboat substantially similar in quality and size to any riverboat casinos used and competitive in Bossier City or Shreveport, Louisiana. "RECORD DATE" means a Record Date specified in the Notes whether or not such Record Date is a Business Day. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption by or pursuant to this Indenture. "REDEMPTION PREMIUM" means (i) on any Redemption Date occurring on or before the first anniversary of the Commencement Date, zero, (ii) on any Redemption Date occurring on or after the first anniversary of the Commencement Date but on or before the second anniversary of the Commencement Date, ten percent (10%) TIMES a fraction, the numerator of which is the amount of calendar days having elapsed from and including the day after the first anniversary of the Commencement Date to and including such Redemption Date, and the denominator of which is three hundred and sixty-five (365), and (iii) on any Redemption Date occurring after the second anniversary of the Commencement Date but before the third anniversary of the Commencement Date, twenty percent (20%) TIMES a fraction, the numerator of which is the amount of calendar days having elapsed from and including the day after the second anniversary of the Commencement Date to and including such Redemption Date, and the denominator of which is three hundred and sixty-four (364). "REDEMPTION PRICE" when used with respect to any Note to be redeemed, means the principal face amount of such Note TIMES the sum of one plus the Redemption Premium as of the Redemption Date for such Note. "REFINANCING INDEBTEDNESS" means Indebtedness (a) issued in exchange for, or the proceeds from the issuance and sale of which are used substantially concurrently to repay, redeem, defease, refund, refinance, discharge or otherwise retire for value, in whole or in part, or (b) constituting an amendment, modification or supplement to, or a deferral or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any Indebtedness in a principal amount not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of (i) the principal amount of the Indebtedness so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an original issue discount, the accreted value thereof (as determined in accordance with GAAP) at the time of such Refinancing; PROVIDED, that (A) Refinancing Indebtedness of any Guarantor of the Company shall only be used to refinance outstanding Indebtedness of such Guarantor, (b) Refinancing Indebtedness shall (x) not have an Average Life shorter than the Indebtedness to be so Refinanced at the time of such refinancing and (y) in all respects, be no less subordinated, if applicable, to the rights of holders pursuant to the Notes than was the Indebtedness to be refinanced and (C) such Refinancing Indebtedness shall have no installment of principal (or redemption) scheduled to come due earlier than the scheduled maturity of any installment of principal of the Indebtedness to be so refinanced which was scheduled to come due prior to the Stated Maturity. "REGISTRAR" shall have the meaning specified in Section 2.3. "RELATED BUSINESS" means the gaming business conducted (or proposed to be conducted) by the Company and its Subsidiaries as of the Issue Date and any and all materially related businesses in support of and ancillary to the gaming business. "RELEASE DATE" means the first date on which the aggregate principal amount of Notes outstanding is equal to or less than $17,500,000.00. "REQUIRED REGULATORY REDEMPTION" means a redemption by the Company of any of a Note or Notes pursuant to, and in accordance with, any order of any Governmental Authority with appropriate jurisdiction and authority relating to a Gaming License, or to the extent necessary in the reasonable, good faith judgment of the Board of Directors of the Company to prevent the loss, failure to obtain or material impairment or to secure the reinstatement of, any material Gaming License, wherein any such case such redemption or acquisition is required because the Holder or beneficial owner of such Note is required to be found suitable or to otherwise qualify under any Gaming Laws and is not found suitable or so qualified within a reasonable period of time. "RESTRICTED INVESTMENT" means, in one or a series of related transactions, any Investment other than in Cash Equivalents; PROVIDED, that the extension of credit to customers of Company-owned or operated casinos or the settlement of gambling debts consistent with industry practice and in the ordinary course of business shall not be a Restricted Investment. "RESTRICTED PAYMENT" means, with respect to any person, (a) the declaration or payment of any dividend or other distribution in respect of Capital Stock of such person, or (b) any payment on account of the purchase, redemption or other acquisition or retirement for value of Capital Stock of such person or any Affiliate of such person; PROVIDED, HOWEVER, that the term "Restricted Payment" does not include any dividend, distribution or other payment (i) to any of the Guarantors by any other Guarantor, (ii) under the Tax Sharing Treaty, or (iii) in repayment of the amount of an escrow or holdback funded solely by a Parent Equity Contribution in connection with a Qualified Sale; PROVIDED, FURTHER that any payment from a Subsidiary of the Guarantor (other than the Company) shall not be a Restricted Payment for purposes of clause (a) or (b) above. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "SECURITY AGREEMENT" means the Pledge and Security Agreement, dated the date hereof, by and among the Company, the Guarantors, and the Trustee for the benefit of the Holders, as the same may be amended from time to time in accordance with the terms thereof. "STATED MATURITY," when used with respect to any Note, means the third anniversary of the Commencement Date. "STOCK PURCHASE AGREEMENT" means that certain Stock Purchase Agreement, dated February 21, 1996, among the Company, JCC, C-M of Louisiana, Inc., a Louisiana corporation (n/k/a JCC), Casino Magic Corp., and Capital Gaming International, Inc. "SUBSIDIARY," with respect to any person, means (i) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such person, by such person and one or more Subsidiaries of such person or by one or more Subsidiaries of such person or (ii) any other person (other than a corporation) in which such person, one or more Subsidiaries of such person, or such person and one or more Subsidiaries of such person, directly or indirectly, at the date of determination thereof has at least majority ownership interest. "SUBSTITUTE BOAT" means a vessel qualifying under the Louisiana Riverboat Economic and Control Act as a riverboat. "TAX SHARING TREATY" means the Tax Allocation Agreement substantially in the form of Exhibit C hereto. "THIRD PARTY" means a person which is not an Affiliate of the Company or any Guarantor. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sec 77aaa-7bbbb) as in effect on the date of the execution of this Indenture. "TRUST MONEYS" shall have the meaning specified in Section 11.1. "TRUSTEE" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "TRUST OFFICER" means any officer within the corporate trust department (or any successor group) of the Trustee including any vice president, assistant vice president, secretary, assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at that time shall be such officers, and also means, with respect to a particular corporate trust officer any other officer of the corporate trust department (or any successor group) of the Trustee to whom such trust matter is referred because of his knowledge of and familiarity with the particular subject. "U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations of, or non-callable obligations guaranteed by, the United States of America for the payment of which obligations or guarantee the full faith and credit of the United States of America is pledged. "U.S. LEGAL TENDER" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "WAITING PERIOD" means the initial 90 day period from and after the consummation of the transactions contemplated by the transfer of the Crescent City Queen Casino pursuant to Section 4.4 hereof. "WHOLLY OWNED" with respect to a Subsidiary of any person means (i) with respect to a Subsidiary that is a limited liability company or similar entity, a Subsidiary whose capital stock is 99% or greater beneficially owned by such person and (ii) with respect to a Subsidiary that is other than a limited liability company or similar entity, a Subsidiary whose capital stock or other equity interest is 100% beneficially owned by such person. Section 1.2. INCORPORATION BY REFERENCE OF TIA. Whenever this Indenture refers to a provision of the TIA, such 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: "COMMISSION" means the SEC. "INDENTURE SECURITYHOLDER" means a Holder or a Noteholder. "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee. "OBLIGOR" on the indenture securities means the Company and any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them thereby. Section 1.3. RULES OF CONSTRUCTION. Unless the context otherwise requires:(i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (iii) "or" is not exclusive; (iv) words in the singular include the plural, and words in the plural include the singular; (v) provisions apply to successive events and transactions; (vi) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (vii) references to Sections or Articles means reference to such Section or Article in this Indenture, unless stated otherwise. Article II. THE NOTES Section 2.1. FORM AND DATING. The Notes and the Trustee's certificate of authentication, in respect thereof, shall be substantially in the form of EXHIBIT A hereto, which is part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company shall approve the form of the Notes and any notation, legend or endorsement on them. Any such notations, legends or endorsements not contained in the form of Note attached as EXHIBIT A hereto shall be delivered in writing to the Trustee. Each Note shall be dated the date of its authentication. The terms and provisions contained in the form of Notes shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Section 2.2. EXECUTION AND AUTHENTICATION. Two Officers shall sign, or one Officer shall sign and one Officer shall attest to, the Notes for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted, or reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless and the Company shall nevertheless be bound by the terms of the Notes and this Indenture. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note, but such signature shall be conclusive evidence that the Note has been authenticated pursuant to the term of this Indenture. The Trustee shall authenticate Notes for original issue in the aggregate principal amount of up to $35,000,000 upon a written order of the Company in the form of an Officers' Certificate. The Officers' Certificate shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated. The aggregate principal amount of Notes outstanding at any time may not exceed $35,000,000, except as provided in Section 2.7. Upon the written order of the Company in the form of an Officers' Certificate, the Trustee shall authenticate Notes in substitution of Notes originally issued to reflect any name change of the Company. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company, any Affiliate of the Company or any of their respective Subsidiaries. Notes shall be issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. Section 2.3. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency in the borough of Manhattan, The City of New York, where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency in the Borough of Manhattan, The City of New York where Notes may be presented for payment ("Paying Agent") and an office or agency where notices and demands to or upon the Company in respect of the Notes may be served. The Company may act as its own Registrar or Paying Agent, except that, for the purposes of Articles III and VII, neither the Company nor any Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a register of the Notes, their respective outstanding principal amounts, and their transfer and exchange. The Company may have one or more co-Registrars and one or more additional Paying Agents. The term "Paying Agent" includes any additional Paying Agent. The Company hereby initially appoints the Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees so to act. The Company shall enter into an appropriate written agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall promptly notify the Trustee in writing of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. Section 2.4. PAYING AGENT TO HOLD ASSETS IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, or interest on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and shall notify the Trustee in writing of any Default by the Company (or any other obligor on the Notes) in making any such payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate such assets and hold them as a separate trust fund for the benefit of the Holders or the Trustee. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets that shall have been delivered by the Company to the Paying Agent, and upon compliance by the Paying Agent with such directions, the Paying Agent (if other than the Company) shall have no further liability for such assets. Section 2.5. NOTEHOLDER 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 Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before the third Business Day preceding 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 reasonably may require of the names and addresses of Holders. The Trustee, the Registrar and the Company shall provide a current securityholder list to any Gaming Authority upon demand. Section 2.6. TRANSFER AND EXCHANGE. When Notes are presented to the Registrar or a co-Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as met; PROVIDED, HOWEVER, that the Notes surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar or Co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's or co-Registrar's request. No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments, or similar governmental charge payable upon exchanges or transfers pursuant to Sections 2.2, 2.10, 3.6, or 9.5). Except for a Required Regulatory Redemption pursuant to Section 3.2 of this Indenture or an order of any Gaming Authority, the Registrar or co-Registrar shall not be required to register the transfer of or exchange of (a) any Note selected for redemption in whole or in part pursuant to being redeemed in part, or (b) any Note for a period of 15 Business Days before the mailing of a notice of an offer to redeem Notes pursuant to Article III hereof and ending on the close of business of the day of such mailing. Section 2.7. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims and submits an affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the effect that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Company and the Trustee, to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. The Company may charge such Holder for its reasonable, out-of-pocket expenses in replacing a Note. Every replacement Note is an additional obligation of the Company. Section 2.8. OUTSTANDING NOTES. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding. A Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note, except as provided in Section 2.9. If a Note is replaced pursuant to Section 2.7 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.7. If on a Redemption Date or the Maturity Date the Paying Agent (other than the Company or an Affiliate of the Company) holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date and payment of the securities called for redemption is not otherwise prohibited, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. Section 2.9. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, amendment, supplement, waiver or consent, Notes owned by the Company, any Guarantor and Affiliates of the Company or of any Guarantor shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, amendment, supplement, waiver or consent, only Notes that the Trustee knows or has reason to know are so owned shall be disregarded. Section 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare, the Guarantor shall endorse and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company reasonably and in good faith considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare, the Guarantor shall endorse and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as permanent Notes authenticated and delivered hereunder. Section 2.11. CANCELLATION.The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent (other than the Company or an Affiliate of the Company), and no one else, shall cancel and, at the written direction of the Company, shall dispose of all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.7, the Company may not issue new Notes to replace Notes it has paid or delivered to the Trustee for cancellation. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 2.11, except as expressly permitted in the form of Notes and as permitted in this Indenture. Section 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) interest on the defaulted interest, to the persons who are Holders on a Record Date (or at its option a subsequent special record date) which date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day, unless the Trustee fixes another record date. At least 15 days before the subsequent special record date, the Company shall mail to each Holder with a copy to the Trustee a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. Article III. MANDATORY REDUCTION; REDEMPTION Section 3.1. MANDATORY PRINCIPAL REDUCTION WITH EXCESS CASH FLOW. On each Interest Payment Date commencing November 15, 1996, and ending with the second Interest Payment Date after the occurrence of the Release Date, the Company will unconditionally pay to the Trustee for the benefit of the Holders the Excess Cash Flow for the fiscal quarter of the Company and the Guarantors ending on the Interest Payment Date immediately preceding such Interest Payment Date; PROVIDED, HOWEVER, that the Company will pay to the Trustee for the benefit of the Holders the Excess Cash Flow for the last fiscal quarter of a fiscal year of the Company and the Guarantors on the SECOND Interest Payment Date following the last date of such last fiscal quarter of the fiscal year. The Company will certify no later than 10 days prior to the applicable Interest Payment Date the amount of Excess Cash Flow to be paid by the Company and will deliver such Excess Cash Flow in accordance with Section 5.1 hereof. If on any Interest Payment Date the Excess Cash Flow otherwise payable shall be $100,000 or less, no Excess Cash Flow payment shall be made to Holders, but as to such Excess Cash Flow (the "Aggregate Excess Cash Flow"), the Trustee shall hold all such Aggregate Excess Cash Flow in the Company Payment Sub- Account in anticipation of distribution in accordance with this Section 3.1; PROVIDED, HOWEVER, that interest earned on Aggregate Excess Cash Flow while in the Company Payment Sub-Account during any fiscal quarter shall be remitted to the Company on the last day of such fiscal quarter. On each Interest Payment Date commencing November 15, 1996, and ending with the second Interest Payment Date after the occurrence of the Release Date on which the Aggregate Excess Cash Flow then held by the Trustee exceeds $100,000, the Trustee will distribute to each Holder upon presentment to the Trustee of such Holder's Note such Holder's PRO RATA share of the Aggregate Excess Cash Flow in reduction of the then outstanding principal amount of the Note by an amount equal to such Holder's PRO RATA share of the Excess Cash Redemption Amount, in addition to any regularly scheduled principal payment due on such Interest Payment Date (if any). After the Release Date or the date of an Adverse State Action, as the case may be, Aggregate Excess Cash Flow distributions made on an Interest Payment Date pursuant to this Section 3.1 will be applied to installments of principal on the Notes in inverse order of maturity. The obligations of the Company under this Section 3.1 shall continue notwithstanding an Adverse State Action. Section 3.2. OPTIONAL REDEMPTION. The Notes may be redeemed at any time, in whole or in part, at the election of the Company at the Redemption Price then applicable for the Redemption Date for such redemption and subject to the conditions set forth herein and in the form of Note set forth in EXHIBIT A hereto. Any redemption pursuant to this Section 3.2 shall be made, to the extent applicable, pursuant to the provisions of Section 3.3 through 3.8 hereof. Section 3.3. ELECTION TO REDEEM; NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to Section 3.2 hereof, at least 30 days but not more than 60 days prior to the date of the notice of redemption described in Section 3.5, the Company shall notify the Trustee in writing of the Redemption Date and deliver to the Trustee an Officers' Certificate stating that such redemption will comply with the conditions contained in Sections 3.3 through 3.8 hereof, as appropriate. If the Company elects, and is permitted by the terms hereof, to credit against any such redemption Notes not previously delivered to the Trustee for cancellation, it shall deliver such Notes with the notice. Section 3.4. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. In the event that less than all of the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed, if the Notes are listed on a national securities exchange, in accordance with the rules of such exchange or, if the Notes are not so listed, on either a pro rata basis or by lot, or such other method as it shall deem fair and equitable. The Trustee shall promptly notify the Company of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. The Trustee may select for redemption portions of the principal of the Notes that have denominations larger than $1,000. Notes and portions of them the Trustee selects shall be in amounts of $1,000 or whole multiples of $1,000. For all purposes of this Indenture unless the context otherwise requires, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 3.5. NOTICE OF REDEMPTION. At least 30 days, and no more than 45 days, before the Redemption Date fixed by the Company, the Company shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Notes to be redeemed at his or her last address as the same appears on the registry books maintained by the Registrar pursuant to Section 2.3 hereof. The notice shall identify the notes to be redeemed (including the CUSIP numbers thereof) and shall state: (1) the Redemption Date; (2) the Redemption Price; (3) 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 and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued; (4) the name and address of the Paying Agent; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Reduction Price; (6) that unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date; (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (8) the aggregate principal amount of Notes that are being redeemed. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's sole expense. Section 3.6. EFFECT OF NOTICE OF REDEMPTION. Once the notice of redemption described in Section 3.5 is mailed, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price, including any Redemption Premium, plus interest accrued to the Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid at the Redemption Price, including any Redemption Premium, plus interest accrued to the Redemption Date, PROVIDED, HOWEVER, that if the Redemption Date is after a regular interest payment record date and on or prior to the interest payment date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant record date, and PROVIDED, FURTHER, that if a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day. Section 3.7. DEPOSIT OF REDEMPTION PRICE. On or prior to 10:00 A.M., New York City time, on each Redemption Date, the Company shall deposit with the Paying Agent in immediately available funds moneys sufficient to pay the Redemption Price of and accrued interest on all Notes to be redeemed on that date other than Notes or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation. On and after any Redemption Date, if money sufficient to pay the Redemption Price of and accrued interest on Notes called for redemption shall have been made available in accordance with the preceding paragraph, the Notes called for redemption will cease to bear interest and the only right of the Holders of such Notes will be to receive payment of the Redemption Price of and, subject to the proviso in Section 3.6, accrued and unpaid interest on such Notes. If any Note called for redemption shall not be so paid, interest will be paid, from the Redemption Date until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case, at the rate and in the manner provided in the Notes. Section 3.8. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Trustee shall authenticate for a Holder a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 3.9. REDEMPTION PURSUANT TO GAMING LAWS. Notwithstanding any other provision of this Indenture, the Notes shall also be redeemable at any time pursuant to, and in accordance with, a Required Regulatory Redemption. If the Company requires the redemption of any Note pursuant to this Section 3.9, then the redemption price shall be the principal amount thereof, plus accrued interest to the date of redemption. The Company shall tender the redemption price (together with any accrued and unpaid interest) to the Trustee no later than 30 and no more than 60 days after the Company gives the Holder or owner of a beneficial or voting interest written notice of redemption or such earlier date as may be ordered by any Gaming Authority. The Company shall notify the Trustee of any disposition or redemption required under this Section 3.9, and upon receipt of such notice, the Trustee shall not accord any rights or privileges under this Indenture or any Note to any Holder or owner of a beneficial or voting interest who is required to dispose of any Note or tender it for redemption, except to pay the redemption price (together with any accrued but unpaid interest) upon tender of such Note. Article IV. SECURITY Section 4.1. SECURITY INTEREST. (a) In order to secure the prompt and complete payment and performance in full of Indenture Obligations, the Company, the Guarantors and the Trustee have entered into this Indenture, the Security Agreement and the Mortgage. Each Holder, by accepting a Note, agrees to all of the terms and provisions of this Indenture and the Collateral Documents, and the Trustee agrees to all of the terms and provisions of the Indenture and the Collateral Documents as this Indenture or any of the Collateral Documents may be amended from time to time pursuant to the provisions thereof and hereof. (b) The Collateral as now or hereafter constituted shall be held for the equal and ratable benefit of the Holders without preference, priority or distinction of any thereof over any other by reason of difference in time of issuance, sale or otherwise, as security for the Indenture Obligations. (c) The provisions of TIA Section 314(d), and the provisions of TIA Section 314(c)(3) to the extent applicable by specific reference in this Article IV, are hereby incorporated by reference herein as if set forth in their entirety and to the same extent as if the Indenture were qualified under the TIA. Section 4.2. RECORDING; OPINIONS OF COUNSEL. (a) Each of the Company and the Guarantors represents that it has caused to be executed and delivered, filed and recorded and covenants that it will promptly cause to be executed and delivered, filed and recorded, all instruments and documents, and have done and will do or will cause to be done all such acts and other things, at the Company's expense, as are necessary to effect and maintain valid and perfected security interests in the Collateral. Each of the Company and the Guarantors shall, as promptly as practicable, cause to be executed and delivered, filed and recorded all instruments and do all acts and other things as may be required by law to perfect, maintain and protect the security interests under the Collateral Documents and herein. The Company and the Guarantors shall promptly obtain title insurance insuring the Trustee as an insured for the benefit of the Holders in the aggregate amount equal to the estimated fair market value of the Property that is subject to the CMLI Mortgage, with such endorsements as are reasonably requested by the Trustee, subject only to those exceptions which are reasonably acceptable to the Trustee. (b) The Company shall furnish to the Trustee, promptly after the execution and delivery of this Indenture, the Security Agreement and the Mortgage and promptly after the execution and delivery of any amendment thereto or any other instrument of further assurance and Opinion(s) of Counsel stating that, in the opinion of such counsel, subject to customary exclusions and exceptions reasonably acceptable to the Trustee, either (i) this Indenture, the Security Agreement, the Mortgage, the CMLI Mortgage, any such amendment and all other instruments of further assurance have been properly recorded, registered and filed has been taken to the extent necessary to make effective valid security interests and to perfect the security interests intended to be created by the Indenture, the Security Agreement and the Mortgage, and reciting the details of such action, or (ii) no such action is necessary to maintain the validity and perfection of the security interests under the Security Agreement, the Mortgage and hereunder. (c) The Company shall furnish to the Trustee, within 60 days after May 15 in each year commencing 1997, an Opinion(s) of Counsel, dated as of such date, stating that, in the opinion of such counsel, subject to customary exclusions and exceptions, either (A) all such action has been taken with respect to the recording, registering, filing, rerecording and refiling of the Indenture, all supplemental indentures, the Security Agreement, the Mortgage, financing statements, continuation statements and all other instruments of further assurance or other Collateral Documents as is necessary to maintain the security interests under the Collateral Documents and hereunder in full force and effect and reciting the details of such action, 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) no such action is necessary to maintain the security interests in full force and effect. Section 4.3. DISPOSITION OF CERTAIN COLLATERAL. (a) The Company and the Guarantors may, without consent of the Trustee, but otherwise subject to the requirements of this Indenture: (i) sell, assign, transfer, license or otherwise dispose of, free from the security interests under the Collateral Documents and hereunder, any machinery, equipment, or other personal Property constituting Collateral that has become worn out, obsolete, or unserviceable or is being upgraded, upon replacing the same with or substituting for the same, machinery, equipment or other Property constituting Collateral not necessarily of the same character but being of at least equal fair value and at least equal utility to the Company as the Property so disposed of, which Property shall without further action become Collateral subject to the security interests under the Collateral Documents and hereunder; (ii) (A) sell, assign, transfer, license or otherwise dispose of, free from the security interests under the Collateral Documents and hereunder, inventory held for resale that is at any time part of the Collateral in the ordinary course of the Company's business, consistent with industry practices, (B) collect, liquidate, sell, factor or otherwise dispose of, free from the security interests under the Collateral Documents and hereunder, accounts receivable or notes receivable that are part of the Collateral in the ordinary course of the Company's business, consistent with industry practices, or (C) make Cash payments out of the Guarantor Collateral Sub-Account to fund operating expenses of the CMLI Real Property or Capital Expenditures in respect of the CMLI Real Property, PROVIDED, HOWEVER, that the Liens of the Trustee under the Collateral Documents attach to the Property acquired or constructed with such Capital Expenditures with the same validity, priority and perfection as the Liens of the Trustee in the CMLI Real Property; (iii) so long as no Default or Event of Default hereunder shall have occurred and be continuing, sell, assign, transfer, license or otherwise dispose of Collateral of the Company for the purpose of making Capital Expenditures permitted to the Company under clauses (iii), (iv), (v), (vi) and (vii) of the definition of Permitted Capital Expenditures; and (iv) abandon, sell, assign, transfer, license or otherwise dispose of any personal Property the use of which is no longer necessary or desirable in the proper conduct of the business of the Company and the maintenance of its earnings and is not material to the conduct of the business of the Company. (b) In the event that the Company or any Guarantor has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral which under the provisions of this Section 4.3 may be sold, exchanged or otherwise disposed of by the Company and the Guarantors without consent of the Trustee, and the Company and the Guarantors request the Trustee to furnish a written disclaimer, release or quitclaim of any interest in such Property under the Collateral Documents, the Trustee shall execute such an instrument upon delivery to the Trustee of an Officers' Certificate by the Company and the Guarantors reciting the sale, exchange or other disposition made or proposed to be made and describing in reasonable detail the Property affected thereby, and stating and demonstrating that such Property is Property which by the provisions of this Section 4.3 may be sold, exchanged or otherwise disposed of or dealt with by the Company and the Guarantors without any release or consent of the Trustee. (c) Any disposition of Collateral made in compliance with the provisions of this Section 4.3 shall be deemed not to impair the security interests under the Collateral Documents and hereunder in contravention of the provisions of this Indenture. Section 4.4. SUBSTITUTION OF COLLATERAL. (a)(i) So long as no Default or Event of Default hereunder shall have occurred and be continuing, the Company may, without the consent of the Trustee, but otherwise subject to the requirements of this Indenture, consummate a Qualified Sale to a Third Party, free and clear of the Liens of the Mortgage and the Security Agreement, in exchange for Cash or for a Qualified Substitute Boat or a combination thereof; PROVIDED, HOWEVER, that any Qualified Sale constituting an Affiliate Conveyance shall meet the requirements of Section 5.10 hereof in all respects. In such event, the Company immediately shall file and record all instruments and documents, and immediately will do or will cause to be done all such acts and other things, at the Company's expense, as are necessary to effect and maintain exclusive, valid and perfected security interests in the Boat Conveyance Proceeds and the Qualified Substitute Boat, as the case may be, and all agreements and contract rights arising under or evidencing such Qualified Sale, in favor of the Trustee for the benefit of the Holders, including, but not limited to, the deposit of Boat Conveyance Proceeds in the Boat Conveyance Proceeds Sub- Account. (ii) So long as no Default or Event of Default hereunder shall have occurred and be continuing, the Company may, without the consent of the Trustee, but otherwise subject to the requirements of this Indenture, enter into a Qualified Lessor Lease, subject to the Liens of the Mortgage or the Other Boat Mortgage, as the case may be, and the other Collateral Documents; PROVIDED, HOWEVER, that any such Qualified Lessor Lease constituting an Affiliate Conveyance shall meet the requirements of Section 5.10 hereof in all respects. In such event, the Company immediately shall file and record all instruments and documents, and immediately will do or will cause to be done all such acts and other things, at the Company's expense, as are necessary to effect and maintain exclusive, valid and perfected security interests in the Boat Conveyance Proceeds arising under such Qualified Lessor Lease, and in all of the Company's right, title and interest in such Qualified Lessor Lease and all rents, profits and proceeds therefrom and contract rights arising thereunder, in favor of the Trustee for the benefit of the Holders, including, but not limited to, the deposit of Boat Conveyance Proceeds in the Boat Conveyance Proceeds Sub-Account. (b) Boat Conveyance Proceeds shall remain in the Boat Conveyance Proceeds Sub-Account with the Trustee subject to the Liens of the Trustee and, so long as no Default or Event of Default shall have occurred and be continuing, shall be released from the Boat Conveyance Proceeds Sub-Account by the Trustee only as follows: (i) During the Waiting Period, Boat Conveyance Proceeds will be released by the Trustee to the Company, first, (A) for the consummation by the Company of the purchase of a Qualified Substitute Boat pursuant to the provisions of Section 11.3 hereof or for the financing or the servicing of the financing of such purchase from time to time, or (B) for the payment of the Adjusted Rent Obligations of the Company under a Qualified Lessee Lease under the provisions of Section 11.3 hereof, and thereafter until the end of the Waiting Period for Capital Expenditures permitted pursuant to the provisions of Section 5.19 hereof; (ii) If during the Waiting Period the Company has entered into a binding contract with a Third Party for the construction of a Qualified Substitute Boat, then after delivery of all certificates, documents, instruments, contracts and agreements precedent to the first release of Boat Conveyance Proceeds under the provisions of Section 11.4 hereof, and until the date that is fifteen (15) months after the last day of the Waiting Period, the Trustee shall release Boat Conveyance Proceeds to the Company solely (A) to fund obligations under such contract for the construction of the Qualified Substitute Boat, PROVIDED, HOWEVER, that the Trustee shall maintain at all times a valid and perfected first priority Lien on and security interest in the Qualified Substitute Boat, whether under the Other Boat Mortgage or otherwise, subject only to Liens permitted pursuant to Section 5.13 hereof; (B) for the financing or the servicing of the financing from time to time by the Company of the purchase of a Qualified Substitute Boat pursuant to the provisions of Section 11.3 hereof; or (C) for the payment of the Adjusted Rent Obligations of the Company under a Qualified Lessee Lease under the provisions of Section 11.3 hereof; (iii) If on or before the last day of the Waiting Period the Company has neither consummated the purchase of a Qualified Substitute Boat, entered into a Qualified Lessee Lease of a Substitute Boat, nor delivered all certificates, documents, instruments, contracts and agreements precedent to the first release of Boat Conveyance Proceeds under the provisions of Section 11.4 hereof for the construction of a Qualified Substitute Boat, then all Boat Conveyance Proceeds remaining in the Boat Conveyance Proceeds Sub-Account with the Trustee on the last day of the Waiting Period shall be deemed to constitute Excess Cash Flow of the Company for the fiscal quarter in which the Waiting Period expires and shall be used to redeem Notes on the Interest Payment Date that is the last day of the fiscal quarter of the Company immediately following the fiscal quarter in which the Waiting Period expires pursuant to the provisions of Article III hereof; and (iv) Notwithstanding any other provisions of this clause (b), all Boat Conveyance Proceeds in the Boat Conveyance Proceeds Sub-Account on the last date of the fifteenth month after the date of the last day of the Waiting Period or at any time thereafter shall be deemed to solely constitute Collateral securing the Indenture Obligations, and the Company shall have no right to request or demand, and the Trustee shall have no obligation to release, Boat Conveyance Proceeds prior to the payment in full of the Indenture Obligations. The Trustee shall release Liens on Boat Conveyance Proceeds pursuant to this Section 4.4 in accordance with the provisions of Article XI, the Collateral Documents and the TIA. Section 4.5. RELEASE DATE; RELEASES OF COLLATERAL. So long as no Default or Event of Default shall have occurred and be continuing, then provided the Trustee shall have received notice from the Company fifteen (15) days before the Release Date of the Release Date, the Trustee shall on the Release Date (or, in the case of failure of the Company to timely notify the Trustee in accordance with this Section 4.5, fifteen (15) days from the date of actual receipt by the Trustee of such notice of the Release Date) release or cause to be released all Liens securing Indenture Obligations other than (i) those Liens granted to the Trustee under the Mortgage or the Other Boat Mortgage, as the case may be, (ii) those Liens granted to the Trustee in respect of a lease by the Company of the Crescent City Queen Casino pursuant to Section 4.4(b) hereof, and (iii) those Liens securing proceeds from the foregoing. The Trustee shall release such Liens pursuant to this Section 4.5 in accordance with the provisions of Article XI, the Collateral Documents and the TIA. Section 4.6 CERTAIN OTHER RELEASES OF COLLATERAL. Subject to applicable law, the release of any Collateral from Liens created by the Security Agreement or the Mortgage or the release of, in whole or in part, the Liens created by the Security Agreement or the Mortgage, will not be deemed to impair the Security Agreement or the Mortgage, as the case may be, in contravention of the provisions of this Indenture if and to the extent the Collateral or Liens are released pursuant to, and in accordance with, the terms hereof. To the extent applicable, without limitation, the Company and each obligor on the Notes shall cause TIA Section 314(d) relating to the release of Property or securities from the Liens of the Security Agreement or the Mortgage to be complied with. Any certificate or opinion required by TIA Section 314(d) may be made by one Officer prior to the qualification of the Indenture under the TIA and by two Officers after such qualification, except in cases which TIA Section 314(d) requires that such certificate or opinion be made by an independent person. Section 4.7 PAYMENT OF EXPENSES. On demand of the Trustee, the Company forthwith shall pay or satisfactorily provide for all reasonable expenditures incurred by the Trustee under this Article IV, including the reasonable fees and expenses of counsel and all such sums shall be a Lien upon the Collateral and shall be secured thereby. Section 4.8 SUITS TO PROTECT THE COLLATERAL. Subject to Section 4.1 of this Indenture and to the provisions of the Security Agreement and the Mortgage, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of the Security Agreement, the Mortgage or this Indenture, 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 or if the enforcement of, or compliance with, such enactment, rule or order would impair the security interests in contravention of this Indenture or be prejudicial to the interests of the Holders or of the Trustee. The Trustee shall give notice to the Company promptly following the institution of any such suit or proceeding. Section 4.9 TRUSTEE'S DUTIES. The powers and duties conferred upon the Trustee by this Article IV are solely to protect the security interests created hereby and shall not impose any duty upon the Trustee to exercise any such powers and duties, except as expressly provided in this Indenture. The Trustee shall be under no duty to the Company or any Guarantor whatsoever to make or give any presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, or other notice or demand in connection with any Collateral, or to take any steps necessary to preserve any rights against prior parties except as expressly provided in this Indenture. The Trustee shall not be liable to the Company or the Guarantors for failure to collect or realize upon any or all of the Collateral, or for any delay in so doing, nor shall the Trustee be under any duty to the Company or the Guarantors to take any action whatsoever with regard thereto. The Trustee shall have no duty to the Company or the Guarantors to comply with any recording, filing, or other legal requirements necessary to establish or maintain the validity, priority or enforceability of the security interests in, or the Trustee's rights in or to, any of the Collateral. Article V COVENANTS Section 5.1. PAYMENT OF NOTES The Company shall pay the principal of (including Excess Cash Flow to be paid by the Company on an Interest Payment Date pursuant to the provisions of Section 3.1 hereof) and interest on the Notes on the dates and in the manner provided in the Notes and this Indenture. An installment of principal of (including Excess Cash Flow to be paid by the Company on an Interest Payment Date pursuant to the provisions of Section 3.1 hereof) or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds for the benefit of the Holders, on or before 10:00 a.m. New York City time on that date, U.S. Legal Tender deposited and designated for and sufficient to pay the installment. Together with any installments of principal the Company will deliver to the Trustee a sufficient number of stickers, in form satisfactory to the Trustee, setting forth the outstanding principal amount of each Note after having given effect to such current principal payments, for delivery by the Trustee to the Holders for the purpose of affixing such stickers to their respective Notes. The Company shall pay interest on overdue principal and on overdue installments of interest at the rate specified in the Notes compounded semi- annually, to the extent lawful. Section 5.2. MAINTENANCE OF OFFICE OR AGENCY. The Company and the Guarantors shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer and exchange and where notices and demands to or upon the Company and the Guarantors in respect of the Notes and this Indenture may be served. The Company and the Guarantors 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 and the Guarantors 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 address of the Trustee set forth in Section 13.2 The Company and the Guarantors 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 and the Guarantors of their obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company and the Guarantors 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 and the Guarantors hereby initially designate the corporate trust office of the Trustee as such office. Section 5.3. LIMITATION ON RESTRICTED PAYMENTS. The Company and the Guarantors will not, and none will permit any of its Subsidiaries to, directly or indirectly, make any Restricted Payment. Section 5.4. CORPORATE EXISTENCE. The Company and the Guarantors shall do or cause to be done all things necessary to preserve and keep in full force and effect their corporate existence and the corporate or other existence of each of their Subsidiaries in accordance with the respective organizational documents of each of them and the rights (charter and statutory) and corporate franchises of the Company and the Guarantors and each of their Subsidiaries; PROVIDED, HOWEVER, that neither the Company nor any of the Guarantors shall be required to preserve, with respect to itself, any right or franchise if (a) the Board of Directors of the Company shall determine reasonably and in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Company and (b) the loss thereof is not disadvantageous in any material respect to the Holders. Section 5.5. PAYMENT OF TAXES AND OTHER CLAIMS. The Company and the Guarantors shall, and shall cause each of their Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company, any Guarantor or any of their Subsidiaries or properties and assets of the Company, any Guarantor, or any of their Subsidiaries and (ii) all lawful claims, whether for labor, materials, supplies, services or anything else, which have become due and payable and which by law have or may become a Lien upon the Property and assets of the Company, any Guarantor or any of their Subsidiaries; PROVIDED HOWEVER, that neither the Company nor any Guarantor shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves have been established in accordance with GAAP. Section 5.6. MAINTENANCE OF INSURANCE. From and at all times after May 13, 1996, the Company and each of the Guarantors and each of their respective Subsidiaries shall have in effect customary comprehensive general liability insurance and (as applicable) brownwater coverage, shall use their best efforts to have completion, performance or similar bonds in place for any Substitute Boat not yet completed, and shall cause the builder of any Substitute Boat to maintain builder's risk coverage insurance, in each case on terms and in an amount reasonably sufficient (taking into account, among other factors, the creditworthiness of the insurer) to avoid a material adverse change in the financial condition or results of operation of the Company and the Guarantors taken as a whole. Section 5.7. COMPLIANCE CERTIFICATE: NOTICE OF DEFAULT. The Company shall deliver to the Trustee within 90 days after the end of its fiscal year an Officers' Certificate complying (whether or not required) with Section 314(a)(4) of the TIA and stating that a review of its activities during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, whether or not the signer knows of any failure of the Company, any Guarantor or any Subsidiary of the Company or any Guarantor to comply with any conditions or covenants in this Indenture and, if such signer does know of such a failure to comply, the certificate shall describe such failure with particularity. The Officers' Certificate shall also notify the Trustee should the relevant fiscal year end on any date other than the current fiscal year end date. The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, immediately upon becoming aware of any Default or Event of Default under this Indenture, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposing to take with respect thereto. The Trustee shall not be deemed to have knowledge of a Default or an Event of Default unless one of its trust officers receives notice of the Default giving rise thereto from the Company or any of the Holders. Section 5.8. REPORTS. Whether or not the Company or any Guarantor is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company and each Guarantor shall deliver to the Trustee and to each Holder, within 15 days after it is or would have been required to file such with the SEC, annual and quarterly consolidating financial statements substantially equivalent to financial statements that would have been included in reports filed with the SEC if the Company were subject to the requirements of Section 13 or 15(d) of the Exchange Act including, with respect to annual information only, a report thereon by the Company's independent public accountants as such would be so required, together with a management's discussion and analysis of financial condition and results of operations which would be so required. Section 5.9. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company and each Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law wherever enacted which would prohibit or forgive the Company or any Guarantor from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that they may lawfully do so) the Company and each Guarantor hereby expressly waives all benefit or advantage of any such law insofar as such law applies to the Notes, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.10. LIMITATION ON TRANSACTIONS WITH AFFILIATES. None of the Company, any Guarantor, or any of their Subsidiaries shall enter into any transaction, including any contract, agreement, understanding, loan, advance or guarantee and including any series of related transactions, with or for the benefit of any Affiliate (an "Affiliate Transaction") except for (i) employment arrangements in the ordinary course with officers and employees of the Company who are not also officers, directors, or employees of any Affiliate of the Company, (ii) the Tax Sharing Treaty, (iii) Parent Equity Contributions, (iv) Indebtedness of JCC which JCC may incur under clause (g) of Section 5.11 hereof, and (v) the conveyance, sale, lease, transfer, assignment or other disposition of the Crescent City Queen Casino or a Qualified Substitute Boat by the Company to an Affiliate (an "Affiliate Conveyance"); PROVIDED, HOWEVER, that with respect to any such Affiliate Conveyance described in clause (v) of this Section 5.10, the Company shall obtain, prior to the consummation of such Affiliate Transaction, a written opinion addressed to the Trustee from an independent investment banking firm of national reputation with experience in the gaming business conducted by the Company that such Affiliate Conveyance is as favorable to the Company from a financial point of view as if made on an arm's length basis with a Third Party. Such investment banking firm shall be promptly selected by the Company and agreed to by the Holders of a majority in aggregate principal amount of then outstanding Notes; PROVIDED, HOWEVER, that if the Holders of a majority in aggregate principal amount of then outstanding Notes do not agree to such investment banking firm, each of the Company and the Holders of a majority in aggregate principal amount of then outstanding Notes shall then promptly select one such investment banking firm, and the two firms so chosen shall select a third investment banking firm to provide such opinion. Section 5.11. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL STOCK. Except as set forth below, from and after May 13, 1996 the Company and the Guarantors will not, and none will permit any of its Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become directly or indirectly liable with respect to (including as a result of an acquisition, merger or consolidation), extend the maturity of, or otherwise become responsible for, contingently or otherwise (individually and collectively, to "incur," or, as appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital Stock. Notwithstanding the foregoing: (a) the Company and the Guarantors may incur Indebtedness evidenced by the Notes and other obligations pursuant to the Indenture up to the amounts specified herein as of the Issue Date; (b) so long as no Default or Event of Default shall have occurred and be continuing at the time, the Company or any Guarantor may incur Permitted FF&E Financing; provided, that (I) prior to the Release Date, the aggregate amount of Indebtedness incurred pursuant to this paragraph (b) (including any Indebtedness issued to refinance, replace or refund such Indebtedness) shall not constitute more than 100% of the cost (reportable on the balance sheet (including all appropriate notes thereto) of such entity in accordance with GAAP) to the Company and the Guarantors of the FF&E so purchased or leased and (ii) prior to the Release Date, the aggregate principal amount of such Permitted FF&E Financing in respect of FF&E funded with all or any portion of Cash of the Company (other than Cash from a Parent Equity Contribution) does not exceed the sum of (x) the excess (the "FF&E Basket") of $6.5 million over the principal amount of all Existing FF&E Indebtedness on the Issue Date, less all payments of principal after the Issue Date in respect of such Existing FF&E Indebtedness and (y) $1 million, at any time, and (iii) in all other cases prior to the Release Date, Permitted FF&E Financing does not at any time exceed $10 million plus the FF&E Basket, less the amount of any such financing described in clause (ii) above then outstanding, at any time; (c) the Company and any of the Guarantors may incur Indebtedness constituting a bond or surety obligation (or an indemnity or similar obligation) (i) in order to prevent the impairment or loss of or to obtain a Gaming License, or (ii) as required under any insurance required under Section 5.6 hereof, but only to the extent required by applicable law and consistent in character and amount with customary industry practice; (d) the Company may incur Indebtedness the proceeds of which are used to pay all or a part of the purchase price of a Qualified Substitute Boat; provided, however, that such Indebtedness and the Liens securing such Indebtedness shall be subordinate and junior, in all respects, to the Indenture Obligations and the Liens of the Trustee securing the Indenture Obligations; (e) the Company may suffer to exist Existing FF&E Financing; (f) the Company and any of the Guarantors may incur Refinancing Indebtedness with respect to any Indebtedness described in clauses (a),(b), (c) and (d) of this covenant so long as, in the case of Indebtedness used to refinance, refund, or replace Indebtedness in clauses (b) and (d), such Refinancing Indebtedness satisfies the applicable requirements of such clauses; (g) JCC may incur (i) the JCC Indebtedness, and (ii) any Indebtedness to an Affiliate other than the Company as to which Indebtedness the Company provides no credit support nor is liable and the proceeds of which Indebtedness are used solely to pay the JCC Indebtedness; and (h) after the Release Date, the Company may incur any Indebtedness, so long as no Default or Event of Default shall have occurred and be continuing at the time. Section 5.12. