PARTICIPATION AGREEMENT
THIS AGREEMENT made as of June 28, 1996, by and between BNC National Bank
(the "Originator'), and Casino Magic American Corp. (the "Participant"),
WITNESSETH
WHEREAS, the Originator has granted the Sisseton-Wahpeton Sioux Tribe
(the "Borrower"), a line of credit and term loan of up to $17,500,000 to
construct and operate a gaming facility on the Lake Traverse Reservation in
North Dakota, which is evidenced by a Construction and Term Loan Agreement, a
Promissory Note, a Security Agreement and a Depository Agreement (collectively
called the "Credit Agreement"), copies of which have been provided to the
Participant, and
WHEREAS, the Originator and the Participant have agreed that the
Participant shall participate in the loans under the Credit Agreement upon the
following terms and conditions,
NOW, THEREFORE, in consideration of the premises of and of the mutual
agreements herein made, the Originator and the Participant hereby agree that:
1.(a) The Participant shall be obligated to purchase a participation in
each advance under the Credit Agreement in an amount equal to its Percentage
of such advance, up to a maximum amount equal to its Commitment. The
Participant's "Percentage" and "Commitment" shall be as set forth on Exhibit A
hereto. Except as provided in paragraph 7 and in subparagraphs (b) and (c),
the Participant shall be entitled to its Percentage of each payment (whether
of principal, interest, late fees, prepayment premiums, or otherwise) received
from the Borrower and of any proceeds of the disposition of collateral.
THIS LOAN PARTICIPATION CONSTITUTES A SALE OF A PERCENTAGE OWNERSHIP
INTEREST IN THE REFERENCED INDEBTEDNESS, AND, COLLATERAL SECURITY AND IN THE
"LOAN DOCUMENTS" (AS DEFINED BELOW) AND SHALL NOT BE CONSTRUED AS AN EXTENSION
OF CREDIT BY THE PARTICIPANT TO THE ORIGINATOR.
(b) Each payment received from the Borrower and all proceeds of the
disposition of any collateral shall (after making allowance for expenses, as
provided in paragraph 7) be applied first to the payment of interest payable
under the Credit Agreement next to the payment of late fees, next to payment
of the principal of the advances, and finally to the payment of prepayment
premiums. The Participant shall be entitled to receive interest on its
participation at a rate of 10% per annum (13% per annum following the
occurrence and during the continuance of any Event of Default as defined in
the Credit Agreement), computed based on actual days elapsed in a 360-day
year. The Originator shall be entitled to retain for its own account all
interest in excess of the interest payable to Participant and other
participants.
(c) The initial advance under the Credit Agreement will include amounts
required to pay origination and placement fees to which the Borrower has
agreed. The Participant and each other participant shall be entitled to
receive at the time of the first advance an amount equal to its "Origination
Fees," set forth on Exhibit A hereto, and the Originator shall be entitled to
retain for its own account all additional amounts advanced to the Borrower to
pay origination and placement fees.
2. The Originator warrants that it has provided to the Participant true
copies of the Construction and Term Loan Agreement, the Note, the Security
Agreement and the Depository Agreement, and that originals or true copies of
all other materials pertinent to the Credit Agreement, including all
certificates, filings and other instruments, agreements and writings issued or
presented in connection therewith (the "Loan Documents") are available for
inspection by the Participant at the Originator's Bismarck, North Dakota
office, and that it will provide all material financial information concerning
the Borrower to the Participant upon receipt, so long as the Participant has
any interest in loans under this Participation Agreement. The Participant
acknowledges its approval, as to form and content, of the Credit Agreement and
the other Loan Documents which have been made available for its inspection.
3. Neither the Originator nor the Participant (i) shall be liable or
responsible for representations or warranties made by, or for obligations
binding upon or assumed by, the Borrower or anyone else; or (ii) makes any
representation or warranty as to the genuineness, legality, validity,
perfection, priority, enforceability or sufficiency of the loans under the
Credit Agreement; or of any other collateral rights and remedies securing such
loans; or of any of the Loan Documents or any other agreement made or
instrument, document or writing issued thereunder, in connection therewith, or
as a result thereof; or (iii) makes any representation or warranty as to the
Borrower, as to any financial statements or collateral reports submitted by or
for the Borrower, as to any risk of loss with respect to this transaction or
as to any matter whatsoever, except that the Originator warrants to the
Participant that it has good title to the participating interest acquired by
the Participant hereunder; or (iv) shall have any right of recourse against
the other party hereto.
