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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
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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