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. None of the Guarantors will, and none will permit any of its Subsidiaries other than the Company to, directly or indirectly, create, assume or suffer to exist any consensual encumbrance or restriction on the ability of any such Subsidiary to pay dividends or make other distributions to, or to pay any obligation to, or to otherwise transfer assets or make or pay loans or advances to, any of the Guarantors, except (a) restrictions imposed by the Notes or the Indenture and (b) restrictions imposed by applicable law. Section 5.13. LIMITATION ON LIENS. Neither the Company nor any of the Guarantors will, and none will permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien in or on any right, title or interest to any of their respective Cash other than the Liens of the Trustee for the benefit of the Holders. Neither the Company nor any of the Guarantors will, and none will permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien in or on any right, title or interest to any of their respective properties or assets, other than Cash, owned by the Company or the Guarantors, as the case may be, on May 13, 1996 except (a) the Liens of the Trustee for the benefit of the Holders, and (b) Liens existing on the Issue Date and identified on a Schedule to be delivered to the Trustee no later than ten (10) days prior to the Issue Date. Neither the Company nor any of the Guarantors will, and none will permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien in or on any right, title or interest to any of their respective properties or assets, other than Cash, acquired after except (u) Permitted Liens, (v) the Liens of the Trustee for the benefit of the Holders, (w) Liens incurred pursuant to Permitted FF&E Financing incurred in accordance with the provisions of paragraph (b) of Section 5.11, which Liens may be exclusive Liens on such Permitted FF&E, (x) Liens in respect of Existing FF&E Financing, (y) Liens incurred in connection with the incurrence of Refinancing Indebtedness in accordance with the provisions of paragraph (f) of Section 5.11, PROVIDED, HOWEVER, that such Liens are not more adverse to the interests of the Holders of the Notes than the Liens replaced or extended thereby, PROVIDED, FURTHER, that such Liens replaced or extended are permitted hereby, and (z) only with respect to real Property acquired by the Guarantors after May 13, 1996, minor title defects and survey exceptions which do not materially detract from the value of the real Property subject thereto (as such Property is used by such Guarantor). Anything in this Section 5.13 to the contrary notwithstanding, after the Release Date, the Company and the Guarantors may incur Liens on any and all their respective Property or assets other than the Collateral, so long as no Default or Event of Default shall have occurred and be continuing at the time. Section 5.14. LIMITATION ON LINES OF BUSINESS. None of the Company, any Guarantor and any of their respective Subsidiaries will directly or indirectly engage in any line or lines of business activity other than in a Related Business. Section 5.15. LIMITATION ON STATUS AS INVESTMENT COMPANY. None of the Company, any Guarantor, or any of their respective Subsidiaries shall become "investment companies" (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. Section 5.16. RESTRICTIONS ON SALE AND ISSUANCE OF STOCK. Prior to the Release Date: (a) The Company and each Guarantor shall not issue or sell, and shall not permit any of their respective Subsidiaries to issue or sell, any Capital Stock of any Subsidiary to any person other than the Company or a Guarantor of the Company. (b) The Company shall not sell or issue Capital Stock (other than Disqualified Capital Stock) unless the same becomes subject to the Lien of this Indenture. Section 5.17. RESTRICTIONS ON SUBSIDIARIES. Prior to the Release Date, neither the Company nor any Guarantor shall create, acquire or suffer to exist any Subsidiary which was not a direct or indirect subsidiary of the Company or such Guarantor, as the case may be, on May 13, 1996. Section 5.18. RESTRICTIONS ON INVESTMENTS. The Company and each Guarantor shall not make any Restricted Investments except, in the case of JCC, its equity interests in the Company. Section 5.19. RESTRICTIONS ON CAPITAL EXPENDITURES. The Company and each Guarantor shall not incur any Capital Expenditures except for Permitted Capital Expenditures. Section 5.20. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. Neither the Company nor any of the Guarantors will, and none will permit any of its Subsidiaries to, in one or a series of related transactions, convey, sell, lease, transfer, assign or otherwise dispose of, directly or indirectly, any of its Property, business or assets, including without limitation upon any sale or other transfer or issuance of any Capital Stock of any Subsidiary or through the issuance, sale or transfer of Capital Stock of a Subsidiary (an "Asset Sale"). Notwithstanding the foregoing: (a) so long as no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect, on a PRO FORMA basis, to, such Asset Sale, the Company may sell, lease, transfer, assign or otherwise dispose of the Crescent City Queen Casino or any Qualified Substitute Boat or other Substitute Boat in accordance with the provisions of Section 4.4 or Section 5.10 hereof, and further subject to the applicable provisions of Article XI hereof; (b) the Company and the Guarantors may sell, lease, transfer, assign or otherwise dispose of any machinery, equipment, or other personal Property that has become worn out, obsolete, or unserviceable or is being upgraded upon replacing the same with or substituting for the same, machinery, equipment or other personal Property not necessarily of the same character but being of at least equal fair value and at least equal utility to the Company as the Property so disposed of; (c) the Company and the Guarantors may (A) sell, assign, transfer, license or otherwise dispose of inventory held for resale in the ordinary course of the Company's business, consistent with industry practices and (B) collect, liquidate, sell, factor or otherwise dispose of accounts receivable or notes receivable in the ordinary course of the Company's business, consistent with industry practices; and (d) the Company and the Guarantors may abandon, sell, assign, transfer, license or otherwise dispose of any personal Property the use of which is no longer necessary or desirable in the proper conduct of the business of the Company and the maintenance of its earnings and is not material to the conduct of the business of the Company; and (e) so long as no Default or Event of Default shall have occurred and be continuing, the Company and the Guarantors may convey, sell, lease, transfer, assign or otherwise dispose of their respective Property or assets other than Collateral. Section 5.21. LIMITATION ON MERGER, SALE OR CONSOLIDATION. Neither the Company nor any of the Guarantors will consolidate with or merge with or into another person. Section 5.22. MAINTENANCE OF BUSINESS. At all times from and after the Commencement Date, the Company will operate a riverboat casino in Bossier City, Louisiana. Section 5.23. COMMENCEMENT DATE; RELEASE DATE; ADVERSE STATE ACTION. (a) The Company shall give the Trustee notice, at the addresses and in the manner set forth in Section 13.2 hereof, of: (i) the Commencement Date, as soon as the occurrence of such date is ascertained by the Company but in no event later than five (5) days after the occurrence thereof; (ii) the Release Date, as soon as the occurrence of such date is ascertained by the Company but in no event later than five (5) days after the occurrence thereof; (iii) the occurrence of an Adverse State Action, in no event later than one (1) day after the Company receives actual notice of the occurrence thereof; and (iv) the date an Adverse State Action is to take effect, immediately upon receipt by the Company of notice of such date. (b) No later than ten (10) days after the Release Date, the Company will deliver to the Trustee an amortization schedule setting forth the amortization of the remaining outstanding principal amount of the Notes in eight (8) equal installments payable on each of the eight (8) Interest Payment Dates immediately following the Release Date (or, if there shall be fewer than eight Interest Payment Dates remaining after the Release Date but before or including the third anniversary of the Commencement Date, in equal installments numbering the amount of remaining Interest Payment Date). (c) No later than ten (10) days after the date of the occurrence of an Adverse State Action, the Company will deliver to the Trustee an amortization schedule setting forth the amortization of the remaining outstanding principal amount of the Notes in equal installments payable on each of the Interest Payment Dates immediately following the date of the occurrence of the Adverse State Action to and including the date on which the Adverse State Action is to take effect against the Company. Article VI. EVENTS OF DEFAULT AND REMEDIES Section 6.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be caused voluntarily or involuntarily or effected, without limitation, by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) the failure by the Company to pay any installment of interest on the Notes as and when due and payable and the continuance of any such failure for 10 days; (2) the failure by the Company to pay all or any part of the principal, or premium, if any, on the Notes when and as the same become due and payable at maturity, redemption, by acceleration or otherwise; PROVIDED that, in respect of a payment of Excess Cash Flow, if the amount thereof, in respect of any period, is greater than the amount originally determined by the Company for purposes of making such payment (but by no more than 5% of such originally determined amount), such greater amount, less the payment already made, shall be deemed to be due and payable to the Trustee 5 days after such greater amount is finally determined; (3) except as provided in clauses (1) or (2) of this Section 6.1, failure of the Company or any Guarantor to comply with any provision of Section 5.10, 5.14, 5.21, 5.22, 11.3 or 11.4 which failure continues for 30 days; (4) failure of the Company or any Guarantor to comply with any provision of Section 4.4 hereof; (5) except as otherwise provided herein, the failure by the Company or any Guarantor to observe or perform any other covenant or agreement contained in the Notes or the Indenture and the continuance of such failure for a period of 30 days after written notice is given to the Company by the Trustee or to the Company and Trustee by the Holders of at least 25% in aggregate principal amount of the Notes outstanding; (6) a decree, judgment, or order by a court of competent jurisdiction shall have been entered adjudging the Company or any Guarantor as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company or such Guarantor under any bankruptcy or similar law, and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction over the appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Company or such Guarantor, or of the Property of any such person, or for the winding up or liquidation of the affairs of any such person, shall have been entered, and such decree, judgment, or order shall have remained in force undischarged and unstayed for a period of 60 days; (7) the Company or any Guarantor shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it or any of its assets or Property, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall, within the meaning of any Bankruptcy Law, become insolvent, fail generally to pay their debts as they become due, or take any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing; (8) a default in the payment of principal, premium or interest when due which extends beyond any stated period of grace applicable thereto or an acceleration for any other reason of maturity of any Indebtedness of the Company, any Guarantor or any of their respective Subsidiaries with an aggregate principal amount in excess of $500,000; (9) final unsatisfied judgments not covered by insurance aggregating in excess of $500,000, at any one time rendered against the Company, any Guarantor or any of their respective Subsidiaries and not stayed, bonded or discharged within 60 days; (10) the closing after the Commencement Date (other than for repair or maintenance) of a substantial portion of the Crescent City Queen Casino or, if applicable, the casino on a Qualified Substitute Boat for more than 45 consecutive days; (11) the loss of the legal right to operate the Crescent City Queen Casino or, if applicable, the casino on a Qualified Substitute Boat and such loss is continuing for more than 90 consecutive days; (12) an event of default specified in any of the Collateral Documents; or (13) any of the Collateral Documents fails to become or ceases to be in full force and effect in accordance with the terms of this Indenture, or ceases (once effective) to create in favor of the Trustee, with respect to any material amount of Collateral, a valid and perfected first priority Lien on the Collateral to be covered thereby (unless a prior or exclusive Lien is specifically permitted by this Indenture). If a Default occurs and is continuing, the Trustee must, within 90 days after the occurrence of such default, give to the Holders notice of such default in accordance with Section 7.5 hereof; PROVIDED, HOWEVER, that, except in the case of a Default or an Event of Default in payment of principal (or premium, if any) of, or interest on, any Note (including the payment of the Redemption Price on the Redemption Date), the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interest of the Holders. If an Event of Default occurs and is continuing (other than an Event of Default specified in clauses (6) or (7), above, relating to the Company or any Guarantor), then in every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of 25% in aggregate principal amount of the Notes then outstanding, by notice in writing to the Company, and to the Trustee if given by Holders (an "Acceleration Notice"), may declare all principal and accrued interest thereon to be due and payable immediately. If an Event of Default specified in clauses (6) or (7), above, relating to the Company or any Guarantor occurs, all principal and accrued interest thereon and any then applicable Redemption Premium will be immediately due and payable on all outstanding Notes without any declaration or other act on the part of Trustee or the Holders. The Holders of no less than a majority in aggregate principal amount of Notes generally are authorized to rescind such acceleration if all existing Events of Default, other than the non- payment of the principal of, premium, if any, and interest on the Notes which have become due solely by such acceleration, have been cured or waived. Prior to the declaration of acceleration of the maturity of the Notes, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may waive on behalf of all the Holders any default, except a default in the payment of principal of or interest on any Note not yet cured, or a default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable security or indemnity. Subject to all provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee. Section 6.2. RESCISSION AND ANNULMENT. Prior to any judgment or decree for payment of any money due being obtained by the Trustee as hereinafter provided in this Article VI, the Holders of a majority in aggregate principal amount of then outstanding Notes, by written notice to the Company and the Trustee, may waive, on behalf of all Holders, an Event of Default or Default if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on all Notes, (B) the principal of (and premium, if any, applicable to) any Notes which would become due otherwise than by such declaration of acceleration, and interest thereon at the rate borne by the Notes, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes, (D) all sums paid or advanced by the Trustee hereunder and the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and (2) all Events of Default, other than the non-payment of amounts which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13. Notwithstanding the previous sentence of this Section 6.2, no waiver shall be effective for any Event of Default or Default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note, unless all such affected Holders agree, in writing, to waive such Event of Default or Default. No such waiver shall cure or waive any subsequent default or impair any right consequent thereon. Section 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if an Event of Default in payment of principal, premium, or interest specified in Section 6.1(1) and (2) occurs and is continuing, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal, premium (if any) and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including compensation to, and expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust in favor of the Holders, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the Property of the Company or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Notes or the Property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise to take any and all actions under the TIA, including (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other Property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official 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 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 7.7. 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 thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust in favor of the Holders, and any recovery of judgment shall, after provision for the payment of compensation to, and expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. Section 6.6. PRIORITIES. Any money collected by the Trustee pursuant to this Article VI shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium (if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the Trustee in payment of all amounts due pursuant to Section 7.7; SECOND: To the Holders in payment of the amounts then due and unpaid for principal of, premium (if any) and interest on, the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium (if any) and interest, respectively; and THIRD: To whomsoever may be lawfully entitled thereto, the remainder, if any. Section 6.7 LIMITATION ON SUITS. No Holder of any Note shall have any right to order or direct the Trustee to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (A) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (B) the Holders of not less than 25% in principal amount of then outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (C) such Holder or Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred or reasonably probable to be incurred in compliance with such request; (D) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (E) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. Section 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision of this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of, and premium (if any) and interest on, such Note on the Maturity Dates of such payments as expressed in such Note (in the case of redemption, the Redemption Price on the applicable Redemption Date, and in the case of Section 3.1, Excess Cash Flow on the applicable date specified in Section 3.1) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 6.9. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the placement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.10. DELAY OR OMISSION NOT WAIVER. No delay or omission by the Trustee or by any Holder of any Note to exercise any right or remedy arising upon any Event of Default shall impair the exercise of any such right or remedy or constitute a waiver of any such Event of Default. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 6.11. CONTROL BY HOLDERS. The Holder or Holders of a majority in aggregate principal amount of then outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee, PROVIDED, that (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 6.12. WAIVER OF PAST DEFAULT. Subject to Section 6.8, the Holder or Holders of not less than a majority in aggregate principal amount of the outstanding Notes may, by written notice to the Trustee on behalf of all Holders, prior to the declaration of the maturity of the Notes, waive any past default hereunder and its consequences, except a default (A) in the payment of the principal of, premium, if any, or interest on, any Note as specified in clauses (1) and (2) of Section 6.1, or (B) in respect of a covenant or provision hereof which, under Article IX, cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair the exercise of any right arising therefrom. Section 6.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, 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, suffered or omitted to be taken by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 6.13 shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the outstanding Notes, or to any suit instituted by any Holder for enforcement of the payment of principal of, or premium (if any) or interest on, any Note on or after the Maturity Date of such Note. Section 6.14. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Company, the Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 6.15. CASH PROCEEDS FROM COLLATERAL. The Cash proceeds of any Collateral obtained and/or disposed of pursuant to the terms of the Collateral Documents shall be held by the Trustee in the manner provided in Article XI hereof for the equal and ratable benefit of the Holders without preference, priority or distinction of any thereof by reason of difference in time of issuance, sale or otherwise. Article VII. TRUSTEE The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. Section 7.1. DUTIES OF TRUSTEE. (a) If a Default or an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of a Default or an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no others, and no covenants or obligations shall be implied in or read into this Indenture which are adverse to the Trustee. (2) 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, including certificates or opinions of the Consulting Professional and the Construction Manager. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.1. (2) The Trustee shall comply with any order or directive of a Gaming Authority that the Trustee submit an application for any license, finding of suitability or other approval pursuant to any Gaming Law and will cooperate fully and completely in any proceeding related to such application. (3) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (4) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith (i) in accordance with a direction received by it pursuant to Section 6.12, or (ii) in reliance upon actions, statements, judgments or representations taken or made by the Consulting Professional or the Construction Manager in accordance with Section 11.4 hereof. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this indenture or at the request, order or direction of the Holders or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1. (f) The Trustee shall not be liable for interest on any assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. Section 7.2. RIGHTS OF TRUSTEE. Subject to Section 7.1: (a) The Trustee may rely on 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 consult with counsel and may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Sections 13.4 and 13.5. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent (including the Consulting Professional) appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (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, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. (g) Except with respect to Section 5.1, the Trustee shall have no duty to inquire as to the performance of the Company's covenants in Article V hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.1(1), 6.1(2) and 5.1, or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. (h) The Trustee may rely on the accuracy of any amortization schedule delivered to it by the Company pursuant to Section 5.23 hereof. Section 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Guarantor, any of their respective Subsidiaries, or their respective Affiliates with the same rights it would have if it were not Trustee. Any agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. Section 7.4. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes, and it shall not be responsible for any statement in the Notes, other than the Trustee's certificate of authentication, or the use or application of any funds received by a Paying Agent other than the Trustee. Section 7.5. NOTICE OF DEFAULT. If a Default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Noteholder notice of the uncured Default or Event of Default within 90 days after such Default or Event of Default occurs. Except in the case of a Default or an Event of Default in payment of principal (or premium, if any) of, or interest on, any Note (including the payment of the Redemption Price on the Redemption Date), the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interest of the Holders. Section 7.6. REPORTS BY TRUSTEE TO HOLDERS. If required by law, within 60 days after each May 15 beginning with May 15, 1997, the Trustee shall mail to each Noteholder a brief report dated as of such May 15 that complies with TIA Section 313(a). If required by law, the Trustee also shall comply with TIA Section 313(b) and 313(c). The Company shall promptly notify the Trustee in writing if the Notes become listed on any stock exchange or automatic quotation system. A copy of each report at the time of its mailing to Noteholders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Notes are listed. Section 7.7. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents, accountants, experts and counsel. The Company shall indemnify the Trustee (in its capacity as Trustee) and each of its officers, directors, attorneys-in-fact and agents for, and hold it harmless against, any claim, demand, expense (including but not limited to reasonable compensation, disbursements and expenses of the Trustee's agents and counsel), loss or liability incurred by them without negligence or bad faith on its part, arising out of or in connection with the administration of this trust and their rights or duties hereunder including the reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company shall defend the claim and the Trustee shall provide reasonable cooperation at the Company's expense in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; PROVIDED, that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and there is no conflict of interest between the Company and the Trustee in connection with such defense. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. To secure the Company's payment obligations in this Section 7.7, the Trustee shall have a lien prior to the Notes on all assets held or collected by the Trustee, in its capacity as Trustee, except assets held in trust to pay principal and premium, if any, of or interest on particular Notes. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(5) or (6) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The Company's obligations under this Section 7.7 and any lien arising hereunder shall survive the resignation or removal of the Trustee, the discharge of the Company's obligations pursuant to Article VIII of this Indenture and any rejection or termination of this Indenture under any Bankruptcy Law. Section 7.8. REPLACEMENT OF TRUSTEE. The Trustee may resign by notifying the Company in writing. The Holder or Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Company and the Trustee in writing and may appoint a successor trustee with the Company's consent. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.1(d) or 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver, Custodian, or other public officer takes charge of the Trustee or its Property; or (4) the Trustee become 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 Holder or Holders of a majority in principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that and provided that all sums owing to the Trustee provided for in Section 7.7 have been paid, the retiring Trustee shall transfer all Property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.7, 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. A successor Trustee shall mail notice of its succession to each Holder. 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 Holder or Holders of at least 10% in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. Section 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee. Section 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. Article VIII. TERMINATION AND DISCHARGE Section 8.1. TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE NOTES. The Company and the Guarantors may terminate all of their obligations under this Indenture (subject to Section 8.2) when: (1) all Notes theretofore authenticated and delivered (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7) have been delivered to the Trustee for cancellation; (2) the Company or a Guarantor has paid or caused to be paid all sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel (who may be outside counsel to the Company, but not in- house counsel to the Company or any of its Subsidiaries), each stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with and that such satisfaction and discharge will not result in a breach or violation of, or constitute a Default under, this Indenture or any other instrument to which the Company, any Guarantor or any of their Subsidiaries is a party or by which it or their Property is bound. Section 8.2. SURVIVAL OF CERTAIN OBLIGATIONS. Notwithstanding the termination of this Indenture and of the Notes referred to in Section 8.1 , the respective obligations of the Company, the Guarantors and the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.11, 2.12, Article III, Article IV, 5.1, 5.2, 5.4, 5.6, 5.15, 6.7, 6.8, 7.7, 7.8, 8.4, 13.1, 13.2, 13.4, 13.5, 13.7, 13.8, 13.11 and this Section 8.2 shall survive until the Notes are no longer outstanding, and thereafter the obligations of the Company and the Trustee under Sections 6.8, 7.7, 7.8, 8.4, 13.11 and this Section 8.2 shall survive. Nothing contained in this Article VIII shall abrogate any of the obligations or duties of the Trustee under this Indenture. Section 8.3. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE. After (i) the conditions of Section 8.1 have been satisfied, (ii) the Company or a Guarantor has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i), above, relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon request shall acknowledge in writing the discharge of the Company's and the Guarantors' obligations under this Indenture except for those surviving obligations specified in Section 8.2. Section 8.4. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.1 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1 until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.1 ; PROVIDED, HOWEVER, that if the Company or a Guarantor has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company or such Guarantor shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent. Article IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holder, the Company or any Guarantor, when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, or may amend, modify or supplement the Collateral Documents, in form satisfactory to the Trustee, for any of the following purposes: (1) to cure any ambiguity, defect, or inconsistency, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action pursuant to this clause (1) shall not adversely affect the interests of any Holder in any respect; (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company or to make any other change that does not adversely affect the rights of any Holder; provided, that the Company has delivered to the Trustee an Opinion of Counsel stating that such change does not adversely affect the rights of any Holder; (3) to provide for additional Collateral for or additional Guarantors of the Notes; (4) to provide for uncertificated Notes in addition to or in place of certificated Notes in compliance with this Indenture; or (5) to comply with the TIA. Section 9.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF HOLDERS. Subject to Section 6.8 and the last sentence of this paragraph, with the consent of the Holders of a majority in aggregate principal amount of then outstanding Notes by written act of said Holders delivered to the Company and the Trustee, the Company and any Guarantor, when authorized by Board Resolutions, and the Trustee may amend or supplement the Mortgage, this Indenture or the Notes or enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Mortgage, this Indenture or the Notes or of modifying in any manner the rights of the Holders under the Collateral Documents, this Indenture or the Notes. Subject to Section 6.8 and the last sentence of this paragraph, the Holder or Holders of a majority in aggregate principal amount of then outstanding Notes not held by Affiliates of the Issuer may waive compliance by the Company or any Guarantor with any provision of the Collateral Documents, this Indenture or the Notes. Notwithstanding the foregoing provisions of this Section 9.2, no such amendment, supplemental indenture or waiver shall, without the consent of the Holders of at least 66 2/3% of the aggregate principal amount of outstanding Notes not held by Affiliates of the Issuer, change any provision of Article IV, Article XII or (except for the Stated Maturity, which is governed by clause (4) (below) extend any Maturity Date of any Note, and no such amendment, supplemental indenture or waiver shall, without the consent of the Holder of each outstanding Note affected thereby: (1) change the percentage of principal amount of Notes whose Holders must consent to an amendment, supplement or waiver of any provision of this indenture or the securities; (2) reduce the rate or extend the time for payment of interest on any Note; (3) reduce the principal amount of any Note; (4) change the Stated Maturity of any Note; (5) alter the redemption provisions of Article III in a manner adverse to any Holder; (6) make any changes in the provisions concerning waivers of Defaults or Events of Default by Holders of the Notes or the rights of Holders to recover the principal or premium of, interest on, or redemption payment with respect to, any Note; (7) make any changes in Section 6.4, 6.7 or this third sentence of this Section 9.2; (8) make the principal of, or the interest on, any Note payable with anything or in any manner other than as provided for in this Indenture and the Notes as in effect on the date hereof; or (9) make the Notes subordinated in right of payment except as provided herein to any extent or under any circumstances to any other indebtedness. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement 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 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 supplemental indenture. After an amendment, supplement or waiver under this Section 9.2 or 9.4 becomes effective, it shall bind each Holder. In connection with any amendment, supplement or waiver under this Article IX, the Company may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, consideration for such Holder's consent to such amendment, supplement or waiver. Section 9.3. COMPLIANCE WITH TIA. Every amendment, waiver or supplement of this Indenture or the Notes shall comply with the TIA as then in effect. Section 9.4. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder 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 or subsequent Holder may revoke the consent as to his Note or portion of his Note by written notice to the Company or the person designated by the Company as the person to whom consents should be sent if such revocation is received by the Company or such person before the date on which the Trustee receives an Officers' Certificate Certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be the date so fixed by the Company notwithstanding the provisions of the TIA. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those persons who were Holders at such record date, and only those persons (or their duly designated proxies), shall be entitled to revoke any consent previously given, whether or not such persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. After an amendment, supplement or waiver becomes effective, it shall bind every Noteholder, unless it makes a change described in any of clauses (1) through (8) of Section 9.2, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note; PROVIDED, HOWEVER, that any such waiver shall not impair or affect the right of any Holder to receive payment of principal and premium and interest on a Note, on or after the respective dates set for such amounts to become due and payable expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates. Section 9.5. NOTATION ON OR EXCHANGE OF NOTES. If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee or require the Holder to put an appropriate notation on the Note. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue, the Guarantors shall endorse and the Trustee shall authenticate a new Note that reflects the changed terms. Any failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment, supplement or waiver. Section 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article IX, provided, that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article IX is authorized or permitted by this Indenture. Article X. MEETINGS OF NOTEHOLDERS Section 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Noteholders may be called at any time and from time to time pursuant to the provisions of this Article X for any of the following purposes: (a) to give any notice to the Company, any Guarantor or to the Trustee, or to give any directions to the Trustee, or to waive or to consent to the waiving of any Default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Noteholders pursuant to any of the provisions of Article VI; (b) to remove the Trustee or appoint a successor Trustee pursuant to the provisions of Article VI; (c) to consent to a waiver pursuant to the provisions of Section 9.2; or (d) to take any other action (i) authorized to be taken by or on behalf of the Holder or Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture (including the selection of the Consulting Professional), or authorized or permitted by law or (ii) which the Trustee deems necessary or appropriate in connection with the administration of this Indenture. Section 10.2. MANNER OF CALLING MEETINGS. The Trustee may at any time call a meeting of Noteholders to take any action specified in Section 10.1, to be held at such time and at such place in The City of New York, State of New York or elsewhere as the Trustee shall determine. Notice of every meeting of Noteholders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to the Company, the Guarantors and to the Holders at their last addresses as they shall appear on the registration books of the Registrar, not less than 10 nor more than 60 days prior to the date fixed for a meeting. The Company shall pay the costs and expenses of preparing and mailing such notice. Any meeting of Noteholders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy, or if notice is waived before or after the meeting by the Holders of all Notes outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice. Section 10.3. CALL OF MEETINGS BY COMPANY OR HOLDERS. In case at any time the Company, pursuant to a Board Resolution, or the Holders of not less than 10% in aggregate principal amount of the securities then outstanding, shall have requested the Trustee to call a meeting of Noteholders to take any action specified in Section 10.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or the Holders of Notes in the amount above specified may determine the time and place in The City of New York, State of New York or elsewhere for such meeting and may call such meeting for the purpose of taking such action, by mailing or causing to be mailed notice thereof as provided in Section 10.2, or by causing notice thereof to be published at least once in each of two successive calendar weeks (on any Business Day during such week) in a newspaper or newspapers printed in the English language, customarily published at least five days a week of a general circulation in The City of New York, State of New York, the first such publication to be not less than 10 nor more than 60 days prior to the date fixed for the meeting. Section 10.4. WHO MAY ATTEND AND VOTE AT MEETINGS. To be entitled to vote at any meeting of Noteholders, a person shall (a) be a registered Holder of one or more Notes, or (b) be a person appointed by an instrument in writing as proxy for the registered Holder or Holders of Notes. The only persons who shall be entitled to be present or to speak at any meeting of Noteholders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company, the Guarantors and their counsel. Section 10.5. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE MEETING; VOTING RIGHTS; ADJOURNMENT. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any action by or any meeting of Noteholders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, and submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think appropriate. Such regulations may fix a record date and time for determining the Holders of record of Notes entitled to vote at such meeting, in which case those and only those persons who are Holders of securities at the record date and time so fixed, or their proxies, shall be entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Noteholders as provided in Section 10.3, in which case the Company or the Noteholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the holders of a majority in principal amount of the Notes represented at the meeting and entitled to vote. At any meeting each Noteholder or proxy shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Notes challenged as not outstanding and ruled by the chairman of the meeting to be not then outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by him or instruments in writing as aforesaid duly designating him as the proxy to vote on behalf of other Noteholders. Any meeting of Noteholders duly called pursuant to the provisions of Section 10.2 or Section 10.3 may be adjourned from time to time by vote of the Holder or Holders of a majority in aggregate principal amount of the Notes represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without further notice. Section 10.6. VOTING AT THE MEETING AND RECORD TO BE KEPT. The vote upon any resolution submitted to any meeting of Noteholders shall be by written ballots on which shall be subscribed the signatures of the Holders of Notes or of their representatives by proxy and the principal amount of the Notes voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Noteholders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that such notice was mailed as provided in Section 10.2 or published as provided in Section 10.3. The record shall be signed and verified by the affidavits of the permanent chairman and the secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. Section 10.7. EXERCISE OF RIGHTS OF TRUSTEE OR NOTEHOLDERS MAY NOT BE HINDERED OR DELAYED BY CALL OF MEETING. Nothing contained in this Article X shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Noteholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Noteholders under any of the provisions of this Indenture or of the Notes. Article XI. APPLICATION OF TRUST MONEYS Section 11.1. "TRUST MONEYS" DEFINED. All Cash or Cash Equivalents received by the Trustee: (a) as Boat Conveyance Proceeds; or (b) upon the release (other than in accordance with Section 4.3 hereof) of Collateral from the Lien of any Collateral Document, subject to satisfaction of any Permitted Liens on such Collateral or as otherwise permitted herein; or (c) as Insurance Proceeds (other than (i) any liability insurance proceeds payable to the Trustee for any loss, liability or expense incurred by it, and (ii) proceeds from any single casualty to Collateral (other than the Crescent City Queen Casino, any Qualified Substitute Boat or Substitute Boat, and the JCC Real Property) where such proceeds do not exceed $50,000 from such casualty; PROVIDED, HOWEVER, that such proceeds described in the foregoing clause (ii) shall constitute Collateral for all other purposes under this Indenture and the Collateral Documents) including proceeds of any insurance received pursuant to Article I, Section 15 of the Mortgage or pursuant to the corresponding provisions of the Other Boat Mortgage or pursuant to Section IV of the JCC Mortgage; or (d) as proceeds of any other sale or other disposition of all or any part of the Collateral by or on behalf of the Trustee (including any proceeds received pursuant to Article II, Section 2 of the Mortgage or the corresponding provisions of the Other Boat Mortgage or pursuant to Section VI of the CMLI Mortgage) or any collection, recovery, receipt, appropriation or other realization of or from all or any part of the Collateral pursuant to the Collateral Documents or otherwise; or (e) for application under this Article XI as elsewhere provided in this Indenture or the Collateral Documents, or whose disposition is not elsewhere otherwise specifically provided for herein or in the Collateral Documents; (all such moneys being herein sometimes called "Trust Moneys"; PROVIDED, HOWEVER, that Trust Moneys shall not include any Property deposited with the Trustee pursuant to Section 3.7 or Article VIII or delivered to or received by the Trustee for application in accordance with Section 6.6 hereof) shall be subject to a Lien and security interest in favor of the Trustee and shall be held by the Trustee for the benefit of the Holders as a part of the Collateral and, upon any entry upon or sale or other disposition of the Collateral or any part thereof pursuant to the Collateral Documents, said Trust Moneys shall be applied in accordance with Section 6.6; but, prior to any such entry, sale or other disposition, all or any part of the Trust Moneys may be withdrawn, and shall be released, paid or applied by the Trustee, from time to time as provided in this Article XI or Article IV. On May 13, 1996 there shall be established and, at all times hereafter until this Indenture shall have terminated, there shall be maintained by the Trustee , an account which shall be entitled the "Collateral Account" which shall be established and maintained by the Trustee at its offices in the Borough of Manhattan, The City of New York. The Collateral Account shall initially contain the following "Basic Sub-Accounts" established by and with the Trustee: (i) the Boat Conveyance Proceeds Sub-Account; (ii) the Net Awards Collateral Sub-Account; (iii) the Guarantor Collateral Sub-Account; (iv) the Company Collateral Sub-Account; and (v) the Company Payment Sub-Account. All Trust Moneys which are received by the Trustee shall be deposited in the Collateral Account as follows: (A) all Boat Conveyance Proceeds shall be deposited into the Boat Conveyance Proceeds Sub-Account; (B) all Insurance Proceeds and Net Awards shall be deposited into the Net Awards Sub-Account; (C) all Cash proceeds of Collateral owned by the Guarantors shall be deposited into the Guarantor Collateral Sub-Account; (D) all Trust Moneys paid to the Trustee for the purpose and in anticipation of the distribution of same to the Holders pursuant to any redemption or principal amortization shall be deposited in the Company Payment Sub-Account; and (E) all other Trust Moneys shall be deposited in the Company Collateral Sub-Account. Trust Moneys thereafter shall be held, applied and/or disbursed by the Trustee in accordance with the terms of this Indenture. The Trustee shall have a Lien on and security interest in the Collateral Account and the Basic Sub-Accounts and all Cash and Cash Equivalents therein from time to time for the benefit of the Holders as part of the Collateral. Section 11.2. WITHDRAWALS OF INSURANCE PROCEEDS AND NET AWARDS. To the extent that any Trust Moneys consist of Insurance Proceeds or a Net Award received by the Trustee pursuant to the provisions of Article I, Section 15 of the Mortgage or the corresponding provisions of the Other Boat Mortgage (which Net Award is required to be applied, or may be applied by the applicable mortgagor or pledgor, to effect a restoration to the affected Collateral) or Section IV of the JCC Mortgage, such Trust Moneys may be withdrawn by the Company and shall be paid by the Trustee upon a request by a Company Order to reimburse the Company to repair, rebuild or replace the Property destroyed, damaged or taken, upon receipt by the Trustee of the following: (a) an Officers' Certificate of the Company dated not more than 30 days prior to the date of the application for the withdrawal and payment of such Trust Moneys: (i) that expenditures have been made, or costs incurred, by the Company in a specified amount for the purpose of making certain repairs, rebuildings and replacements of the Collateral, which shall be briefly described, and stating the fair value thereof to the Company at the date of the expenditure or incurrence thereof by the Company; (ii) that no part of such expenditures or costs has been or is being made the basis for the withdrawal of any Trust Moneys in any previous or then pending application pursuant to this Section 11.2; (iii) that there is no outstanding Indebtedness except as permitted herein, other than costs for which payment is being requested and customary retainage not to exceed ten per cent (10%); (iv) that the Property to be repaired, rebuilt or replaced is necessary or desirable in the conduct of the business of the Company; (v) whether any part of such repairs, rebuildings or replacements within six months before the date of acquisition thereof by the Company has been used or operated by others than the Company in a business similar to that in which such Property has been or is to be used or operated by the Company and whether the fair value to the Company at the date of such acquisition, of such part of such repairs, rebuildings or replacements is at least the greater of $25,000 and 1% of the aggregate principal amount of the outstanding Notes; (vi) that no Default or Event of Default shall have occurred and be continuing; and (vii) that all conditions precedent herein provided for relating to such withdrawal and payment have been complied with; (b) all documentation required under Section 314(d) of the TIA; (c) an Architect's Certificate stating: (i) that all restoration work to which such request relates has been done in compliance with the approved plans and specifications and in accordance with all provisions of law; (ii) the sums requested are required to reimburse the Company for payments by the Company to, or are due to, the contractors, subcontractors, materialmen, laborers, engineers, architects or other persons rendering services or materials for the restoration, and that, when added to the sums, if any, previously paid out by Trustee, such sums do not exceed the cost of the restoration to the date of such Architect's Certificate; (iii) whether or not the Estimate continues to be accurate, and if not, what the entire cost of such restoration is then estimated to be; and (iv) that the amount of the Insurance Proceeds or Net Award plus any amount received by the Trustee under a surety, guaranty, letter of credit or commitment remaining after giving effect to such payment will be sufficient on completion of the restoration to pay for the same in full (including, in detail, an estimate by trade of the remaining costs of completion); (d) an Opinion of Counsel (who shall be outside counsel to the Company) substantially stating: (i) that the instruments that have been or are therewith delivered to the Trustee conform to the requirements of this Indenture and the Collateral Documents, and that, upon the basis of such requests of the Company and the accompanying documents specified in this Section 11.2, all conditions precedent herein provided for relating to such withdrawal and payment have been complied with, and the Trust Moneys whose withdrawal is then requested may be lawfully paid over under this Section 11.2; (ii) that the Collateral Documents create a valid and perfected Lien on such repairs, rebuildings and replacements, that the same and every part thereof are subject to no Liens prior to the Lien of the Collateral Documents, except Liens of the type permitted under the Collateral Documents to which the Property so destroyed or damaged shall have been subject at the time of such destruction or damage; and (iii) that all of the right, title and interest in and to said repairs, rebuildings or replacements, or combination thereof, of the Company are then subject to the Lien of the Collateral Documents; (e) each such request shall be accompanied by: (i) an Opinion of Counsel or a title insurance policy, binder or endorsement satisfactory to the Trustee confirming that there has not been filed with respect to all or any part of the mortgaged Property any Lien which could have priority over the Lien of the Mortgage or the Other Boat Mortgage, as the case may be other than those Liens which will be satisfied with the proceeds being advanced; and (ii) an Officer's Certificate stating that all certificates, permits, licenses, waivers, other documents, or any combination of the foregoing required by law in connection with or as a result of such restoration to the extent then completed have been obtained. Upon compliance with the foregoing provisions of this Section 11.2 and the provisions of the applicable Collateral Document, the Trustee shall pay on the written request of the Company an amount of Trust Moneys of the character aforesaid equal to the amount of the expenditures or costs stated in the Officers' Certificate required by clause (i) of subsection (a) of this Section 11.2, or the fair value to the Company of such repairs, rebuildings and replacements stated in such Officers' Certificate (or in such independent appraiser's or independent financial advisor's certificate, if required by the TIA), whichever is less; PROVIDED, HOWEVER, that notwithstanding the above, so long as no Default or Event of Default shall have occurred and be continuing, in the case that any insurance proceeds or award for such Property or proceeds of such sale does not exceed the lesser of $25,000 or 1% of the principal amount of the then outstanding Notes, and, in the good faith estimate of the Company, such destruction or damage resulting in such insurance proceeds does not detrimentally affect the value or use of the applicable Collateral in any material respect, upon delivery to the Trustee of an Officers' Certificate of the Company to such effect, the Trustee shall release to the Company such insurance proceeds or condemnation award for such Property or proceeds of such sale, free of the Lien hereof and of the Collateral Documents, and such