4.(a) The Originator will notify the Participant by 12:30 p.m. Bismarck,
North Dakota time, on the same day upon which an advance is to be made to the
Borrower under the Credit Agreement of the amount of the requested advance and
the amount of the Participant's Percentage of such advance. Prior to 2:30,
Bismarck, North Dakota time, on the date of the advance, the Participant shall
pay to the Originator, in immediately available funds, the Participant's
Percentage of the advance. The obligation of the Participant to make such
payment to the Originator shall be absolute and unconditional and without
set-off, counterclaim or deduction of any kind, and the Participant shall not
be relieved of the obligation to make any such payment for any reason.
(b) If the Participant shall fail to make any payment required by
subparagraph (a) at the time, in the funds and at the place provided, the
Originator may, but shall not be obliged to, advance funds on behalf of the
Participant. Each such advance shall be secured by the Participant's interest
in all payments made by the Borrower and all proceeds of collateral under the
Credit Agreement, and such advance shall be secured by the Participant's
interest in all payments made by the Borrower and all proceeds of collateral
under the Credit Agreement, and such advance may be repaid by application by
the Originator of payments to which the Participant would otherwise to be
entitled under this Participation Agreement. Any amount not paid by the
Participant to the Originator as provided herein shall bear interest at the
rate of 10% for each day from the date such payment is due until such payment
is made in full or the advance is repaid in full.
(c) Upon receiving a payment required by subparagraph (a), the
Originator shall issue to the Participant a participation certificate in the
form of Exhibit B confirming, to the best knowledge of the person executing
the same, the aggregate amount owed to the Originator by the Borrower under
the Credit Agreement and the Participant's, and each other participant's
participation in such amount.
5.(a) The Originator is hereby granted, subject to paragraphs 6 and 7,
the power and authority to administer, manage and service the advances under
the Credit Agreement; to waive the performance of obligations of the Borrower;
to excuse the non-occurrence of conditions; to collect and receive any and all
payments and collections by or for the account of the Borrower and at its sole
discretion (subject to the Credit Agreement) to release such payments and
collections to the Borrower or apply the same to the payment of indebtedness;
and otherwise to do and refrain from doing any and all acts and things which
the Originator would be required or permitted to do or refrain from doing
under or with respect to the Loan Documents if it had retained its entire
interest as lender under the Loan Documents, but acting on behalf of the
Participant and all other participants.
(b) The Originator's power and authority granted in this paragraph shall
terminate upon written notice to the Originator and the Participant from the
Supermajority Participants (as defined below). Such notice may be given only
upon or following: (i) the Originators insolvency, closing or liquidation,
(ii) a determination by the Supermajority Participants that the Originator has
failed to fulfill any of its obligations under this Participation Agreement,
or (iii) the inability of the Originator and the Supermajority Participants to
agree as to a course of action to be taken following an Event of Termination.
Upon termination, the Supermajority Participants may immediately notify the
Borrower, directing the Borrower to make all payments required by the Credit
Agreement directly to any participant designated in such notice, whereupon
such participant shall succeed to the powers and authority granted to the
Originator under paragraph 5(a) hereof. The Originator shall be obligated to
join in any such notice to the Borrower if the Supermajority Participants so
request, but shall be under no further obligation thereafter to service,
administer or manage the advances under the Credit Agreement. Any participant
designated by the Supermajority Participants shall thereafter service,
administer and manage the advances under the Credit Agreement for the benefit
of the Originator, the Participant and each other participant, and in doing so
shall be subject to a standard of care no less stringent than the standard of
care applicable to the Originator under paragraph 6 hereof. "Supermajority
Participants" means participants (not necessarily including the Participant)
whose participations in advances under the Credit Agreement total no less than
67% in the aggregate.
6. The power and authority granted in paragraph 5 is subject to the
qualification that the Originator will not agree, whether before or after an
Event of Termination (as defined in paragraph 12), to extend the maturity of
or sell at a discount any indebtedness or evidence of indebtedness in which
the Participant has an interest hereunder or to change the rate of interest on
any such indebtedness without prior written approval by the Participant. The
Originator will exercise the same degree of care and judgment in exercising
the power and authority granted in paragraph 5 as it exercises with respect to
loans in which no participations are sold, and shall not be under any
liability to the Participant as a result of anything it may do or refrain from
doing, except in case of its negligence or willful misconduct. The Originator
will not take any action which does not affect it and the Participant in like
fashion, in a manner commensurate with the proportionate shares of each.