proceeds shall be deemed to have beenreleased pursuant to Section 4.6 hereof. Section 11.3. WITHDRAWAL OF BOAT CONVEYANCE PROCEEDS FOR PURCHASE OR QUALIFIED LESSEE LEASE OF SUBSTITUTE BOAT. To the extent that any Trust Moneys consist of Boat Conveyance Proceeds received by the Trustee pursuant to the provisions of Section 4.4, and the Company intends to use such Boat Conveyance Proceeds pursuant to the provisions of Section 4.4(b), such Boat Conveyance Proceeds may be withdrawn by the Company and shall be paid by the Trustee to the Company (or as otherwise directed by the Company) upon a Company Order to the Trustee and upon receipt by the Trustee of the following: (a) A notice (each, a "Boat Conveyance Proceeds Release Notice"), which shall (i) refer to this Section 11.3, (ii) describe with particularity the use to be made by the Company (including, without limitation, (A) the amount of the purchase price of such Qualified Substitute Boat and, if such withdrawal is for the payment of interest on or a principal installment of the financing of such purchase price, the amount of such current payment and the outstanding principal amount of such financing, (B) the amount and nature of any Capital Expenditures, and (C) the calculation of Adjusted Rent Obligations for which such Company Order is made) with respect to the released Boat Conveyance Proceeds in accordance with Section 4.4(b) and (iii) be accompanied by a counterpart of the instruments proposed to give effect to the release fully executed and acknowledged (if applicable) by all parties thereto other than the Trustee; (b) An Officers' Certificate certifying that (i) the release of the Boat Conveyance Proceeds complies with the terms and conditions of Section 4.4 of this Indenture, (ii) there is no Default or Event of Default in effect or continuing on the date thereof (both before and after giving effect to the proposed use of the Boat Conveyance Proceeds), (iii) the release of the Boat Conveyance Proceeds will not result in a Default or Event of Default hereunder and (iv) all conditions precedent to such release have been complied with; (c) All documentation required under Section 314(d) of the TIA; (d) If the Boat Conveyance Proceeds are to be used for in whole or in part for the purchase price of a Qualified Substitute Boat or the financing thereof or the servicing and amortization of such financing from time to time, the Company shall also deliver to the Trustee: (i) an Other Boat Mortgage and other agreements or instruments in recordable form sufficient to grant to the Trustee, for the benefit of the Holders, a valid perfected first priority Lien on (i) such Qualified Substitute Boat, and (ii) all contracts, agreements and other purchase documentation, and all other indemnification and other contract rights, of the Company arising out of or related to its purchase of such Qualified Substitute Boat, subject only to Liens permitted pursuant to Section 5.13 hereof; (ii) a policy of title insurance issued by a nationally recognized title insurance company and approved by the Trustee, which approval shall not be unreasonably withheld (or an endorsement to the title insurance policy issued to the trustee on the Issue Date or a commitment to issue a policy of title insurance or an endorsement), insuring that the Lien of this Indenture and the Collateral Documents constitutes a valid and perfected first priority Lien on such Qualified Substitute Boat in an aggregate amount equal to the fair value of the Qualified Substitute Boat, together with an Officers' Certificate (or, at the request of the Trustee in its sole discretion, an Opinion of Counsel) stating that any specific exceptions to such title insurance are Liens permitted pursuant to Section 5.13 hereof and containing such endorsements and other assurances of the type included in the title insurance policy delivered to the Trustee on the Issue Date with respect to the Mortgage; and (iii) evidence of payment or a closing statement indicating payment of all title premiums, recording charges, transfer taxes and other costs and expenses, including reasonable legal fees and disbursements of counsel for each of the Trustee (and any local counsel), that may be incurred to validly and effectively subject the Qualified Substitute Boat to the Lien of any applicable Collateral Document and to perfect such Lien; PROVIDED, HOWEVER, that if the deliveries required under clauses (d)(i), (ii), and (iii) above have been previously made to the Trustee under the provisions of this clause (d), the Company shall be required only to deliver an Officer's Certificate certifying that the documents, agreements and instruments delivered under clauses (d)(i), (ii) and (iii) above are in full force and effect; (e) If the Boat Conveyance Proceeds are to be used in whole or in part for the payment of the Adjusted Rent Obligations of the Company pursuant to a Qualified Lessee Lease, the Company shall also deliver to the Trustee: (i) a leasehold boat mortgage or other instruments in recordable form sufficient to grant to the Trustee, for the benefit of the Holders, a valid first priority Lien on all right, title and interest of the Company in the Qualified Lessee Lease; PROVIDED, HOWEVER, that if the deliveries required under this clause (i) have been previously made to the Trustee under the provisions of this clause (e), the Company shall be required only to deliver an Officer's Certificate certifying that the documents, agreements and instruments delivered under this clause(i) are in full force and effect; (ii) an Opinion of Counsel and a title insurance policy, binder or endorsement satisfactory to the Trustee, in each case confirming that there has not been filed with respect to all or any part of the Substitute Boat which is the subject of the Qualified Lessee Lease any Lien which could have priority over the Lien of the leasehold boat mortgage of the Trustee; and (iii) an Officer's Certificate certifying that (A) such Qualified Lessee Lease permits the interest of the Company to be encumbered by such leasehold boat mortgage or other instruments evidencing the Liens of the Trustee, (B) the Company's interest in such Qualified Lessee Lease is assignable to the Trustee or its designee upon notice to, but without the consent of, the lessor thereunder, and, in the event that it is so assigned, is further assignable by the Trustee or its designee and their successors and assigns upon notice to, but without a need to obtain the consent of, such lessor, and upon such assignment the assignee shall be fully released from all liability thereunder; (C) such Qualified Lessee Lease is in full force and effect and no default has occurred under such lease, nor is there any existing condition which, but for the passage of time or the giving of notice, would result in a default under the terms of such lease; (D) such Qualified Lessee Lease requires the lessor thereunder to give notice of any default by the Lessee to the Trustee, and such Qualified Lessee Lease further provides that no notice of termination given under such lease shall be effective against the Trustee unless a copy has been delivered to the Trustee in the manner described in such lease; (E) a mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the Lessee under such lease) to cure any default under such Qualified Lessee Lease, which is curable after the receipt of notice of any such default before the lessor thereunder may terminate such lease, and if such Qualified Lessee Lease is terminated, the lessor thereunder shall at the option of the Trustee enter into a new lease on exactly the terms of the Qualified Lessee Lease; (F) such Qualified Lessee Lease does not impose any restrictions on subletting which would be viewed as commercially unreasonable by prudent ship lending institutions, and such Qualified Lessee Lease contains a covenant that the lessor thereunder is not permitted, in the absence of any uncured default, to disturb the possession, interest or quiet enjoyment of any Lessee in the relevant portion of the Property subject to such lease for any reason, or in any manner, which would adversely affect the security provided by the related leasehold boat mortgage; (G) all amounts requested under the Company Order are to pay Adjusted Rent Obligations of the Company; and (H) the Lessee's interest in the Substitute Boat which is subject to such Qualified Lessee Lease is not subject to any Lien other than the Qualified Lessee Lease and any Lien for taxes not due and payable. (f) An Opinion of Counsel stating that the documents that have been or are therewith delivered to the Trustee conform to the requirements of this Indenture and that all conditions precedent herein provided for (including, without limitation, the conditions specified in clauses (d) and (e) of this Section 11.3) relating to such application of Boat Conveyance Proceeds have been complied with. Upon compliance with the foregoing provisions of this Indenture, the Trustee shall apply the Boat Conveyance Proceeds as directed and specified by the Company Section 11.4. WITHDRAWAL OF BOAT CONVEYANCE PROCEEDS FOR CONSTRUCTION OF QUALIFIED SUBSTITUTE BOAT OR FOR CAPITAL EXPENDITURES ON SUCH QUALIFIED SUBSTITUTE BOAT. To the extent that any Trust Moneys consist of Boat Conveyance Proceeds received by the Trustee pursuant to the provisions of Section 4.4, and the Company intends to use such Boat Conveyance Proceeds for the construction of a Qualified Substitute Boat pursuant to the provisions of Section 4.4(b), or for Permitted Capital Expenditures, such Boat Conveyance Proceeds may be withdrawn by the Company and shall be paid by the Trustee to the Company (or as otherwise directed by the Company) upon a Company Order to the Trustee and upon the following terms and conditions: (a) The Qualified Substitute Boat shall be constructed and equipped, and the Permitted Capital Expenditures shall be made, pursuant to plans and specifications prepared by independent, licensed architects and engineers (collectively, the "Plans"), a construction agreement and construction schedule (collectively the "Construction Agreement") and a budget (the "Budget") which shall have been approved in writing by the Consulting Professional, in its best professional opinion, and a certificate of the Consulting Professional to that effect shall have been delivered to the Trustee. (b) Disbursements for costs of constructing and equipping the Qualified Substitute Boat or the Permitted Capital Expenditures included in the Budget, shall be made as such costs are incurred, but not more often than monthly; the amount of the costs which have been incurred shall be as is set forth and approved, from time to time, in a certificate of the Consulting Professional and such other evidence as may be reasonably required by the Trustee, less a retention of 10% of such costs until the Qualified Substitute Boat or the Permitted Capital Expenditures have been fully completed and equipped. (c) If at any time the Consulting Professional determines that the unfunded cost of completing the construction and equipping of the Qualified Substitute Boat or the Permitted Capital Expenditures exceeds the amount of the Boat Conveyance Proceeds remaining in the Boat Conveyance Proceeds Sub- Account, the Company shall deposit with the Trustee in the Boat Conveyance Proceeds Sub- Account additional funds from some other source in an amount equal to such excess, and such funds shall be used first to complete the construction and the equipping of the Qualified Substitute Boat or the Permitted Capital Expenditures. (d) Amounts shall be disbursed from the Boat Conveyance Proceeds Sub-Account only for payment of costs specified in the Budget. (e) The Qualified Substitute Boat, if constructed in accordance with the Plans, will comply with all legal requirements, as evidenced by an opinion of outside counsel for the Company satisfactory to the Consulting Professional. (f) Upon demand of the Consulting Professional, the Company, at its sole cost and expense, shall correct promptly any defect in the Qualified Substitute Boat, any material departure from the Plans and any failure to comply with applicable legal requirements, all to the satisfaction of the Consulting Professional. (g) The Company, without the prior written consent of the Consulting Professional, shall not make (a) any single change to the Plans that would require the Company to incur greater than $25,000 in additional costs or (b) any changes to the Plans that would in the aggregate, require the Company to incur greater than $100,000 in additional costs. Furthermore, the Company shall provide copies of all change orders, change bulletins and other revisions of the Plans and the Construction Agreement to the Consulting Professional prior to the commencement of any work reflecting such changes or revisions, regardless of whether the Consulting Professional's prior approval is required. (h) The Company shall pay or reimburse the Trustee and the Consulting Professional for all expenses incurred by the Trustee and the Consulting Professional with respect to any and all transactions and matters contemplated hereby including, without limitation, the fees of the Consulting Professional. (i) The Trustee shall have received a certificate from the Consulting Professional certifying that: (i) it is satisfied that all past and current (if then due and payable) taxes and assessments applicable to the Qualified Substitute Boat, the Permitted Capital Expenditure, or the Property on which the Permitted Capital Expenditure is to be constructed (the "Improved Property"), or payable by the Company have been paid; (ii) if the Qualified Substitute Boat or the Permitted Capital Expenditure is constructed as planned, the Qualified Substitute Boat or the Permitted Capital Expenditure, as the case may be, shall be suitable for its intended purpose and will be capable of being put into service without the need for additional expenditures except as set forth in the approved Budget; (iii) it is satisfied that, and it has received an opinion of counsel addressed to the Trustee for the benefit of the Holders, that the Trustee has a valid perfected security interest in the Qualified Substitute Boat, the Permitted Capital Expenditure and the Improved Property and all furniture, fixtures, equipment thereon or forming a part thereof or for which advances hereunder have been made free and clear of all other Liens, claims and encumbrances other than Liens permitted pursuant to Section 5.13 hereof; (iv) the Contractor shall have entered into an agreement with the Consulting Professional on behalf of the Trustee in form and substance satisfactory to the Trustee pursuant to which the Contractor shall agree that it shall not make any changes to the Plans or execute any change orders except as expressly permitted hereby and that in the event of a default of the Company under the Construction Contract or the bankruptcy of the Company the Contractor shall, at the election of the Trustee and the Consulting Professional continue to perform the Construction Contract on its then executory terms for the benefit of the Trustee; (v) the Contractor has delivered to the Consulting Professional a list of its subcontractors which is current as of the date of the certificate; (vi) it has received certified copies of duly executed counterparts of the Construction Agreement and the requisite permits, licenses and authorizations; (vii) it has received a copy of the Plans, satisfactory in form and content to the Trustee and the Consulting Professional. (viii) it has received the Budget, together with a cost breakdown and schedule for construction of the Qualified Substitute Boat or the Permitted Capital Expenditures setting forth all items of costs and expenses and estimating the construction trade schedules required to complete the construction and equipping of the Qualified Substitute Boat or the Permitted Capital Expenditures. (ix) it has received a critical path method schedule for completion of the construction and equipping of the Qualified Substitute Boat or the Permitted Capital Expenditures, which schedule shall be in form and substance satisfactory to the Consulting Professional; and (x) it has received an Officers' Certificate from the Company certifying that (A) the release of the Boat Conveyance Proceeds for the construction of the Qualified Substitute Boat or the Permitted Capital Expenditures complies with the terms and conditions of Section 4.4 of this Indenture, (B) there is no Default or Event of Default in effect or continuing on the date thereof (both before and after giving effect to the proposed use of the Boat Conveyance Proceeds), (C) the release of the Boat Conveyance Proceeds pursuant to the Company Order will not result in a Default or Event of Default hereunder, (D) the representations and warranties which are contained in the Indenture or any certificate, document or financial or other statement furnished under or in connection with the Indenture are correct on and as of the date of the advance as if made on and as of such date, (E) all utility services and facilities necessary for the construction of Permitted Capital Improvements without impediment or delay will be available at or within the boundaries of the Improved Property, and all utility services and facilities necessary for the operation of Permitted Capital Improvements for its intended purposes will be available at or within the boundaries of the Improved Property when needed, (F) all required permits, authorizations, licenses and certificates for the construction of the Qualified Substitute Boat or the Permitted Capital Improvements have been obtained and are in full force and effect on and as of such date, (G) expenditures have been made, or costs incurred, by the Company in a specified amount for the construction of the Qualified Substitute Boat or the Permitted Capital Expenditures, which shall be briefly described, and stating the fair value thereof to the Company at the date of the expenditure or incurrence thereof by the Company; (H) no part of such expenditures or costs has been or is being made the basis for the withdrawal of any Boat Conveyance Proceeds in any previous or then pending application pursuant to this Section 11.4; (I) there is no outstanding Indebtedness, other than costs for which payment is being requested and customary retainage not to exceed ten per cent (10%); (J) the Qualified Substitute Boat or Permitted Capital Expenditures is necessary or desirable in the conduct of the business of the Company; (K) the Qualified Substitute Boat, if constructed in accordance with the Plans, will comply with all legal requirements; and (L) all conditions precedent to such release have been complied with. (j) All of the foregoing items and all other documents and legal matters in connection with the transactions contemplated by this Indenture shall be satisfactory in form and substance to the Trustee. (k) The Collateral Documents shall constitute a valid lien on the Collateral (including the Improved Property, unincorporated work and materials) for the full amount of the Boat Conveyance Proceeds advanced to and including such date. The Company shall deliver to the Trustee a title insurance policy, binder or endorsement on the date of each Company Order confirming that there has not been filed with respect to all or any part of the Improved Property any Lien which has not been discharged of record, other than as disclosed by surveys resulting from the prosecution of work pursuant to the approved Plans. (l) All materials and fixtures incorporated in the construction of the Qualified Substitute Boat or the Permitted Capital Expenditures shall have been purchased so that their absolute ownership shall have vested in the Company prior to the Trustee making advances of the Boat Conveyance Proceeds, the proceeds of which are used to purchase such materials and fixtures, and the Company shall have produced and furnished, if required by the Trustee, the contracts, bills of sale or other agreements under which title to such materials and fixtures is claimed. (m) The Consulting Professional and the Trustee shall have received a statement of the Company, in form and substance satisfactory to the Trustee, setting forth the names, addresses and amounts due or to become due as well as the amounts previously paid to every contractor, subcontractor, and supplier furnishing materials for or performing labor on the construction of any part of the Qualified Substitute Boat. (n) The Trustee shall have received and approved (i) an inspection report of the Consulting Professional covering the progress of construction, conformity of the work with the Plans, quality of work completed and percentage of work completed prepared in a professional manner in accordance with industry norms and (ii) an Officer's Certificate requesting such disbursement, satisfactory in form and substance to the Consulting Professional, with appropriate insertions, accompanied by true copies of unpaid invoices, receipted bills and lien waivers, and such other supporting information as the Consulting Professional may reasonably request. (o) All instruments relating to each advance and all actions taken on or prior to each advance shall be reasonably satisfactory to the Trustee, and the Trustee shall have been furnished with such documents, reports, certificates, affidavits and other information, in form and substance reasonably satisfactory to the Trustee, as the Trustee may require to evidence compliance with all of the provisions of the Indenture (p) The Company shall have furnished to the Trustee lien waivers and subordination agreements in form and substance reasonably satisfactory to the Consulting Professional from such contractors, subcontractors, suppliers and materialmen as the Consulting Professional may require, evidencing that they have been paid in full (less retainage) for all work performed or materials supplied to the date of the Company's request for such advance. (q) The Qualified Substitute Boat or the Permitted Capital Expenditures shall not have been materially damaged by fire or other casualty unless there shall have been received, by the Trustee or a person approved by the Trustee, insurance proceeds sufficient in the reasonable judgment of the Trustee after consultation with the Consulting Professional, to effect satisfactory restoration and completion of the Qualified Substitute Boat on or before the date that is fifteen months from the last day of the Waiting Period. (r) The Qualified Substitute Boat or the Permitted Capital Expenditures shall not be deemed completed for purposes of this Indenture until all of the conditions set forth in this subsection shall have been satisfied. (i) The Qualified Substitute Boat shall have been completed substantially in accordance with the Plans and accepted by the Company subject to completion of any minor "punch list" items having an aggregate cost to complete or repair not to exceed $100,000; and (ii) The Trustee shall have received the following, in each case in form and substance satisfactory to the Trustee: (A) evidence of the approval by all appropriate Governmental Authorities of the Qualified Substitute Boat as being complete as to construction including, without limitation, a copy of a certificate of occupancy, if applicable, or other permits, certificates or authorizations as the Consulting Professional deems appropriate (B) the certification of (1) the Architect and (2) the Contractor that to the best of their knowledge the Qualified Substitute Boat has been completed substantially in accordance with the Plans, that connection has been made to all appropriate utility facilities and that the Qualified Substitute Boat is ready for occupancy. (s) All other documentation required under Section 314(d) of the TIA and not described above shall be delivered to the Trustee with any Company Order delivered pursuant to the terms of this Section 11.4. Section 11.5. INVESTMENT OF TRUST MONEYS. All or any part of any Trust Moneys held by the Trustee shall from time to time be invested or reinvested by the Trustee in any Cash Equivalents pursuant to the written direction of the Company, which shall specify the Cash Equivalents in which Trust Moneys shall be invested. Unless an Event of Default occurs and is continuing, any interest on such Cash Equivalents (in excess of any accrued interest paid at the time of purchase) that may be received by the Trustee shall be forthwith paid to the Company. Such Cash Equivalents shall be held by the Trustee as a part of the Collateral, subject to the same provisions hereof as the cash used by it to purchase such Cash Equivalents. The Trustee shall not be liable or responsible for any loss resulting from such investments or sales except only for its own negligent action, its own negligent failure to act or its own willful misconduct in complying with this Section 11.5. Article XII. GUARANTY Section 12.1. GUARANTY. (a) In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Guarantors hereby irrevocably and unconditionally guarantees (the "Guaranty") 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 and enforceability of this Indenture, the Notes or the obligations of the Company under this Indenture or the Notes, that: (w) the principal and premium (if any) of and interest on the Notes will be paid in full when due, whether at the maturity or interest payment date, by acceleration, call for redemption, or otherwise; (x) all other obligations of the Company to the Holders or the Trustee under this Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of this Indenture and the Notes; and (y) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, they will be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration, call for redemption or otherwise. Failing payment when due of any amount so guaranteed for whatever reason, each Guarantor shall be obligated to pay the same before failure so to pay becomes an Event of Default. (b) Each Guarantor hereby agrees that its obligations with regard to this Guaranty shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, 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 hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company or right to require the prior disposition of the assets of the Company to meet its obligations, protest, notice and all demands whatsoever and covenants that this Guaranty 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 either the Company or such Guarantor to the Trustee or such Holder, this Guaranty, 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 Section 6.1 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration as to the Company of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of those obligations as provided in Section 6.1, those obligations (whether or not due and payable) will forthwith become due and payable by each of the Guarantors for the purpose of this Guaranty. (d) It is the intention of each Guarantor and the Company that the obligations of each Guarantor hereunder shall be in, but not in excess of, the maximum amount permitted by applicable law. Accordingly, if the obligations in respect of the Guaranty would be annulled, avoided or subordinated to the creditors of any Guarantor by a court of competent jurisdiction in a proceeding actually pending before such court as a result of a determination both that such Guaranty was made without fair consideration and, immediately after giving effect thereto, such Guarantor was insolvent or unable to pay its debts as they mature or left with an unreasonably small capital, then the obligations of such Guarantor under such Guaranty shall be reduced by such court if such reduction would result in the avoidance of such annulment, avoidance or subordination; PROVIDED, HOWEVER, that any reduction pursuant to this paragraph shall be made in the smallest amount as is strictly necessary to reach such result. For purposes of this paragraph, "fair consideration", "insolvency", "unable to pay its debts as they mature", "unreasonably small capital" and the effective times of reduction, if any, required by this paragraph shall be determined in accordance with applicable law. Section 12.2. CERTAIN BANKRUPTCY EVENTS. Each Guarantor hereby covenants and agrees that in the event of the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, such Guarantor shall not file (or join in any filing of), or otherwise seek to participate in the filing of, any motion or request seeking to stay or to prohibit (even temporarily) execution on the Guaranty and hereby waives and agrees not to take the benefit of any such stay of execution, whether under Section 362 or 105 of the United States Bankruptcy Code or otherwise. Article XIII. MISCELLANEOUS Section 13.1. TIA CONTROLS. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of the TIA, the imposed duties, upon qualification of this Indenture under the TIA, shall control. Section 13.2. NOTICES. Any notices or other communications to the Company, the Guarantors or the Trustee required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company or any Guarantor: Casino Magic of Louisiana Corp. c/o Casino Magic Corp. 711 Casino Magic Drive Bay St. Louis. MS 39520 Attention: Chief Financial Officer with a copy to: Casino Magic Corp. 711 Casino Magic Drive Bay St. Louis. MS 39520 if to the Trustee: First Trust National Association 180 East Fifth Street Saint Paul, Minnesota 55101 Attention: Scott Strodthoff The Company, the Guarantors or the Trustee by notice to each other party may designate additional or different addresses as shall be furnished in writing by such party. Any notice or communication to the Company, the Guarantors or the Trustee shall be deemed to have been given or made as of the date so delivered, if personally delivered; when answered back, if telexed, when receipt if acknowledged, if telecopied; and 5 Business Days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Noteholder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. Section 13.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Guarantors, the Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c). Section 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate (in form and substance reasonably satisfactory to the Trustee) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel (in form and substance reasonably satisfactory to the Trustee) stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he 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 complied with; and (4) a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; 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 13.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee may make reasonable rules for action by or at a meeting of Noteholders. The Paying Agent or Registrar may make reasonable rules for its functions. Section 13.7. LEGAL HOLIDAYS. A "Legal Holiday" used with respect to a particular place of payment is a Saturday, a Sunday or a day on which banking institutions in New York, New York are not required to be open. If a payment date is a Legal Holiday in New York, New York, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 13.8. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OR THE AFORESAID COURTS. THE COMPANY AND EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION. Section 13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of any of the Company, the Guarantors or any of their respective Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 13.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee, stockholder or incorporator, as such, of the Company or the Guarantors shall not have any liability for any obligations of the Company or the Guarantors under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their reactions. Each Noteholder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. Section 13.11. SUCCESSORS. All agreements of the Company and the Guarantors in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successor. Section 13.12. DUPLICATE ORIGINALS. All parties may sign any number of copies or counterparts of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. Section 13.13. SEVERABILITY. In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. Section 13.14. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Reconciliation and Tie Table and headings of the Articles and the Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. SIGNATURE IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above. CASINO MAGIC OF LOUISIANA, CORP. By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary Attest: ________________ FIRST TRUST NATIONAL ASSOCIATION, as Trustee By: /s/ R. Prokosch Name: Richard Prokosch Title: Trust Officer Attest: ________________ GUARANTORS: JEFFERSON CASINO CORPORATION By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary Attest: ________________ Exhibit A [FORM OF NOTE] CASINO MAGIC OF LOUISIANA, CORP. 11 1/2 SENIOR SECURED NOTES DUE 1999 No. $ Casino Magic of Louisiana Corp. a Louisiana corporation (hereinafter called the "Company," which term includes any successor under the Indenture hereinafter referred to), for value received, hereby promises to pay to ______, or registered assigns, the principal sum of ________ Dollars, on November 13, 1999 or such earlier date as is provided for in the Indenture. Interest Payment Dates: February 15, May 15, August 15, and November 15. Reference is made to the further provisions of this Security on the reverse side, which will, for all purposes, have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Instrument to be duly executed under its corporate seal. Dated: May 13, 1996 CASINO MAGIC OF LOUISIANA, CORP. By: _____________________________ Attest: __________________________ Secretary [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Securities described in the within mentioned Indenture. _________________________________ FIRST TRUST NATIONAL ASSOCIATION, as Trustee By: ____________________________ Authorized Signatory Dated: CASINO MAGIC OF LOUISIANA, CORP. 11 1/2% Senior Secured Notes due 1999 1. PRINCIPAL Casino Magic of Louisiana, Corp., a Louisiana corporation (the "Company"), promises to pay the principal amount of this Note to the Holder hereof on the date that is the third anniversary of the earlier of the following dates: (i) 180 days after May 13, 1996, and (ii) the first date that a riverboat casino is opened by the Company for public gaming play in Bossier City, Louisiana (the "Commencement Date"). Notwithstanding the foregoing, from and after the first date on which the aggregate principal amount of Notes issued and outstanding under the Indenture is equal to or less than $17,500,000 (the "Release Date"), the principal amount of the Note, together with interest accrued thereon at a rate of 11 1/2% per annum, shall be paid by the Company to the Holder hereof quarterly in equal installments commencing on the first Interest Payment Date (as defined below) after the Release Date and ending on the Maturity Date. Notwithstanding all of the foregoing, from and after the date of the occurrence of an Adverse State Action (as such term is defined in the Indenture (the "Adverse State Action Date"), the principal amount of the Note, together with interest accrued thereon at a rate of 11 1/2% per annum, shall be paid by the Company to the Holder hereof quarterly in equal installments commencing on the first Interest Payment Date (as defined below) after the Adverse State Action Date and ending on the first Interest Payment Date immediately subsequent to the date that the Adverse State Action takes effect. In addition to the foregoing, subject to the terms of Section 3.1 of the Indenture, on each Interest Payment Date commencing November 15, 1996, and ending with the second Interest Payment Date after the Release Date occurs, the Company will unconditionally pay to each Holder such Holder's PRO RATA share of the Excess Cash Flow (as defined in the Indenture) for the fiscal quarter of the Company and the Guarantors ending on the Interest Payment Date immediately preceding such Interest Payment Date in reduction of the then outstanding principal amount of the Note by an amount equal to such Holder's PRO RATA share of the Excess Cash Redemption Amount (as defined below), in addition to any regularly scheduled principal payment due on such Interest Payment Date (if any); PROVIDED, HOWEVER, that the Company will pay to each Holder such Holder's PRO RATA share of the Excess Cash Flow for the last fiscal quarter of a fiscal year of the Company and the Guarantors on the SECOND Interest Payment Date following the last date of such last fiscal quarter of the fiscal year. The obligations of the Company under this paragraph shall continue notwithstanding an Adverse State Action. "EXCESS CASH REDEMPTION AMOUNT" for any Interest Payment Date means the amount of the Aggregate Excess Cash Flow to be paid to the Holders on such Interest Payment Date in reduction of the outstanding principal amount of the Notes TIMES a fraction, the numerator of which is 100 and the denominator of which is (100 plus the Excess Cash Redemption Premium for such Interest Payment Date). "EXCESS CASH REDEMPTION PREMIUM" means (i) on any Interest Payment Date occurring on or before the first anniversary of the Commencement Date, zero, (ii) on any Interest Payment Date occurring on or after the first anniversary of the Commencement Date but on or before the second anniversary of the Commencement Date, ten percent (10%) TIMES a fraction, the numerator of which is the amount of calendar days having elapsed from and including the day after the first anniversary of the Commencement Date to and including such Interest Payment Date, and the denominator of which is three hundred and sixty-five (365), and (iii) on any Interest Payment Date occurring after the second anniversary of the Commencement Date but before the third anniversary of the Commencement Date, twenty percent (20%) TIMES a fraction, the numerator of which is the amount of calendar days having elapsed from and including the day after the second anniversary of the Commencement Date to and including such Interest Payment Date, and the denominator of which is three hundred and sixty-four (364). 2. INTEREST Casino Magic of Louisiana, Corp., a Louisiana corporation (the "Company"), promises to pay interest from May 13, 1996 on the principal amount of this Note at a rate of 11 1/2% per annum. To the extent it is lawful, the Company promises to pay interest on any interest payment due but unpaid on such principal amount at a rate of 11 1/2% per annum compounded semi-annually. The Company will pay interest quarterly on February 15, May 15, August 15, and November 15 of each year (each, an "Interest Payment Date"), commencing August 15, 1996. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 13, 1996. Interest will be computed on the basis of a 360-day year consisting of twelve 30 day months. 3. METHOD OF PAYMENT. The Company shall pay principal of and interest on the Notes (except defaulted interest) to the persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date. Except as provided below, the Company shall pay principal and interest in such coin or currency of the United States of America as at the time of payment shall be legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by wire transfer of Federal funds, or interest by its check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to a Holder at the Holder's registered address. Together with any installments of principal the Company will deliver to the Paying Agent or the Trustee a sufficient number of stickers, in form satisfactory to the Trustee, setting forth the outstanding principal amount of each Note after having given effect to such current principal payments, for delivery by the Trustee to the Holders for the purpose of affixing such stickers to their respective Notes. Upon delivery to the Paying Agent or the Trustee of this Note, the registered Holder hereof should receive a sticker together with such principal payment, which sticker will be affixed by the Paying Agent or the Trustee to the top of the front page of this Note atop all such previous stickers and which sticker will set forth the outstanding principal amount of this Note after having given effect to the current principal payment. Notwithstanding the foregoing, the Registrar will maintain a record of the outstanding principal amount of all outstanding Notes. Failure by the Trustee to affix such stickers shall in no way affect the legality, validity, or transferability of this Note; PROVIDED, HOWEVER, that in the event of any discrepancy between the principal amount of this Note on its face and on the records of the Registrar, the records of the Registrar will govern absent manifest error. 4. PAYING AGENT AND REGISTRAR. Initially, First Trust National Association (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or Co-registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar or Co-registrar. 5. INDENTURE The Company issued the Notes under an Indenture, dated as of May 13, 1996 (the "Indenture"), between the Company, the Guarantors named therein and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. 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, as in effect on the date of the Indenture. The Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of them. The Notes are senior, secured obligations of the Company limited in aggregate principal amount to $35,000,000. 6. REDEMPTION. The Notes may be redeemed at any time, in whole or in part, at the election of the Company at the Redemption Price applicable for such Redemption Date. The Redemption Price of this Note if so optionally redeemed is the amount equal to the principal face amount of this Note TIMES the sum of one PLUS the Redemption Premium as of the Redemption Date of this Note. "REDEMPTION PREMIUM" when used with respect to this Note when redeemed or prepaid, in whole or in part, means (i) on any Redemption Date occurring on or before the first anniversary of the Commencement Date, zero, (ii) on any Redemption Date occurring on or after the first anniversary of the Commencement Date but on or before the second anniversary of the Commencement Date, ten percent (10%) TIMES a fraction the numerator of which is the amount of calendar days having elapsed from and including the day after the first anniversary of the Commencement Date to and including such Redemption Date and the denominator of which is three hundred and sixty-five (365), and (iii) on any Redemption Date occurring after the second anniversary of the Commencement Date and before the third anniversary of the Commencement Date, twenty percent (20%) TIMES a fraction the numerator of which is the amount of calendar days having elapsed from and including the day after the second anniversary of the Commencement Date to and including such Redemption Date and the denominator of which is three hundred and sixty-four (364). This Note may also be redeemed at any time pursuant to, and in accordance with, any order of any Gaming Authority with appropriate jurisdiction and authority relating to a Gaming License, or to the extent necessary in the reasonable, good faith judgment of the Board of Directors of the Company to prevent the loss, failure to obtain or material impairment or to secure the reinstatement, of any material Gaming License, where in any such case such redemption or acquisition is required to be found suitable or so qualified within a reasonable period of time. Any redemption of the Notes shall comply with Article III of the Indenture. 7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class mail at least 30 days but not more than 45 days before the Redemption Date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, from and after any Redemption Date, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent on such Redemption Date, the Notes called for redemption will cease to bear interest and the only right of the Holders of such Notes will be to receive payment of the Redemption Price, including any accrued and unpaid interest to the Redemption Date. 8. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of, or exchange Notes in accordance with, the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption. 9. PERSONS DEEMED OWNERS. The Registered Holder of a Note may be treated as the owner of it for all purposes. 10. UNCLAIMED MONEY. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money back to the Company at its written request. After that, all liability of the Trustee and such Paying Agent(s) with respect to such money shall cease. 11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any time deposits into an irrevocable trust with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including the financial covenants, but excluding its obligation to pay the principal of and interest on the Notes). 12. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of a majority, and in certain cases at least two-thirds, in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, or make any other change that does not adversely affect the rights of any Holder of a Note. 13. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on the ability of the Company and its Subsidiaries to, among other things, incur additional Indebtedness and Disqualified Capital Stock, make payments in respect of its Capital Stock, enter into transactions with Affiliates, incur Liens, sell assets, merge or consolidate with any other person and sell, lease, transfer or otherwise dispose of substantially all of its properties or assets. The limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. 14. SECURITY. In order to secure the obligations under the Indenture, the Company, the Guarantors and the Trustee have entered into certain security agreements in order to create security interests in and liens upon certain assets and properties of the Company and the Guarantors. 15. GAMING LAWS. The rights of the Holder of this Note and any owner of any beneficial interest in this Note are subject to the Gaming Laws and the jurisdiction and requirements of the Gaming Authorities and the further limitations and requirements set forth in the Indenture. 16. SUCCESSORS. When a successor assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 17. DEFAULTS AND REMEDIES. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture of the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest), if it determines that withholding notice is in their interest. 18. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, 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. 19. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer, employee or incorporator, as such, past, present or future, of the Company or any successor corporation shall have any liability for any obligation of the Company under the Notes or the Indenture. Each Holder of a Note 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. 20. AUTHENTICATION. This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Note. 21. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used in the name of a Holder of a Note 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). 22. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. [FORM OF ASSIGNMENT] I or we assign this Note to __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ (Print or type name, address and zip code of assignee) Please insert Social Security or other identifying number of assignee _________ and irrevocably appoint ________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: __________ Signed: ______________________________________ __________________________________________________________________________ (Sign exactly as your name appears on the other side of this Note) EXHIBIT B FORM OF GUARANTY For value received, ________________, a _______________ corporation, hereby unconditionally guarantees to the Holder of the Note upon which this Guaranty is endorsed the due and punctual payment, as set forth in the Indenture pursuant to which such Note and this Guaranty were issued, of the principal of, premium (if any) and interest on such Note when and as the same shall become due and payable for any reason according to the terms of such Note and which this Guaranty is endorsed will not become effective until the Trustee signs the certificate of authentication on such Note. __________________________________ By: _____________________________ Attest: __________________________ EXHIBIT C TAX ALLOCATION AGREEMENT Agreement effective as of May 31, 1992, by and among Casino Magic Corp. "(Parent)" and each of its undersigned subsidiaries. WITNESSETH WHEREAS, the parties hereto are members of an affiliated group "(Affiliated Group)" as defined in Section 1504(a) of the Internal Revenue Code of 1986, as amended; and WHEREAS, such Affiliated Group will file a U.S. consolidated income tax return for its tax year 1992 and is required to file consolidated tax returns for subsequent years; and WHEREAS, it is the intent and desire of the parties hereto that a method be established for allocating the consolidated tax liability of the Affiliated Group among its members, for reimbursing the Parent for payment of such tax liability, for compensating any party for use of its losses or tax credits, and to provide for the allocation and payment of any refund arising from a carryback of losses or tax credits from subsequent tax years. NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the parties hereto agree as follows: 1. A U.S. consolidated income tax return shall be filed by the Parent for the tax year ended December 31, 1992, and for each subsequent taxable period in respect of which this agreement is in effect and for which the Affiliated Group is required or permitted to file a consolidated tax return. Each subsidiary shall execute and file such consents, elections, and other documents that may be required or appropriate for the proper filing of such returns. 2. a. For each tax period, each member of the Affiliated Group shall compute its separate tax liability as if it had filed a separate tax return and shall pay such amount to the Parent. For purposes of this agreement, any liability for alternative minimum tax shall be treated as part of the member's separate tax liability. b. The separate return tax liability of each member shall be computed in a manner consistent with the provisions of Regulation Sec. 1.1552- 1(a)(2)(ii), provided that the carryover of any tax attribute from a prior tax year that is not available in determining the consolidated tax liability of the group for such taxable period shall be disregarded. c. Parent shall file on behalf of the Affiliated Group a consolidated federal income tax return and shall make all payments required to be paid to the Internal Revenue Service in satisfaction of the Federal income tax liability (including estimated taxes and additions to tax, penalties and interest) of the Affiliated Group. Payments made pursuant to Sections 2, 3, and 6 hereof shall be the only payments required to be made by any member of the Affiliated Group in respect of the consolidated Federal income tax liability of the Affiliated Group for any taxable year. 3. Payment of the consolidated tax liability for a taxable period shall include the payment of estimated tax installments due for such taxable period, and each subsidiary shall pay to the Parent its share of each payment within ten days of receiving notice of such payment from the Parent, but in no event later than the due date for each such payment. Any amounts paid by a subsidiary on account of a separate return or separate estimated payments that are credited against the consolidated tax liability of the Affiliated Group shall be included in determining the payments due from such subsidiary. Any overpayment of estimated tax should be refunded to the subsidiary. 4. If for any taxable period the separate return liability of any member of the Affiliated Group, including the Parent, exceeds the consolidated tax liability for such period as a result of any excess losses or tax credits of one or more members (a "loss member"), then the Parent shall pay to each such loss member its allocable portion of such excess amount within ten days after the date of filing on the consolidated return for such period. 5. If part or all of an unused loss or tax credit is allocated to a member of the Affiliated Group pursuant to Regulation Sec. 1.1502-79, and is carried back or forward to a year in which such member filed a separate return or a consolidated return with another affiliated group, any refund or reduction in tax liability arising from the carryback or carryover shall be retained by such member. Notwithstanding the above, the Parent shall determine in its sole discretion whether an election shall be made not to carry back part or all of a consolidated net operating loss for any tax year in accordance with Section 172(b)(3). 6. If the consolidated tax liability is adjusted for any taxable period, whether by means of an amended return, claim for refund, or after a tax audit by the Internal Revenue Service, the liability of each member shall be recomputed to give effect to such adjustments, and in the case of a refund, the Parent shall make payment to each member for its share of the refund received by Parent, determined in the same manner as in paragraph 2 above, within ten days after the refund is received by the Parent, and in the case of an increase in tax liability, each member shall pay to the Parent its allocable share of such increased tax liability within ten days after receiving notice of such liability from the Parent. 7. If during a consolidated return period the Parent or any subsidiary acquires or organizes another corporation that is required to be included in the consolidated return, then such corporation shall join in and be bound by this agreement. 8. Each subsidiary hereby agrees to join in any state, city, or local combined or similar income or franchise tax return to be filed by any group of corporations of which Parent is or shall become a member for all taxable periods for which it is so requested from time to time by Parent, and to take no action inconsistent therewith. In the event a subsidiary is included in a combined, joint, consolidated, or unitary state income or franchise tax return with any member of the Affiliated Group, the parties shall allocate and pay such taxes and compensate for the use of tax losses or tax credits in a manner consistent with the approach provided in this agreement for federal income taxes. Payments made pursuant to the preceding sentence will be deemed deductible pursuant to Section 164 for purposes of computing the separate return tax liability of a subsidiary pursuant to Section 2(b) hereof. 9. This agreement shall apply to the tax year ending December 31, 1992, and all subsequent taxable periods unless the Parent and the subsidiaries agree to terminate the agreement. Notwithstanding such termination, this agreement shall continue in effect with respect to any payment or refunds due for all taxable periods prior to termination. 10. This agreement shall be binding upon and inure to the benefit of any successor, whether by statutory merger, acquisition of assets, or otherwise, to any of the parties hereto, to the same extent as if the successor had been an original party to the agreement. IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by their duly authorized representatives on May 9, 1996. Casino Magic Corp. by: ______________________________ its: ______________________________ Mardi Gras Casino Corp. by: ______________________________ its: ______________________________ Biloxi Casino Corp. by: ______________________________ its: ______________________________ Casino Magic Finance Corp. by: ______________________________ its: ______________________________ Bay St. Louis Casino Corp. by: ______________________________ its: ______________________________ Casino Magic Mang. Serv. Corp. by: ______________________________ its: ______________________________ Jefferson Casino Corp. by: ______________________________ its: ______________________________ Carolina Magic Corp. by: ______________________________ its: ______________________________ Casino One Corp. by: ______________________________ its: ______________________________ Boston Casino Corp. by: ______________________________ its: ______________________________ Crawford County Casino Corp. by: ______________________________ its: ______________________________ Magic Resorts Corp. by: ______________________________ its: ______________________________ St. Louis Casino Corp. by: ______________________________ its: ______________________________ Gateway Casino Co. of St. Louis by: ______________________________ its: ______________________________ C-M of Louisiana, Inc. by: ______________________________ its: ______________________________ Bucks County Casino Corp. by: ______________________________ its: ______________________________ Delta Casino Corp. by: ______________________________ its: ______________________________ Maverick Casino Corp. by: ______________________________ its: ______________________________ Kansas Magic Corp. by: ______________________________ its: ______________________________ Coastal Land of Florida, Inc. by: ______________________________ its: ______________________________ Casino Magic American Corp. by: ______________________________ its: ______________________________ Gulfport Casino Corp. by: ______________________________ its: ______________________________ Mobile Casino Corp. by: ______________________________ its: ______________________________ Iowa Magic Corp. by: ______________________________ its: ______________________________ Atlantic Pacific Corp. by: ______________________________ its: ______________________________ 625 Corp. by: ______________________________ its: ______________________________ Casino Advertising, Inc. by: ______________________________ its: ______________________________ EXHIBIT D JCC Real Property Description (1) TRACT "A". A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 35, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 65_05'05" EAST ALONG THE SOUTH LINE OF SAID COOK SUBDIVISION A DISTANCE OF 384.69 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN SOUTH 12_56'40" WEST A DISTANCE OF 150.37 FEET TO A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE, THENCE RUN SOUTH 60_12'49" EAST A DISTANCE OF 168.20 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 26_06'32" WEST A DISTANCE OF 251.31 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN NORTH 70_42'00" WEST ALONG THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 575.91 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING AT THE INTERSECTION OF THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET WITH THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN NORTH 23_05'00" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 140.56 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN NORTH 24_48'39" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 328.51 FEET TO THE POINT OF BEGINNING. SAID TRACT CONTAINING 5.2319 ACRES. (2) TRACT "B".A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8, KAYWOOD SUBDIVISION, AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 28_05'04" WEST A DISTANCE OF 335.76 FEET TO A SET 1/2" DIAMETER IRON ROD BEING ON THE FORMER NORTHERLY HIGH BANK OF THE RED RIVER, THENCE RUN NORTHWESTERLY ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 614.30 FEET, NORTH 55_22'23" WEST TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN NORTH 24_48'49" EAST A DISTANCE OF 897.25 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE RUN SOUTH 65_02'25" EAST ALONG THE SOUTH LINE OF LOT 34, A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE WESTERLY RIGHT- OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 24_47'37" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 329.85 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN SOUTH 22_34'14" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 194.43 FEET TO A FOUND 5/8" DIAMETER IRON ROD BEING AT THE INTERSECTION OF THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS WITH THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN SOUTH 70_42'00" EAST ALONG THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 5.17 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 19_18'00" WEST ALONG THE WEST LINE OF LOT 1, KAYWOOD SUBDIVISION, UNIT 2, AS RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, A DISTANCE OF 200.26 FEET TO A SET 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 1, THENCE RUN SOUTH 70_42'00" EAST ALONG THE SOUTH LINE OF KAYWOOD SUBDIVISION UNIT 2 AND KAYWOOD SUBDIVISION A DISTANCE OF 585.48 FEET TO THE POINT-OF- BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 4.914 ACRES. (3) TRACT "C".A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA, AND BEING A PORTION OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11, OF THE CONVEYANCE RECORDS OF BOSSIER PARISH. SAID TRACT MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 34, RUN THENCE NORTH 29_35'39" EAST ALONG THE WEST LINE OF LOT 34 A DISTANCE OF 165.24 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20, THENCE RUN SOUTH 82_32'09" EAST ALONG THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20 A DISTANCE OF 58.03 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 29_33'17" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 190.07 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, THENCE RUN NORTH 65_02'25" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 55_34'42" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 44.49 FEET TO THE POINT OF BEGINNING, SAID TRACT CONTAINING 0.22 ACRES. (4) TRACT "D".A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHWEST CORNER OF LOT 114, RIVERSIDE SUBDIVISION AS RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, RUN THENCE SOUTH 70_23'37" EAST ALONG THE REAR LINE OF RIVERSIDE SUBDIVISION A DISTANCE OF 248.66 FEET TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN SOUTH 29_01'37" WEST AND PARALLEL WITH THE EASTERLY LINE OF LOT 110 OF RIVERSIDE SUBDIVISION A DISTANCE OF 1021.25 FEET TO A FOUND 1" DIAMETER IRON PIPE, BEING ON THE FORMER HIGH BANK OF THE RED RIVER, THENCE RUN NORTH 62_19'02" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 127.28 FEET TO A POINT, WHICH IS ON THE PROJECTION OF THE WESTERLY LINE OF LOT 112, RIVERSIDE SUBDIVISION, THENCE CONTINUE NORTH 64_07'56" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 101.11 FEET TO A SET 1/2" DIAMETER IRON ROD, LOCATED ON THE PROJECTION OF THE EASTERLY LINE OF LOT 8, KAYWOOD SUBDIVISION, THENCE RUN NORTH 28_05'04" EAST A DISTANCE OF 335.76 FEET TO A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8 KAYWOOD SUBDIVISION AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE CONTINUE NORTH 28_05'04" EAST ALONG THE EASTERLY LINE OF LOT 8 A DISTANCE OF 202.64 FEET TO A FOUND 2" DIAMETER IRON PIPE BEING THE NORTHEAST CORNER OF LOT 8, THENCE CONTINUE NORTH 28_05'04" EAST A DISTANCE OF 50.65 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 26_06'32" EAST A DISTANCE OF 251.31 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN NORTH 31_05'36" EAST A DISTANCE OF 149.25 FEET TO THE POINT OF BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 5.753 ACRES. (5) LOTS 1, 2 AND 4, KAYWOOD SUBDIVISION, UNIT NO. 2, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA AS PER PLAT RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, (6) LOTS 6, 7 AND 8 KAYWOOD SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA. (7) LOTS 110, 111 AND 112, RIVERSIDE SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, LESS A STRIP OF LAND SEVEN (7') FEET IN WIDTH RUNNING BACK BETWEEN PARALLEL LINES ALONG THE ENTIRE EASTERLY SIDE OF LOT 110. Together with all the buildings and improvements situated on the above described Land and all appurtenances, rights, ways, privileges, servitudes, prescriptions and advantages thereunto belonging or in anywise appertaining, including, but without limitation, all component parts of the above described Land, and all component parts of any building or other construction located on the above described Land, now or hereafter a part of or attached to said Land or used in connection therewith. EXHIBIT E Indebtedness of JCC under that certain Promissory Note, dated May 3, 1996, issued by JCC and C-M of Louisiana, Inc. (n/k/a JCC) to Mark G. George, in the original principal amount of $6,800,000, and under all agreements and documents delivered by JCC in connection with such note. EX-10.2 5 MORTGAGE, * UNITED STATES OF AMERICA ASSIGNMENT OF LEASES * AND RENTS AND SECURITY * STATE OF LOUISIANA AGREEMENT SECURING * FUTURE ADVANCES * PARISH OF ORLEANS * BY * * C-M OF LOUISIANA, INC. * BE IT KNOWN, that on this 11th day of May 1996, before me, the undersigned Notary Public duly commissioned and qualified, and in the presence of the witnesses hereinafter named and undersigned, personally came and appeared: C-M OF LOUISIANA, INC.("MORTGAGOR") (Taxpayer I.D. No.______________), a Louisiana corporation, represented herein by Robert A. Callaway, its Secretary, duly authorized to appear herein by the Unanimous Written Consent of the Sole Shareholder of Mortgagor, a multiple original of which is attached hereto and made a part hereof, which has a mailing address of 711 Casino Magic Drive, Bay St. Louis, Mississippi 39520, who declared that Mortgagor does by these presents declare and acknowledge an indebtedness unto: FIRST TRUST NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE ("Mortgagee")(Taxpayer I.D. No. 41-0257700), a national association having a place of business at 180 East Fifth Street, St. Paul, Minnesota 55101, Attn.: Scott Strodthoff. Recitals A. Pursuant to that certain Indenture dated as of May 13, 1996 among Casino Magic of Louisiana, Corp. (CASINO MAGIC LOUISIANA"), Mortgagor and Jefferson Casino Corporation, both as Guarantors, and the Mortgagee (as amended, amended and restated, supplemented or otherwise modified from time to time, the "INDENTURE"), Casino Magic Louisiana issued its 11 1/2% Senior Secured Notes due 1999 (as amended, amended and restated, supplemented or otherwise modified from time to time, and including all 11 1/2% Senior Secured Notes due 1999 issued in exchange or substitution therefor, the "Notes") in the aggregate principal amount of $35 million. B. Pursuant to Article XII of the Indenture, Mortgagor has guaranteed (such guarantee by Mortgagor being hereinafter referred to as the "Guarantee"), to the Noteholder(s) and to the Mortgagee, inter alia, the Notes and the obligations of Casino Magic Louisiana under the Indenture and the Notes. C. Mortgagor is entering into this Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances (the "Mortgage"), in favor of Mortgagee for the benefit of the Mortgagee to secure the full and punctual payment and performance of the Secured Obligations (as hereinafter defined). SECTION I - GRANTING CLAUSES In order to secure all present and future Secured Obligations, all according to the terms and tenor hereof, Mortgagor does by these presents specially mortgage, affect and hypothecate, to inure to the use and benefit of Mortgagee, the following described property (hereinafter collectively called the "Mortgaged Property, to-wit: (a) All those certain lots, pieces or parcels of land owned or hereafter acquired by Mortgagor located in Bossier City, Parish of Bossier, State of Louisiana, as more particularly described as follows, as the description of the same may be amended, modified or supplemented from time to time, and all and singular the reversions or remainders in and to said land and the tenements, hereditaments, transferable development rights, servitude's, easements (in gross and/or appurtenant), agreements, rights-of-way or use, rights (including alley, drainage and any other rights to produce or share in the production of anything from or attributable thereto) , privileges, royalties and appurtenances to said land, now or hereafter belonging or in anywise appertaining thereto, including any such right, title, interest in, to or under any agreement or right granting, conveying or creating, for the benefit of said land, any easement, servitude, development rights (including "air rights"), water, water rights, riparian rights, mineral rights (including rights in respect of oil, gas and other hydrocarbon substances), right or license in any way affecting said land and/or other land and in, to or under any streets, ways, alleys, vaults, gores or strips of land adjoining said land or any parcel thereof, or in or to the air space over said land, all rights of ingress and egress with respect to said land, and all claims or demands of Mortgagor, either at law or in equity, in possession or expectancy, of, in or to the same (all of the foregoing hereinafter collectively referred to as the "Land"): (1) TRACT "A". A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 35, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 65'05'05" EAST ALONG THE SOUTH LINE OF SAID COOK SUBDIVISION A DISTANCE OF 384.69 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN SOUTH 12'56'40" WEST A DISTANCE OF 150.37 FEET TO A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE, THENCE RUN SOUTH 60'12'49" EAST A DISTANCE OF 168.20 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 26'06'32" WEST A DISTANCE OF 251.31 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN NORTH 70'42'00" WEST ALONG THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 575.91 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF-WAY LINE OF WOODLAWN STREET WITH THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN NORTH 23'05'00" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 140.56 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN NORTH 24'48'39" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 328.51 FEET TO THE POINT OF BEGINNING. SAID TRACT CONTAINING 5.2319 ACRES. (2) TRACT "B". A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8, KAYWOOD SUBDIVISION, AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 28'05'04" WEST A DISTANCE OF 335.76 FEET TO A SET 1/2" DIAMETER IRON ROD BEING ON THE FORMER NORTHERLY HIGH BANK OF THE RED RIVER, THENCE RUN NORTHWESTERLY ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 614.30 FEET, NORTH 55'22'23" WEST TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN NORTH 244849" EAST A DISTANCE OF 897.25 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE RUN SOUTH 65'02'25" EAST ALONG THE SOUTH LINE OF LOT 34, A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE WESTERLY RIGHT- OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 24'47'37" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 329.85 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN SOUTH 22'34'14" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 194.43 FEET TO A FOUND 5/8" DIAMETER IRON ROD BEING AT THE INTERSECTION OF THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS WITH THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN SOUTH 70'42'00" EAST ALONG THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 5.17 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 19'1 8'00" WEST ALONG THE WEST LINE OF LOT 1, KAYWOOD SUBDIVISION, UNIT 2, AS RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, A DISTANCE OF 200.26 FEET TO A SET 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 1, THENCE RUN SOUTH 70'42'00" EAST ALONG THE SOUTH LINE OF KAYWOOD SUBDIVISION UNIT 2 AND KAYWOOD SUBDIVISION A DISTANCE OF 585.48 FEET TO THE POINT-OF- BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 4.914 ACRES. (3) TRACT "C". A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA, AND BEING A PORTION OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11, OF THE CONVEYANCE RECORDS OF BOSSIER PARISH. SAID TRACT MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 34, RUN THENCE NORTH 29'35'39" EAST ALONG THE WEST LINE OF LOT 34 A DISTANCE OF 165.24 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20, THENCE RUN SOUTH 82'32'09" EAST ALONG THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20 A DISTANCE OF 58.03 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 29'33'17" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 190.07 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, THENCE RUN NORTH 65'02'25" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 55'34'42" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 44.49 FEET TO THE POINT OF BEGINNING, SAID TRACT CONTAINING 0.22 ACRES. (4) TRACT "D". A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHWEST CORNER OF LOT 114, RIVERSIDE SUBDIVISION AS RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, RUN THENCE SOUTH 70-23- 37" EAST ALONG THE REAR LINE OF RIVERSIDE SUBDIVISION A DISTANCE OF 248.66 FEET TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN SOUTH 29'01'37" WEST AND PARALLEL WITH THE EASTERLY LINE OF LOT 110 OF RIVERSIDE SUBDIVISION A DISTANCE OF 1021.25 FEET TO A FOUND 1" DIAMETER IRON PIPE, BEING ON THE FORMER HIGH BANK OF THE RED RIVER, THENCE RUN NORTH 62'19'02" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 127.28 FEET TO A POINT, WHICH IS ON THE PROJECTION OF THE WESTERLY LINE OF LOT 112, RIVERSIDE SUBDIVISION, THENCE CONTINUE NORTH 64'07'56" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 101.1 1 FEET TO A SET 1/2" DIAMETER IRON ROD, LOCATED ON THE PROJECTION OF THE EASTERLY LINE OF LOT 8, KAYWOOD SUBDIVISION, THENCE RUN NORTH 28'05'04" EAST A DISTANCE OF 335.76 FEET TO A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8 KAYWOOD SUBDIVISION AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE CONTINUE NORTH 28'05'04" EAST ALONG THE EASTERLY LINE OF LOT 8 A DISTANCE OF 202.64 FEET TO A FOUND 2" DIAMETER IRON PIPE BEING THE NORTHEAST CORNER OF LOT 8, THENCE CONTINUE NORTH 28'05'04" EAST A DISTANCE OF 50.65 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 26'06'32" EAST A DISTANCE OF 251.31 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN NORTH 31'05'36" EAST A DISTANCE OF 149.25 FEET TO THE POINT OF BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 5.753 ACRES. (5) LOTS 1, 2 AND 4, KAYWOOD SUBDIVISION, UNIT NO. 2, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA AS PER PLAT RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, (6) LOTS 6, 7 AND 8 KAYWOOD WOOD SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA. (7) LOTS 110, 111 AND 112, RIVERSIDE SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, LESS A STRIP OF LAND SEVEN (7') FEET IN WIDTH RUNNING BACK BETWEEN PARALLEL LINES ALONG THE ENTIRE EASTERLY SIDE OF LOT 1 10. The Land described in SUBSECTIONS I (a) (1) , (2) , (3) , (4) , (5) , (6) AND (7) above is in accordance with the survey of Smith and Raley, Inc. , Consulting Engineers, made on August 23, 1991 and last revised on May 9, 1996, a copy of which is attached hereto. Together with all the buildings and improvements situated on the above- described Land and all appurtenances, rights, ways, privileges, servitude's, prescriptions and advantages thereunto belonging or in anywise appertaining, including, but without limitation, all component parts of the above- described Land, and all component parts of any building or other construction located on the above-described Land, now or hereafter a part of or attached to said Land or used in connection therewith. (b) All buildings, structures, facilities and other improvements now or hereafter located on the Land, and all appurtenances, rights, ways, privileges, servitude's, prescriptions and advantages thereunto belonging or in anywise appertaining, including, but without limitation, all component parts of the Land, and all component parts of any building or other construction located on the Land, now or hereafter a part of or attached to said immovable and all building material, building equipment, supplies and fixtures of every kind and nature now or hereafter located on the Land or attached to, contained in or used in connection with any such buildings, structures, facilities or other improvements, and all appurtenances and additions thereto and betterments, renewals, substitutions and replacements thereof, owned by Mortgagor or in which Mortgagor has or shall acquire an interest (all of the foregoing hereinafter collectively referred to as "IMPROVEMENTS". (c) All equipment (as defined in the Louisiana Commercial Laws, La. R.S. 10:1-101 ET SEQ. (the "UCC") now owned or hereafter acquired by the Mortgagor or in which Mortgagor has or shall acquire an interest, wherever situated, and now or hereafter located on, attached to, contained in or used in connection with the properties referred to in granting clauses (a), (b), (e) or (f) of this Section I, or placed on any part thereof, though not attached thereto, including, but not limited to the following, to the extent that the same are not Improvements: all machinery, apparatus, goods, equipment, materials, fittings, fixtures, chattels and tangible personal property and all appurtenances, accessories, parts, attachments, additions, special tools and accessions now and hereafter affixed thereto or used in connection therewith and betterments, renewals, substitutions and replacements thereof and therefor, (all of the foregoing hereinafter collectively referred to as the "IMPROVEMENTS") including all screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, furniture and furnishings, heating, lighting, plumbing, ventilating, air conditioning, refrigerating, incinerating and/or compacting plants, systems, fixtures and equipment, elevators, hoists, stores, ranges, vacuum and other cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, ducts, conduits, dynamos, engines, compressors,, generators, boilers, stokers, furnaces, pumps, tanks, appliances, equipment, fittings and fixtures (the Land, the Improvements and the Equipment hereinafter collectively referred to as the "PREMISES") . All funds, accounts, deposits, instruments, documents, general intangibles, and notes or chattel paper arising from or by virtue of any transactions related to the Premises; all permits, licenses, franchises, certificates and other rights and privileges obtained in connection with the Premises. Without limitation, Mortgagor hereby grants to Mortgagee a security interest in and to all of Mortgagor's present and future equipment" and general intangibles" (as defined in the UCC) in or relating to the Premises, and Mortgagee shall have, in addition to all rights and remedies provided herein, all of the rights and remedies of a "secured party" under the UCC. This Mortgage constitutes and shall be deemed to be a "security agreement" for all purposes of the UCC. If the lien of this Mortgage is subject to a security interest covering any property described in this granting clause (c), then all of the right, title and interest of Mortgagor in and to any and all such property is hereby assigned to Mortgagee, together with the benefits of all deposits and payments now or hereafter made thereon by or on behalf of Mortgagor. It is agreed that all Equipment is part and parcel of the Land and the Improvements and appropriated to the use thereof and, whether affixed to the Land and/or the Improvements or not, shall, for purposes of this Mortgage be deemed conclusively to be real estate and mortgaged or otherwise conveyed or encumbered hereby. (d) All the leases, subleases, lettings and licenses and all other contracts, bonds and agreements affecting the Premises and/or any other property or rights conveyed or encumbered hereby, or any part thereof, now or hereafter entered into, and all amendments, modifications, supplements, additions, extensions and renewals thereof (all of the foregoing hereinafter collectively called the "LEASES"), and all right, title and interest of Mortgagor thereunder, including cash and securities deposited thereunder (as down payments, security deposits or otherwise); the right to receive and collect the rents, security deposits, income, proceeds, earnings, royalties, revenues, issues and profits payable thereunder and the rights to enforce, whether at law or in equity or by any other means, all provisions and options thereof or thereunder (all of the foregoing hereinafter collectively called the "RENTS"), and the right to apply the same to the payment and performance of the Secured Obligations. (e) Any and all moneys (other than cash received from Casino Magic Corp. as payment for common stock with no privileges, preferences or rights to redemption or repayment), goods, accounts, chattel paper, general intangibles, documents, instruments, contract rights and other real and personal property (including property exchanged therefor), of every kind and nature, which may from time to time be subjected to the lien hereof by Mortgagor through a supplement to this Mortgage or otherwise, or by anyone on its behalf or with its consent, or which may come into the possession of or be subject to the control of Mortgagee pursuant to this Mortgage, it being the intention and agreement of Mortgagor that all property hereafter acquired (including pursuant to any so called "tax sale" or foreclosure of any lien) or constructed by Mortgagor with respect to the Premises shall be subject to the lien and security interest of this Mortgage and shall forthwith upon acquisition or construction thereof by Mortgagor and without any act or deed by Mortgagor be subject to the lien and security interest of this Mortgage as if such property were now owned by Mortgagor and were specifically described in this Mortgage and conveyed or encumbered hereby or pursuant hereto, and Mortgagee is hereby authorized to receive any and all such property as and for additional security hereunder. (f) All unearned premiums under insurance policies now or hereafter obtained by Mortgagor, all proceeds (including funds, accounts, deposits, instruments, general intangibles, notes or chattel paper) of the conversion, voluntary or involuntary, of any of the property described in these granting clauses into cash or other liquidated claims, including proceeds of hazard, title and other insurance, whether attributable to the insurance loss of the Premises or otherwise, as provided in Louisiana Revised Statutes or otherwise, and proceeds received pursuant to any sales or rental agreements of Mortgagor in respect of the property described in these granting clauses, and all judgments, damages, awards, settlements and compensation (including interest thereon) heretofore or hereafter made to the present and all subsequent owners of the Premises and/or any other property or rights conveyed or encumbered hereby for any injury to or decrease in the value thereof for any reason, or by any governmental or other lawful authority for the taking by eminent domain, condemnation or otherwise of all or any part thereof, including awards for any change of grade of streets. The Mortgaged Property is to remain so specially mortgaged, affected and hypothecated unto and in favor of the Mortgagee until the full and final payment or discharge of the Secured Obligations, and the Mortgagor is herein and hereby bound and obligated not to sell or alienate the Mortgaged Property to the prejudice of this act. The maximum amount of the Secured Obligations that may be outstanding at any time and from time to time that this Mortgage secures, including without limitation as a mortgage, as an assignment and as a security agreement, including all principal, interest and any expenses or advances incurred by the Mortgagee, whether stipulated herein or otherwise, and all other amounts included within the Secured Obligations, is fifty million ($50,000,000.00) dollars (the "MAXIMUM Amount"). The Mortgagor acknowledges that this Mortgage secures the Secured Obligations and advances made or incurred by the Mortgagee under or pursuant to this Mortgage, the Indenture or otherwise, whether optional or obligatory by the Mortgagee. This Mortgage is and shall remain effective, even though the amount of the Secured Obligations may now be zero or may later be reduced to zero, until all of the amounts, liabilities and obligations, present and future, comprising the Secured Obligations have been incurred and are extinguished. When no Secured Obligations secured by this Mortgage exists and the Mortgagee is not bound to permit any Secured Obligations to be incurred, this Mortgage may be terminated by the Mortgagor upon thirty (30) days prior written notice sent by the Mortgagor to the Mortgagee in accordance with the provisions of this Mortgage. SECTION II - SECURITY INTEREST (a) With respect to all personal property (both. tangible and intangible) and any fixtures constituting a part of the Mortgaged Property, this Mortgage shall likewise be a security agreement and a financing statement and for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and for the purpose of further securing the full and punctual payment and performance of the Secured Obligations, Mortgagor hereby grants to Mortgagee a security interest in all of Mortgagor's rights, titles and interests in and to the Mortgaged Property insofar as the Mortgaged Property consists of equipment, contract rights, general intangibles, documents, instruments, chattel paper, fixtures and any and all other personal property of any kind or character defined in and subject to the provisions of the UCC, including the proceeds, profits, rents, revenues and products from any and all of such personal property. Upon the occurrence and during the continuance of any Event of Default (as hereinafter defined), Mortgagee is and shall be entitled to all of the rights, powers and remedies afforded a secured party by the UCC with reference to the personal property and fixtures in which Mortgagee has been granted a security interest herein, or Mortgagee may proceed as to both the real and personal property covered hereby in accordance with the rights and remedies granted under this Mortgage in respect of the real property covered hereby. Such rights, powers and remedies shall be cumulative and in addition to those granted to Mortgagee under any other provision of this Mortgage or under any other instrument executed in connection with or as security for the Secured Obligations. A carbon or photographic or other reproduction of this Mortgage shall be sufficient as a financing statement covering the Mortgaged Property. (b) Mortgagor shall, forthwith after the execution and delivery of this mortgage and thereafter, from time to time, cause this Mortgage and any financing statement, continuation statement or similar instrument relating to any thereof or to any property intended to be subject to the Lien of this Mortgage to be filed, registered and recorded in such manner and in such places as may be required by any present or future law in order to fully protect the validity, priority and perfection thereof or the Lien hereof upon the Mortgaged Property and the interest and rights of Mortgagee herein and therein. Mortgagor shall pay or cause to be paid all taxes and fees incident to such filing, registration-ration and recording, all expenses incident to the preparation, execution and acknowledgment thereof, and of any instrument of further assurance, and all federal or State stamp taxes or other taxes, duties and charges arising out of or in connection with the execution and delivery of such instruments. (c) Mortgagor shall, at the sole cost and expense of Mortgagor, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers, financing statements, continuation statements and assurances as Mortgagee shall from time to time reasonably request which may be necessary in the requesting party's judgment to assure, perfect, mortgage, transfer and confirm unto the Mortgagee the property and rights hereby mortgaged or granted or which Mortgagor may be or may hereafter become bound to mortgage or grant to Mortgagee or which may facilitate the performance of the terms of this Mortgage or the filing, registering or recording of this Mortgage. In the event Mortgagor shall fail to execute any instrument required to be executed by Mortgagor pursuant to this SUBSECTION II (c), Mortgagee may execute the same as the attorney in-fact for Mortgagor, such power of attorney being coupled with an interest and irrevocable. (d) Nothwithstanding the provisions of this Section II above, the security interest shall not attach to property originally acquired by Casino Magic Louisiana with Permitted FF&E financing (as defined in the Indenture). SECTION III - SECURED OBLIGATIONS This Mortgage is executed and delivered by Mortgagor to secure the payment and performance of the obligations (collectively, the "Secured Obligations") described below: (a) Payment of and performance of any and all indebtedness, obligations and liabilities of Mortgagor now or hereafter existing under or in respect of the Guarantee, including, without limitation, payment of principal, premium, if any, and interest when due and payable, and all other amounts due or to become due under or in connection with the Indenture as in effect on the date hereof (including, without limitation, all sums due to the Mortgagee pursuant to Section 7.7 of the Indenture), the Notes (as defined herein and in the Indenture) and the performance of all other obligations to the Mortgagee and the Holders (as defined herein and in the Indenture) under the Indenture, the Notes and the Collateral Documents (as defined in the Indenture), according to the terms thereof; (b) Any sums which may be advanced or paid by Mortgagee under the terms hereof on account of the failure of Mortgagor to comply with the covenants of Mortgagor contained herein; (c) Payment and performance of all covenants, agreements, and obligations of Mortgagor herein contained; (d) all renewals, rearrangements, increases, substitutions and extensions, and all amendments, supplements and modifications, to any of the obligations described in the preceding clauses (a)through (c). SECTION IV - REPRESENTATIONS, WARRANTIES AND COVENANTS Mortgagor hereby represents, warrants and covenants as follows: (a) GOOD TITLE; AUTHORITY AND VALIDITY. Mortgagor has good and merchantable title to the Mortgaged Property and the landlord's interest and estate under or in respect of the Leases, subject to the Excepted Liens, and has, in all material respects, full corporate power and lawful authority to mortgage, pledge and hypothecate and to grant a security interest in all of the Mortgaged Property all in the manner and form herein provided and without obtaining the waiver, consent or approval of any lessor, sublessor, Governmental Authority or entity or other party whomsoever or whatsoever which has not been obtained, except in the case of certain environmental permits and approvals which, by their terms, are not transferable or cannot be transferred without the prior approval of the issuing agency. The Improvements upon the Land are all within the boundary lines of the Land or have the benefit of valid servitude's or easements, and there are no encroachments thereon that would materially impair the use thereof. The Mortgaged Property is free and clear of any and all Liens or encumbrances of any nature or kind except for the Excepted Liens and the Leases. Mortgagor has all necessary permits, franchises, licenses, rights-of-way, servitude's or other rights or authority needed in connection with the operation and maintenance of the Mortgaged Property, except where the failure to have the same would not have a Material Adverse Effect; except where such default would not individually or in the aggregate have a Material Adverse Effect; except as provided in the Excepted Liens, Mortgagor's grant of a Lien and security interest in the Mortgaged Property in the manner herein provided does not result in the creation or imposition of any other Lien or security interest, adverse claim or option upon any of the Mortgaged Property. Mortgagor's chief executive office and chief place of business is located at the address set forth in Section VIII(L) of this Mortgage. Mortgagor will not change its name, identity or corporate structure or its chief executive office or chief place of business or its taxpayer identification number without notifying Mortgagee at least thirty (30) days prior to the effective date of such change. (b) DEFENSE OF TITLE. Mortgagor will warrant and defend title to the Mortgaged Property, subject to Excepted Liens, against the claims and demands of all other Persons whomsoever and will maintain and preserve the Lien created hereby so long as any of the Secured Obligations secured hereby remains unpaid or not satisfied. Should an adverse claim be made against the title to any material part of the Mortgaged Property, Mortgagor agrees it will immediately notify Mortgagee in writing thereof and defend against such adverse claim to the extent necessary to preserve Mortgagee's rights and benefits hereunder, subject to Excepted Liens, and Mortgagor further agrees that Mortgagee may take such other reasonable action as it deems advisable to protect and preserve its interest in the Mortgaged Property, and in such event Mortgagor will indemnify Mortgagee against any and all costs, reasonable attorney's fees and other expenses which they may incur in defending against any such adverse claim. Such obligations shall be payable on demand and shall bear interest from the date of demand therefor until paid at the Note Rate. Any proceeds of any policy of title insurance maintained by Mortgagor with respect to the Mortgaged Property shall, for the purposes of this Mortgage, be paid and applied in the same manner as Insurance Proceeds (as hereinafter defined). (c) FIRST LIEN. This Mortgage is, and always will be kept, a direct first Lien and security interest upon the Mortgaged Property, subject to the Excepted Liens, and Mortgagor will not create or suffer to be created or permit to exist any Lien, security interest or charge prior or junior to or on parity with the Lien and security interest of this Mortgage upon the Mortgaged Property or any part thereof or upon the Rents therefrom, except for the Excepted Liens. (d) MAINTENANCE OF MORTGAGED PRO-PROPERTY. Mortgagor will at its own expense do or cause to be done all things necessary to preserve and keep in full repair, working order and efficiency, reasonable wear and tear excepted, all of the Mortgaged Property, including, without limitation, all equipment, machinery and facilities, and from time to time will make all the needful and proper repairs, renewals and replacements so that at all times the state and condition of the Mortgaged Property will be fully preserved and maintained. (e) PERFORMANCE OF CONTRACTS. Mortgagor will promptly pay and discharge all rentals, or other payments and will perform or cause to be performed each and every act, matter or thing required by, each and all of the contracts, instruments or agreements executed in connection with or incident to the ownership and operation of the Mortgaged Property and will do all other things necessary to keep unimpaired Mortgagor's rights with respect thereto and to prevent any forfeiture thereof or default thereunder. Mortgagor will operate the Mortgaged Property in a good and workmanlike manner and in accordance with the practices of the industry and in compliance with all Governmental Requirements affecting ownership and operation of such facilities, including without limitation, Environmental Laws. (f) PAYMENT BY MORTGAGEE. Mortgagor agrees that if Mortgagor fails to perform any act or to take any action which Mortgagor is required to perform or take hereunder or pay any money which Mortgagor is required to pay hereunder (taking into account applicable grace or cure periods), Mortgagee in Mortgagor's name or its own name may, but shall not be obligated to, perform or cause to perform such act or take such action or pay such money, and any expenses so incurred by Mortgagee and any money so paid by Mortgagee shall be a demand obligation owing by Mortgagor to Mortgagee, and Mortgagee, upon making such payment, shall be subrogated to all of the rights of the Person receiving such payment. Each amount due and owing by Mortgagor to Mortgagee pursuant to this Mortgage shall bear interest from the date of such expenditure or payment or other occurrence which gives rise to such amount being owed to Mortgagee until paid at the Note Rate, and all such amounts together with such interest thereon shall be a part of the Secured Obligations and shall be secured by this Mortgage. (g) NAME OF MORTGAGOR. Mortgagor does not do business with respect to the Mortgaged Property under any name other than C-M of Louisiana, Inc. (h) OPERATION BY THIRD PARTIES. To the extent any of the Mortgaged Property is operated by a party or parties other than Mortgagor, Mortgagor's covenants as expressed in this SECTION IV are modified to require that Mortgagor use its best efforts (including without limitation the reasonable exercise of all rights and remedies as are available to Mortgagor) to obtain compliance with such covenants by the operator or operators of the Mortgaged Property. (I) COMPLIANCE WITH LAWS. The Mortgaged Property complies and at all times will comply with all local zoning, land use, setback and other development, use and occupancy requirements of Governmental Authorities. (i) PAYMENT OF TAXES, INSURANCE PREMIUMS, ASSESSMENTS; COMPLIANCE WITH LAW AND INSURANCE REQUIREMENTS. (I) Unless contested in accordance with the provisions of SUBSECTION IV (j)(v) hereof, Mortgagor shall pay and discharge or cause to be paid and discharged, from time to time when the same shall become due, all real estate and other taxes, special assessments, levies, permits, inspection and license fees, all premiums for insurance, all water and sewer rents and charges, and all other public charges imposed upon or assessed against the Mortgaged Property or any part thereof or upon the revenues, rents, issues, income and profits of the Mortgaged Property, including, without limitation, those arising in respect of the occupancy, use or possession thereof. (ii) During the continuance of an Event of Default, Mortgagor shall deposit with Mortgagee, on the first day of each month, an amount reasonably estimated by Mortgagee to be equal to one-twelfth (1/12th) of the annual taxes, assessments and other items required to be discharged by Mortgagor under SUBSECTION IV (j)(i) and amounts reasonably estimated by Mortgagor to be necessary to maintain the insurance coverages contemplated in SUBSECTION IV (1) below, which estimates shall not be less than one-twelfth (1/12th) of the annual taxes, assessments, insurance premiums and other items required to be discharged by Mortgagor during the year immediately preceding the year during which such Event of Default occurred. Such amounts shall be held by Mortgagee without interest to Mortgagor and applied to the payment of each obligation in respect of which such amounts were deposited, in such order or priority as Mortgagee shall determine, on or before the date on which such obligation would become delinquent. If at any time the amounts so deposited by Mortgagor shall, in Mortgagee's judgment, be insufficient (when added to the installments anticipated to be paid thereafter) to discharge any of such obligations when due, Mortgagor shall, immediately upon demand, deposit with Mortgagee such additional amounts as may be requested by Mortgagee. Nothing contained in this SUBSECTION IV (j) shall affect any right or remedy of Mortgagee under any provision of this Mortgage or of any statute or rule of law to pay any such amount from its own funds (provided, however, that Mortgagee shall not in any event be obligated to pay any of such amounts from its own funds) and to add the amount so paid, together with interest at the Note Rate, to the Secured Obligations, or relieve Mortgagor of its obligations to make or provide for the payment of the annual taxes, assessments and other charges required to be discharged by Mortgagor under SUBSECTION IV (j)(i) . Mortgagor hereby grants to Mortgagee a security interest in all sums held pursuant to this SUBSECTION IV (j)(ii) to secure payment and performance of the Secured Obligations. During the continuance of any Event of Default, Mortgagee may apply all or any part of the sums held pursuant to this SUBSECTION IV (j)(ii) to the payment and performance of the Secured Obligations in accordance with the provisions of the Indenture. Mortgagor shall redeposit with Mortgagee an amount equal to all amounts so applied as a condition to the cure, if any, of such Event of Default, in addition to fulfillment of any other required conditions. (iii) Unless contested in accordance with the provisions of SUBSECTION IV (j)(v) , Mortgagor shall timely pay (or obtain a bond in the amount of) all lawful claims and demands of mechanics, materialmen, laborers, warehousemen, employees, suppliers, government agencies administering worker's compensation insurance, old age pensions and social security benefits, and all amounts owed under collective bargaining agreements and all other claims, judgments, demands or amounts of any nature which, if unpaid or not bonded, could result in or permit the creation of a Lien (other than an Excepted Lien) on the Mortgaged Property or any part thereof or the Rents arising therefrom, or which might result in forfeiture of all or any part of the Mortgaged Property. (iv) Mortgagor shall maintain, or cause to be maintained, in full force and effect, all permits, certificates, authorizations, consents, approvals, registrations, filings, licenses, franchises or other instruments now or hereafter required by any Governmental Authority to operate or use and occupy the Mortgaged Property and the Equipment for its intended uses (collectively, the "Permits"; each, a "Permit"). Mortgagor represents that, to is knowledge and subject to those requirements for notice, approval or reissuance set forth by applicable law, none of the Permits will be subject to cancellation, forfeiture or any limitation on the scope thereof solely by virtue of the execution of this Mortgage or the f foreclosure of the Lien hereof. Unless contested in accordance with the provisions of SUBSECTION IV (j)(v), Mortgagor shall comply promptly with, or cause prompt compliance with, all requirements set forth in the Permits and all Governmental Requirements applicable to all or any part of the Mortgaged Property or the condition, use or occupancy of all or any part thereof or any recorded deed of restriction, declaration, covenant running with the land or otherwise, now or hereafter in force. Mortgagor shall not initiate or consent to any change in the zoning, subdivision or any other use classification of the Land. (v) Mortgagor may at its own expense contest the amount or applicability of any of the obligations described in SUBSECTIONS IV (j)(i), IV(j)(iii) and IV (j)(iv) by appropriate legal proceedings, prosecution of which operates to prevent the collection or enforcement thereof or the sale or forfeiture of the Mortgaged Property or any part thereof to satisfy such obligations; PROVIDED, HOWEVER, that (A) any such contest shall be conducted in good faith by appropriate legal proceedings promptly instituted and diligently conducted and (B) in connection with such contest, Mortgagor shall have made provision for the payment or performance of such contested obligation on Mortgagor's books if and to the extent required by generally accepted accounting principles then utilized by Mortgagor in the preparation of its financial statements, or shall have deposited with Mortgagee a sum sufficient to pay and discharge such obligation and Mortgagee's estimate of all interest and penalties related thereto. Notwithstanding the foregoing provisions of this SUBSECTION IV (j)(v), (A) no contest of any such obligations may be pursued by Mortgagor if such contest would expose Mortgagee or any other Secured Party to any possible criminal liability, or any civil liability for failure to comply with such obligations and (B) if at any time payment or performance of any obligation contested by Mortgagor pursuant to this SUBJECTION IV (j)(v) shall become necessary to prevent the a tax sale conveying the Mortgaged Property or any portion thereof because of nonpayment or nonperformance, Mortgagor shall pay or perform the same in sufficient time to prevent the tax sale. (vi) Mortgagor shall not in its use and occupancy of the Mortgaged Property or the Equipment (including, without limitation, in the making of any Alteration, as hereinafter defined) take any action that would cause the termination, revocation or denial of any insurance coverage required to be maintained under this Mortgage or that pursuant to written notice from any applicable insurer, would be the basis for a defense to any claim under any insurance policy maintained in respect of the Mortgaged Property or the Equipment and Mortgagor shall otherwise comply with the requirements of any insurer that issues a policy of insurance in respect of the Mortgaged Property or the Equipment. (vii) Mortgagor shall, promptly upon receipt of any written notice regarding any failure by Mortgagor to pay or discharge any of the obligations described in SUBSECTION IV (j),(i),(ii), (iii) OR (vi), furnish a copy of such notice to Mortgagee. Mortgagor shall, promptly upon receipt of any written notice regarding any failure by mortgagor to pay or discharge any of the obligations described in SUBSECTION IV (j) or (iv), furnish a copy of such notice to Mortgagee. (k) CERTAIN TAX LAW CHANGES. In the event of the passage after the date of this Mortgage of any law deducting from the value of real property, for the purpose of taxation, amounts in respect of any Lien thereon or changing in any way the laws for the taxation of mortgages or debts secured by mortgages for federal, state or local purposes or the manner of the collection of any such taxes, and imposing a new tax, either directly or indirectly, on this Mortgage or the interest of Mortgagee or any other Secured Party in any Mortgaged Property (other than income, franchise or similar taxes imposed on Mortgagee or such Secured Party), Mortgagor shall promptly pay Mortgagee or such Secured Party such amount or amounts as may be necessary from time to time to pay such tax and such amount shall bear interest at the Note rate from the date due until paid in full. 1) REQUIRED INSURANCE POLICIES. (I) Mortgagor shall maintain, or cause to be maintained, in full force and effect the following insurance coverages, as applicable, in respect of the Mortgaged Property and the Equipment: (A) Physical hazard insurance on an "all risk" basis covering hazards commonly covered by fire and extended coverage, lightning, tornado, wind damage, civil commotion, hail, riot, strike, water damage, sprinkler leakage, collapse and malicious mischief, in an amount equal to the full replacement cost of the Improvements and all Equipment, with such deductibles as would be maintained by a prudent operator of property similar in use and configuration to the Mortgaged Property and located in the locality where the Mortgaged Property is located. "Full replacement cost" means the Cost of Construction to replace the Improvements and the Equipment, exclusive of depreciation, excavation, foundation and footings, as determined from time to time by a proper officer of Mortgagor in consultation with its insurance company or insurance agent, as appropriate; (B) Comprehensive general liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Mortgaged Property and any adjoining streets, sidewalks and passageways and covering any and all claims, including, without limitation, all legal liability, subject to customary exclusions, to the extent insurable, imposed upon Mortgagee or any other Secured Party and all court costs and attorneys, fees, arising out of or connected with the possession, use, leasing, operation or condition of the Mortgaged Property, with policy limits and deductibles in such amounts as would be maintained by a prudent operator of property similar in use and configuration to the Mortgaged Property and located in the locality where the Mortgaged Property is located, but in no event less than $10,000,000.00; (C) Workers compensation insurance as required by the laws of the State to protect Mortgagor against claims for injuries sustained in the course of employment at the Mortgaged Property; (D) Comprehensive boiler and machinery insurance to cover sudden and accidental breakdown, including but not limited to, explosion of any boilers and machinery located on the Mortgaged Property or comprising any Equipment, with policy limits and deductibles in such amounts as would be maintained by a prudent operator of property similar in use and configuration to the Mortgaged Property and the Equipment and located in the locality where the Mortgaged Property is located, but in no event less than $35,000,000.00; (E) Comprehensive automobile liability insurance policy against claims for bodily injury, death and property damage covering all owned, leased, non- owned and hired motor vehicles, including loading and unloading in such amounts as would be maintained by a prudent operator of property similar in use and configuration to the Mortgaged Property and the Equipment and located in the locality where the Mortgaged Property is located, but in no event less than $1,000,000.00; (F) Business interruption insurance on an annual basis in amounts not less than (1) the projected gross profit of the Mortgaged Property during the applicable twelve-month period or (2) the amount necessary to pay the fixed charges and other expenses of owning, operating and maintaining the Mortgaged Property for the same period; (G) To the extent not otherwise covered by the insurance required under clauses (A) and (B) of this SUBSECTION IV (1)(i), during the performance of any alterations, renovations, repairs, restorations or construction, broad form Builders Risk Insurance on an all risk completed value basis; and (H) Such other insurance, against such risks and with policy limits and deductibles in such amounts as would be maintained by a prudent operator of property similar in use and configuration to the Mortgaged Property and located in the locality in which the Mortgaged Property is located. (ii) Mortgagor may maintain the coverages required by this subsection IV(l) under blanket policies covering the Mortgaged Property and other locations owned or operated by Mortgagor if the terms of such blanket policies otherwise comply with the provisions of this subsection IV(l) and contain specific coverage allocations in respect of the Mortgaged Property determined in accordance with the provisions of this subsection IV(l). All insurance policies in respect of the coverages required by subsections IV (1)(i)(A) , IV(1)(i)(D), IV(1)(i)(G) and, if applicable, IV(l)(i)(H) shall be in amounts at least sufficient to prevent coinsurance liability and all losses thereunder shall be payable to Mortgagee, as loss payee, subject to the terms of the Indenture, pursuant to a standard noncontributory New York mortgage endorsement or local equivalent, and each such policy shall, to the extent obtainable at commercially reasonable costs, (A) include effective waivers (whether under the terms of such policy or otherwise) by the insurer of all claims for insurance premiums against all loss payees and named insureds other than Mortgagor and all rights of subrogation against any named insured, and (B) provide that any losses thereunder shall be payable notwithstanding (1) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by Mortgagor or Mortgagee or any other named insured or loss payee, (2) the occupation or use of the Mortgaged Property or the Equipment for purposes more hazardous than permitted by the terms of the policy, (3) any foreclosure or other proceeding relating to the Mortgaged Property or the Equipment or (4) any change in the title to or ownership or possession of the Mortgaged Property or the Equipment; provided, however, that (with respect to items contemplated in clauses (3) and (4) above) any notice requirements of the applicable policies are satisfied. All insurance policies in respect of the coverages required by subsections IV(l) ' shall name Mortgagee as an additional insured. Each policy of insurance required under this subsection IV(l) shall provide that (A) notices of any failure by Mortgagor to pay any insurance premium in respect thereof, be furnished to Mortgagee contemporaneously with any such notice given to Mortgagor and (B) it may not be canceled or otherwise terminated without at least thirty (30) days, prior written notice to Mortgagee and shall permit Mortgagee to pay any premium therefor within thirty (30) days after receipt of any notice stating that such premium has not been paid when due. The policy or policies of such insurance or certificates of insurance evidencing the required coverages and all renewals or extensions thereof shall be delivered to Mortgagee upon receipt by Mortgagor. Settlement of any claim under any of the insurance policies referred to in this subsection IV(l) (other than the insurance contemplated in clause(C) of this subsection IV(l)(i)) shall require the prior approval of Mortgagee and Mortgagor shall use its best efforts to cause each such insurance policy to contain a provision to such