7. The Originator is entitled to be reimbursed by the Borrower for all
non-routine costs, expenses, losses, damages and liabilities (including,
without limitation, all reasonable attorneys' fees and foreclosure and
collection expenses) at any time incurred by or imposed upon the Originator
with respect to the Credit Agreement or any other Loan Document or in
connection with or as a result of any action taken or omitted by the
Originator under paragraph 5. All payments received by either party after the
occurrence of any Event of Termination with respect to the indebtedness in
which the Participant has an interest hereunder (whether such payments are
from the Borrower or from any other person) shall be applied first to
reimburse the Originator for such expenses. If such reimbursements are not
sufficient to pay or reimburse the Originator, the Participant will pay the
Originator, upon demand, an amount equal to the Participant's Percentage of
the deficiency.
8. The Participant may transfer its interest in advances under the
Credit Agreement. If it does so, it shall immediately notify the Originator
in writing of such transfer; and the Originator shall be entitled to assume
conclusively that no such transfer has been made, unless and until such
written notice is received. Except as otherwise expressly agreed in writing
by the Originator, the Participant shall not, by reason of such transfer or
otherwise, be relieved of any of its obligations hereunder. Each transferee
shall be subject to the provisions of this Agreement and to any request made,
waiver or consent given or other action taken hereunder by the Participant
prior to the receipt by the Originator of written notice of such transfer.
9. If the Participant shall obtain any payment (whether voluntary,
involuntary, by exercise of any right of setoff, or otherwise) upon
indebtedness of Borrower arising under the Credit Agreement so as to reduce
the amount owed to the Participant to an amount which is less than the
Participant's Percentage of the total indebtedness outstanding under the
Credit Agreement, the Participant shall purchase from the Originator (without
warranty and without recourse) an additional participation in any indebtedness
of the Borrower arising under the Credit Agreement, so that the amount owed to
the Participant equals its Percentage of the total indebtedness, and the
Originator will distribute such amount to other participants so that the
amount owed to each equals its Percentage of the total indebtedness. If all
or any portion of any excess payment originally obtained by the Participant is
thereafter recovered from it, the purchase of a participation may be rescinded
and the purchase price restored to it to the extent of the recovery, but
without interest.
10. The Originator may sell additional participating interests in the
advances under the Credit Agreement to any person or persons at any time,
whether at par, at a premium or at a discount, for any price or consideration,
in any amount or proportion, for any term or period of time and upon any terms
and conditions, except that the Originator will not sell participating
interests granting participants proportionate shares in such advances which at
any one time exceed 95% thereof in the aggregate.
11. This Agreement shall be governed by the substantive laws of the
State of North Dakota, and shall be binding upon and inure to the benefit of
the parties and their respective participants, successors and assigns.
Neither Borrower nor any other person, except the parties and their successors
and assigns, shall be entitled to rely on, have the benefit of, or enforce any
provision of this Agreement.
12. The term "Event of Termination" means the earlier of the following
events: (i) occurrence of an Event of Default under the Credit Agreement; or
(ii) demand for payment of any indebtedness outstanding under the Credit
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first above written.
BNC NATIONAL BANK CASINO MAGIC AMERICAN CORP.
By /s/ Brad J. Scott By /s/ Marlin F. Torguson
Its Executive Vice-President Its Chairman of the Board
EXHIBIT A
Name of Participant Commitment Percentage
Origination Fees
Casino Magic American Corp. $5,000,000 28.571429% $25,000
EXHIBIT B
BNC NATIONAL BANK
("ORIGINATOR")
This will certify and confirm that as of ___________, 1996, pursuant to a
Participation Agreement dated as of ___________, 1996 ("Participation
Agreement"), the Originator has sold participation interests to the following
Participants in the amounts and percentages so stated in the advances made by
the Originator as evidenced by the Credit Agreement (as defined in the
Participation Agreement):
Originator $__________ ___% $__________________
TOTAL AMOUNT $17,500,000 100% $__________________
Each participant's Participation is subject in all respects to its
Participation Agreement.
BNC NATIONAL BANK
By ___________________________