effect. (iii) At least thirty (30) days prior to the expiration of any insurance policy required by this subsection IV (1) , Mortgagor shall deliver to Mortgagee evidence that such policy or policies shall be renewed or extended and Mortgagor shall deliver promptly to Mortgagee after receipt thereof the policy or policies renewing or extending such expiring policy or renewal or extension certificates. (iv) Mortgagor shall not purchase additional policies in respect of the insurance coverages required to be maintained under this subsection IV(l), unless Mortgagee is included thereon as an additional named insured and, if applicable, with loss payable to Mortgagee under an endorsement containing the provisions described in subsection IV(l) (ii) and the policy evidencing such insurance otherwise complies with the requirements of ' subsection IV(l)(ii). Mortgagor immediately shall notify Mortgagee whenever any such separate insurance policy is obtained and promptly shall deliver to Mortgagee the policy or certificate evidencing such insurance. (m) Inspection. Mortgagor shall permit Mortgagee, by any of its officers, employees, agents, accountants and attorneys, to visit and inspect the Mortgaged Property, examine the books and records and accounts of the Mortgagor, take copies and extracts therefrom, and discuss the affairs, finances and accounts of the Mortgagor with the Mortgagor's officers, accountants and auditors, all upon reasonable prior notice at such times as may be reasonably requested by Mortgagee. (n) Mortgagor To Maintain Improvements. Mortgagor shall not commit any waste on the Mortgaged Property or with respect to any Equipment or make any change in the use of the Mortgaged Property or any Equipment. Mortgagor represents and warrants that (i) to Mortgagor's knowledge, the Mortgaged Property is served by all electric, gas, sewer, water facilities and any other utilities required or necessary for the current and contemplated use thereof and any easements or servitude's necessary to the furnishing of such utility service by Mortgagor have been obtained and duly recorded, and (ii) Mortgagor has access to the Mortgaged Property from public roads sufficient to allow Mortgagor and its tenants and invitees to conduct its and their businesses at the Mortgaged Property as it is currently conducted and is contemplated to be conducted. Mortgagor shall not alter the occupancy or use of the Mortgaged Property without the prior written consent of Mortgagee. No Improvements comprising a portion of the Mortgaged Property may be demolished nor shall any Equipment be removed without the prior written consent of Mortgagee. (o) Leases. (i) All of the Leases are valid and effective in accordance with their respective terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar law affecting or relating to enforcement of creditors' rights generally, and (ii) general equitable principles. To Mortgagor's knowledge, Mortgagor is not in breach of or in default (and to Mortgagor's knowledge, no event has occurred which with due notice or lapse of time or both, may constitute such a breach or default) under any Lease, and no party to any Lease has given Mortgagor written notice of or made a claim with respect to any breach or default. (ii) Mortgagor shall manage and operate the Mortgaged Property or cause the Mortgaged Property to be managed and operated in a reasonably prudent manner and, except as otherwise permitted under subsection IV(p), will not enter into any Lease (or any amendment or modification thereof) or other agreement subsequent to the date hereof with any Person which, individually or in the aggregate, would have a Material Adverse Effect on the value of the property subject thereto. (iii) Mortgagor shall not: (A) receive or collect, or permit the receipt or collection of, any rental or other payments under any Lease more than one (1) month in advance of the respective period in respect of which they are to accrue, except that (a) in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of one (1) month' s rent and (b) Mortgagor may receive and collect escalation and other charges in accordance with the terms of each Lease; (B) assign, transfer or hypothecate (other than to Mortgagee hereunder or as otherwise permitted under subsection IV(p) of this Mortgage) any rental or other payment under any Lease whether then due or to accrue in the future, the interest of Mortgagor as lessor under any Lease or the rents, issues, revenues, profits or other income of the Mortgaged Property; (C) enter into any Lease after the date hereof that does not contain terms to the effect as follows: (1) such Lease and the rights of the tenant thereunder shall be subject and subordinate to the rights of Mortgagee under and the Lien of this Mortgage; (2) such Lease has been assigned as collateral security by Mortgagor as landlord thereunder to Mortgagee under this Mortgage; (3) in the case of any foreclosure hereunder, the rights and remedies of the tenant in respect of any obligations of any successor landlord thereunder shall be limited to the equity interest of such successor landlord in the Mortgaged Property and any successor landlord shall not (a) be liable for any act, omission or default of any prior landlord under the Lease or (b) be required to make or complete any tenant improvements or capital improvements or repair, restore, rebuild or replace the demised premises or any part thereof in the event of damage, casualty or condemnation or (c) be required to pay any amounts to tenant arising under the Lease prior to such successor landlord taking possession; (4) the tenant I s obligation to pay rent and any additional rent shall not be subject to any abatement, deduction, counterclaim or setoff as against Mortgagee or any purchaser upon the foreclosure of any portion of the Mortgaged Property or the giving or granting of a deed in lieu thereof (dation en paiement) by reason of a landlord default occurring prior to such foreclosure, and Mortgagee or such purchaser will not be bound by any advance payments of rent in excess of one month or any security deposits unless such security was actually received by Mortgagee; and (5) the tenant agrees to attorn, at the option of Mortgagee or any purchaser of the Mortgaged Property, to the successor owner upon a foreclosure of the Mortgaged Property or the giving or granting of a deed in lieu thereof (dation en paiement); and (D) terminate or permit the termination of any Lease of space, accept surrender of all or any portion of the space demised under any Lease prior to the end of the term thereof or accept assignment of any Lease to Mortgagor which, individually or in the aggregate, would have a Material Adverse-Effect or materially impair the Lien of this Mortgage therein unless: (1) the tenant under such Lease has not paid the equivalent of two months I rent and Mortgagor has made reasonable efforts to collect such rent; or (2) Mortgagor shall deliver to Mortgagee an Officer's Certificate to the effect that Mortgagor has entered into a new Lease (or Leases) for the space covered by the terminated or assigned Lease with a term (or terms) which expire(s) no earlier than the date on which the terminated or assigned Lease was to expire (excluding renewal options), and with a tenant (or tenants) having a creditworthiness sufficient to pay the rent and other charges due under the new Lease (or Leases), and the tenant(s) shall have commenced paying rent, including, without limitation, all operating expenses and other amounts payable under the new Lease (or Leases), without any abatement or concession, in an amount at least equal to the amount which would have then been payable under the terminated or assigned Lease. (iv) Mortgagor timely shall perform and observe all the terms, covenants and conditions required to be performed and observed by Mortgagor under each Lease and will not engage in any conduct in respect of any Lease which would have individually or in the aggregate a Material Adverse Effect or materially impair the Lien of this Mortgage or the security interest created hereby. Mortgagor promptly shall notify Mortgagee of the receipt of any notice from any lessee under any Lease claiming that Mortgagor is in default in the performance or observance of any of the terms, covenants or conditions thereof to be performed or observed by Mortgagor and will cause a copy of each such notice to be delivered promptly to Mortgagee. (p) Transfer Restrictions. Mortgagor shall not, without the prior written consent of Mortgagee, further mortgage, encumber, hypothecate, sell, convey, assign or lease all or any part of the Mortgaged Property or suffer any of the foregoing to occur by operation of law or otherwise (each a "Transfer"), except in accordance with the provisions of Section 5.20 of the Indenture, the terms of which are incorporated herein by this reference. Notwithstanding the foregoing, the Mortgagor may grant a mortgage junior to this Mortgage for improvements to the Mortgaged Property consistent with the contemplated use of such property. (q) Destruction; Condemnation. (i) Destruction: Insurance Proceeds. If there shall occur any damage to, or loss or destruction of, the Improvements and Equipment, or any part of any thereof (each, a "Destruction"), Mortgagor shall promptly send to Mortgagee a notice setting forth the nature and extent of such Destruction. The proceeds of any insurance payable in respect of any such Destruction are hereby assigned and shall be paid to Mortgagee to be held in the Collateral Account. All insurance proceeds paid to Mortgagee pursuant to this subsection, less the amount of any expenses incurred in litigating, arbitrating, compromising or settling any claim arising out of such Destruction (the "Insurance Proceeds"), shall constitute Trust Moneys and be applied in accordance with the provisions of subsections IV(a)(iii), IV(q)(iv) and IV (q)(v). (ii) Condemnation; Assignment of Award. If there shall occur any taking of the Mortgaged Property or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, general or special, or by reason of the temporary requisition of the use or occupancy of the Mortgaged Property or any part thereof, by any Governmental Authority, civil or military (each, a "Taking") , Mortgagor immediately shall notify Mortgagee upon receiving notice of such Taking or commencement of proceedings therefor. Mortgagee may (but shall not be obligated to) participate in any proceedings or negotiations which might result in any Taking. Mortgagee may be represented by counsel satisfactory to it at the expense of Mortgagor. Mortgagor shall deliver or cause to be delivered to Mortgagee all instruments requested by it to permit such participation. Mortgagor shall in good faith and with due diligence file and prosecute what would otherwise be Mortgagor's claim for any such award or payment and cause the same to be collected and paid over to Mortgagee, and hereby irrevocably authorizes and empowers Mortgagee, in the name of Mortgagor as its true and lawful attorney-in-fact or otherwise to collect and to receipt for any such award or payment, and, in the event Mortgagor fails so to act, to file and prosecute such claim. Mortgagor shall pay all costs, fees and expenses incurred by Mortgagee in connection with any Taking and seeking and obtaining any award or payment on account thereof. Any proceeds, award or payment in respect of any Taking are hereby assigned and shall be paid to Mortgagee to be held in the Collateral Account. Mortgagor shall take all steps necessary to notify the condemning authority of such assignment. Such proceeds, award or payment paid to Mortgagee, less the amount of any expenses incurred in litigating, arbitrating, compromising or settling any claim arising out of such Taking ("Net Award") , shall constitute Trust Moneys and be applied in accordance with the provisions of subsections IV(q)(iii), IV(q)(iv)- and IV(q)(v). Payment or Restoration. So long as no Event of Default shall have occurred and be continuing, Mortgagor shall have the right, at Mortgagor's option, to require Mortgagee to apply such Net Award or Insurance Proceeds to the payment of the Secured Obligations, in accordance with the Indenture or to perform a restoration (each, a "Restoration") of the affected portions of the Mortgaged Property and the Equipment. In the event that Mortgagor elects to make such payment, such Net Award or Insurance Proceeds shall be delivered to Mortgagee to be held as Trust Moneys subject to withdrawal and application by Mortgagee in accordance with the provisions of the Indenture. In the event Mortgagor elects to perform a Restoration, Mortgagor shall give written notice ("Restoration Election Notice") of such election to Mortgagee within twenty (20) business days after the date that Mortgagee receives the applicable Insurance Proceeds or Net Award, as the case may be. Mortgagor shall, within twenty (20) business days following the date of delivery of a Restoration Election Notice, commence and diligently continue to perform the Restoration of that portion or portions of the Mortgaged Property and Equipment subject to such Destruction or affected by such Taking so that, upon the completion of the Restoration, the Mortgaged Property shall be in the same condition and shall be of at least equal utility for its intended purposes as the Mortgaged Property was immediately prior to such Destruction or Taking. Mortgagor shall so complete such Restoration with its own funds to the extent that the amount of any Net Award or Insurance Proceeds is insufficient for such purpose. In the event Mortgagee does not receive a Restoration Election Notice within such twenty (20) business day period, Mortgagee shall apply such Insurance Proceeds or Net Award to the payment of the Secured Obligations, in accordance with the provisions of the Indenture. (iv) Restoration. In the event a Restoration is to be performed under this subsection IV(a)(iv), Mortgagee shall not release any part of the Net Award or the Insurance Proceeds except in accordance with the provisions of ' subsection IV (c[) (v) and Mortgagor shall, prior to commencing any work to effect a Restoration of the Mortgaged Property and the Equipment, promptly (but in no event later than sixty (60) days following any Destruction or Taking) furnish to Mortgagee: (A) complete plans and specifications (the "Plans and Specifications") for the Restoration; (B) an officer's certificate stating that all permits and approvals required by law to commence work in connection with the Restoration have been obtained; (C) a certificate (an "Architect's Certificate") of an independent, reputable architect or engineer acceptable to Mortgagee and licensed in the State (1) stating that the Plans and Specifications have been reviewed and approved by the signatory thereto, (2) containing such signatory's estimate (an "Estimate") of the costs of completing the Restoration, and (3) upon completion of such Restoration in accordance with the Plans and Specifications, the utility of the Mortgaged Property and the Equipment will be equal to or greater than the utility thereof immediately prior to the Destruction or Taking relating to such Restoration; and (D) if the Estimate exceeds the Insurance Proceeds or the Net Award, as the case may be, by $5,000,000 or more, an Additional Undertaking in an amount equal to not less than the Estimate less the amount of the Insurance Proceeds or the Net Award, as the case may be, then held by Mortgagee for application toward the cost of such Restoration. Upon receipt by Mortgagee of each of the items required pursuant to clauses (A) through (D) above, Mortgagee shall acknowledge receipt of the Plans and Specifications. Promptly upon such acknowledgment of receipt by Mortgagee, Mortgagor shall commence and diligently continue to perform the Restoration substantially in accordance with such Plans and Specifications and in material compliance with all Governmental Requirements, free and clear of all Liens except Excepted Liens. Mortgagor shall so complete such Restoration with its own funds to the extent that the amount of any Net Award or Insurance Proceeds is insufficient for such purpose. (v) Restoration Advances Following Destruction or Taking of Mortgaged Property. In the event Mortgagor performs a Restoration of the Mortgaged Property and Equipment as provided in subsection IV (a) (iv) , Mortgagee shall apply any Insurance Proceeds or Net Award held by Mortgagee on account of the Destruction or Taking to the payment of the cost of performing such Restoration pursuant to the relevant provisions of the Indenture. In the event there shall be any surplus after application of the Net Award or the Insurance Proceeds to Restoration of the Mortgaged Property and the Equipment, such surplus shall be paid by Mortgagor to the Mortgagee for application in accordance with the Indenture; provided, however, that if an Event of Default shall have occurred and be continuing, such surplus shall be applied by Mortgagee to the payment of the Secured Obligations. Notwithstanding anything to the contrary herein, if a Destruction or Taking of all or substantially all of the Mortgaged Property occurs on a date which is less than 12 months prior to Maturity, as such term is defined in the Indenture, all Insurance Proceeds and Net Awards shall be applied to the permanent repayment or prepayment of any Secured Obligations then outstanding in accordance with the Indenture. (r) Alterations mortgagor shall not make any material structural addition, modification or change (each, an "Alteration") to the Mortgaged Property or the Equipment, except as is necessary to achieve the contemplated use of the Mortgaged Property. (s) Hazardous Material. (i) Mortgagor holds all Permits required to permit Mortgagor to conduct its business in the manner now or contemplated to be conducted and none of the Mortgagor I s operations are being conducted in a manner that violates the terms and conditions under which any such Permit was granted, including without limitation, under any Environmental Laws; all such Permits are valid and in full force and effect; and to the knowledge of Mortgagor, no suspension, cancellation, revocation or termination of any such Permit is threatened. (ii) There are no claims, actions, suits, proceedings or investigations pending or to the knowledge of Mortgagor, threatened, before any Governmental Authority or before any arbitrator brought by or against Mortgagor or with respect to any of the Mortgaged Property the basis of which is any Environmental Law. (iii) Mortgagor shall (A) comply with any and all applicable present and future Environmental Laws relating to the Mortgaged Property; (B) pay in a timely fashion the cost of any removal, response measure or corrective action relating to any Hazardous Materials required by any Environmental Law or any order, regulation, consent decree or similar agreement or instrument and keep the Mortgaged Property free of any Lien imposed pursuant to any Environmental Law; (C) not release, discharge or dispose of any Hazardous Materials on, under or from the Mortgaged Property in violation of any Environmental Law; (D) apply any insurance proceeds or other sums received by it in respect of the removal of any Hazardous Material or any other corrective action relating to any Hazardous Material to such removal or corrective action; and (E) not take, or fail to take any action with respect to any Environmental Laws or in connection with any Hazardous Materials that could reasonably be expected to result in the incurrence of any obligation or liability of Mortgagee or any other Secured Party. In the event Mortgagor fails to comply with the covenants in the preceding sentence, Mortgagee may, in addition to any other remedies set forth herein, but shall not be obligated to, as Mortgagee for and at Mortgagor's sole cost and expense cause to be taken, any remediation, removal, response or corrective action relating to Hazardous Materials that is required by Environmental Law and is not being done or contested by Mortgagor. Any costs or expenses incurred by Mortgagee for such purpose shall be immediately due and payable by Mortgagor and shall bear interest at the Note Rate. Mortgagor shall provide to Mortgagee and its agents and employees access to the Mortgaged Property to take any action required by Environmental Laws, or in connection with any Hazardous Materials, that could be expected to result in the incurrence of any obligation or liability of Mortgagee or any other Secured Party, if Mortgagor fails to do so and such action or removal is required under any Environmental Laws as provided above. Upon written request by Mortgagee, and which shall be made not more frequently than once in any six- month period or at any time that Mortgagee is exercising its remedies under this Mortgage, Mortgagee shall have the right, but shall not be obligated, at the sole cost and expense of Mortgagor, to conduct an environmental audit or review of the Mortgaged Property relating to the specific items as required in writing or relating to- the remedy that Mortgagee is exercising under this Mortgage by persons or firms appointed by Mortgagee, and Mortgagor shall cooperate in all reasonable respects in the conduct of such environmental audit or review, including, without limitation, by providing reasonable access to the Mortgaged Property and to all records relating thereto. Nothing contained herein shall result in Mortgagee or any other Secured Party being deemed an "owner" or "operator" under applicable Environmental Law. (iv) Mortgagor may at its own expense contest the amount or applicability of any of the obligations described in the first sentence of subsection IV(s)(iii) by appropriate legal proceedings, prosecution of which operates to prevent the enforcement thereof; provided, however, that (A) any such contest shall be conducted in good faith by appropriate legal proceedings promptly instituted and diligently conducted and (B) in connection with such contest, Mortgagor shall have made provision for the payment or performance of such contested obligation on Mortgagee's books if and to the extent required by generally accepted accounting principles then utilized by Mortgagor in the preparation of its financial statements, or shall have deposited with Mortgagee a sum sufficient to pay and discharge such obligation and Mortgagee's estimate of all interest and penalties related thereto. Notwithstanding the foregoing provisions of this subsection IV (s) (iv) , no contest of any such obligations may be pursued by Mortgagor if such contest would expose Mortgagee or any other Secured Party to any possible criminal liability, or any civil liability for failure to comply with such obligations. (t) Asbestos. Mortgagor shall not install nor permit to be installed in the Mortgaged Property asbestos or any asbestos containing material (collectively, "ACM") . With respect to any ACM currently present in the Mortgaged Property, Mortgagor shall comply with all federal, state or local laws, regulations or orders applicable to ACM located on the Mortgaged Property, all at Mortgagor's sole cost and expense. If Mortgagor shall fail so to comply with such laws or regulations, Mortgagee may, but shall not be obligated to, in addition to any other remedies set forth herein, take those steps reasonably necessary to comply with applicable law, regulations or orders. Any costs or expenses incurred by Mortgagee for such purpose shall be immediately due and payable by Mortgagor and bear interest at the Note Rate. Mortgagor shall provide to Mortgagee and its agents and employees reasonable access to the Mortgaged Property upon reasonable prior notice to remove such ACM if Mortgagor fails to do so; provided, however, that nothing contained herein shall obligate Mortgagee to exercise any rights under such license. Mortgagor shall indemnify and hold the Mortgagee or any other Secured Party harmless from and against all loss, cost, damage and expense that Mortgagee or any other Secured Party may sustain as a result of the presence in or on the Mortgaged Property of any ACM and any removal thereof. (u) Books and Records; Reports. Mortgagor shall keep proper books of record and account, which shall accurately represent the financial condition of Mortgagor and the business affairs of Mortgagor relating to the Mortgaged Property. Mortgagee and its authorized representatives shall have the right, from time to time, upon reasonable prior notice to examine the books and records of Mortgagor relating to the operation of the Mortgaged Property at the office of Mortgagor. (v) No Claims Against Mortgagee. Nothing contained in this Mortgage shall constitute any consent or request by Mortgagee, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Mortgaged Property or any part thereof, nor as giving Mortgagor any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Mortgagee in respect thereof or any claim that any Lien based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the Lien of this Mortgage. (w) Utility Services. Mortgagor shall pay, or cause to be paid, when due all charges for all public or private utility services, all public or private rail and highway services, all public or private communication services, all sprinkler systems, and all protective services, any other services of whatever kind or nature at any time rendered to or in connection with the Mortgaged Property or any part thereof, shall comply in all material respects with all contracts relating to any such services, and shall do all other things reasonably required for the maintenance and continuance of all such services to the extent required to fulfill the obligations set forth in subsection IV(n). (x) Notwithstanding any provisions herein to the contrary, Mortgagor shall retain the right, at all times prior to foreclosure [or deed-in-lieu (dation en paiement) thereof], to exercise custody and control with respect to actions to be taken at the Mortgaged Property relating to the environmental condition thereof. (y) Prohibition of Construction of Unowned Improvements. Mortgagor shall not allow the construction of any improvements on the Land that will not be owned by Mortgagor ("'Unowned Improvements"), unless the owner of the Unowned Improvements shall execute a mortgage ("New Mortgage") bearing against the Unowned Improvements to further secure the Secured Obligations. The New Mortgage is to be: (i) in form and substance substantially similar to this Mortgage and acceptable to Mortgagee, (ii) a first Lien upon a good and merchantable title to the Unowned Improvements, and (iii) fully executed and filed for registry prior to (A) the filing of the Notice of any contract for the Unowned Improvements, as required by Louisiana Revised Statutes 9:4811, and (B) the beginning of the work for the Unowned Improvements, as defined by Louisiana Revised Statutes 9:482OA(2). (z) All of the representations and warranties contained in this Section or elsewhere in this Mortgage shall be true through and until the date on which all obligations of Mortgagor under this Mortgage and the Secured Obligations are fully paid or satisfied, and Mortgagor shall promptly notify Mortgagee of any event which would render any of said representations and warranties untrue or misleading. SECTION V - ASSIGNMENT OF LEASES, RENTS, ISSUES AND PROFITS (a) To further secure the full and punctual payment and performance of the Secured Obligations up to the Maximum Amount outstanding at any time and from time to time, the Mortgagor does hereby assign and pledge unto Mortgagee, and grant a continuing security interest in and to, subject to the terms and conditions hereof, all of the Mortgagor's estate, right, title and interest (the "Mortgagor's Interest") in the Leases and Rents including, without limitation, the following: (i) the immediate and continuing right to receive and collect Rents payable by all tenants or other parties pursuant to Leases; (ii) all claims, rights, powers, privileges and remedies of Mortgagor, whether provided for in any Lease or arising by statute or at law or in equity or otherwise, consequent on any failure on the part of any tenant to perform or comply with any term of any Lease; (iii) all rights to take all actions upon the happening of a default under any Lease as shall be permitted by such Lease or by law, including, without limitation, the commencement, conduct and consummation of proceedings at law or in equity; and (iv) the full power and authority, in the name of Mortgagor or otherwise, to enforce, collect, receive and receipt for any and all of the foregoing and to do any and all other acts and things whatsoever which Mortgagor or any landlord is or may be entitled to do under the Leases or by law. (b) Any Rents received by Mortgagee hereunder, after payment of all proper costs and charges, shall be applied to all amounts due and owing with respect to the Secured Obligations. Mortgagee shall be accountable to Mortgagor only for Rents actually received by Mortgagee pursuant to this assignment. The collection of such Rents and the application thereof shall not cure or waive any Event of Default or waive, modify or affect notice of an Event of Default or invalidate any act done pursuant to such notice. (c) So long as no Event of Default shall have occurred and be continuing, Mortgagor shall have a license to collect and apply the Rents and to enforce the obligations of tenants under the Leases. Immediately upon the occurrence and during the continuance of any Event of Default, the license granted in the immediately preceding sentence shall cease and terminate, with or without any notice, action or proceeding. Upon such Event of Default and during the continuance thereof, Mortgagee may (but shall not be obligated to) to the fullest extent permitted by the Leases (i) exercise any of Mortgagor's rights under the Leases, (ii) enforce the Leases, (iii) demand, collect, sue for, attach, levy, recover, receive, compromise and adjust, and make, execute and deliver receipts and releases for all Rents or other payments that may then be or may thereafter become due, owing or payable with respect to the Leases and (iv) generally do, execute and perform any other act, deed, matter or thing whatsoever that ought to be done, executed and performed in and about or with respect to the Leases, as fully as allowed or authorized by the Mortgagor's Interest. (d) During the continuance of each and every Event of Default, Mortgagor hereby irrevocably authorizes and directs the tenant under each Lease to pay directly to, or as directed by, Mortgagee all Rents accruing or due under its Lease. Mortgagor hereby authorizes the tenant under each Lease to rely upon and comply with any notice or demand from Mortgagee for payment of Rents to Mortgagee and Mortgagor shall have no claim against any tenant for Rents paid by such tenant to Mortgagee pursuant to such notice or demand. (e) Mortgagor at its sole cost and expense shall enforce all material provisions of the Leases in accordance with their terms. Neither this Mortgage nor any action or inaction on the part of Mortgagee shall release any tenant under any Lease, any guarantor of any Lease or Mortgagor from any of their respective obligations under the Leases or constitute an assumption of any such obligation on the part of Mortgagee. No action or failure to act on the part of Mortgagor shall adversely affect or limit the rights of Mortgagee under this Mortgage or, through this Mortgage, under the Leases. (f) All rights, powers and privileges of Mortgagee herein set forth are coupled with an interest and are irrevocable, subject to the terms and conditions hereof, and Mortgagor shall not take any action under the Leases or otherwise which is inconsistent with this Mortgage or any of the terms hereof and any such action inconsistent herewith or therewith shall be void. Mortgagor shall, from time to time, upon request of Mortgagee, execute all instruments and further assurances and all supplemental instruments and take all such action as Mortgagee from time to time may request in order to perfect, preserve and protect the interests intended to be assigned to Mortgagee hereby. (g) Mortgagor shall not, unilaterally or by agreement, subordinate, amend, modify, extend, discharge, terminate, surrender, waive or otherwise change any term of any of the Leases in any manner which would violate this Mortgage. If the Leases shall be amended as permitted hereby, they shall continue to be subject to the provisions hereof without the necessity of any further act by any of the parties hereto. (h) Nothing contained herein shall operate or be construed to (I) obligate Mortgagee to perform any of the terms, covenants or conditions contained in the Leases or otherwise to impose any obligation upon Mortgagee with respect to the Leases (including, without limitation, any obligation arising out of any covenant of quiet enjoyment contained in the Leases in the event that any tenant under a Lease shall have been joined as a party defendant in any action by which the estate of such tenant shall be terminated) or (ii) place upon Mortgagee any responsibility for the operation, control, care, management or repair of any portion of the Mortgaged Property. (i) The assignment of Leases and Rents contained in this Section V is made pursuant to provisions of La. R.S. 9:4401 et sea. SECTION VI - EVENTS OF DEFAULT (a) Events of Default. As used in this Mortgage, "Event of Default" shall mean: (i) The occurrence of an Event of Default under the Indenture, or (ii) A breach or violation of the terms of this Mortgage, or (iii) If any representation or warranty made by the Mortgagor proves to have been incorrect in any material respect, or (iv) A writ or warrant of executory process, fieri facias, attachment or any similar process being issued by any court against the Mortgaged Property, and such writ or warrant is not released or bonded within ten (10) days after its entry. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, in addition to any other rights and remedies Mortgagee may have pursuant to this Mortgage or as provided by law, the Mortgagee may declare the entire principal amount of the Secured Obligations then outstanding including interest accrued thereon to be immediately due and payable without presentment, demand, protest, notice of protest or dishonor or other notice of default of any kind, all of which are hereby expressly waived by the Mortgagor, and without limitation, Mortgagee may take such action, without notice or demand, as it deems advisable and is permitted by law to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner and order as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee, except to the extent otherwise provided by law: (i) (A) Mortgagee shall have the right and option to proceed with foreclosure of the Mortgaged Property in such manner as permitted or required by applicable law relating to the sale of real estate and exercise all rights of a secured party under the UCC whether relating to the sale of collateral after default by a debtor, or otherwise,(as such applicable laws and UCC now exist or as may be hereafter amended)or by any other present or subsequent articles or enactments relating to the sale of real estate or collateral. (B) Mortgagor agrees to surrender possession of the hereinabove described Mortgaged Property to the purchaser at the aforesaid sale, immediately after such sale, in the event such possession has not previously been surrendered by Mortgagor. The right of sale hereunder shall not be exhausted by one or more such sales, and Mortgagee may cause to occur other and successive sales until all of the Mortgaged Property be legally sold or all of the Secured Obligations shall have been paid. (ii) (A) Upon the occurrence and during the continuance of any Event of Default, Mortgagee shall have the right and power to proceed by a suit or suits in equity or at law, whether for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder or for the sale of the Mortgaged Property under the judgment or decree of any court or courts of competent jurisdiction, or for the appointment of a receiver or keeper pending any foreclosure hereunder or the sale of the Mortgaged Property under the order of a court or courts of competent jurisdiction or under executory or other legal process, or for the enforcement of any other appropriate legal or equitable remedy. Any money advanced by Mortgagee in connection with any such receivership shall be a demand obligation (which obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to Mortgagee and shall bear interest from the date of making such advance by Mortgagee until paid at the Note Rate, all of which shall constitute a portion of the Secured Obligations and shall be secured by this Mortgage and by any other instrument securing the Secured Obligations. (B) Mortgagor agrees to the full extent that it lawfully may, that, in case one or more of the Events of Default shall have occurred and shall not have been remedied, then, and in every such case, Mortgagee shall have the right and power to enter into and upon and take possession of all or any part of the Mortgaged Property in the possession of Mortgagor, its successors or assigns, or its or their agents or servants, and may exclude Mortgagor, its successors or assigns, and all persons claiming under Mortgagor, and its or their agents or servants wholly or partly therefrom; and, holding the same, Mortgagee may use, administer, manage, operate and control the Mortgaged Property and conduct the business thereof to the same extent as Mortgagor, its successors or assigns, might at the time do and may exercise all rights and powers of Mortgagor, in the name, place and stead of Mortgagor, or otherwise as Mortgagee shall deem best. All costs, expenses and liabilities of every character incurred by Mortgagee in administering, managing, operating, and controlling the Mortgaged Property shall constitute a demand obligation (which obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to Mortgagee and shall bear interest from date of expenditure until paid at the Note Rate, all of which shall constitute a portion of the Secured Obligations and shall be secured by this Mortgage and by any other instrument securing the Secured Obligations. In connection with any action taken by Mortgagee pursuant to this subsection (ii), Mortgagee shall not be liable for any loss sustained by Mortgagor resulting from any act or omission of Mortgagee in administering, managing, operating or controlling the Mortgaged Property, including a loss arising from the ordinary negligence of Mortgagee, unless such loss is caused by its own gross negligence or willful misconduct and bad faith, nor shall Mortgagee be obligated to perform or discharge any obligation, duty or liability of Mortgagor. (C) Mortgagor shall and does herein agree to indemnify Mortgagee for, and to hold Mortgagee harmless from, any and all liability, loss or damage which may or might be incurred by Mortgagee by reason of this Mortgage or the exercise of rights or remedies hereunder, including a loss arising from the ordinary negligence of the Mortgagee, except as such liability, loss or damage is occasioned by the gross negligence or willful misconduct of such party; should Mortgagee make any expenditure on account of any such liability, loss or damage, the amount thereof, including costs, expenses and reasonable attorneys, fees, shall be a demand obligation (which obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to Mortgagee and shall bear interest from the date expended until paid at the Note Rate, shall be a part of the Secured Obligations and shall be secured by this Mortgage and any other instrument securing the Secured Obligations. (D) Mortgagor hereby assents to, ratifies and confirms any and all actions of Mortgagee with respect to the Mortgaged Property taken under this paragraph (ii). (iii) Every right, power and remedy herein given to Mortgagee shall be cumulative and in addition to every other right, power and remedy herein specifically given or now or hereafter existing in equity, at law or by statute; and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by Mortgagee, and the exercise, or the beginning of the exercise, of any such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter any other right, power or remedy. No delay or omission by Mortgagee in the exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing. (iv) To the extent permitted under applicable law, Mortgagee shall have the right (but shall not be obligated to) to become the purchaser at any sale held by any receiver or public officer, whether by judicial procedure or otherwise, and shall have the right (but shall not be obligated to) to have all or any part of the Secured Obligations then owing credited against the amount of the bid made by Mortgagee at such sale. (v) Upon any sale, whether or by virtue of judicial proceedings or otherwise, it shall not be necessary for any public officer acting under execution or order of court to have physically present or constructively in his or her possession any of the Mortgaged Property, and Mortgagor hereby agrees to deliver all of such personal property to the purchasers at such sale on the date of sale, and if it should be impossible or impracticable to make actual delivery of such property, then the title and right of possession to such property shall pass to the purchaser at such sale as completely as if such property had been actually present and delivered. (vi) Upon any sale, whether made or by virtue of judicial proceedings or otherwise, the receipt of the officer making a sale under judicial proceedings, shall be a sufficient discharge to the purchaser or purchasers at any sale for his or her or their purchase money, and such purchaser or purchasers, his or her or their assigns or personal representatives, shall not,-after paying such purchase money and receiving such receipt of such officer therefor, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or nonapplication thereof. (vii) (A) Any sale or sales of the Mortgaged Property or any part thereof, whether under and by virtue of judicial proceedings or otherwise, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Mortgagor of, in and to the Premises and the Mortgaged Property sold, and shall be a perpetual bar, both at law and in equity, against Mortgagor, its successors and assigns, and against any and all persons claiming or who shall thereafter claim all or any of the property sold from, through or under Mortgagor, its successors and assigns; and Mortgagor, if requested by Mortgagee to do so, shall join in the execution and delivery of all proper conveyances,, assignments and transfers of the properties so sold. (B) The proceeds of any sale of the Mortgaged Property or any part thereof and all other moneys received by Mortgagee in any proceedings for the enforcement hereof, whose application has not elsewhere herein been specifically provided for, shall be applied first, to the payment of all expenses incurred by Mortgagee incident to the enforcement of this Mortgage or any of the Secured Obligations (including, without limiting the generality of the foregoing, expenses of any entry or taking of possession, of any sale, of advertisement thereof, and of conveyances, and court costs, compensation of agents and employees and reasonable attorneys' fees), and to the payment of all other charges, expenses, liabilities and advances incurred or made by Mortgagee under this Mortgage; and then to the payment of the Secured Obligations in such order and manner as is determined by Mortgagee in its sole discretion. (C) Mortgagee may resort to any security given by this Mortgage or to any other security now existing or hereafter given to secure the payment of any of the Secured Obligations secured hereby, in whole or in part, and in such portions and in such order as may seem best to Mortgagee in its sole discretion and any such action shall not in anywise be-considered as a waiver of any of the rights, benefits or Liens created by this Mortgage. (D) Mortgagor agrees, to the full extent that it may lawfully so agree, that it will not at any time insist upon or plead or in any manner whatever claim or take the benefit or advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or the possession thereof by any purchaser at any sale made pursuant to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but Mortgagor, for itself and all who may claim through or under it, so far as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws. Mortgagor, for itself and all who may claim through or under it, waives any and all right to have the property included in the Mortgaged Property marshaled upon any foreclosure of the Lien hereof, and agrees that any court having jurisdiction to foreclose such Lien may sell the Mortgaged Property as an entirety. If any law referred to herein and now in force, of which Mortgagor or its successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the operation or application of the provisions hereof. (E) If the proceeds of any sale or other lawful disposition of the Mortgaged Property by Mortgagee are insufficient to pay the Secured Obligations, then Mortgagor shall pay or cause to be paid any deficiency. (viii) Without in any manner limiting the generality of any of the other provisions of this Mortgage; (A) some portions of the goods described or to which reference is made herein are or are to become fixtures on the Land described or to which reference is made herein; (B) the security interests created hereby under the UCC will, to the extent not covered by the mortgage created herein, attach to minerals including oil and gas; (C) this Mortgage may be filed as a financing statement; and (D) Mortgagor is the record owner of the real estate or interests in the real estate comprised of the Mortgaged Property. (ix) The Mortgaged Property may be sold in one or more parcels or as a whole and in such manner and order as Mortgagee, in its sole discretion, may determine. (x) For purposes of Louisiana executory process, Mortgagor acknowledges the Secured Obligations secured hereby, whether now existing or to arise hereafter, and confesses judgment thereon if not paid when due, including, but not limited to, principal, interest, late charges, attorneys' fees, court costs, and any and all other sums due from Mortgagor to Mortgagee. Upon the occurrence of an Event of Default hereunder and at any time thereafter so long as the same shall be continuing, and in addition to all other rights and remedies granted Mortgagee hereunder, it shall be lawful for and Mortgagor hereby authorizes Mortgagee without making a demand or putting Mortgagor in default, a putting in default being expressly waived, to cause all and singular the Mortgaged Property to be seized and sold, Mortgagor-waiving the benefit of any and all laws or parts of laws relative to appraisement of property, seized and sold under executory process or other legal process, and consenting that the Mortgaged Property be sold without appraisement, either in its entirety or in lots or parcels, as Mortgagee may determine, to the highest bidder for cash or on such other terms as the plaintiff in such proceedings may direct. In addition, Mortgagee shall have all of the rights and remedies available to it under this Mortgage, as a mortgagee under Louisiana law or as a secured party under the UCC, then in effect. (xi) Mortgagor hereby waives in favor of the Mortgagee: (A) the benefit of appraisement provided for in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and all other laws conferring the same; (B) the demand f or payment and three (3) days notice of demand for payment as provided in Articles 2639 and 2721 of the Louisiana Code of Civil Procedure; (C) the notice of seizure provided by Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; and (D) the three (3) days delay provided for in Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; (E) the benefit of the other provisions of Articles 2331, 2722 and 2723 of the Louisiana Code of Civil Procedure, not specifically mentioned above; and (F) any and all exemptions of seizure or otherwise to which Mortgagor is or may be entitled under the constitution and statutes of the State of Louisiana insofar as the Mortgaged Property is concerned. (xii) 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, the Mortgagor and the Mortgagee agree that the court 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, without bond. 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 5% of the gross revenues of the Mortgaged Property, which shall be included in the Secured 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. (xiii) Any and all declarations of facts 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. The Mortgagor specifically agrees that such an affidavit by a representative of the Mortgagee as to the existence, amount, terms and maturity of the Secured Obligations and of a default thereunder shall constitute authentic evidence of such facts for the purpose of executory process. Mortgagee's exercise of the foregoing remedies will not be construed to constitute Mortgagee as a mortgagee in possession of the Mortgaged Property nor to obligate Mortgagee to take any action or to incur expenses or perform or discharge any obligation, duty or liability of Mortgagor under any lease, or for the control, care, management, or repair of the Mortgaged Property; nor will it operate to make Mortgagee responsible or liable for any waste committed on the Mortgaged Property by any Person or for any dangerous or defective condition of the Mortgaged Property, or for any act or omission relating to the management, upkeep, repair, or control of the Mortgaged Property that results in loss or injury or death to any Person. SECTION VII - CERTAIN DEFINITIONS As used herein, the following terms shall have the following meanings: "Additional Undertaking" shall mean (a) cash or cash equivalents or (b) a Surety Bond, an Additional Undertaking Guarantee or an Additional Undertaking Letter of Credit which is provided by a Person whose long-term unsecured debt is rated at least "AA" (or equivalent) by a nationally recognized statistical rating agency and is otherwise satisfactory to Mortgagee. Additional Undertakings shall be addressed directly to Mortgagee and shall name Mortgagee as the beneficiary thereof and the party entitled to make claims thereunder. "Additional Undertaking Guarantee" shall mean the unconditional guarantee of payment of any corporation or partnership organized and existing under the laws of the United States of America or any State or the District of Columbia or Canada or province thereof that has a long-term unsecured debt rating satisfactory to Mortgagee at the time such guarantee is delivered, given to Mortgagee, accompanied by an opinion of counsel to such guarantor to the effect that such guarantee has been duly authorized, executed and delivered by such guarantor and constitutes the legal, valid and binding obligation of such guarantor enforceable against such guarantor by Mortgagee in accordance with its terms, subject to customary exceptions at the time for opinions for such instruments, together with an opinion of counsel to the effect that, taking into account the purpose under this Mortgage for which such guarantee will be given, such guarantee and accompanying opinion are responsive to the requirements of this Mortgage. "ADDITIONAL UNDERTAKING LETTER OF CREDIT" shall mean a clean, irrevocable, unconditional letter of credit in favor of Mortgagee and entitling Mortgagee to draw thereon in The City of New York issued by a bank satisfactory to Mortgagee, accompanied by an opinion of counsel to such bank to the effect that such letter of credit has been duly authorized, executed and delivered by such bank and constitutes the legal, valid and binding obligation of such bank enforceable against such bank by Mortgagee in accordance with its terms subject to customary exceptions at the time for opinions for such instruments, together with an opinion of counsel to the effect that, taking into account the purpose under - this Mortgage for which such letter of credit will be given, such letter of credit and accompanying opinion are responsive to the requirements of this Mortgage. "COLLATERAL ACCOUNT" shall have the meaning set forth in the Indenture. "ENVIRONMENTAL LAW" or "ENVIRONMENTAL LAWS" means any and all present and future statutes, rules, regulations, orders, administrative orders, judicial orders, judgments, judicial decisions, decrees, laws, rulings, permits, licenses, certificates, codes and ordinances from any and all federal, state, parish, district, municipal, city, local and other legislative bodies, courts, boards, agencies, administrative agencies, commissions, bodies, councils, offices and authorities of any nature whatsoever in any way relating to or applicable to (a) the protection of health, safety, and the indoor and outdoor environment, (b) the conservation, management, and use of natural resources and wildlife, (c) the protection and use of surface water and groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Materials (as defined herein), and (e) pollution (including any release to air, land, surface water, and groundwater), and includes, but is not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. 559601 et seq., the Solid Waste Disposal Act, as amended by the Resources Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sec.'s 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. Sec.'s 1251 et seq., the Clean Air Act, 42 U.S.C. 557401 et seq., the Toxic Substances Control Act, 15 U.S.C. 552601 et seq., the Coastal Zone Management Act of 1972, 16 U.S.C. Sec.'s 51451, et seq., the Endangered Species Act of 1973, 16 U.S.C. 551531, et seq., the Coastal Wetlands Planning, Protection and Restoration Act, 16 U.S.C. Sec.'s 3951, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. 551801 et seq., the Occupational Safety and Health Act of 1970, 29 U.S.C. Sec.'s 651 et seq., the Oil Pollution Act of 1990, 33 U.S.C. Sec.'s 52701 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sec.'s 11001 et seq., the National Environmental Policy Act of 1969, 42 U.S.C. 554321 et seq., the Noise Control Act of 1972, 42 U.S.C. Sec.'s 4901, et seq., the Safe Drinking Water Act,' 42 U.S.C. Sec.'s 5300(f) et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Sec.'s 136 et seq., any and all similar or related state laws and regulations, including, but not limited to, the Louisiana Environmental Quality Act, La. R.S. Sec.'s 30:2001 et seq., the State and Local Coastal Resources Management Act of 1978, La. R. S. Sec.'s 549:214.21 et seq., the Louisiana Coastal Wetlands Conservation and Restoration Act, La. R.S. Sec.'s 49:214.1 et seq., the Louisiana Abandoned Oilfield Waste Site Law, La. R.S. Sec.'s 30:71 et seq., the Louisiana Oilfield Site Restoration Law, La. R. S. Sec.'s 30:80 et seq., the Louisiana Hazardous Materials Transportation and Motor Carrier Safety Act, La. R.S. Sec.'s 532:1501 et seq., the Louisiana Pesticide Law, La. R.S. Sec.'s 3:3301 et seq., the Natural Resources and Energy Act of 1973 and the Louisiana Hazardous Liquid Pipeline Law, La. R.S. Sec.'s 30:501 et seq., the Surface Mining and Reclamation Act, La. R.S. Sec.'s 30:901 et seq., the Threatened and Endangered Species Conservation Law, La. R.S. 5556:1901 et seq., any and all similar, implementing or successor laws, and any and all amendments, rules, regulations orders and directives issued thereunder or relating thereto. "EXCEPTED-LIENS" shall mean those Liens listed on Exhibit A attached hereto. "GOVERNMENTAL AUTHORITY" shall include the country, the state, parish, city and political subdivisions in which any Person or such Person's Property is located or which exercises valid jurisdiction over any such Person or such Person's Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them including monetary authorities which exercises valid jurisdiction over any such Person or such Person's Property. Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, Mortgagor or Mortgagee or any other Secured Party. "GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement, including, without limitation, Environmental Laws, energy regulations and occupational safety and health standards or controls, of any Governmental Authority. "HAZARDOUS MATERIALS" means any and all hazardous or toxic chemicals, waste, by-products, pollutants, contaminants, compounds, products or substances, including, without limitation, medical waste, biological waste, asbestos (including asbestos containing materials or substances), polychlorinated byphonyls, petroleum (including crude oil or any fraction thereof, petroleum derivatives, and petroleum by-products), any and all materials of any and every kind, the exposure to, or manufacture, possession, presence, use, generation, storage, transportation, treatment, spill, release, disposal, abatement, clean-up, removal, remediation or handling of which, either by itself or in combination with other materials located or expected to be on or near the Mortgaged Property, (a) is prohibited, controlled or regulated by any Environmental Law, (b) poses a threat or nuisance to health, safety, welfare, the environment, or the Mortgaged property, (c) due to its characteristics or interaction with one or more other substances, wastes, chemicals, compounds or mixtures, damages or threatens to damage health, safety, or the environment or is required to be remediated by any law, including, but not limited to, Environmental Laws, (d) is hazardous, toxic, ignitable, radioactive, corrosive, or reactive and which is regulated by any law, including, but not limited to, Environmental Laws, (e) is regulated or monitored by any governmental authority, or (f) is a basis for potential liability of Mortgagor to any governmental authority or third party under any Environmental Law or any other applicable law, rule, judgment, order or regulation. Hazardous Materials shall include, but are not limited to, hydrocarbons, petroleum, gasoline, crude oil and any products or byproducts thereof. "HOLDER" or "NOTEHOLDER" shall mean the person in whose name the Notes, or any one of them is officially registered from time to time pursuant to the terms of the Indenture. "LIEN" shall mean any interest in the Mortgaged Property owed to, or a claim by a Person, whether such interest is based on law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "LIEN" shall also include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting the Mortgaged Property. "MATERIAL ADVERSE EFFECT" shall mean, as to any Person, asset or Property, a material adverse effect on the business, assets, properties, condition (financial or other), operations or results of operations of such Person, asset or Property, which effect is not adequately and effectively insured or indemnified against by a financially sound insurance company, and excepting effects arising solely out of general national economic conditions and/or effects arising solely out of matters affecting the industry in which such Person, asset or Property conducts business a whole. "NOTE RATE" shall mean the rate borne by the Notes, that is 11-1/2% per annum. "NOTEHOLDER" see "HOLDER" "PERSON" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government or any agency, instrumentality or political subdivision thereof, or any other form of entity. "PROPERTY" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "STATE" shall mean the state where the Land is located. "SURETY BOND" shall mean a clean irrevocable surety bond or credit insurance policy in favor of Mortgagee issued by an insurance company the claims paying ability rating of which at the time such surety bond or credit insurance policy is delivered is satisfactory to Mortgagee, accompanied by an opinion of counsel to such insurance company to the effect that such surety bond or credit insurance policy has been duly authorized, executed and delivered by such insurance company and constitutes the legal, valid and binding obligation of such insurance company enforceable against such insurance company by Mortgagee in accordance with its terms subject to customary exceptions at the time for opinions for such instruments, together with an opinion of counsel to the effect that, taking into account the purpose under this Mortgage for which such surety bond will be given, such surety bond and accompanying opinions are responsive to the requirements of this Mortgage. "Trust Money" shall mean those certain proceeds set forth in subsections IV(a)(i) and IV(a)(ii). SECTION VIII - MISCELLANEOUS (a) CHOICE OF LAW. The terms and provisions of this Mortgage and the enforcement hereof shall be governed by and construed in accordance with the laws of the State of Louisiana. (b) SEVERABILITY. If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction and the remaining provisions hereof shall-be liberally construed in favor of Mortgagee in order to effectuate the provisions hereof, and the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction. If any part of the Secured Obligations cannot be lawfully secured by this Mortgage or if any part of the Mortgaged Property cannot be lawfully subject to the Lien and security interest hereof to the full extent of such Secured Obligations, then all payments made shall be applied on said Secured Obligations first in discharge of that portion thereof which is not secured by this Mortgage. (c) CONSTRUCTION OF THIS INSTRUMENT. This instrument may be construed as a mortgage, assignment, security agreement, fixture filing, pledge, financing statement, hypothecation or contract, or any one or more of them, in order fully to effectuate the Lien hereof and the purposes and agreements herein set forth. (d) CAPTIONS; GENDER AND NUMBER. The captions and section headings of this Mortgage are for convenience only and are not to be used to define the provisions hereof. The term "Mortgagee" as used herein shall mean and include any successors to or assigns of First Trust National Association in its capacity as Indenture Trustee under the Indenture. The terms used to designate Mortgagee and Mortgagor shall be deemed to include the respective heirs, legal representatives, successors and assigns of such parties. All terms contained herein shall be construed, whenever the context of this Mortgage so requires, so that the singular includes the plural and so that the masculine includes the feminine. (e) RIGHTS OF MORTGAGEE. The Lien, security interest and other security rights of Mortgagee hereunder shall not be impaired by any indulgence, moratorium or release granted by Mortgagee, including, but not limited to, any renewal, extension or modification with respect to any Secured Obligation, or any surrender, compromise, release, renewal, extension, exchange or substitution which Mortgagee may grant in respect of the Mortgaged Property, or any part thereof or any interest therein, or any release or indulgence granted to any endorser, guarantor or surety of any Secured obligation. (f) WAIVER OF AN EVENT OF DEFAULT. Mortgagee may waive any Event of Default without waiving any other prior or subsequent Event of Default. Mortgagee may remedy any Event of Default without waiving the Event of Default remedied. No single or partial exercise by Mortgagee of any right, power or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power or remedy hereunder may be exercised at any time and from time to time. No modification or waiver of any provision hereof nor consent to any departure by Mortgagor therefrom shall in any event be effective unless the same shall be in writing and signed by Mortgagee and then such waiver or consent shall be effective only in the specific instances, for the purpose for which given and to the extent therein specified. No notice to nor demand on Mortgagor if any case shall of itself entitle Mortgagor to any other or further notice of demand in similar or other circumstances. Acceptance by Mortgagee of any payment in an amount less than the amount then due on any Secured Obligations shall be deemed an acceptance on account only and shall not in any way excuse the existence of an Event of Default hereunder. (g) SUCCESSOR MORTGAGOR. 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 with such successor or successors in interest with reference to this Mortgage and the Secured Obligations in the same manner as with Mortgagor, without in any way vitiating or discharging Mortgagor's liability hereunder or for the payment of the Secured Obligations or performance of the obligations secured hereby. No transfer of the Mortgaged Property, no forbearance on the part of Mortgagee and/or any other Secured Party, and no extension of the time for the payment of the Secured Obligations, in whole or in part, shall affect the liability of Mortgagor or any other person hereunder or for obligations secured hereby. (h) LEFT BLANK INTENTIONALLY (i) COVENANTS RUNNING WITH THE LAND. The covenants and agreements herein contained shall constitute covenants running with the land and interests covered or affected hereby and shall be binding upon the heirs, legal-representatives, successors and assigns of the parties hereto. (j) NOTICES. All notices requests, demands and other communications provided for or permitted hereunder shall be in writing (including telex and telecopy communications) and shall be sent by mail, telex, telecopier or hand delivery: If to Mortgagor, to the following address: C-M of Louisiana, Inc. 711 Casino Magic Drive Bay St. Louis, Mississippi 39520 Attention: Robert A. Callaway With a copy to: Daniel K. Rester, Esq. Hoffman Sutterfield Ensenat P. 0. Drawer 4407 2431 South Acadian Thruway, Suite 600 Baton Rouge, Louisiana 70821-4407 If to Mortgagee, to the following address: First Trust National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Scott Strodthoff With a copy to: Mark G. Rabogliatti, Esq. Oppenheimer Wolff & Donnelly Plaza VII 45 South Seventh Street, Suite 3400 Minneapolis, Minnesota 55402 All such notices, requests, demands and communications shall be deemed to have been duly given or made, when delivered by hand or five (5) business days after being deposited in the mail, postage paid, when telexed answer back received and when telecopied, receipt acknowledged. Any party hereto may change its address set forth in this subsection (1) by notice to the other parties given in accordance with the provisions of this subsection (1). (k) MORTGAGEE'S CONSENT. Except where otherwise expressly provided herein, in any instance hereunder where the approval, consent or the exercise of judgment of Mortgagee is required, the granting or denial of such approval or consent and the exercise of such judgment shall be within the sole discretion of Mortgagee, and Mortgagee shall not, for any reason or to any extent, be required to grant such approval or consent or exercise such judgment in any particular manner, regardless of the reasonableness of either the request or Mortgagee's judgment. (l) FORECLOSURE. In the event there is a foreclosure sale hereunder, and at the time of such sale Mortgagor or Mortgagor's successors or assigns or any other person claiming any interest in the Mortgaged Property by, through or under Mortgagor, are occupying or using the Mortgaged Property or any part thereof, each and all shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of either the landlord or tenant, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser; to the extent permitted by applicable law, the purchaser at such sale shall, notwithstanding any language herein apparently to the contrary, have the sole option to demand immediate possession following the sale or to permit the occupants to remain as tenants at will. In the event the tenant fails to surrender possession of said property upon demand, the purchaser shall be entitled to institute and maintain a summary action for possession of the Mortgaged Property in any court having jurisdiction. The purchaser or purchasers at foreclosure shall have the right to affirm or disaffirm any lease of the Mortgaged Property or any part thereof. (m) REIMBURSEMENT. Mortgagor shall reimburse Mortgagee, upon demand, for all fees, including reasonable attorneys' fees, costs and expenses incurred by Mortgagee in connection with the administration and enforcement of this Mortgage and/or the Secured Obligations. If any action or proceedings, including, without limitation, bankruptcy or insolvency proceedings, is commenced to which action or proceeding Mortgagee is made a party or in which it becomes necessary to defend or uphold the Lien or validity of this Mortgage, Mortgagor shall, upon demand, reimburse Mortgagee for all expenses (including, without limitation, attorneys, and agents' fees and disbursement) incurred by Mortgagee in such action or proceedings. In any action or proceeding to foreclose this Mortgage or to recover or collect the Secured Obligations, the provisions of law relating to the recovery of costs, disbursements and allowances shall prevail unaffected by this covenant. Mortgagor's obligations under this subsection VIII (M) shall survive the satisfaction of this Mortgage and the discharge of Mortgagor's other obligations hereunder. (n) WAIVER OF STAY. (i) Mortgagor agrees that in the event that Mortgagor or any property or assets of Mortgagor shall hereafter become subject of a voluntary or involuntary proceeding under the Bankruptcy Code or Mortgagor shall otherwise be a party to any federal or state bankruptcy, insolvency, moratorium or similar proceeding to which the provisions relating to the automatic stay under Section 362 of the Bankruptcy Code or any similar provision in any such law is applicable, then, in any such case, whether or not Mortgagee has commenced foreclosure proceedings under this Mortgage, Mortgagee shall be entitled to relief from any such automatic stay as it relates to the exercise of any of the rights and remedies (including, without limitation, any foreclosure proceedings) available to Mortgagee as provided in this Mortgage or in any other document evidencing or securing the Secured Obligations. (ii) Mortgagee shall have the right to petition or move any court having Jurisdiction over any proceeding described in subsection VIII(n)(i) for the purposes provided therein, and Mortgagor agrees (a) not to oppose any such petition or motion and (b) at Mortgagor's sole cost and expense, to assist and cooperate with Mortgagee, as may be requested by Mortgagee from time to time, in obtaining any relief requested by Mortgagee, including, without limitation, by filing any such petitions, supplemental petitions, requests for relief, documents, instruments or other items from time to time requested by Mortgagee or any such court. (o) Waiver of Jury Trial. To the extent permitted by law, Mortgagor hereby knowingly, voluntarily and intentionally waives any rights it may have to a trial by jury in the respect of any litigation based hereon, or directly or indirectly arising out of, under or in connection with, this Mortgage or any course of conduct, course of dealing, statements (whether verbal or written) or actions of Mortgagor or Mortgagee. (p) LEFT BLANK INTENTIONALLY (q) ACCEPTANCE. The acceptance of this Mortgage by Mortgagee is presumed, and therefore this Mortgage has not been executed and need not be executed by Mortgagee. (r) PROVISIONS OF THE INDENTURE. Notwithstanding anything to the contrary contained in this Mortgage, it is the understanding of the parties hereto that any actions by Mortgagee are subject to the provisions of the Indenture; provided that (i) the provisions of this Mortgage shall govern and control to the extent any provision of the Indenture would negate or adversely affect the enforceability, validity, perfection or priority of the Lien or security interest created by this Mortgage, and (ii) the provisions of Sections I, II, III and V hereof shall govern and control in the event of a conflict with the Indenture. (s) ENVIRONMENTAL INDEMNITY. The Mortgagor will defend, indemnify and hold Mortgagee and any other Secured Party and their directors, officers, agents and employees harmless from and against all claims, demands, causes of action, liabilities, losses, costs and expenses (including, without limitation, costs of suit, reasonable attorneys' fees and fees of expert witnesses) arising from or in connection with (i) the presence in, on or under or the removal from the Mortgaged Property of any hazardous substances or solid wastes (as defined elsewhere in this Mortgage), or any releases or discharges of any hazardous substances or solid wastes on, under or from such property, (ii) any activity carried on or undertaken on or off the Mortgaged Property, whether prior to or during the term of this Mortgage, and whether by Mortgagor or any predecessor in title or any officers, employees, agents, contractors or subcontractors of Mortgagor or any predecessor in title, or any third persons at any time occupying or present on the Mortgaged Property, in connection with the handling, use, generation, manufacture, treatment, removal, storage, decontamination, clean-up, transport or disposal of any hazardous substances or solid wastes at any time located or present on or under the Mortgaged Property, (iii) the Mortgagor exercising its rights, whether under subsections IV(s)(iii) or IV(t), or otherwise, including, but not limited to, the taking of any remediation, removal, response or corrective action relating to Hazardous Materials on the Mortgaged Property or the conducting of an environmental audit or review of the Mortgaged Property or taking steps reasonably necessary to comply with applicable law, regulations or orders, or (iii) any breach of any representation, warranty or covenant under the terms of this Mortgage. The foregoing indemnity shall further apply to any residual contamination on or under the Mortgaged Property, or affecting any natural resources, and to any contamination of the Mortgaged Property or natural resources arising in connection with the generation, use, handling, storage, transport or disposal of any such hazardous substances or solid wastes, and irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances. Without prejudice to the survival of any other agreements of the Mortgagor hereunder, the provisions of this Section shall survive the final payment and performance of the Secured Obligations and the termination of this Mortgage and shall continue thereafter in full force and effect. (t) CONTEMPLATED USE. The use of the phrases "contemplated use" and "contemplated to be conducted" herein refers to the plans of the Mortgagor to construct or have constructed and operate or have operated on the Mortgaged Property a berthing facility for vessels, a land based boarding facility, parking lot(s), restaurant(s), hotel and entertainment complex and ancillary activities related thereto. (u) CERTIFICATES. The production of mortgage, conveyance, tax research or other certificates is waived by consent, and the Mortgagor and the Mortgagee agree to hold me, Notary, harmless for failure to procure and attach same. THUS DONE AND PASSED, on the date first above written, in the presence of the undersigned competent witnesses, who hereunto sign their names with Mortgagor and me, Notary, after due reading of the whole. WITNESSES: C-M OF LOUISIANA, INC. MORTGAGOR BY: /s/ ROBERT A. CALLAWAY /s/ NAME: ROBERT A. CALLAWAY TITLE: SECRETARY /s/ /S/ BERNARD H. BERINS BERNARD H. BERINS, NOTARY PUBLIC EXHIBIT "A" EXCEPTED LIENS None UNANIMOUS WRITTEN CONSENT OF THE SOLE SHAREHOLDER OF C-M OF LOUISIANA, INC. The undersigned, the sole shareholder of C-M of Louisiana, Inc. having voting power on the matters set forth herein, hereby consents, pursuant to Section 76 of the Louisiana Business Corporation Law, to the following corporate action: WHEREAS, this corporation is a business corporation organized under the laws of the State of Louisiana, and under its Charter and said laws has full power and authority to assign, transfer, sell and deliver its own property; to borrow money and to secure payment of the same by mortgage or pledge of its own property, or otherwise, and all prerequisite steps and proceedings, acts and things preliminary to the adoption of these resolutions have been taken and done in due and proper form, time and matter. WHEREAS, on the 21st day of February, 1996 a Stock Purchase Agreement ("Stock Purchase Agreement") was entered into among Casino Magic Corp. ("Magic"), a Minnesota corporation, Jefferson Casino Corporation ("JCC"), a Louisiana Corporation, this corporation, Capital Gaming International, Inc. ("CGII"), a New Jersey corporation and Casino Magic of Louisiana, Corp., a Louisiana corporation ("Casino Magic Louisiana" and together with CGII, "Sellers"), with respect to the purchase by Magic, through JCC or another of its wholly owned subsidiaries to which the Stock Purchase Agreement is assigned in accordance with Paragraph 9 therein, of all of the newly issued capital stock of reorganized Casino Magic Louisiana, which owns the Crescent City Queen riverboat, the associated Louisiana riverboat gaming license issued by the Louisiana Department of Public Safety and Corrections, Riverboat Gaming Enforcement Division of the Office of State Police and certain related assets. WHEREAS, this corporation has agreed to enter, along with others, into that certain Indenture dated as of the 13th day of May, 1996 by and among Casino Magic Louisiana, as issuer, the Guarantors named therein, and First Trust National Association, as Trustee, in the amount of $35,000,000.00 ("Indenture"). WHEREAS, pursuant to Article XII of the Indenture, this corporation will guarantee (such guaranty by this corporation being hereinafter referred to as the "Guarantee") to the Noteholder(s) (as defined in the Indenture) and to First Trust National Association, inter alia, the Notes (as defined in the Indenture) or the obligations of Casino Magic Louisiana under the Indenture, the Notes, and the other Collateral Documents (as defined in the Indenture). WHEREAS, an affiliate of this corporation, JCC will also, pursuant to Article XII of the Indenture, guarantee the Notes or the obligations of Casino Magic Louisiana under the Indenture or the Notes. WHEREAS Casino Magic Louisiana as of the time of its execution of the Indenture will be an affiliate of this corporation. WHEREAS, the Noteholders are not willing to enter into the Indenture without the execution by this corporation of the Guarantee. WHEREAS, it is in the best interest of this corporation to assist Casino Magic Louisiana in obtaining the financial accommodation set forth in the Indenture because this corporation will receive an advantage and benefit arising out of the Indenture, including, but not limited to the utilization of the Real Property (as defined below). WHEREAS, this corporation is the owner of that certain real property more particularly described on Exhibit "A" attached hereto and made a part hereof (hereinafter referred to as the "Real Property"). WHEREAS, this corporation has agreed to secure the Guarantee by executing a Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances, which said mortgage is to bear against the Real Property and other property owned by or to be owned by this corporation. WHEREAS, this corporation has agreed to enter into that certain Pledge and Security Agreement dated as of the 13th day of May, 1996 by and among Casino Magic Louisiana, this corporation. JCC, and First Trust National Association ("Pledge"). RESOLVED that this corporation does hereby confirm and ratify any and all actions taken on its behalf by Ed Ernst, its President, in the Stock Purchase Agreement. RESOLVED that Robert A. Callaway, this corporation's Secretary, be and is hereby authorized and directed on behalf of this corporation to execute the Indenture, including the Guarantee, and the Pledge, which Indenture, Guarantee and Pledge to be in the form, substance and content as said officer may deem necessary or appropriate. FURTHER RESOLVED that as collateral and security for the Guarantee, this corporation mortgage, pledge, hypothecate, deliver or grant a security interest in any or all of the assets and properties of this corporation of any nature whatsoever, whether immovable or movable, corporeal or incorporeal, both now owned and hereafter acquired, together with all proceeds thereof, including, but not limited to the following described property, to-wit: 1. The Real Property; 2. All buildings, structures, facilities and other improvements now or hereafter located on the Real Property; 3. All equipment (as, defined in the Louisiana Commercial Laws LA. RS 10:1101 et seq. (the "UCC")) now owned or hereafter acquired by this corporation; 4. All of the leases, subleases, lettings and licenses and all other contracts, bonds and agreements affecting the Real Property, the improvements thereon and/or any other property or rights described herein and all of the rents deriving therefrom; 5. Any and all moneys, goods, accounts, chattel paper, general and tangibles, documents, instruments, contract rights and other real and personal property (including property exchanged therefor) of every kind and nature, which may from time to time be subjected to the lien granted by this corporation to secure the Guarantee whether through a supplement to the mortgage to be granted or otherwise; 6. All unearned premiums under insurance policies now or hereafter obtained by mortgagor and all proceeds for conversion, voluntary or involuntary of any of the property described herein. FURTHER RESOLVED that Robert A. Callaway, this corporation's Secretary, be and is hereby authorized and directed on behalf of this corporation to execute and deliver to First Trust National Association one (1) or more mortgages, whether a Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances, or otherwise, in conventional or collateral form, Security Agreements, Pledge Agreements, Assignments, Financing Statements, Agreements and Certificates, as may be now or hereafter required by First Trust National Association from time to time to secure all or any portion of the Guarantee, including without limitation supplemental or additional collateral documents encumbering assets and properties of this corporation in the future. All such Mortgages, Security Agreements, Pledge Agreements, Assignments, Financing Statements, Agreements and Certificates to contain such terms, covenants and conditions as may be approved by the said officer of this corporation, said officer's execution and delivery thereof on behalf of this corporation to be conclusive evidence of said officer's approval. FURTHER RESOLVED that the documents described in the above paragraphs may contain a confession of judgment, pact de non alienando, authorization of executory process, waiver of appraisal, consent to private sale and other remedial clauses as determined by First Trust National Association in its sole discretion. FURTHER RESOLVED that Robert A. Callaway, this corporation's Secretary, is hereby authorized to do such further acts and things and execute any and all documents and instruments, both original and amendatory, of every kind and character on behalf of this corporation as may be necessary or appropriate, in said officer's judgment, from time to time to carry out the terms of the Indenture, Guarantee, Pledge, mortgages, Security Agreements, Pledge Agreements, Assignments, Financing Statements, Agreements and Certificates and the purposes of these Resolutions. FURTHER RESOLVED that this corporation does hereby ratify and confirm any action which Robert A. Callaway, this corporation's Secretary, may take pursuant to these Resolutions. This Unanimous Written Consent of the Sole Shareholder is dated May 9, 1996. CASINO MAGIC CORP., SOLE SHAREHOLDER BY: /s/ ROBERT A. CALLAWAY NAME: ROBERT A. CALLAWAY TITLE: SECRETARY C E R T I F I C A T E I, the undersigned Secretary of C-M of Louisiana, Inc., certify that (1) the subscriber to the foregoing Unanimous Written Consent constitutes the sole shareholder of this Corporation having voting power on the matters set forth therein, (2) the same is the only action taken with respect to the matters referred to therein and that such resolutions were not thereafter altered, amended or repealed; and (3) the above and foregoing resolutions are good, valid and binding upon C-M of Louisiana, Inc. May 11, 1996 /s/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, Secretary C-M of Louisiana, Inc. EXHIBIT "A" 1. TRACT "A" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31,32 OR 33, Tl8N-Rl3W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 35, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 65-05'05" EAST ALONG THE SOUTH LINE OF SAID COOK SUBDIVISION A DISTANCE OF 384.69 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN SOUTH 12'56'40" WEST A DISTANCE OF 150.37 FEET TO A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE, THENCE RUN SOUTH 60'12'49" EAST A DISTANCE OF 168.20 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 26'06'32" WEST A DISTANCE OF 251.31 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN NORTH 70'42'00" WEST ALONG THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 575.91 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING AT THE INTERSECTION OF THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET WITH THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN NORTH 23'05'00" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 140.56 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN NORTH 24'48'39" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 328.51 FEET TO THE POINT OF BEGINNING. SAID TRACT CONTAINING 5.2319 ACRES. 2. TRACT "B" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, Tl8N-Rl3W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8, KAYWOOD SUBDIVISION, AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 28'05'04" WEST A DISTANCE OF 335.76 FEET TO A SET 1/2" DIAMETER IRON ROD BEING ON THE FORMER NORTHERLY HIGH BANK OF THE RED RIVER, THENCE RUN NORTHWESTERLY ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 614.30 FEET, NORTH 55'22'23" WEST TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN NORTH 24'48'49" EAST A DISTANCE OF 897.25 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE RUN SOUTH 65'02'25" EAST ALONG THE SOUTH LINE OF LOT 34, A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 24'47'37" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 329.85 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN SOUTH 22'34'14" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 194.43 FEET TO A FOUND 5/8" DIAMETER IRON ROD BEING AT THE INTERSECTION OF THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS WITH THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN SOUTH 70'42'00" EAST ALONG THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 5.17 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 19'1 8'00" WEST ALONG THE WEST LINE OF LOT 1, KAYWOOD SUBDIVISION, UNIT 2, AS RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, A DISTANCE OF 200.26 FEET TO A SET 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 1, THENCE RUN SOUTH 70'42'00" EAST ALONG THE SOUTH LINE OF KAYWOOD SUBDIVISION UNIT 2 AND KAYWOOD SUBDIVISION A DISTANCE OF 585.48 FEET TO THE POINT-OF-BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 4.914 ACRES. 3. TRACT "C" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, Tl8N-Rl3W, CADDO PARISH, LOUISIANA, AND BEING A PORTION OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11, OF THE CONVEYANCE RECORDS OF BOSSIER PARISH. SAID TRACT MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 34, RUN THENCE NORTH 29'35'39" EAST ALONG THE WEST LINE OF LOT 34 A DISTANCE OF 165.24 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20, THENCE RUN SOUTH 82'32'09" EAST ALONG THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20 A DISTANCE OF 58.03 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 29'33'17" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 190.07 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, THENCE RUN NORTH 65'02'25" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 55'34'42" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 44.49 FEET TO THE POINT OF BEGINNING, SAID TRACT CONTAINING 0.22 ACRES. 4. TRACT "D" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, Tl8N-Rl3W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHWEST CORNER OF LOT 114, RIVERSIDE SUBDIVISION AS RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, RUN THENCE SOUTH 70-23-37" EAST ALONG THE REAR LINE OF RIVERSIDE SUBDIVISION A DISTANCE OF 248.66 FEET TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN SOUTH 29'01'37" WEST AND PARALLEL WITH THE EASTERLY LINE OF LOT 110 OF RIVERSIDE SUBDIVISION A DISTANCE OF 1021.25 FEET TO A FOUND 1" DIAMETER IRON PIPE, BEING ON THE FORMER HIGH BANK OF THE RED RIVER, THENCE RUN NORTH 62'19'02" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 127.28 FEET TO A POINT, WHICH IS ON THE PROJECTION OF THE WESTERLY LINE OF LOT 112, RIVERSIDE SUBDIVISION, THENCE CONTINUE NORTH 64'07'56" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 101.11 FEET TO A SET 1/2" DIAMETER IRON ROD, LOCATED ON THE PROJECTION OF THE EASTERLY LINE OF LOT 8, KAYWOOD SUBDIVISION, THENCE RUN NORTH 28'05'04" EAST A DISTANCE OF 335.76 FEET TO A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8 KAYWOOD SUBDIVISION AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE CONTINUE NORTH 28'05'04" EAST ALONG THE EASTERLY LINE OF LOT 8 A DISTANCE OF 202.64 FEET TO A FOUND 2" DIAMETER IRON PIPE BEING THE NORTHEAST CORNER OF LOT 8, THENCE CONTINUE NORTH 28'05'04" EAST A DISTANCE OF 50.65 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 26'06'32" EAST A DISTANCE OF 251.31 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN NORTH 31'05'36" EAST A DISTANCE OF 149.25 FEET TO THE POINT OF BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 5.753 ACRES. 5. LOTS 1, 2 AND 4, KAYWOOD SUBDIVISION, UNIT NO. 2, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA AS PER PLAT RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA. 6. LOTS 6, 7 AND 8 KAYWOOD SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA. 7. LOTS 110, 111 AND 112, RIVERSIDE SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, LESS A STRIP OF LAND SEVEN (7') FEET IN WIDTH RUNNING BACK BETWEEN PARALLEL LINES ALONG THE ENTIRE EASTERLY SIDE OF LOT 110. EX-10.3 6 AMENDMENT OF MORTGAGE, * UNITED STATES OF AMERICA ASSIGNMENT OF LEASES * AND RENTS AND SECURITY * STATE OF LOUISIANA AGREEMENT SECURING * FUTURE ADVANCES * PARISH OF ORLEANS * BY * * JEFFERSON CASINO * CORPORATION and * * FIRST TRUST NATIONAL * ASSOCIATION, AS * INDENTURE TRUSTEE * BE IT KNOWN, that on this 13th day of May 1996, before me, the undersigned Notary Public duly commissioned and qualified, and in the presence of the witnesses hereinafter named and undersigned, personally came and appeared: JEFFERSON CASINO CORPORATION ("JCC") (Taxpayer I.D. No. 72-1310739), a Louisiana corporation, represented herein by Robert A. Callaway, its secretary, duly authorized to appear herein by the Unanimous Written Consent of the Sole Shareholder of Mortgagor, a multiple original of which is attached hereto and made a part hereof, which has a mailing address of 711 Casino Magic Drive, Bay St. Louis, Mississippi 39520, and FIRST TRUST NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE ("MORTGAGEE")(TAXPAYER I.D. No. 41-0257700), a national association having a place of business at 180 East Fifth Street, St. Paul, Minnesota 55101, Attn.: Scott Strodthoff, represented herein by Richard Prokosch, its Trust Officer, Corporate Finance, duly authorized, who declared that: 1. C-M of Louisiana, Inc. ("CMLI"), as mortgagor executed an Act of Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances dated May 11, 1996 and passed before Bernard H. Berins, Notary Public for the Parish of Orleans, State of Louisiana and which mortgage was recorded (a) in the mortgage records of Bossier Parish on May 13, 1996 at 11:27 a.m. as Instrument No. 614182 and (b) in the mortgage records of Caddo Parish on May 13, 1996 at 11:11 a.m. as Instrument No. 1515166 ("MORTGAGE"). 2. Subsequent to the execution and recordation of the Mortgage, but prior to the execution of this Act of Amendment of Mortgage, Assignment of Leases and Rents and Security Agreement Securing Future Advances ("AMENDMENT") CMLI was merged into JCC ("MERGER") all in accordance with the Certificate of the Secretary of State of the State of Louisiana, a copy of which is attached hereto as Exhibit "A". NOW, THEREFORE, JCC and Mortgagee hereby amend the Mortgage as follows: Recitals A and B of the Mortgage are amended so henceforth they shall read as follows: A. Pursuant to that certain Indenture date as of May 13, 1996 among Casino Magic of Louisiana, Corp. ("CASINO MAGIC LOUISIANA"), JCC, as Guarantor, and the Mortgagee (as amended, amended and restated, supplemented or otherwise modified from time to time, the "INDENTURE"), Casino Magic Louisiana issued its 11 1/2% Senior Secured Notes due 199 (as amended, amended and restated, supplemented or otherwise modified from time to time, and including all 11 1/2% Senior Secured Notes due 1999 issued in exchange or substitution therefor, the "NOTES") in the aggregate principal amount of $35 million. B. Pursuant to Article XII of the Indenture, JCC has guaranteed (such guarantee by Mortgagor being hereinafter referred to as the "GUARANTEE"), to the Noteholder(s) and to the Mortgagee, inter alia, the Notes and the obligations of Casino Magic Louisiana under the Indenture and the Notes. Except as set forth above, all of the remaining terms, provisions and conditions of the Mortgage shall remain in full force and effect. This Amendment shall be deemed to be an amendment of the Mortgage and shall not constitute a novation of the Mortgage, or the indebtedness secured thereby. JCC as the surviving entity under the Merger, herewith ratifies and confirms the Mortgage, as amended herein THUS DONE AND PASSED, on the date first above written, in the presence of the undersigned competent witnesses, who hereunto sign their names with Mortgagor and me, Notary, after due reading of the whole. WITNESSES: JEFFERSON CASINO CORPORATION /s/------------------- BY: /s/ ROBERT A. CALLAWAY Name: ROBERT A. CALLAWAY Title: SECRETARY /s/------------------- FIRST TRUST NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE BY: /s/ RICHARD PROKOSCH Name: RICHARD PROKOSCH TITLE: TRUST OFFICER /s/ BERNARD H. BERINS, NOTARY PUBLIC BENARD H. BERINS UNANIMOUS WRITTEN CONSENT OF THE SOLE SHAREHOLDER OF JEFFERSON CASINO CORPORATION The undersigned, the sole shareholder of Jefferson Casino Corporation having voting power on the matters set forth herein, hereby consents, pursuant to Section 76 of the Louisiana Business Corporation Law, to the following corporate action: WHEREAS, this corporation is a business corporation organized under the laws of the State of Louisiana, and under its Charter and said laws has full power and authority to assign, transfer, sell and deliver its own property; to borrow money and to secure payment of the same by mortgage or pledge of its own property, or otherwise, and all prerequisite steps and proceedings, acts and things preliminary to the adoption of these resolutions have been taken and done in due and proper form, time and matter. WHEREAS, on the 21st day of February, 1996 a Stock Purchase Agreement ("Stock Purchase Agreement") was entered into among Casino Magic Corp. ("Magic"), a Minnesota corporation, C-M of Louisiana, Inc. ("CMLI"), a Louisiana Corporation, this corporation, Capital Gaming International, Inc. ("CGII"), a New Jersey corporation and Casino Magic of Louisiana, Corp., a Louisiana corporation ("Casino Magic Louisiana" and together with CGII, "Sellers"), with respect to the purchase by Magic, through this corporation or another of Magic's wholly owned subsidiaries to which the Stock Purchase Agreement is assigned in accordance with Paragraph 9 therein, of all of the newly issued capital stock of reorganized Casino Magic Louisiana, which owns the Crescent City Queen riverboat, the associated Louisiana riverboat gaming license issued by the Louisiana Department of Public Safety and Corrections, Riverboat Gaming Enforcement Division of the Office of State Police and certain related assets. WHEREAS, this corporation has agreed to enter, along with others, into that certain Indenture dated as of the 13th day of May, 1996 by and among Casino Magic Louisiana, as issuer, the Guarantors named therein, and First Trust National Association, as Trustee, in the amount of $35,000,000.00 ("Indenture"). WHEREAS, pursuant to Article XII of the Indenture, this corporation will guarantee (such guaranty by this corporation being hereinafter referred to as the "Guarantee") to the Noteholder(s) (as defined in the Indenture) and to First Trust National Association, inter alia. the Notes (as defined in the Indenture) or the obligations of Casino Magic Louisiana under the Indenture, the Notes, and the other Collateral Documents (as defined in the Indenture). WHEREAS, Casino Magic Louisiana as of the time of its execution of the Indenture will be an affiliate of this corporation. WHEREAS, the Noteholders are not willing to enter into the Indenture without the execution by this corporation of the Guarantee. WHEREAS, it is in the best interest of this corporation to assist Casino Magic Louisiana in obtaining the financial accommodation set forth in the Indenture because this corporation will receive an advantage and benefit arising out of the Indenture, including, but not limited to the utilization of that certain real property more particularly described on Exhibit "A" attached hereto and made a part hereof (hereinafter referred to as the "Real Property"). WHEREAS, CMLI had agreed to secure its proposed guarantee, inter alia, of the Notes or the obligations of Casino Magic Louisiana under the Indenture, the Notes, and the other Collateral Documents by executing on May 11, 1996 a Mortgage, Assignment of - Leases and Rents and Security Agreement Securing Future Advances ("Mortgage"), in which Mortgage as collateral and security for the proposed guarantee, CMLI mortgaged, pledged, hypothecated, delivered or granted a security interest in any or all of the assets and properties of CMLI of any nature whatsoever, whether immovable or movable, corporeal or incorporeal, whether then owned or thereafter to be acquired, together with all proceeds thereof, including, but not limited to the following described property, to-wit: 1. The Real Property 2. All buildings, structures, facilities and other improvements now or hereafter located on the Real Property; 3. All equipment (as defined in the Louisiana Commercial Laws LA. RS 10:1- 101 et seq. (the "UCC")) now owned or hereafter acquired by CMLI; 4. All of the leases, subleases, lettings and licenses and all other contracts, bonds and agreements affecting the Real Property, the improvements thereon and/or any other property or rights described herein and all of the rents deriving therefrom; 5. Any and all monies, goods, accounts, chattel paper, general and tangibles, documents, instruments, contract rights and other real and personal property (including property exchanged therefor) of every kind and nature, which may from time to time be subjected to the lien granted by CMLI to secure the guarantee whether through a supplement to the mortgage to be granted or otherwise; 6. All unearned premiums under insurance policies now or hereafter obtained by mortgagor and all proceeds for conversion, voluntary or involuntary of any of the property described herein, all as is more fully described in the Mortgage. WHEREAS, the Mortgage was recorded (a) in the mortgage records of Bossier Parish on May 13, 1996 at 11:27 a.m. as Instrument No. 614182 and (b) in the mortgage records of Caddo Parish on May 13, 1996 at 11:11 a.m. as Instrument No. 1515166. WHEREAS, on May 13, 1996, following the execution of the Mortgage, CMLI was merged into this corporation ("Merger"). WHEREAS, the Noteholders require this corporation to execute an Amendment of the Mortgage ("Amendment") to reflect, the changes in the parties executing the Indenture as a result of the Merger. WHEREAS, this corporation has agreed to enter into that certain Pledge and Security Agreement dated as of the 13th day of May, 1996 by and among Casino Magic Louisiana, this corporation and First Trust National Association ("Pledge"). RESOLVED that this corporation does hereby confirm and ratify any and all actions taken on its behalf by Ed Ernst, its President, in the Stock Purchase Agreement. RESOLVED that Robert A. Callaway, this corporation's Secretary, be and is hereby authorized and directed on behalf of this corporation to execute the Indenture, including the Guarantee, and the Pledge, which Indenture, Guarantee and Pledge to be in the form, substance and content as said officer may deem necessary or appropriate. RESOLVED that Robert A. Callaway, this corporation's Secretary, be and is hereby authorized and directed on behalf of this corporation to execute the Amendment, with the Amendment including without limitation, a ratification and confirmation by this corporation of the Mortgage, and which Amendment to be in the form, substance and content as said officer may deem necessary or appropriate. FURTHER RESOLVED that the documents described in the above paragraphs may contain a confession of judgment, pact de non alienando, authorization of executory process, waiver of appraisal, consent to private sale and other remedial clauses as determined by First Trust National Association in its sole discretion. FURTHER RESOLVED that Robert A. Callaway, this corporation's Secretary, is hereby authorized to do such further acts and things and execute any and all documents and instruments, both original and amendatory, of every kind and character on behalf of this corporation as may be necessary or appropriate, in said officer's judgment, from time ,o time to carry out the terms of the Indenture, Guarantee, Pledge, Amendment and the purposes of these Resolutions. FURTHER RESOLVED that this corporation does hereby ratify and confirm any action which Robert A. Callaway, this corporation's Secretary, may take pursuant to these Resolutions. This Unanimous Written Consent of the Sole Shareholder is dated May 13, 1996. CASINO MAGIC CORP., SOLE SHAREHOLDER BY:/S/ ROBERT A. CALLAWAY NAME: ROBERT A. CALLAWAY TITLE: SECRETARY C E R T I F I C A T E I, the undersigned Secretary of Jefferson Casino Corporation, certify that (1) the subscriber to the foregoing Unanimous Written Consent constitutes the sole shareholder of this Corporation having voting power on the matters set forth therein, (2) the same is the only action taken with respect to the matters referred to therein and that such resolutions were not thereafter altered, amended or repealed; and (3) the above and foregoing resolutions are good, valid and binding upon Jefferson Casino Corporation. May 13, 1996 /S/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, SECRETARY Jefferson Casino Corporation EXHIBIT "A" 1. TRACT "A" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W. BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS. BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 35, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 65'05'05" EAST ALONG THE SOUTH LINE OF SAID COOK SUBDIVISION A DISTANCE OF 384.69 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN SOUTH 12'56'40" WEST A DISTANCE OF 150.37 FEET TO A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE, THENCE RUN SOUTH 60'12'49" EAST A DISTANCE OF 168.20 FEET TO A FOUND 5/8" DIAMETER IRON ROD. THENCE RUN SOUTH 26'06'32" WEST A DISTANCE OF 251.31 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN NORTH 70'42'00" WEST ALONG THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 575.91 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING AT THE INTERSECTION OF THE NORTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET WITH THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN NORTH 23'05'00" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 140.56 FEET TO A FOUND 1/2" DIAMETER IRON PIPE, THENCE RUN NORTH 24'48'39" EAST ALONG THE EASTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 328.51 FEET TO THE POINT OF BEGINNING. SAID TRACT CONTAINING 5.2319 ACRES. 2. TRACT "B" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8, KAYWOOD SUBDIVISION, AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, RUN THENCE SOUTH 28'05'04" WEST A DISTANCE OF 335.76 FEET TO A SET 1/2" DIAMETER IRON ROD BEING ON THE FORMER NORTHERLY HIGH BANK OF THE RED RIVER. THENCE RUN NORTHWESTERLY ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 614.30 FEET, NORTH 55'22'23" WEST TO A FOUND 1" DIAMETER IRON PIPE, THENCE RUN NORTH 24'48'49" EAST A DISTANCE OF 897.25 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, COOK SUBDIVISION. AS RECORDED IN BOOK 141, PAGE 11 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE RUN SOUTH 65'02'25" EAST ALONG THE SOUTH LINE OF LOT 34, A DISTANCE OF 9.58 FEET T0 A FOUND 1/2" DIAMETER IRON ROD BEING ON THE WESTERLY RIGHT- OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 24'47'37" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 329.85 FEET TO A FOUND 1/2" DIAMETER IRON PIPE. THENCE RUN SOUTH 22'34'14" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 194.43 FEET TO A FOUND 5/8" DIAMETER IRON ROD BEING AT THE INTERSECTION OF THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS WITH THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET, THENCE RUN SOUTH 70'42'00" EAST ALONG THE SOUTHERLY RIGHT-OF-WAY LINE OF WOODLAWN STREET A DISTANCE OF 5.17 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN SOUTH 19'18'00" WEST ALONG THE WEST LINE OF LOT 1, KAYWOOD SUBDIVISION, UNIT 2. AS RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, A DISTANCE OF 200.26 FEET TO A SET 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 1, THENCE RUN SOUTH 70'42'00" EAST ALONG THE SOUTH LINE OF KAYWOOD SUBDIVISION UNIT 2 AND KAYWOOD SUBDIVISION A DISTANCE OF 585.48 FEET TO THE POINT-OF- BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT. SAID TOTAL TRACT CONTAINING 4.914 ACRES. 3. TRACT "C" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA, AND BEING A PORTION OF LOT 34, COOK SUBDIVISION, AS RECORDED IN BOOK 141, PAGE 11, OF THE CONVEYANCE RECORDS OF BOSSIER PARISH. SAID TRACT MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER IRON ROD BEING THE SOUTHWEST CORNER OF LOT 34, RUN THENCE NORTH 29'35'39" EAST ALONG THE WEST LINE OF LOT 34 A DISTANCE OF 165.24 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20. THENCE RUN SOUTH 82'32'09" EAST ALONG THE SOUTH RIGHT-OF-WAY LINE OF INTERSTATE 20 A DISTANCE OF 58.03 FEET TO A FOUND 1/2" DIAMETER IRON PIPE BEING ON THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS, THENCE RUN SOUTH 29'33'17" WEST ALONG THE WESTERLY RIGHT-OF-WAY LINE OF KAYWOOD COURTS A DISTANCE OF 190.07 FEET TO A FOUND 1/2" DIAMETER IRON ROD BEING ON THE SOUTH LINE OF LOT 34, THENCE RUN NORTH 65'02'25" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 9.58 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 55'34'42" WEST ALONG THE SOUTH LINE OF LOT 34 A DISTANCE OF 44.49 FEET TO THE POINT OF BEGINNING, SAID TRACT CONTAINING 0.22 ACRES. 4 TRACT "D" A TRACT OF LAND LOCATED IN SECTION 32, T18N-R13W, BOSSIER CITY, BOSSIER PARISH, AND/OR SECTIONS 31, 32 OR 33, T18N-R13W, CADDO PARISH, LOUISIANA. SAID TRACT BEING MORE FULLY DESCRIBED AS FOLLOWS: BEGINNING AT A FOUND 1/2" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHWEST CORNER OF LOT 114. RIVERSIDE SUBDIVISION AS RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, RUN THENCE SOUTH 70'23'37" EAST ALONG THE REAR LINE OF RIVERSIDE SUBDIVISION A DISTANCE OF 248.66 FEET TO A FOUND 1" DIAMETER IRON PIPE. THENCE RUN SOUTH 29'01'37" WEST AND PARALLEL WITH THE EASTERLY LINE OF LOT 110 OF RIVERSIDE SUBDIVISION A DISTANCE OF 1021.25 FEET TO A FOUND 1" DIAMETER IRON PIPE, BEING ON THE FORMER HIGH BANK OF THE RED RIVER. THENCE RUN NORTH 62'19'02" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 127.28 FEET TO A POINT. WHICH IS ON THE PROJECTION OF THE WESTERLY LINE OF LOT 112, RIVERSIDE SUBDIVISION, THENCE CONTINUE NORTH 64'07'56" WEST ALONG THE FORMER HIGH BANK OF THE RED RIVER A DISTANCE OF 101.11 FEET TO A SET 1/2" DIAMETER IRON ROD, LOCATED ON THE PROJECTION OF THE EASTERLY LINE OF LOT 8, KAYWOOD SUBDIVISION, THENCE RUN NORTH 28'05'04" EAST A DISTANCE OF 335.76 FEET TO A FOUND 3/4" DIAMETER CRIMP TOP IRON PIPE BEING THE SOUTHEAST CORNER OF LOT 8 KAYWOOD SUBDIVISION AS RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, THENCE CONTINUE NORTH 28'05'04" EAST ALONG THE EASTERLY LINE OF LOT 8 A DISTANCE OF 202.64 FEET TO A FOUND 2" DIAMETER IRON PIPE BEING THE NORTHEAST CORNER OF LOT 8, THENCE CONTINUE NORTH 28'05'04" EAST A DISTANCE OF 50.65 FEET TO A FOUND 1/2" DIAMETER IRON ROD, THENCE RUN NORTH 26'06'32" EAST A DISTANCE OF 251.31 FEET TO A FOUND 5/8" DIAMETER IRON ROD, THENCE RUN NORTH 31'05'36" EAST A DISTANCE OF 149.25 FEET TO THE POINT OF BEGINNING, AND ALL THAT LAND LYING BETWEEN THE SOUTHERLY MOST LINE OF SAID DESCRIBED TRACT AND THE EXISTING HIGH BANK OF THE RED RIVER, AND LYING BETWEEN THE PROJECTED LINES OF THE EASTERLY AND WESTERLY BOUNDARIES OF SAID DESCRIBED TRACT, SAID TOTAL TRACT CONTAINING 5.753 ACRES. 5. LOTS 1, 2 AND 4, KAYWOOD SUBDIVISION, UNIT NO. 2. A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA AS PER PLAT RECORDED IN BOOK 450, PAGE 113 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA. 6. LOTS 6, 7 AND 8 KAYWOOD SUBDIVISION, A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 339, PAGE 229 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA. 7. LOTS 110, 111 AND 112, RIVERSIDE SUBDIVISION. A SUBDIVISION OF BOSSIER PARISH, AND/OR CADDO PARISH, LOUISIANA, AS PER PLAT RECORDED IN BOOK 60, PAGE 157 OF THE CONVEYANCE RECORDS OF BOSSIER PARISH, LOUISIANA, LESS A STRIP OF LAND SEVEN (7') FEET IN WIDTH RUNNING BACK BETWEEN PARALLEL LINES ALONG THE ENTIRE EASTERLY SIDE OF LOT 110. EXHIBIT A UNITED STATES OF AMERICA STATE OF LOUISIANA DUPLICATE FOX MCKEITHEN SECRETARY OF STATE The Secretary of State of the State of Louisiana, I do hereby Certify that a Joint Merger Agreement whereby C-M OF LOUISIANA, INC., domiciled at Shreveport, Louisiana, is merged into JEFFERSON CASINO CORPORATION Domiciled at Baton Rouge, Louisiana, Certified by the Secretary of each corporation as having been approved by the shareholders, and signed and acknowledged by the Vice-President of each corporation on May 13, 1996, Was recorded in this Office on May 13, 1996, the date merger became effective, and filed in Record of Charters Book 345, By virtue of this agreement, I further certify that C-M OF LOUISIANA, INC., domiciled at Shreveport, Louisiana, is no longer qualified to transact business in this State. In testimony whereof, I have hereunto set my hand and caused the Seal of my Office to be affixed at the City of Baton Rouge on. May 13, 1996 /s/ FOX MCKEITHEN (STATE SEAL) DOB Secretary of State UNITED STATES OF AMERICA STATE OF LOUISIANA FOX MCKEITHEN SECRETARY OF STATE As Secretary of State of the State of Louisiana. I do hereby Certify that the annual transcript was prepared by and in this office from the record on file of which to be a copy and that is filed true and correct. In testimony whereof, I have hereunto set my hand and caused the Seal of my Office to be affixed at the City of Baton Rouge on May 13, 1996 /s/ FOX MCKEITHEN (STATE SEAL) Secretary of State JOINT MERGER AGREEMENT STATE OF LOUISIANA PARISH OF ORLEANS This Joint Merger Agreement dated as of the 13th day of May, 1996, is entered into pursuant to the provisions of Section 112 of the Louisiana Business Corporation Law, by and between a majority of the directors of JEFFERSON CASINO CORPORATION (hereinafter referred to as "Surviving Corporation") and a majority of the directors of C-M OF LOUISIANA, INC. (hereinafter referred to as the "Assimilated Corporation"). WITNESSETH: WHEREAS, the parties hereto desire that the Assimilated Corporation be merged with and into the Surviving Corporation pursuant to this Joint Merger Agreement (the "Agreement") providing for such merger (the "Merger"), on the date and at the time provided for herein (the "Effective Date"); and WHEREAS, the Agreement provides for the issuance of shares of the surviving Corporation stock ("Stock") upon the merger being effective; and WHEREAS, the parties hereto desire to set forth certain representations, warranties, and covenants made by each to the other as an inducement to the execution and delivery of this Agreement and certain additional agreements related to the Merger, NOW THEREFORE, in consideration of the premises and of the mutual representations, warranties, and covenants herein contained, the parties hereby agree as follows: ARTICLE I CONDITIONS PRECEDENT 1.01 This agreement is effective only if approved by the shareholders of both the Surviving Corporation and the Assimilated Corporation. If the shareholders for each corporation approve this Agreement by the vote required by Section 112C of the Louisiana Business Corporation Law, the fact of such approval shall be certified hereon by the secretary or assistant secretary of each corporation, and this Agreement so approved and certified shall be signed and acknowledged by the president or vice president of each corporation. 1.02 This Agreement, when and if so approved, certified, signed and acknowledged, shall be delivered to the Secretary of State of Louisiana for filing and recording, and a copy of the Certificate of Merger issued by the Secretary of State, certified by him, shall be filed for record in the Office of the Recorder of Mortgages in each Parish in this State in which either corporation has its registered office, and shall also be recorded in the Conveyance Records of each Parish in this State in which either corporation has immovable property, title to which will be transferred as a result of the merger. 1.03 As provided in Section 114 of the Louisiana Business Corporation Law, the merger shall be effective as of the date (the "Effective Date) when this Agreement is filed with the Secretary of State, as aforesaid. 1.04 On the Effective Date the Surviving Corporation shall issue and deliver to the shareholders of the Assimilated Corporation the number of shares set out opposite the name of such shareholders in accordance with this Agreement. ARTICLE 2 THE ASSIMILATED CORPORATION'S REPRESENTATIONS AND WARRANTIES The Assimilated Corporation represents and warrants to the surviving corporation as of the date hereof and on the Effective Date as follows: 2.01 GOOD STANDING. The Assimilated Corporation is a corporation duly organized and validly existing in good standing under the laws of the State of Louisiana, and it is duly authorized, qualified and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in the places and in the manner as now conducted. The character and location of the assets now owned or regularly leased by the Assimilated Corporation (as hereinafter defined) in the conduct of and the nature of the business as now owned by it do not require qualification as a foreign corporation in any jurisdiction which they are not so registered. 2.02 STOCKHOLDERS AND STOCK. The authorized capital stock of the Assimilated Corporation consists solely of 100 shares of Common Stock, $0.00 par value, of which shares are issued and outstanding. Each share of said Stock is duly and validly authorized and issued, fully paid, and nonassessable. No option, warrant, call, or commitment of any kind obligating the Assimilated Corporation to issue any of its capital stock exists. 2.03 FINANCIAL STATEMENTS. The Assimilated Corporation has delivered to the Surviving Corporation copies of all relevant financial statements of the Assimilated Corporation: Except as and only to the extent expressly disclosed by the Assimilated Corporation and identified as being delivered pursuant to this Section 2.03(a), such financial statements have been prepared in accordance with generally accepted accounting principles, applied on a consistent basis throughout the periods indicated. 2.04 LIABILITIES. The Assimilated Corporation has delivered to the Surviving Corporation an accurate list as of the 13th day of May, 1996 of all liabilities of the Assimilated Corporation. 2.05 ACCOUNT RECEIVABLES. The Assimilated Corporation has delivered to the Surviving Corporation an accurate list as of the 13th day of May, 1996 of the accounts and notes receivable of the Assimilated Corporation except to the extent of the reserve for bad debts reflected thereon, to the best knowledge of the Assimilated Corporation, such accounts and notes are collectible in the amounts shown on said list. 2.06 FIXED ASSETS. The Assimilated Corporation has delivered to the Surviving Corporation an accurate list and a substantially complete description as of the 13th day of May, 1996 of all the fixed assets of the Assimilated Corporation including true and correct copies of leases on properties on which are situated buildings, warehouses, workshops, and other structures used in the operation of the business of the Assimilated Corporation. Substantially all of the machinery, and equipment of the Assimilated Corporation are in reasonably good working order and condition to the knowledge and belief of the Assimilated Corporation. Such leases are in full force and effect and constitute valid and binding agreements of the parties thereto in accordance with their respective terms. Except as indicated on the fist contemplated by Section 2.06, the Assimilated Corporation has neither acquired nor sold nor otherwise disposed of any fixed assets, except in the ordinary course of business. All fixed assets used either by the Assimilated Corporation in the operation of its business are either owned by the Assimilated Corporation or leased under an agreement reflected on the schedule hereto. 2.07 Title. To the knowledge and belief of the Assimilated Corporation, the Corporation has good and marketable title to all properties, assets and leasehold estates, real and personal owned and used in its business, and which is material to the operation of that business (except as since sold or otherwise disposed of in the ordinary course of business), subject to no mortgage, pledge, lien conditional sales agreement, encumbrance, or charge, except for: a. Liens securing specified liabilities (with respect to which no default exists); and b. Liens for current taxes and assessments not in default; and C. Liens arising by operation of law of which, except to the extent disclosed, the Assimilated Corporation has no knowledge of any such liens existing. 2.08 Between the date of this Agreement and the Closing Date: a. The Assimilated Corporation will afford to the officers and authorized representatives of the Surviving Corporation access to the properties, books, and records of the Assimilated Corporation and will furnish the Surviving Corporation with such additional financial and operating data and other information as to the business and properties of the Assimilated Corporation as the Surviving Corporation may from time to time reasonably request. b. The Assimilated Corporation will: 1. Carry on their business in substantially the same manner as they have heretofore, and not introduce any material new method of management, operation, or accounting. 2. Maintain their properties and facilities in as good working order and condition as at present, ordinary wear and tear excepted; 3. Perform all their material obligations under agreements relating to or affecting its assets, properties, and rights; 4. Keep in full force and effect present insurance polices or other comparable insurance coverage; and 5. Use their best efforts to maintain and preserve their business organization intact, retain their present employees and maintain their relationships with suppliers, customers, and others having business relations with them. C. The Assimilated Corporation will not, without the prior written consent of the Surviving Corporation: 1. Make any change in their Articles of Incorporation; 2. Issue any securities; 3. Declare or pay any divided or make any distribution in respect of their stock whether now or hereafter outstanding, or purchase, redeem, or otherwise acquire or retire for value any shares of their stock, 4. Enter into any contract or commitment or incur or agree to incur any liability or make any capital expenditures except in the normal course of business; 5. Increase the compensation payment or become payable to any officer, employee or agent, or make any bonus payment to any such person; 6. Create, assume, or permit any mortgage pledge, or other hen or encumbrance upon any assets or properties whether now owned or hereafter acquired; 7. Sell, assign, lease or otherwise transfer or dispose of any property or equipment except in the normal course of business; or 8. Merge or consolidate or agree to merge or consolidate with or into any other corporation. ARTICLE 3 CONDITIONS TO THE OBLIGATIONS OF THE ASSIMILATED CORPORATION 3.01 CONDITIONS. The obligations of the Assimilated Corporation hereunder are at its option, subject to the satisfaction on or prior to the Effective Date of the following conditions: a. True Representations. The representations and warranties of the Surviving Corporation contained in the Agreement shall be true on and as of the Effective Date with the same effect as though such representations and warranties had been made on and as of such date; any and all of the agreements of the Surviving Corporation to be performed on or before the Closing Date pursuant to the terms hereof shall have been performed; and the Surviving Corporation shall have delivered to the Assimilated Corporation a certificate dated the Closing Date and signed by it to all such effects. b. Surviving Corporation's Condition. No material adverse change in the results of operations, financial condition, or business of the Surviving Corporation shall have occurred, and the Surviving Corporation shall not have suffered any material loss or damage to any of its properties or assets, whether or not covered by insurance, since April 1, 1996, which change, loss or damage materially affects or impairs the ability of the Surviving Corporation to conduct its business and the Assimilated Corporation shall have received a certificate signed by the Surviving Corporation. c. Continued Representations: The representations and warranties of the Surviving Corporation contained in this Agreement shall be accurate as of the Effective Date as though such representations and warranties had been made at and as of that time; all of the terms, covenants, and conditions of this Agreement to be complied with and performed by the Surviving Corporation on or before the Effective Date shall have been duly complied with and performed; and a certificate to the foregoing effect dated the Effective Date and signed by a party authorized by the Board of Directors of the Surviving Corporation shall have been delivered to the Stockholders. e. Board Authority. The Assimilated Corporation shall have received a copy of the resolutions authorizing the execution, delivery and performance of this Agreement by the Surviving Corporation certified by the Secretary of the Surviving Corporation to have been adopted by the Board of Directors of the Surviving Corporation and to be in full force and effect as of the Effective Date. ARTICLE 4 REPRESENTATIONS OF SURVIVING CORPORATION 4.01 Representations and Warranties of Surviving Corporation. The Surviving Corporation represents and warrants to the Assimilated Corporation as of the date hereof and on the Effective Date as follows (all representations and warranties being joint and several): a. Good Standing. The Surviving Corporation is a corporation duly organized and validly existing in good standing under the laws of the State of Louisiana, and it is duly authorized qualified and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in the places and in the manner as now conducted. The character and location of the assets now owned or regularly leased by the Surviving Corporation (as hereinafter defined) in the conduct of its businesses and the nature of the business as now transacted by it do not require qualification as a foreign corporation in any jurisdiction. b. Stockholders and Stock. The authorized capital stock of the Surviving Corporation consists solely of 100 shares of Common Stock, $0.00 par value, of which shares are issued and outstanding. Each share of Surviving Corporation Stock is duly and validly authorized and issued, fully paid and nonassessable, and was not issued in violation of the preemptive rights of any Stockholder. No option, warranty, call, or commitment of any kind obligating the Surviving Corporation to issue any of its capital stock exists. ARTICLE 5 EFFECT OF MERGER Upon the consummation of the merger as hereinabove provided (the "Effective Date"), the effect of the merger shall be that established by Section 115 of the Louisiana Business Corporation Law, and without limitation thereof, shall include the following: a. The Surviving Corporation and the Assimilated Corporation shall be one corporation, which shall be the Surviving Corporation, and which shall survive the merger for that purpose. b. The separate existence of the Assimilated Corporation shall cease. C. The Surviving Corporation shall possess all the rights, privileges, and franchises previously possessed by it, and those possessed by the Assimilated Corporation. d. All of the property and assets of whatsoever kind or description of the Assimilated Corporation and all debts due on whatever account to it, shall be taken and be deemed to be transferred to and vested in the Surviving Corporation without further act or deed. e. The Surviving Corporation shall be responsible for all the liabilities and obligations of the Assimilated Corporation. ARTICLE 6 MANNER OF CONVERSION OF SHARES 6.01 The manner and basis of converting the shares of the Assimilated Corporation into shares of the Surviving Corporation shall be as follows: a. All shares of Common Stock of the Surviving Corporation now authorized and issued and outstanding shall remain outstanding and shall not be affected by the Merger. b. Each share of Common Stock of the Assimilated Corporation issued and outstanding on the Effective Date shall forthwith be converted into 1 share(s) of the Common Stock of the Surviving Corporation, and each holder of Common Stock of the Assimilated Corporation, upon presentation and surrender to the Surviving Corporation of the certificate or certificates representing such stock of the Assimilated Corporation, shall be entitled to receive in exchange therefor certificates representing shares of Common Stock of the Surviving Corporation on the basis herein provided. ARTICLE 7 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION 7.01 The Articles of Incorporation and the By-laws of the Surviving Corporation are not altered or otherwise affected by virtue of the merger. ARTICLE 8 GENERAL 8.01 Additional Instruments. The parties hereto shall deliver or cause to be delivered the Effective Date, and at such times and places as shall be reasonably agreed on, such additional instruments as any party may reasonably request for the purpose of carrying out this Agreement. The Surviving Corporation and the Assimilated Corporation will cooperate and use their best efforts to have the present Officers, Directors, and employees of the Surviving Corporation and the Assimilated Corporation cooperate on and after the Effective Date in furnishing information evidence, proceedings, arrangements, or disputes of any nature with respect to matters pertaining to all periods prior to the Effective Date. 8.02 Assignment. This Agreement and the rights of the Assimilated Corporation hereunder may not be assigned (except by operation of law) and shall be binding upon and shall insure to the benefit of the parties hereto, and the successors of and the heirs and legal representatives of the parties hereto. However, the Surviving Corporation shall have the right at the Effective Date or subsequently thereto, to cause the stock of the Assimilated Corporation to be transferred to a wholly-owned subsidiary of the Surviving Corporation. 8.03 Entire Agreement. This Agreement and the documents delivered pursuant hereto constitute the entire agreement and understanding between the parties hereto and supersede any prior agreement and understanding relating to the subject matter of this Agreement. This Agreement may be modified or amended only by duly authorized written instrument executed by the parties hereto. 8.04 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. It shall not be necessary that any single counterpart hereof be executed by all parties hereto as long as at least one counterpart is executed by each party. 8.05 Notices. Any notice or communication required or permitted hereunder shall be sufficiently given if sent by first class mail postage prepaid: (a) To the Surviving Corporation: Daniel K. Rester Attorney at Law 2431 S. Acadian Thruway, Suite 600 P. 0. Drawer 4407 Baton Rouge LA 70821-4407 (b) To the Assimilated Corporation: Mr. S. Judd Tooke Attorney at Law 1700 Irving Place Shreveport LA 71101 8.06 Survivorship. All warranties, covenants, representations, and guarantees shall survive the closing and execution of the documents contemplated by this Agreement. The parties hereto in executing, and in carrying out the provision of this Agreement are relying solely on the representations, warranties, and agreements contained in this Agreement or in any writing delivered p t to provisions of this Agreement or at the closing of the transactions herein provided for and not upon any representation warranty, agreement, promise, or information, written or oral, made by any person other than as specifically set forth herein or therein. 8.07 Law. This Agreement shall be construed in accordance with the laws of the State of Louisiana. IN WITNESS WHEREOF, a majority of the Board of Directors of each corporation has signed this Agreement on this 13th day of May, 1996. JEFFERSON CASINO CORPORATION C-M OF LOUISIANA, INC. (SURVIVING CORPORATION) ASSIMILATED CORPORATION) /S/ DANIEL K. RESTER /S/ DANIEL K. RESTER Daniel K. Rester, Vice-President Daniel K. Rester, Vice-President CERTIFICATE The undersigned, Secretary of JEFFERSON CASINO CORPORATION (the "Surviving Corporation"), hereby certifies that the above Joint Merger Agreement was adopted by a majority of the Board of Directors of the Surviving Corporation on the 13th day of May, 1996. /S/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, SECRETARY CERTIFICATE The undersigned, Secretary of C-M OF LOUISIANA, INC. (the "Assimilated Corporation"), hereby certifies that the above Joint Merger Agreement was adopted by a majority of the Board of Directors of the Assimilated Corporation on the 13th day of May, 1996. /s/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, SECRETARY CERTIFICATE The undersigned, Secretary of Jefferson Casino Corporation (the "Surviving Corporation") hereby certifies that the above Joint Merger Agreement was adopted by vote of at least two-thirds of the voting present at the special meeting of the Shareholders of the corporation called for such purpose on the 13th day of May, 1996. /S/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, SECRETARY CERTIFICATE The undersigned, Secretary of C-M of Louisiana, Inc. (the "Assimilated Corporation") hereby certifies that the above Joint Merger Agreement was adopted by vote of at least two-thirds of the voting present at the special meeting of the shareholders of the corporation called for such purpose on the 13th day of May, 1996. /S/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, SECRETARY ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS On this 13th day of May, 1996, before me, personally carne and appeared DANIEL K, RESTER. Vice-President of JEFFERSON CASINO CORPORATION , who being duly sworn, did depose and say that he is the Vice-President of JEFFERSON CASINO CORPORATION, the Corporation described in and which executed the foregoing instrument as its free act and deed, and he signs Es name hereto by order of resolution of the Board of Directors of said corporation. WITNESSES: JEFFERSON CASINO CORPORATION /S/ ----------------- BY: /S/ DANIEL K. RESTER DANIEL K. RESTER, VICE-PRESIDENT /S/ ----------------- /S/ --------------------- NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS On this 13th day of May, 1996, before me, personally came and appeared DANIEL K, RESTER, Vice-President of C-M OF LOUISIANA, INC., who being duly sworn, did depose and say that he is the Vice-President of C-M OF LOUISIANA INC., the Corporation described in and which executed the foregoing instrument as its free act and deed, and he signs his name hereto by order of resolution of the Board of Directors of said corporation. WITNESSES: C-M OF LOUISIANA, INC. BY: /S/ DANIEL K. RESTER DANIEL K. RESTER, VICE-PRESIDENT /S/ ------------------ /S/ ------------------ /S/ ------------------ NOTARY PUBLIC RESOLUTION OF THE BOARD OF DIRECTORS OF C-M OF LOUISIANA, INC. Robert A. Callaway, Secretary of C-M of Louisiana, Inc., a Louisiana Corporation, hereby certifies that the following resolutions were adopted by the Board of Directors of C-M of Louisiana, Inc., at a duly held telephonic meeting Confirmed by written consent thereof on May 13, 1996, and that the resolutions are in full force and effect as of the date of this certificate, without modification: RESOLVED, that C-M OF LOUISIANA, INC., through this Board enter into a Joint Agreement of Merger with JEFFERSON CASINO CORPORATION, such Joint Agreement to be in substantially the same form as the draft of the Joint Agreement attached hereto and incorporated herein by reference. BE IT FURTHER RESOLVED, that once a majority of the respective directors of C-M of Louisiana, Inc. and Jefferson Casino Corporation have executed the Joint Agreement in accordance with law, the Joint Agreement be submitted to the shareholders of this corporation for their comments and approval at a meeting to be held in the City of New Orleans, State of Louisiana, on the 13th day of May, 1996, at 12:00 o'clock P.M., and that the Secretary of the of the Corporation shall promptly prepare and give due notice of such meeting in accordance with the provisions of Section 112C of the Louisiana Business Corporation Act, the By-laws of the Corporation and such other law as may be applicable under the circumstances. BE IT FURTHER RESOLVED, that an appropriate proxy statement be prepared by the Secretary of the Corporation, with the assistance of counsel for the Corporation and such other special counsel as may be employed therefor, soliciting proxies to vote for the approval of such Joint Agreement of Merger consistent with the requirements of Rule 145 promulgated by the Securities and Exchange Commission. BE IT FURTHER RESOLVED, that if said plan of Merger is approved by the Stockholders, the Officers of the Corporation are authorized to take such actions and to execute, deliver, and file such documents as may be necessary or appropriate to carry out the plan of Merger. RESOLVED, that the Joint Agreement of Merger presented to this meeting, a copy of which attached hereto, between the Corporation and Jefferson Casino Corporation, be and the same hereby is approved in all respects in the form submitted. RESOLVED, further, that Directors and Officers of the Corporation are authorized to take such actions and to execute, deliver, and file such documents as may be necessary or appropriate to carry out the plan of Merger. /S/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY Secretary RESOLUTION OF THE BOARD OF DIRECTORS OF . JEFFERSON CASINO CORPORATION Robert A. Callaway, Secretary of Jefferson Casino Corporation, a Louisiana corporation, hereby certifies that the following resolutions were adopted by the Board of Directors of Jefferson Casino Corporation, at a duly held telephonic meeting confirmed by written consent thereof on May 13, 1996, and that the resolutions are in full force and effect as of the date of this certificate, without modification: RESOLVED, that JEFFERSON CASINO CORPORATION, through this Board enter into a Joint Agreement of Merger with C-M OF LOUISIANA, INC., such Joint Agreement to be in substantially the same form as the draft of the Joint Agreement attached hereto and incorporated herein by reference. BE IT FURTHER RESOLVED, that once a majority of the respective directors of Jefferson Casino Corporation and C-M of Louisiana, Inc. have executed the Joint Agreement in accordance with law, the Joint Agreement be submitted to the shareholders of this corporation for their comments and approval at a meeting to be held in the City of New Orleans, State of Louisiana, on the 13th day of May, 1996, at 12:00 o'clock P.M., and that the Secretary of the of the Corporation shall promptly prepare and give due notice of such meeting in accordance with the provisions of Section 112C of the Louisiana Business Corporation Act, the By-laws of the Corporation and such other law as may be applicable under the circumstances. BE IT FURTHER RESOLVED, that an appropriate proxy statement be prepared by the Secretary of the Corporation, with the assistance of counsel for the Corporation and such other special counsel as may be employed therefor, soliciting proxies to vote for the approval of such Joint Agreement of Merger consistent with the requirements of Rule 145 promulgated by the Securities and Exchange Commission. BE IT FURTHER RESOLVED, that if said plan of Merger is approved by the Stockholders, the Officers of the Corporation are authorized to take such actions and to execute, deliver, and file such documents as may be necessary or appropriate to carry out the plan of Merger. RESOLVED, that the Joint Agreement of Merger presented to this meeting, a copy of which attached hereto, between the Corporation and C-M of Louisiana, Inc., be and the same hereby is approved in all respects in the form submitted. RESOLVED, further, that Directors and Officers of the Corporation are authorized to take such actions and to execute, deliver, and file such documents as may be necessary or appropriate to carry out the plan of Merger. /s/ ROBERT A. CALLAWAY ROBERT A. CALLAWAY, Secretary Resolution of the Shareholders of Jefferson Casino Corporation The Shareholders by a majority vote have approved the merger of Jefferson Casino Corporation and C-M of Louisiana, Inc. DONE this 13th day of May, 1996. /s/ Robert A. Callaway Robert A. Callaway, Secretary Resolution of the Shareholders of C-M of Louisiana, Inc. The Shareholders by a majority vote have approved the merger of Jefferson Casino Corporation and C-M of Louisiana, Inc. DONE this 13th day of May, 1996. /s/ Robert A. Callaway Robert A. Callaway, Secretary EX-10.4 7 ========================================================================= PLEDGE AND SECURITY AGREEMENT DATED AS OF MAY 13, 1996 AMONG CASINO MAGIC OF LOUISIANA CORP. JEFFERSON CASINO CORPORATION, as Grantors and FIRST TRUST NATIONAL ASSOCIATION As Agent FOR THE BENEFIT OF THE HOLDERS OF 11 1/2% SENIOR SECURED NOTES DUE 1999 ========================================================================= PLEDGE AND SECURITY AGREEMENT ("Security Agreement") dated as of May 13, 1996, made by CASINO MAGIC OF LOUISIANA CORP., a Louisiana corporation (the "Company") and JEFFERSON CASINO CORPORATION, a Louisiana corporation ("JCC" and, together with the Company, the "Grantors"), to FIRST TRUST NATIONAL ASSOCIATION, as agent (the "Trustee") for the benefit of the holders (the "Holders") from time to time of the Notes hereinafter referred to. Except as otherwise defined herein, terms used herein and defined in the Indenture (as hereinafter defined) shall be used herein as so defined. W I T N E S S E T H WHEREAS, in accordance with that certain Stock Purchase Agreement, dated February 21, 1996, among the Company, Capital Gaming International, Inc., JCC, C-M of Louisiana, Inc. (n/k/a JCC) and Casino Magic Corp., and the Second Amended Plan of Reorganization of the Company, dated March 15, 1996, the Company will issue $35,000,000 aggregate principal amount of Senior Secured Notes Due 1999 (as same may be from time to time amended, modified or supplemented, the "Notes", which term shall include all securities issued under the Indenture as the same may be from time to time amended, modified or supplemented, pursuant to an Indenture (the "Indenture"), dated as of May 13, 1996, among the Company, as issuer, JCC, as guarantor, and the Trustee, as Trustee; WHEREAS, the Grantors are the legal and beneficial owners of the Collateral (as hereinafter defined); WHEREAS, it is a condition precedent to the purchase of the Notes under the Indenture that the Grantors execute and deliver to the Trustee this Security Agreement; and WHEREAS, Grantors desire to execute this Security Agreement to satisfy the condition described in the preceding paragraph; NOW, THEREFORE, in consideration of the benefits accruing to the Grantors, the receipt and sufficiency of which are hereby acknowledged, the Grantors hereby make the following representations and warranties to the Trustee and hereby covenant and agree with Trustee as follows: 1. CERTAIN DEFINED TERMS. (a) As used in this Security Agreement, the following terms have the meanings specified below (such meanings being equally applicable to both the singular and plural forms of the terms defined): "ACCOUNT" means any "account," as such term is defined in Section 9-106 of the UCC, now owned or hereafter acquired by any Grantor and, in any event, includes, without limitation, (i) all accounts receivable, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received or acquired by or belonging or owing to any Grantor (including, without limitation, under any trade name, style or division thereof) whether arising out of goods sold or services rendered by such Grantor, or from any other transaction, whether or not the same involves the sale of goods or services by any Grantor (including, without limitation, any such obligation which might be characterized as an account or contract right under the UCC), (ii) all of any Grantor's rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of any Grantor's rights to any goods represented by any of the foregoing (including, without limitation, unpaid seller's rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (iii) all moneys due or to become due to any Grantor under all contracts for the sale of goods or the performance of services or both by any Grantor (whether or not yet earned by performance on the part of any Grantor or in connection with any other transaction), now in existence or hereafter occurring, including, without limitation, the right to receive the proceeds of said purchase orders and contracts, and (iv) all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing. "CHATTEL PAPER" means any "chattel paper," as such term is defined in Section 9-105(i)(b) of the UCC, now owned or hereafter acquired by any Grantor. "COMPUTER HARDWARE AND SOFTWARE" means, with respect to any Grantor, (i) all computer and other electronic data processing hardware, whether now owned, licensed or leased or hereafter acquired by such Grantor, including, without limitation, all integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware; (ii) all software programs, whether now owned, licensed or leased or hereafter acquired by such Grantor, designed for use on the computers and electronic data processing hardware described in clause (i) above, including, without limitation, all operating system software, utilities and application programs in whatsoever form (source code and object code in magnetic tape, disk or hard copy format or any other listings whatsoever); (iii) all firmware associated therewith, whether now owned, licensed or leased or hereafter acquired by such Grantor; and (iv) all documentation for such hardware, software and firmware described in the preceding clauses (i), (ii) and (iii) above, whether now owned, licensed or leased or hereafter acquired by such Grantor, including, without limitation, flow charts, logic diagrams, manuals, specifications, training materials, charts and pseudo codes. "CONTRACTS" means all contracts, undertakings or other agreements (other than Chattel Paper, Documents or Instruments) in or under which any Grantor may now or hereafter have any right, title or interest, including, without limitation, with respect to an Account, any agreement relating to the terms of payment or the terms of performance thereof. "DOCUMENTS" means any "document," as such term is defined in Section 9- 105(l)(f) of the UCC, now owned or hereafter acquired by any Grantor. "EQUIPMENT" means any "equipment," as such term is defined in Section 9- 109(2) of the UCC, now owned or hereafter acquired by any Grantor and, in any event, includes, without limitation, all machinery, equipment, furnishings, fixtures, vehicles, computers and other electronic data- processing and office equipment now owned or hereafter acquired by any Grantor and any and all additions, substitutions and replacements of any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto. "GENERAL INTANGIBLES" means any "general intangibles," as such term is defined in Section 9-106 of the UCC, now owned or hereafter acquired by any Grantor and, in any event, includes, without limitation, all uncertificated partnership interests, uncertificated interests in limited liability companies and other entities, dividends or distributions payable in respect of equity interests owned by any Grantor and proceeds from the sale or other disposition of any equity interest owned by any Grantor to the extent such equity interest does not otherwise constitute collateral for the obligations, customer lists, trademarks, patents, rights in intellectual property, licenses, permits, copyrights, trade secrets, proprietary or confidential information, inventions (whether patented or patentable or not) and technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill, rights of indemnification and all right, title and interest which any Grantor may now or hereafter have in or under any Contract, now owned or hereafter acquired by any Grantor. "INSTRUMENT" means any "instrument," as such term is defined in Section 9- 105(l)(i) of the UCC, now owned or hereafter acquired by any Grantor, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. "INVENTORY" means any "inventory," as such term is defined in Section 9- 109(4) of the UCC, now owned or hereafter acquired by any Grantor, and wherever located, and, in any event, includes, without limitation, all inventory, merchandise, goods and other personal property now owned or hereafter acquired by any Grantor which are held for sale or lease or are furnished or are to be furnished under a contract of service or which constitute raw materials, work in process or materials used or consumed or to be used or consumed in any Grantor's business, or the processing, packaging, delivery or shipping of the same, and all finished goods. "PLEDGED COLLATERAL" means, collectively, (i) all of the capital stock described in Schedule 1 hereto as being owned by JCC and issued by the Company (the "Stock"); (ii) all additional shares of capital stock or other securities of the Company from time to time acquired by any Grantor in any manner (any such shares being "Additional Shares"); (iii) the certificates representing the shares referred to in clauses (i) and (ii) above; and (iv) all dividends, distributions, cash, Instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing. "UCC" means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of Louisiana; PROVIDED, HOWEVER, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Trustee's and the Secured Parties' security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Louisiana, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. (b) As used in this Security Agreement, the terms "certificated securities," "deposit account," "fixtures," "goods," "proceeds," and "uncertificated securities" shall have the meanings given to such terms in the UCC. (c) Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Indenture. 2. SECURITY FOR NOTES, ETC. This Security Agreement is given by the Grantors in favor of the Trustee for the benefit of the Trustee and the Holders (referred to herein as the "Secured Creditors") to secure (i) the payment in full when due, whether at stated maturity, by acceleration or otherwise (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy or the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Sec. 362(a)) of (a) the principal of and interest on the Notes and (b) all other obligations and indebtedness of the Grantors, now existing or hereafter incurred under, arising out of or in connection with the Notes, the Guaranty, the Collateral Documents and the Indenture (together with this Agreement, collectively, the "Credit Documents"); and (ii) the due performance of and compliance with the terms of the Credit Documents by the Grantors, to the extent of any such Grantor's respective obligations thereunder (all such principal, interest, obligations and liabilities being herein collectively called the "Obligations") 3. DEFINITION OF SECURITIES. As used herein, the term "Stock" shall mean all of the shares of the Company from time to time issued and outstanding. The Grantors represent and warrant that on the date hereof (i) the Stock consists of 100 shares of Common Stock, par value $ .01 per share; (ii) JCC is the sole legal and beneficial owner of the Stock; and (iii) all such shares of the Stock are validly issued, fully paid and nonassessable. 4. PLEDGE AND ASSIGNMENT. 4.1. PLEDGE AND ASSIGNMENT. To secure the obligations and for the purposes set forth in Section 2, the Grantors hereby pledge, assign, transfer, grant and deposit with the Trustee a continuing first priority security interest in and to all of the right, title and interest of the Grantors in and to the following property, whether now existing or hereafter acquired (collectively, the "Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Computer Hardware and Software and all rights with respect thereto, including, without limitation, any and all licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications, and any substitutions, replacements, additions or modern conversions of any of the foregoing; (iv) all Contracts and any and all claims of the Grantors for damages arising out of or for breach of or a default under any Contract and the rights of the Grantors to perform or to compel performance under any Contract and to exercise all remedies thereunder; (v) all Documents; (vi) all Equipment; (vii) all General Intangibles; (viii) all Instruments; (ix) all Inventory; (x) all Pledged Collateral; (xi) all other certificated securities and all other uncertificated securities; (xii) all Boat Conveyance Proceeds and all other cash of the Grantors; (xiii) all deposit accounts of the Grantors; (xiv) all other goods and personal property of the Grantors whether tangible or intangible or whether now owned or hereafter acquired by the Grantors and wherever located (collectively, the "General Collateral,"); (xv) all books, records, writings, data bases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating, or referring to any of the foregoing; and (xvi) to the extent not otherwise included, all proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing; PROVIDED, HOWEVER, that the Collateral shall expressly not include (a) furniture, fixtures and Equipment of the Company, (1) owned by the Company on May 13, 1996 (including, but not limited to, furniture, fixtures and Equipment subject to Liens securing the Indebtedness arising out of the claims of Bally Gaming, Inc. and International Gaming Corp. or their respective successors, assigns, affiliates or agents pursuant to the Stock Purchase Agreement) or (2) acquired by the Company after May 13, 1996 with Permitted FF&E Financing the terms of which forbid any Lien on such furniture, fixtures and equipment in favor of any other person (including the Trustee for the benefit of the Holders), (b) cash of the Company obtained by the Company solely from the sale of Inventory or the provision of services in the ordinary course of the Company's gaming operations, and (c) cash of JCC received from Parent Equity Contributions or as proceeds of Indebtedness which JCC may incur under clause (g) of Section 5.11 of the Indenture. 4.2. DELIVERY OF COLLATERAL. The Grantors shall deliver to the Trustee on the date hereof, and with respect to any Stock acquired by the Grantors after the date hereof, within five (5) days of such receipt, all certificates representing the Stock, accompanied by stock powers duly executed in blank by the Company. 5. APPOINTMENT OF SUB-AGENTS. The Trustee shall have the right to appoint one or more sub-agents at the Grantors' expense for the purpose of retaining physical possession of the Collateral. 6. RIGHTS, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an Event of Default (such term to mean an Event of Default under, and as defined in, the Indenture) shall have occurred and be continuing, the Grantors shall be exclusively entitled to exercise all rights with respect to the Collateral, including with respect to the Stock, the rights, including voting rights, set forth in the Certificate of Incorporation of the Company as it relates to the Stock (the "Certificate,,) and, if authorized by such Certificate or by law, to give consents, waivers or ratifications in respect thereof; PROVIDED, HOWEVER, that no rights shall be exercised or any consent, waiver or ratification given or any action taken which would violate or be inconsistent with any of the terms of this Security Agreement, any other Credit Document or any other instrument or agreement referred to therein, or which could reasonably be expected to have a material adverse effect on the value of the Collateral or the security intended to be provided by this Security Agreement. In case an Event of Default shall occur and be continuing, the rights granted to the Grantors under this Section 6 shall cease and the rights of the Trustee under Section 8 hereof shall become applicable. 7. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until an Event of Default shall have occurred and be continuing, the Grantors shall be entitled to retain all cash dividends and other cash distributions (in each case to the extent authorized by the terms of the Indenture) in respect of the Stock. All dividends and other distributions in the form of certificated securities shall be delivered to the Trustee within five days of receipt thereof. After an Event of Default and while any Event of Default is continuing, the right of the Grantors to retain all cash dividends and distributions shall cease, and all dividends and distributions shall immediately be delivered by the Grantors to the Trustee. 8. REMEDIES IN CASE OF EVENT OF DEFAULT. (a) In case an Event of Default shall have occurred and be continuing, the Trustee shall be entitled to exercise, in accordance with the terms of the Indenture, all of the rights, powers and remedies (whether vested in it by this Security Agreement, the Certificate, any other Credit Document or by law) for the protection and enforcement of its rights in respect of the Collateral, including without limitation, the following rights: (i) to receive all amounts payable (if any) in respect of the Collateral; (ii) to transfer all or any part of the Collateral into the Trustee's name, the names of the respective Holders or the names of their respective nominees; (iii) to vote all or any part of the Collateral (whether or not transferred into the name of the Trustee) and to give all consents, waivers and ratifications and to otherwise exercise all rights available to it in respect of the Collateral and otherwise to act with respect thereto as though it were the outright owner thereof (the Grantors hereby irrevocably constituting and appointing the Trustee the proxy and attorney-in-fact of the Grantors, with full power of substitution to do so) in accordance with the rights granted under the Certificate, the Collateral or applicable law; and (iv) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, for cash, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as may be reasonable; PROVIDED, HOWEVER, that at least 10 days' notice of the time and place of any such sale shall be given to the Grantors. At any such sale, unless prohibited by applicable law, the Trustee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any right or equity of redemption of the Grantors. Neither the Trustee nor any Secured Creditor shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto. Notwithstanding the foregoing, the Trustee shall not be obligated to take any action with respect to the exercise of any rights or remedies hereunder or pursuant to the instructions of Holders owning a majority of the principal amount of the Notes unless the Trustee receives indemnity satisfactory to it against any risk, claim, liability, loss, cost or expense. (b) The provisions of this Section 8(b) shall, without limiting the generality of any other provision of this Agreement, be applicable in the event any foreclosure shall take place in Louisiana on any Collateral or proceeds or, in connection with any foreclosing hereunder, Louisiana law shall otherwise be applicable. 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 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 Grantors do hereby acknowledge the Obligations and confess judgment in favor of the Trustee and the Secured Parties for the full amount of the Obligations. The Grantors do by these presents consent and agree that upon the occurrence of an Event of Default it shall be lawful for the Trustee to cause all and singular the Collateral and the proceeds 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 parcels or portions 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 for the purpose of executory process. The Grantors hereby waive in favor of the Trustee: (a) the benefit of appraisement as 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 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 days delay provided by Louisiana Code of Civil Procedure Articles 2331 and 2722; and (e) the 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 the proceeds) or any part thereof is seized as an incident to an action for the recognition or enforcement of this Agreement by executory process, ordinary process, sequestration, writ of fierl facias, or otherwise, the Grantors and the Trustee agree that the court issuing any such order shall, if petitioned for by the Trustee, direct the applicable sheriff or marshall to appoint as a keeper of the Collateral and the proceeds, the Trustee or any agent designated by the Trustee or any person named by the Trustee at the time such seizure is effected. This designation is pursuant to Louisiana Revised Statutes 9:5136-9:5140.2 and the 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 Collateral and the proceeds, an amount equal to $250.00 pr day payable on a monthly basis. The designation of keeper made herein shall not be deemed to require the Trustee to provoke the appointment of such a keeper. 9. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the Trustee provided for in this Security Agreement, the Certificate or the Credit Documents shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy now or hereafter existing at law or in equity or by statute. The exercise or commencement of the exercise by the Trustee or any Secured Creditor of any one or more of the rights, powers or remedies provided for in this Security Agreement, the Certificate, the Credit Documents or by applicable law shall not preclude the simultaneous or later exercise by the Trustee or any Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Trustee or any Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. 10. APPLICATION OF PROCEEDS. All moneys collected by the Trustee upon any sale or other disposition of the Collateral, together with all other moneys received by the Trustee hereunder, shall be applied: (i) first, to the payment of all costs and expenses incurred by the Trustee in connection with such sale, the delivery of the Collateral or the collection of any such moneys (including, without limitation, reasonable attorneys' fees and expenses); (ii) second, to the extent moneys remain after the application pursuant to preceding clause (i), to the Holders of the Notes to pay principal of or interest on the Notes and all reasonable expenses; and (iii) third, to the extent moneys remain after the application pursuant to preceding clause (ii), to the Grantors. 11. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Trustee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise) the receipt by the Trustee or the officer making the sale of the purchase price for such Collateral shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Trustee or such officer or be answerable in any way for the misapplication or nonapplication thereof. 12. INDEMNITY. Each of the Grantors, jointly and severally, agrees to indemnify and hold harmless the Trustee from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever kind or nature, and to reimburse the Trustee for all costs and expenses, including reasonable attorneys, fees and disbursements arising out of or resulting from this Security Agreement or the exercise by the Trustee of any right or remedy granted to it hereunder or under the Certificate, the Indenture, the Collateral Documents, the Collateral or applicable law, except to the extent that it is finally judicially determined that such claims, demands, losses, judgments and liabilities arose primarily out of the gross negligence or willful misconduct of the Trustee. In no other event shall the Trustee be liable for any matter or thing in connection with this Security Agreement other than to account for moneys actually received by it in accordance with the terms hereof. If and to the extent that the obligations of the Grantors under this Section 12 are unenforceable for any reason, the Grantors hereby agree to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. The Grantors will upon demand pay to the Trustee the amount of any and all reasonable expenses, including fees and disbursements of its counsel and agents, which the Trustee may incur in connection with performance of Trustee's duties and administration of this Security Agreement or the exercise or enforcement of any of its rights or remedies hereunder or any action otherwise taken pursuant to this Security Agreement. 13. FURTHER ASSURANCES. The Grantors agree that they will, at the Grantors' own expense, file and refile such financing statements, continuation statements and other documents in such offices as may be necessary or appropriate or that the Trustee may reasonably request and wherever required or permitted by law in order to perfect and preserve the Trustee's security interest in the Collateral and hereby authorize the Trustee to file financing statements and amendments thereto relative to all or any part of the Collateral without the signature of the Grantors where permitted by law, and agree to do such further acts and things and to execute and deliver to the Trustee such additional conveyances, assignments, supplements, agreements and instruments as may be necessary or appropriate or that the Trustee may reasonably require or deem advisable to carry into effect the purposes of this Security Agreement or to further assure and confirm unto the Trustee its rights, powers and remedies hereunder. 14. THE TRUSTEE AS AGENT. The Trustee will hold in accordance with this Security Agreement all items of the Collateral at any time received by it under this Security Agreement. The interest of each Secured Creditor in the Collateral shall be in proportion to the aggregate unpaid principal amount of the obligations owed to and held by such Secured Creditor plus accrued and unpaid interest thereon and except with respect to the claims of the Trustee as agent hereunder and under the Indenture, without priority or preference of any Secured Creditor over the other. It is expressly understood and agreed that the obligations of the Trustee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Security Agreement, are only those expressly set forth in this Security Agreement and the Indenture. Nothing contained herein shall impose any duties on the Trustee beyond the duties of Trustee as Trustee under the Indenture. 15. TRANSFER BY THE GRANTORS. The Grantors will not sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein (except pursuant to the Indenture or this Security Agreement). 16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GRANTORS. Each Grantor represents, warrants and covenants, as applicable, that: (a) it is the beneficial owner of, and has good and marketable title to, the Collateral pledged by it in Section 4 subject to no pledge, lien, mortgage, hypothecation, security interest, charge, option or other encumbrance whatsoever, except the liens and security interests created by this Security Agreement; (b) each Contract pledged by it is in full force and effect, has not been amended or modified, has not been assigned by such Grantor to any party, and no party has sent or received any notice of default thereunder and no event has occurred as of the date hereof which with the passage of time or the giving of notice, or both, would constitute a default thereunder; (c) no material amendment or modification of any Contract which would have a material adverse effect on the Trustee or the assignment and security interest granted hereby to the Trustee shall be effective without the prior written consent of the Trustee; (d) the delivery of this Security Agreement by it does not constitute the basis for a default under any Contract pledged by it; (e) there is not pending or threatened any claim or litigation against or affecting it contesting the validity of any of the Collateral; (f) it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Security Agreement; (g) this Security Agreement has been duly authorized, executed and delivered by such Grantor and constitutes a legal, valid and binding obligation of such Grantor enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors, rights generally or by equitable principles relating to enforceability; (h) no consent of any other party (including without limitation any stockholder or creditor of such Grantor, or any of its subsidiaries) and, except for UCC filings made on or contemporaneously with the date hereof in the jurisdictions and appropriate offices set forth on Schedule 2 hereto, no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required to be obtained by such Grantor in connection with the execution, delivery or performance of this Security Agreement or to obtain a valid and perfected first security interest in the Collateral; (i) the execution, delivery and performance of this Security Agreement will not violate any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, or of the certificate of incorporation or by-laws of such Grantor or of any securities issued by such Grantor, or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which such Grantor is a party or which purports to be binding upon such Grantor or upon any of its assets, and will not result in the creation or imposition of any lien or encumbrance on any of the assets of the Grantors except as contemplated by this Security Agreement; (j) each Grantor's chief executive office and principal place of business are as set forth on Schedule 3 hereto, and each other location where Inventory or Equipment of each Grantor is located, and any other location where any Grantor maintains a place of business, are as set forth on Schedule 4 hereto;(k) all the shares of the Stock have been duly and validly issued, are fully paid and nonassessable; and (1) the pledge, assignment and delivery of the Stock and, after certain financing statements have been filed with respect to the Collateral, this Security Agreement, creates a valid and perfected first security interest in the Collateral, subject to no prior lien or encumbrance or to any agreement purporting to grant to any third party a lien or encumbrance on the property or assets of such Grantor which would include the Collateral. The Grantors covenant and agree that they will defend the Trustee's right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever; and the Grantors covenant and agree that they will have like title to and right to pledge any other property at any time hereafter pledged to the Trustee as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Trustee and the Secured Creditors. The Grantors shall notify Trustee in the event any Grantor receives any material notice or communication with respect to any Agreement, including, without limitation, notices of default, and shall promptly forward copies of any such communications to Trustee. Each Grantor agrees that it will not move its chief executive office or change its name without giving the Trustee at least 30 days prior written notice thereof. 17. GRANTORS' OBLIGATIONS ABSOLUTE, ETC. Except as otherwise required by law, the Obligations of the Grantors under this Security Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstances or occurrence whatsoever, including, without limitation: (a) any renewal, extension, amendment or modification of or addition or supplement to or deletion from the Indenture or the Collateral Documents or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof; (b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument or this Security Agreement; (c) any furnishing of any additional security to the Trustee or its assignee or any acceptance thereof or any release of any security by the Trustee or its assignee; (d) any limitation on any party's liability or obligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or (e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to a Grantor or any subsidiary of a Grantor, or any action taken with respect to the Security Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not such Grantor shall have notice or knowledge of any of the foregoing. 18. TERMINATION; RELEASE. On the date when no Notes are outstanding and all obligations have been indefeasibly paid in full, this Security Agreement shall terminate, and the Trustee, at the request and expense of the Grantors, will execute and deliver to the Grantors a proper instrument or instruments acknowledging the satisfaction and termination of this Security Agreement, and will duly assign, transfer and deliver to the Grantors a proper instrument or instruments acknowledging the satisfaction and termination of this Security Agreement, and will duly assign, transfer and deliver to the Grantors (without recourse and without any representation or warranty other than a representation and warranty that the Trustee has complied with all of the requirements of this Security Agreement) such of the Collateral as may be in the possession of the Trustee and as has not theretofore been sold or otherwise applied or released pursuant to this Security Agreement, together with any moneys at the time held by the Trustee hereunder, will return to the Grantors all of the documents delivered by the Grantors to the Trustee pursuant to this Security Agreement and will execute and file under the UCC or other applicable law such termination statements and other documents in such offices as the Grantors may deem necessary or appropriate and wherever required or permitted by law in order to terminate the Trustee's security interest in the Collateral, and agrees to do such further acts and things and to execute and deliver to the Grantors such additional instruments as the Grantors may reasonably require or deem advisable to terminate such security interest. Notwithstanding the foregoing, so long as no Default or Event of Default shall have occurred under the Indenture and be continuing, then provided the Trustee shall have received notice from the Company fifteen (15) days before the Release Date (as such term is defined in the Indenture) of the Release Date, the Trustee shall on the Release Date (or, in the case of failure of the Company to timely notify the Trustee in accordance with this Section 18, fifteen (15) days from the date of actual receipt by the Trustee of such notice of the Release Date) release or cause to be released all Liens of this Security Agreement securing obligations other than (i) those Liens granted to the Trustee in respect of a lease by the Company of the Crescent City Queen Casino pursuant to Section 4.4(b) of the Indenture, and (ii) those Liens securing proceeds from the foregoing. The Trustee shall release such Liens pursuant to this Section 18 in accordance with the provisions of Article XI of the Indenture, the Collateral Documents and the TIA. 19. NOTICES, ETC. All notices and other communications hereunder shall be in writing and shall be delivered or mailed in the manner set forth in the Indenture, addressed as follows: (a) if to a Grantor, at: Casino Magic of Louisiana Corp. c/o Casino Magic Corp. 711 Casino Magic Drive Bay St. Louis. MS 39520 Attention: Chief Financial Officer with a copy to: Casino Magic Corp. 711 Casino Magic Drive Bay St. Louis. MS 39520 (b) if to the Trustee, at: First Trust National Association 180 East Fifth Street Saint Paul, Minnesota 55101 Attention: Scott Strodthoff or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder. All notices to any Holder shall be given by delivering or mailing such notice to the Trustee under the Indenture. 20. MISCELLANEOUS. This Security Agreement shall be binding upon the successors and assigns of the Grantors and shall inure to the benefit of and be enforceable by the Trustee and its successors and assigns. This Security Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Louisiana. The headings in this Security Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Security Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Security Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Security Agreement which shall remain binding on all parties thereto. IN WITNESS WHEREOF, the Grantors and the Trustee have caused this Security Agreement to be executed by their duly authorized officers as of the date first above written. CASINO MAGIC OF LOUISIANA, CORP., Grantor By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary JEFFERSON CASINO CORPORATION, Grantor By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary FIRST TRUST NATIONAL ASSOCIATION, as agent By: /s/ R. Prokesd Name: Richard Prokesd Title: Trust Officer SCHEDULE 1 to Pledge and Security Agreement dated as of May 13, 1996 among Casino Magic of Louisiana, Corp C-M of Louisiana, Inc. Jefferson Casino Corporation, as Grantors and First Trust National Association, as Agent for the benefit of the Holders of ll 1/2% Senior Secured Notes Due 1999 ************************************************* 100 shares newly issued by Crescent City Capital Development Corporation as debtor-in-possession SCHEDULE 2 Orleans Parish, Louisiana Recorder of Mortgages SCHEDULE 3 to Pledge and Security Agreement dated as of May 13, 1996 among Casino Magic of Louisiana, Corp C-M of Louisiana, Inc. Jefferson Casino Corporation, as Grantors and First Trust National Association, as Agent for the benefit of the Holders of 11 1/2% Senior Secured Notes Due 1999 ************************************************ 711 Casino Magic Drive Bay St. Louis, MS 39520 SCHEDULE 4 to Pledge and Security Agreement dated as of May 13, 1996 among Casino Magic of Louisiana, Corp C-M of Louisiana, Inc. Jefferson Casino Corporation, as Grantors and First Trust National Association, as Agent for the benefit of the Holders of 11 1/2% Senior Secured Notes Due 1999 ************************************************* Casino Magic of Louisiana, Corp. will have inventory in the following parishes in the State of Louisiana: Orleans Bossier Caddo Terrebonne EX-10.5 8 FIRST PREFERRED SHIP MORTGAGE This FIRST PREFERRED SHIP MORTGAGE (this "Mortgage") dated May 13, 1996 from CASINO MAGIC OF LOUISIANA, CORP., a Louisiana corporation, herein represented by its undersigned duly authorized officer, (address: 711 Casino Magic Drive, Bay St. Louis, Mississippi, 39250) (the "Owner") to First Trust National Association, (a United States national banking association), (address: 180 East Fifth Street, St. Paul, MN 55101, Attn: Scott Stradthoff) as Trustee (in such capacity, together with any successor appointed pursuant to the Indenture, the "Trustee" or the "Mortgagee") for the benefit of the holders (the "Holders") under an Indenture dated as of May 13, 1996 among the Owner, the Guarantors and the Trustee relating to the issuance by the owner of its $35,000,000 of Senior Secured Notes due 1999. Terms used herein and not otherwise defined herein are used as defined in or by reference to the Indenture. A copy of said Indenture is attached hereto as Exhibit A and made a part hereof. WITNESSETH That: WHEREAS: A. The Owner is the sole owner of the whole of the vessel, duly documented in the name of the Owner under the laws and f lag of the United States of America with its hailing port at New Orleans, Louisiana (the "Vessel"), and described as follows: - ---------------------------------------------------------------------------- OFFICIAL GROSS NAME NUMBER TONNAGE HAILING PORT Crescent City 1028319 10507 New Orleans, Queen Louisiana - ---------------------------------------------------------------------------- B. Pursuant to the terms of the Indenture, the owner will issue its $35,000,000 Senior Secured Notes due 1999; C. The Owner is a wholly owned subsidiary of Guarantor, Jefferson Casino Corporation, and an affiliate of Guarantor, C-M of Louisiana, Inc.; the Guarantors have guaranteed the Notes unconditionally, as to premium, if any, principal, and interest, jointly and severally with the Owner. D. The Owner, in order to secure repayment of the Notes, the Guaranty and the Indenture Obligations, and to secure the performance and observance and compliance with all of the agreements, covenants and conditions in this Mortgage and the performance and observance and compliance with all of the agreements, covenants and conditions in the Indenture, has granted, conveyed, mortgaged, pledged, set over and confirmed and does by (Received 96 MAY 13 stamp by NATIONAL VESSEL DOCUMENTATION CENTER) these presents grant, convey, mortgage, pledge, set over and confirm unto Mortgagee, its successors and assigns, the whole of the Vessel, together with all of the machinery, covers, anchors, chains, tackle, apparel, furniture, fittings and navigation equipment, and all other appurtenances thereto 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, but excepting existing gaming equipment (including but not limited to gaming equipment securing claims of Bally Gaming, Inc. and International Game Technology Corp.) or property acquired with Permitted FF&E Financing; NOW, THEREFORE, THIS MORTGAGE WITNESSETH: That in consideration of the premises and the sums lent as above recited and of other good and valuable consideration, the receipt whereof is hereby acknowledged, and in order to secure the payment of the principal and interest and premium on the said indebtedness loaned, and to be loaned, according to the terms of the Notes, the Guaranty, the Indenture and this Mortgage and all other amounts due and to become due under or pursuant to the Indenture (all such principal and interest and other sums being hereinafter called the "Indebtedness hereby secured") , and to secure the performance and observance of and compliance with the covenants, terms and conditions herein and in the Notes, the Guaranty and the Indenture, the Owner has granted, conveyed, mortgaged, pledged, set over and confirmed and does by these presents grant, convey, mortgage, pledge, set over and confirm unto the Mortgagee, its successors and assigns, the whole of the Vessel, together with all of the machinery, covers, anchors, chains, tackle, apparel, furniture, fittings and navigation equipment, and all other appurtenances thereto 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 hereinafter referred to as the "Vessel" or the "Collateral, 11 but excepting existing gaming equipment (including but not limited to gaming equipment securing claims of Bally Gaming, Inc. and International Game Technology Corp.) or property acquired with Permitted FF&E Financing; TO HAVE AND TO HOLD the Collateral unto the Mortgagee, its successors and assigns, to its and its successors' and assigns, own use and behoof forever, PROVIDED only, and the condition of these presents is such, that if the Owner, or its successors or assigns, shall pay or cause to be paid the Indebtedness hereby secured as and when the same shall become due and payable in accordance with the terms of this Mortgage, the Notes, the Guaranty and the Indenture, and shall perform, observe and comply with the covenants, terms and conditions in this Mortgage, the Notes, the Guaranty and the Indenture, expressed or implied, to be performed, observed or complied with, by and on the part of the Owner, then these presents and the rights hereunder shall cease, determine and be void, otherwise to be and remain in full force and effect. IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Collateral above described is to be held subject to the further covenants, conditions, provisions, terms and uses hereinafter set forth. ARTICLE I Covenants of the Owner SECTION 1. Subject to the conditions and limitations set forth in this Mortgage, the owner will pay or cause to be paid the Indebtedness hereby secured in accordance with the terms of the Indenture, the Notes and the Guaranty, and will observe, perform and comply with the covenant terms and conditions herein, expressed or implied, on its part to be observed, performed or complied with. SECTION 2. The Owner is qualified to own and operate the Vessel under the flag of the United States and engage in the coastwise trade of the United States, and will continue to be so qualified during the life of this Mortgage; and subject to the conditions and limitations set forth in this Mortgage, the Indebtedness hereby secured is and will be the valid and binding obligation of the owner enforceable in accordance with its terms. SECTION 3. The owner lawfully owns and is lawfully possessed of the Vessel free from any security interest, lien, charge or encumbrance whatsoever other than (a) this Mortgage, (b) liens for current crew's wages, (c) liens covered by valid policies of insurance held by the Mortgagee and meeting the requirements of Section 15 below, (d) liens not covered by insurance, incurred in the ordinary course of business and not more than thirty (30) days past due, and will warrant and defend the title and possession thereto and to every part thereof for the benefit of the Mortgagee against the claims and demands of all persons whomsoever. SECTION 4. The Owner will comply with and satisfy all the provisions of Chapter 313 of Title 46 of the Untied States Code, as at any time amended, in order to establish and maintain this Mortgage as a first preferred ship mortgage thereunder upon the Vessel and upon all renewals, improvements and replacements made in or to the same. SECTION 5. The Owner will not cause or permit the Vessel to be operated in any manner contrary to law, will not abandon the Vessel in a foreign port, will not engage in any unlawful trade or violate any law or carry any cargo that will expose the Vessel to penalty, forfeiture or capture, and will not do, or suffer or permit to be done, anything which can or may injuriously affect the registration or enrollment of the Vessel or its qualification to engage in the United States coastwise trade under the laws and regulations of the United States of America and will at all times keep the Vessel duly documented thereunder for such purpose. without the prior written consent of the Mortgagee, the Owner covenants and agrees that the Vessel will not be removed from the inland waterways of the United States. SECTION 6. The Owner will pay and discharge or cause to be paid and discharged when due and payable, from time to time, all taxes, assessments, governmental charges, fines and penalties lawfully imposed on the Vessel and any income therefrom. SECTION 7. Except as otherwise provided in the Indenture, neither the Owner, any charterer, the Master of the Vessel nor any other person has or shall have any right, power or authority to create, incur or permit to have placed or imposed or continued upon the Vessel any lien whatsoever other than liens listed in Section 3(a), (b), (c) and (d) of Article I above, and liens for salvage, provided that such liens listed in such subsection (c) and (d) shall not have priority over this mortgage. SECTION 8. The Owner will place, and at all times and places retain, a properly certified copy of this Mortgage with the Master of the Vessel or with her papers and will cause such certified copy and such Vessel's marine document to be exhibited to any and all persons having business therewith which might give rise to any lien thereon other than liens for crew's wages and salvage, and to any representative of the Mortgagee; and will place with the Master of the Vessel a framed printed notice in plain type reading as follows: NOTICE OF MORTGAGE "This Vessel is owned by the Owner and is covered by a First Preferred Ship Mortgage under authority of Chapter 313 of Title 46 of the United States Code in favor of First Trust National Association, a national banking association, as Trustee (the "Mortgagee,,) , under an Indenture dated as of May 13, 1996 relating to the issuance of Thirty-Five Million Dollars ($35,000,000) Senior Secured Notes due 1999. Under the terms of said Mortgage, neither the owner, any charterer, nor the Master of this Vessel has any right, power or authority to create, incur or permit to be imposed upon this vessel any lien whatsoever other than for current crew's wages and salvage." SECTION 9. Except as otherwise provided for in the Indenture and except for the lien of this Mortgage, the owner will not suffer to be continued any lien, encumbrance or charge on the Vessel, and in due course and in any event within thirty (30) days after the same becomes due and payable, or within fourteen (14) days after being requested to do so by the Mortgagee, will pay or cause to be discharged or make adequate provision for the satisfaction or discharge of all claims or demands, or will cause the Vessel to be released or discharged from any lien, encumbrance or charge therefor. SECTION 10. If a libel or complaint be filed against the Vessel or the Vessel be otherwise attached, levied upon or taken into custody by virtue of any legal proceeding in any court, the owner will promptly notify the Mortgagee thereof by facsimile or telex, confirmed by letter, at its address, as specified in this Mortgage, and within fifteen (15) days after the Owner receives notice of such event will cause the Vessel to be released and all liens thereon other than this Mortgage to be discharged and will promptly notify the Mortgagee thereof in the manner aforesaid. SECTION 11. The Owner will at all times and without cost or expense to the Mortgagee maintain and preserve, or cause to be maintained and preserved, the Vessel and all its equipment, outfit and appurtenances, tight, staunch, strong, in good condition, working order and repair and in all respects seaworthy and fit for its intended service, except ordinary wear and tear. The Vessel shall, and the Owner covenants that she will, at all times comply with all applicable laws, treaties and conventions to which the United States of America is party, and rules and regulations issued thereunder, and shall have on board as and when required thereby valid certificates showing compliance therewith. The Owner will not make, or permit to be made, any substantial change in the structure, type or speed of the Vessel or change in her rig, without first receiving the written approval thereof by the Mortgagee. SECTION 12. Unless restricted by Gaming Law, as defined in the Indenture: (a) The Owner will at all reasonable times afford the Mortgagee or its authorized representative full and complete access to the Vessel for the purpose of inspecting and valuing the Vessel and her cargo and papers and, at the request of the Mortgagee, the owner will deliver for inspection copies of any and all contracts and documents relating to the Vessel, whether on board or not. (b) The Owner hereby agrees to furnish the Mortgagee promptly on written demand, all charter parties or contracts of affreightment relating to the Vessel and full details as to the parties, times of delivery and the like pertaining thereto. SECTION 13. The Owner will not transfer or change the flag or hailing port of the Vessel without the written consent of the Mortgagee first had and obtained, and any such written consent to any one transfer or change of flag or hailing port shall not be construed to be a waiver of this provision with respect to any subsequent proposed transfer or change of flag or hailing port. The Owner may require the transfer or change of the hailing port of the Vessel subject to the terms hereof and of the Indenture. SECTION 14. Except as otherwise provided in the Indenture, the owner will not sell, mortgage, charter or transfer the Vessel without the written consent of the Mortgagee first had and obtained, and any such written consent to any one sale, mortgage, charter or transfer shall not be construed to be a waiver of this provision with respect to any subsequent proposed sale, mortgage, charter or transfer. Except as otherwise provided in the Indenture, any such sale, mortgage, charter or transfer of the Vessel shall be subject to the provisions of this Mortgage and of the Indenture. SECTION 15. (a) The Owner will at all times keep the Vessel adequately insured in conformity with good marine practice, including obtaining hull and machinery insurance with an all risks addendum, in a minimum amount of $30 million to cover the Vessel and $10 million to cover gaming equipment, for the protection of the interests of both the owner and the Mortgagee, but without expense to the Mortgagee. Whenever required by the Mortgagee, the owner will cause to be carried and maintained on and in respect of the Vessel without expense to the Mortgagee insurance in such amounts (with such deductibles or franchises), against such risks (including, without limitation, pollution risks) , in such form (including, without limitation, the form of the loss payable clause and the designation of named assured) , in United States Dollars and with such insurance companies, underwriters, associations, clubs or funds, as the Mortgagee shall from time to time require or approve. The Owner will also without expense to the Mortgagee have the Vessel fully entered in a Protection and Indemnity Association, club or insurance company in good standing and acceptable to the Mortgagee, for such amount as the Mortgagee may require or approve, in both protection and indemnity classes, or keep the Vessel similarly insured against such risks in a manner acceptable to the Mortgagee. (b) The Owner will furnish the Mortgagee at the closing of this Mortgage and from time to time on request and, in any event, on the date hereof and thereafter at least annually, a detailed report signed by a firm of marine insurance brokers or insurance companies acceptable to the Mortgagee with respect to the insurance carried and maintained on the Vessel, together with their opinion as to the adequacy thereof and its compliance with the provisions of this Mortgage and any requirements which the Mortgagee may have notified to the Owner. The Owner will cause such firm to agree to advise the Mortgagee promptly of any default in the payment of any premium or call and of any other act or omission on the part of the owner of which they have knowledge and which might invalidate or render unenforceable, in whole or in part, any insurance on the Vessel. The Owner will assign to the Mortgagee its rights under any policies of insurance in respect to the Vessel and use its best efforts to cause the insurer to acknowledge notice of such assignment. (c) Unless the Mortgagee shall otherwise agree, all insurance must (i) name the Mortgagee as an assured, but without liability for premiums, calls or assessments, (ii) contain a cancellation clause providing that the insurers undertake not to exercise any right of cancellation which they may have by reason of non-payment of premiums or calls when due without giving thirty (30) days, prior written notice of such cancellation to the Mortgagee and an opportunity of paying any such unpaid premium or call, (iii) contain a provision that the insurance will not be permitted to lapse or be materially modified without thirty (30) days, prior written notice being given to the Mortgagee and (iv) contain the agreement of the insurer that any loss thereunder shall be payable to the Mortgagee notwithstanding any action, inaction or breach of representation or warranty by the owner, except to the extent provided by subsection (d) hereof. (d) All amounts of whatsoever nature payable under any insurance must be payable to the Mortgagee as Trustee for distribution first to itself as set forth in Section 9 of Article II of this Mortgage and Article XI, Section 11.2 of the Indenture, and thereafter to the Owner or others as their interests may appear. (e) All amounts paid to the Mortgagee in respect of any insurance on the Vessel shall be deposited and disbursed from Net Awards Sub-Account under Section 11.2 of the Indenture as follows: (i) for so long as no Event of Default (as such term is defined in Section 1 of Article II hereof) has occurred and is continuing, any amount which might have been paid at the time, in accordance with the provisions hereof directly to the Owner or others, shall be paid by the Mortgagee, to, or as directed by, the Owner. (ii) all amounts paid to the Mortgagee in respect of an actual or constructive or arranged total loss or seizure or requisition of the Vessel shall be applied by the Mortgagee as set forth in Section 9 of Article II of this Mortgage; (iii) all other amounts paid to the Mortgagee in respect of any insurance on the Vessel, may in the sole discretion of the Mortgagee, be held and applied to the prepayment of the principal amount of the Indebtedness hereby secured or to making of needed repairs or other work on the Vessel, or to the payment of other claims incurred by the Owner relating to the Vessel, or may be paid to the Owner or whomsoever may be entitled thereto. (f) In the event that any claim or lien is asserted against the Vessel for loss, damage or expense which is covered by insurance required hereunder and it is necessary for the Owner to obtain a bond or supply other security to prevent arrest of the Vessel or to release the Vessel from arrest on account of such claim or lien, the Mortgagee, on request of the Owner, may, in the sole discretion of the Mortgagee, assign to any person, firm or corporation executing a surety or guarantee bond or other agreement to save or release the Vessel from such arrest, all right, title and interest of the Mortgagee in and to said insurance covering said loss, damage or expense, as collateral security to indemnify against liability under said bond or other agreement. (g) The Owner shall deliver to the Mortgagee upon request certified copies and, whenever so requested by the Mortgagee, the originals of all certificates of entry, cover notes, binders, evidences of insurance and policies for the purpose of inspection or safekeeping, or, alternatively, satisfactory letters of undertaking from the broker holding the same. (h) The Owner agrees that it will not execute or permit or willingly allow to be done any act by which any insurance may be suspended, impaired or canceled, and that it will not permit or allow the Vessel to undertake any voyage or run any risk or transport any cargo which may not be permitted by the policies in force, without having previously insured the Vessel by additional coverage to extend to such voyages, risks or cargoes. (i) The Owner will comply with and satisfy all of the provisions of any applicable law, conventions, regulation, proclamation or order concerning financial responsibility for liabilities imposed on the owner or the vessel with respect to pollution by any state or nation or political subdivision thereof and will maintain all certificates or other evidence of financial responsibility as may be required by any such law, convention, regulation, proclamation or other with respect to the trade in which the Vessel is from time to time engaged and the cargo carried by it. (j) The Owner represents and warrants that it has and will have and maintain all "licenses" and "permits" necessary, requisite or desirable for the Vessel to be operated as a "riverboat" as such terms are defined by the Louisiana Riverboat Economic Development and Gaming Control Act, La. R.S. 4:501, et seg. (the 'Act'), and that it shall comply in all respects with the Act, the rules and regulations promulgated thereunder, and the orders of all governmental agencies, boards and commissions enforcing the provisions of the Act. SECTION 16. The Owner will reimburse the Mortgagee, within ten (10) days after written request, with interest as set forth in the Indenture, for any and all expenditures which the Mortgagee may from time to time make, lay out or expend in providing such protection in respect to insurance, discharge or purchase of liens, taxes, dues, assessments, governmental charges, fines and penalties lawfully imposed, repairs, attorney's fees, necessary transaction fees and other matters as the owner is obligated hereunder to provide, but fails to provide. Such obligation of the owner to reimburse the Mortgagee shall be secured by this Mortgage, and shall be payable by the owner on demand. The Mortgagee, though privileged so to do, shall be under no obligation to the Owner to make any such expenditures, nor shall the making thereof relieve the Owner of any default in that respect. SECTION 17. The Owner will fully perform any and all charter parties or other contracts which it may enter into with respect to the Vessel. SECTION 18. In the event that this Mortgage or any provision hereof shall be deemed invalidated in whole or in part by reason of any present or future law or any decision of any authoritative court, or if the documents at any time held by the Mortgagee shall be deemed by the Mortgagee for any reason insufficient to carry out the true intent and spirit of this Mortgage, then from time to time, the owner will execute, within ten (10) days after delivery of such documents to the Owner on its own behalf, such other and further assurances and documents as in the reasonable opinion of such Mortgagee may be required more effectively to subject the Vessel to the payment of the Indebtedness hereby secured, as in this Mortgage provided, and the performance of the terms and provisions of this Mortgage, the Indenture, the Notes and the Guaranty. ARTICLE II Events of Default and Remedies SECTION 1. Each of the following events shall constitute an "Event of Default" under this Mortgage subject to the notice and cure provisions as applicable set forth in Section 6.1 of the Indenture: (a) an Event of Default under the Indenture; or (b) any other payment in respect of the Indebtedness hereby secured has not been received by the Mortgagee when due; or (c) the statements in Sections 2 and 3 of Article I of this Mortgage shall prove to be untrue in a material way; or (d) a default by the Owner shall have occurred in the due and punctual observance and performance of any of the agreements, covenants or conditions of this Mortgage; Then, and in each and every such case, the Mortgagee shall have the right to: (1) Declare all the then unpaid Indebtedness hereby secured to be due and payable immediately as set forth in Section 6.1 of the Indenture, and upon such declaration the same, including interest to date of declaration, and all other costs, fees and other charges, shall become and be immediately due and payable; (2) Exercise all of the rights and remedies in foreclosure and otherwise given to mortgagees by the provisions of Chapter 313 of Title 46 of the United States Code, or other applicable law including the law of any other jurisdiction where the Vessel may be found; (3) Bring suit at law, in equity or in admiralty, in any court of any nation in the world, as it may be advised, to recover judgment for the Indebtedness hereby secured, and collect the same out of any and all property of the Owner covered by this Mortgage; (4) Take and enter into possession of the Vessel, at any time, wherever the same may be, without legal process and without being responsible for loss or damage, and the Owner 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 (subject to any Approvals as may be necessary) , and demand, collect and retain all hire, freights, earnings, issues, revenues, income, profits, return premiums, salvage awards or recoveries, recoveries in general average, and all other sums due or to become due in respect to the Vessel or in respect of any insurance thereon from any person whomsoever, 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 . (S) 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 Owner without charge, or to dock her at any other place at the cost and expense of the owner; (5) Take and enter into possession of the Vessel, at any time, wherever the same may be, without legal process, and if it seems desirable to the Mortgagee and 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 and upon such terms and conditions as the Mortgagee may deem advisable, free from any claim by the Owner in admiralty, in equity, at law or by statute, at public or private sale, by sealed bids or otherwise, by mailing, by air or otherwise, notice of such sale, whether public or private, addressed to the Owner at its last known address, fourteen (14) days prior to the date fixed for entering into the contract for sale. Any sale may be held at such place and at such time as the Mortgagee by notice may have specified, or may be adjourned by the Mortgagee 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; and any sale may be conducted without bringing the Vessel to the place designated-for such sale and in such manner as the Mortgagee may deem to be for its best advantage, and the Mortgagee may become the purchaser at any sale. SECTION 2. 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 Owner therein and thereto, and shall bar the Owner, its successors and assigns, and all persons claiming by, through or under them. 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. In case of any such sale, if the Mortgagee is the purchaser, the Mortgagee shall be entitled, for the purpose of making settlement or payment for the property purchased, to use and apply the Indebtedness hereby secured in order that there may be credited against the amount remaining due and unpaid thereon the sums payable out of the net proceeds of such sale to the Mortgagee after allowing for the costs and expenses of sale and other charges; and thereupon such purchaser shall be credited, on account of such purchase price, with the net proceeds that shall have been so credited upon the Indebtedness hereby secured. At any such sale, the Mortgagee may bid for and purchase such property and upon compliance with the terms of sale may hold, retain and dispose of such property without further accountability therefor. SECTION 3. The Mortgagee is hereby appointed attorney-in-fact of the Owner to execute and deliver to any purchaser aforesaid, said attorney-in-fact being hereby vested with full power and authority to make, in the name and on behalf of the Owner, 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 owner will, if and when required by the Mortgagee, execute such form of conveyance of the Vessel as the Mortgagee may direct or approve. SECTION 4. The Mortgagee is hereby appointed attorney-in-fact of the Owner, upon the occurrence and during the continuance of an Event of Default, in the name of the Owner to demand, collect, receive, compromise and sue for, so far as may be permitted by law, all freight, hire, earnings, issues, revenues, income and profits of the Vessel and all amounts due from underwriters under any insurance thereon as payment of losses or as return of premiums or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due at the time of the happening of an Event of Default in respect of the Vessel, or in respect of any insurance thereon, from any person whomsoever, and to make, give and execute in the name of the Owner acquittances, receipts, releases or other discharges for the same, whether under seal or otherwise, and to endorse and accept in the name of the owner all checks, notes, drafts, warrants, agreements and other instruments in writing with respect to the foregoing. SECTION 5. Whenever any right to enter and take possession of the Vessel accrues to the Mortgagee, it may require the Owner to deliver, and the Owner shall on demand, at its own cost and expense, deliver to the Mortgagee the Vessel 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 or keeper of the vessel and of the freights, hire, earnings, issues, revenues, income and profits due or to become due and arising from the operation thereof. SECTION 6. The Owner authorizes and empowers the Mortgagee, or its appointees or any of them on behalf of the Mortgagee, to appear in the name of the owner, its successors and assigns, in any court of any country or nation of the world where a suit is pending against the Vessel because of or on account of an alleged lien against the Vessel from which the Vessel has not been released and to take such proceedings as the Mortgagee may consider proper towards the defense of such suit and the purchase or discharge of such lien, and all expenditures made or incurred by the Mortgagee for the purpose of such defense or purchase or discharge shall be a debt due from the Owner, 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. The authority and power hereby conferred upon the Mortgagee or its appointees does not preclude the right and power of the Owner to sue in its own name or to enter into agreements with third parties with respect to the Vessel prior to the occurrence of an Event of Default, subject always to the restrictions imposed by this Mortgage. The Mortgagee shall give 10 days written notice to Owner before exercising this right, unless quicker action is necessary in order to prevent prejudice to rights of the Vessel, Owner or Mortgagee. SECTION 7. 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 an Event of Default shall impair any such right, power or remedy or be construed to be a waiver of such Event of Default or to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any security or of any payment of or on account of the Indebtedness hereby secured maturing after an 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. No consent, waiver or approval of the Mortgagee shall be deemed to be effective unless in writing and duly signed by an authorized signatory of the Mortgagee. SECTION 8. 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 Owner 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 exist as if no such proceedings had been taken. SECTION 9. The proceeds of any sale of the Vessel received by the Mortgagee, and the net earnings of any charter operation or other use of the Vessel after acceleration of the Indebtedness hereby secured, or insurance received by the Mortgagee, and any and all other moneys 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 for, shall be applied as set forth in the Indenture. SECTION 10. Until an Event of Default shall occur, the owner (a) shall be suffered and permitted to retain actual possession and use of the Vessel and (b) shall have the right, from time to time, in its discretion, and without application to the Mortgagee, and without obtaining a release thereof by the Mortgagee, to dispose of, free from the lien hereof, boilers, machinery, rigging, anchors, chains, tackle, apparel, furniture, fittings, covers, equipment or any other appurtenances of the Vessel that are no longer useful, necessary, profitable or advantageous in the operation of the Vessel, first or simultaneously replacing the same by new machinery, rigging, anchors, chains, tackle, apparel, furniture, fittings, covers, equipment, or other appurtenances of substantially equal value to the Owner, which shall forthwith become subject to the lien of this Mortgage as a first preferred mortgage thereon. SECTION 11. (a) If any provision of the Indenture, the Notes, the Guaranty or this Mortgage should be deemed invalid or shall be deemed to affect adversely the preferred status of this Mortgage under any applicable law, such provision shall cease to be a part of this Mortgage without affecting the remaining provisions, which shall remain in full force and effect. (b) In the event that any provision of this Mortgage, the Notes, the Guaranty or the Indenture or any of the documents or instruments which may from time to time be delivered hereunder or thereunder or any provision hereof shall be deemed invalidated by present or future law of any nation or by decision of any court, this shall not affect the validity or enforceability, or both, of all or any other parts of this Mortgage, the Notes, the Indenture, the Guaranty, any of such documents or instruments and, in any such case, the Owner covenants and agrees that, on demand, it will execute and deliver such other and further agreements or documents or instruments, or any of them, and do such things as the Mortgagee in its sole discretion may deem to be necessary to carry out the true intent of this Mortgage, the Indenture, the Guaranty and of the Notes secured hereby. (c) Anything herein to the contrary notwithstanding, it is intended that nothing herein shall waive the preferred status of this Mortgage and that, if any provision in this Mortgage or portion thereof shall be construed to waive the preferred status of this Mortgage, then such provision to such extent shall be void and of no effect. SECTION 12. The Owner hereby acknowledges and agrees that the Mortgagee shall not be required to have the Vessel marshalled (upon any sale of the Vessel pursuant to this Mortgage or otherwise) or be required to realize on any other collateral prior to its realization on the Vessel. ARTICLE III Sundry Provisions SECTION 1. If the principal of, premium, if any, interest and all costs, fees and other charges on the Owner's Notes should not be satisfied from the proceeds from the sale of the Vessel, the owner shall remain fully liable for any deficiency. SECTION 2. All of the covenants, promises, stipulations and agreements of the Owner in this Mortgage contained shall bind the owner and its successors and assigns. In the event of any assignment or transfer of this Mortgage, the term "Mortgagee", as used in this Mortgage, shall be deemed to mean and include any such assignee or transferee. This Mortgage may not be amended or supplemented orally but may be amended or supplemented from time to time by an instrument in writing executed by the Owner and the Mortgagee. SECTION 3. Wherever and whenever herein any right, power or authority is granted or given to the Mortgagee such right, power or authority may be exercised in all cases by the Mortgagee or by such agent or agents of the Mortgagee which, when taken, shall constitute the act of the Mortgagee hereunder. SECTION 4. This Mortgage may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. SECTION 5. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by facsimile or registered or certified mail, postage prepaid, return receipt requested, addressed as provided in Section 13.2 of the Indenture. Any party hereto may by notice to the other party designate such additional or different addresses as shall be furnished in writing by such party in the manner provided in the Indenture. Any notice or communication to any party shall be deemed to have been given or made as of the date so delivered, if personally delivered, when answered back, if telexed; when receipt is acknowledged, if faxed, and five calendar days after mailing, if sent by registered or certified mail (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee) . The Grantor may give notice to the Holders at the addresses set forth for them in the register kept by the Registrar under the Indenture or may request that the Trustee notify the Holders at such addresses. SECTION 6. For purposes of this Mortgage and for purposes of recording this Mortgage as required by Chapter 313 of Title 46 of the United States Code, the total amount of this Mortgage is THIRTY-FIVE MILLION DOLLARS ($35,000,000) and interest and performance of mortgage covenants; there is no separate discharge amount. SECTION 7. For purposes of this Mortgage, except as otherwise expressly provided herein, or unless the context shall otherwise require, capitalized terms used herein that are not defined herein but that are defined in or by reference in the Indenture shall have the respective meanings stated in or referred to in the Indenture. SECTION 8. Each of the provisions of this Mortgage is subject to, and shall be enforced in compliance with, the provisions of the Gaming Laws. SECTION 9. This Mortgage shall be governed by and construed in accordance with the laws of the State of Louisiana as applied to contracts made and performed within the State of Louisiana without regard to principles of conflicts of law. SECTION 10. In the event that any term or provision of this Mortgage shall be inconsistent with the terms of the Indenture, the Indenture should control, accept as otherwise required by the Ship Mortgage Act or the general maritime law of the United States. IN WITNESS WHEREOF, the Owner has caused this First Preferred Ship Mortgage covering the Vessel to be duly executed and delivered the day and year first above written. WITNESSES: CASINO MAGIC OF LOUISIANA, CORP. /s/ JoLynn M. Marino By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BEFORE ME, the undersigned Notary Public, duly commissioned and qualified within and for the State and Parish aforesaid, personally came and appeared: CASINO MAGIC OF LOUISIANA, CORP., appearing herein through the undersigned officer, who declared and acknowledged to me, Notary, and to the undersigned witnesses that he signed and executed the above and foregoing instrument by order of the Board of Directors of said corporation, for the objects, purposes and considerations therein expressed, as his own free act and as the free will, act and deed of the said corporation. IN WITNESS WHEREOF, this instrument is executed in the presence of the undersigned witnesses and me, Notary, on this 13th day of May, 1995. WITNESSES: CASINO MAGIC OF LOUISIANA, CORP. /s/ JoLynn M. Marino By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary /s/ Notary Public (name unreadable) NOTARY PUBLIC EX-10.6 9 ASSUMPTION AGREEMENT This Agreement, dated the 13th day of May, 1996, is entered into among Casino Magic Corp.("Magic"), Jefferson Casino Corp. ("JCC"), (Magic and JCC, "Purchasers"), Capital Gaming International, Inc. ("CGII"), and Crescent City Capital Development Corp. ("CCCDC"). RECITALS: WHEREAS, CCCDC is currently debtor in possession in a Chapter 11 bankruptcy proceeding pending in the United States Bankruptcy Court for the Eastern District of Louisiana (the "Bankruptcy Case"); and WHEREAS, pursuant to a Stock Purchase Agreement dated February 21, 1996, Purchasers agreed to purchase all of the newly issued capital stock of Reorganized CCCDC pursuant to a Plan of Reorganization submitted in the Bankruptcy Case; and WHEREAS, pursuant to paragraph 4 of the Stock Purchase Agreement, Purchasers agreed to assume at the Closing all the secured obligations of CCCDC to Bally Gaming, Inc. and International Game Technology collateralized by security interests in gaming equipment manufactured and sold by Bally Gaming, Inc. and International Game Technology to CCCDC in an aggregate amount not exceeding $6,500,000 (the "Assumed Liabilities"); and WHEREAS, on April 29, 1996, a Second Amended Plan of Reorganization was confirmed in the Bankruptcy Case which provided for the consummation of the Stock Purchase Agreement conditioned, among other things, on the assumption of the Assumed Liabilities as set forth in paragraph 4 of the Stock Purchase Agreement; and WHEREAS, Purchasers, in connection with the Closing of the Stock Purchase Agreement, wish to confirm the assumption of indebtedness required by the Letter Agreement and the Plan. NOW, THEREFORE, in consideration of the above, it is agreed as follows: 1. ASSUMPTION. Purchasers hereby assume all liability and obligation with respect to the Assumed Liabilities. 2. INDEMNIFICATION. Purchasers agree to indemnify, defend and hold harmless CGII, CCCDC, and their respective officers, directors, attorneys and agents, from and against any liability, cost or expense (including reasonable attorneys fees) arising out of or resulting from Purchasers' failure to fulfill its obligations as set forth in paragraph 1 above. IN WITNESS WHEREOF, the undersigned have executed this Assumption Agreement as of the date and year first written above. CASINO MAGIC CORP. By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary JEFFERSON CASINO CORP. By: /s/ Robert Callaway Name: Robert Callaway Title: Secretary CAPITAL GAMING INTERNATIONAL, INC. By: /s/ Edward M. Tracey Name: Edward M. Tracy Title: President and CEO CRESCENT CITY CAPITAL DEVELOPMENT CORP. By: /s/ Edward M. Tracey Name: Edward M. Tracy Title: President and CEO EX-10.7 10 PROMISSORY NOTE $1,975,000.00 May 13, 1996 New Orleans, Louisiana FOR VALUE RECEIVED, I, we, and each of us, in solido, whether as makers, endorsers or sureties, (all hereinafter collectively the "Borrower"), promise to pay to the order of Bally Gaming, Inc. (the "Lender") at 6601 South Bermuda Road, Las Vegas, Nevada 89119, the principal sum of One Million Nine Hundred Seventy-five Thousand and 00/100 ($1,975,000.00) Dollars, plus interest thereon, at the rate of eleven per cent (11%) per annum, from date until paid, or so much thereof as may be outstanding from time to time, payable as follows: A $296,250.00 principal payment shall be made by Borrower to Lender by May 28, 1996, with the balance payable monthly, in 36 equal payments of principal and interest of $55,676.85, beginning sixty days after the commencement of gaming operations on the M/V Crescent city Queen, official Number 1028319 ("vessel"), or sixty days from date hereof, whichever is later. Notwithstanding the foregoing, Borrower may, at Borrower's sole option, fully satisfy Borrower's obligations under this note by making a single payment in the amount of $1,700,000.00, by wire transfer of immediately available funds to Lender's bank account number 1840087346, at First Interstate Bank, ABA Routing number 121200019, at 3800 Howard Hughes Parkway, Las Vegas, Nevada 89193, on or before May 28, 1996, which payment shall constitute full and final payment of Borrower's obligations under this note. The term "commencement of gaming operations" shall mean the first day after the date of this agreement on which members of the general public is admitted to the Vessel for the purpose of conducting gaming activities. All payments and prepayments made by the Borrower hereunder shall be made in lawful money of the United states to the Lender in immediately available funds before 5:00 P.M. (Pacific time) on the date that such payment is required to be made. The Borrower hereby authorizes the Lender, if and to the extent payment is not made when due hereunder, to charge from time to time against any of the Borrower's accounts with the Lender any amount so due. Any payment received and accepted by the Lender after such time shall be considered for all purposes (including the calculation of interest, to the extent permitted by law) as having been made on the Lender's next following Business Day. If the day for any payment or prepayment hereunder falls on a day which is not a Business Day, then for all purposes of this Note, the same shall be deemed to have fallen on the next following Business Day, and such extension of time shall in such case be included in the computation of payments of interest. For the purposes of this paragraph "Business Day" shall mean a day other than a Saturday, Sunday or legal holiday for commercial banks in Las Vegas, Nevada. The Borrower and any guarantor, accommodation party, endorser or other person or entity liable for the demand or collection of this Note expressly waive demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, bringing of suit, diligence in taking any action to collect amounts called for hereunder and in the handling of property at any time existing as security in connection herewith, and shall be directly and primarily liable, in solido, for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission as or with, respect to the collection of any amount called for hereunder or in connection with any right, lien, interest or property at any and all times had or existing as security for any amount called for hereunder. Any of the following events shall be considered an "Event of Default" as that term is used herein: (i) the Borrower fails to make payment when due of any principal or interest installment on this Note; (ii) the Borrower defaults in the payment of any amounts due to the Lender or in the observance or performance of any of the covenants, or agreements contained in any security or credit agreements, notes, leases, collateral or other documents relating to any debt of the Borrower to the Lender, including the indebtedness represented by this Note; (iii) the Borrower defaults in the payment of any amounts due to any person (other than the Lender) or in the observance or performance of any of the covenants or agreements contained in any security or credit agreements, notes, leases, collateral or other documents relating to any Debt of the Borrower to any person (other than the Lender) in excess of $500,000.00, and any grace period applicable to such default has elapsed; (iv) a receiver, conservator, liquidator or trustee of the Borrower, or of any of its property is appointed by order or decree of any court or agency or supervisory authority having jurisdiction; or an order for relief is entered against the Borrower, under the Federal Bankruptcy Code; or the Borrower is adjudicated bankrupt or insolvent or any material portion of the property of any of the Borrower is sequestered by court order and such order remains in effect for more than 30 days after such party obtains knowledge thereof, or a petition is filed against the Borrower under any state, reorganization, arrangement, insolvency, readjustment of debt, dissolution, liquidation or receivership law of any jurisdiction, whether now or hereafter in affect, and such petition is not dismissed within 60 days; (v) the Borrower files a case under the Federal Bankruptcy Code or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any case or petition against it under any such law;' (vi) the Borrower makes an assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a receiver, trustee or liquidator of the Borrower or of all or any part of its property; (vii) judgment for the payment of money in excess of $500,000.00 (which is not covered by insurance) is rendered by any court or other governmental body against the Borrower, and the Borrower does not discharge the same or provide for its discharge in accordance with its terms, or procure a stay of execution thereof within 30 days from the date of entry thereof, and within said 30-day period or such longer period during which execution of such judgment shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal while providing such reserves therefor as may be required under generally accepted accounting principles; or (viii) a writ or warrant of attachment or any similar process shall be issued by any court against all or any material portion of the property of the Borrower, and such writ or warrant of attachment or any similar process is not released or bonded within 30 days after its entry. Upon the happening of any Event of Default specified in the preceding paragraph (other than clauses (iv) and (v) thereof), the Lender may, without notice to the Borrower, declare the entire principal amount of the Note plus interest accrued hereon to be immediately due and payable without presentment, demand, protest, notice of protest or dishonor or other notice of default of any kind, all of which are hereby expressly waived by the Borrower. Upon the happening of any Event of Default specified in clauses (iv) or (v) of the preceding paragraph, the entire principal amount of this Note plus interest accrued hereon shall, without notice or action by the Lender, be immediately due and payable without presentment, demand, protest, notice of protest or dishonor or other notice of default of any kind, all of which are hereby expressly waived by the Borrower. Upon the occurrence of any Event of Default, the Lender shall have the right to set-off any funds of the Borrower in the possession of the Lender against any amounts then due by the Borrower to the Lender on this note. If an Event of Default occurs and this Note is placed in the hands of an attorney for collection, or suit is filed hereon, or proceedings are had in bankruptcy, probate, receivership or other judicial proceedings for the establishment or collection of any amount called for hereunder, or any amount payable or to be payable hereunder is collected through any such proceedings, the Borrower agrees it is also to pay the owner and holder of this Note twenty-five (25%) percent of all sums due hereunder as attorneys' fees. This Note shall be governed by and construed under the laws of the state of Louisiana. IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered on the day first written above. CASINO MAGIC OF LOUISIANA, CORP. BORROWER By: /s/ Robert A. Callaway ROBERT A. CALLAWAY, Secretary -----END PRIVACY-ENHANCED MESSAGE-----