HOFFMAN
SUTTERFIELD
ENSENAT
A Professional Law Corporation
Baton Rouge, LA 70821-4407
P.O. Drawer 4407
2431 South Acadian Thruway
Suite 600
New Orleans, LA 70130-6121 Telephone (504)928-6800 Houston, TX 770002
Suite 2100 Poydras Center Fax (504) 923-0573 Texas Commerce Tower
650 Poydras Street 600 Travis, Ste 2860
Telephone (504) 523-1385 Tel (713) 227-5505
Fax (504) 524-6891 Fax (713) 227-2733
January 28, 1997
Casino Magic of Louisiana, Corp.
Jefferson Casino Corporation
1701 Old Minden Road
Bossier City, LA 71111
RE: Opinion Letter - Casino Magic of Louisiana, Corp.
$115,000,000 13% First Mortgage Notes due 2003
Our File No. C0622-010
Gentlemen:
We have acted as special counsel to Casino Magic of Louisiana, Corp., a
Louisiana corporation ("CM-LA") and Jefferson Casino Corporation ("JCC"), a
Louisiana corporation, in connection with the issuance and sale of
$115,000,000 First Mortgage Notes Due 2003 in August 1996 (the "Series A
Notes") and deliver this opinion at your request in connection with the
exchange offer (the "Exchange Offer") pursuant to which up to $115,000,000
First Mortgage Notes due 2003 with Contingent Interest ( the "Series B Notes")
are being offered by CM-LA (guaranteed like the Series A Notes by JCC) in
exchange for the Series A Notes. The Series B Notes are substantially
identical to the Series A Notes except that we understand the Series B Notes
are being registered under the Securities Act of 1933, as amended (the
"Securities Act") pursuant to a Form S-4 registration (No. 333-14535) (the
"Registration Statement"), The Series A Notes and Series B Notes are
collectively referred to herein as the "Notes". The Series B Notes, like the
Series A Notes, will be issued pursuant to the Indenture dated August 22,
1996, between CM-LA, JCC and First Union Bank of Connecticut, the Trustee (the
"Trustee"). We understand that in connection with the Registration Statement,
the Indenture is being qualified under the Trust Indenture Act of 1939, as
amended (the "TIA") and, although we are not securities law counsel for CM-LA
and do not otherwise opine pursuant hereto as to compliance with the
Securities Act or the TIA, we render this opinion at your request with respect
to the matters expressly set forth herein in compliance with requirements of
the TIA. We further consent to the filing of
this Opinion by you as an exhibit to the Registration Statement. We
understand that the Notes were issued for the development, construction,
equipping and
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 2
opening of a new dockside riverboat casino and entertainment complex located
in Bossier City, Louisiana ("Casino Magic-Bossier City"). All terms not
defined in this Opinion shall have the same meaning as that provided for in
the Indenture.
In the capacity described above and to the extent described above, we
have examined the following:
A. Mortgage by CM-LA in favor of First Union Bank of Connecticut
as trustee for the benefit of the holders of the Notes.
B. Security Agreement between CM-LA, as debtor, and First Union
Bank of Connecticut, as trustee for the benefit of the holders of the Notes.
C. Security Agreement between JCC, as debtor, and First Union
Bank of Connecticut, as trustee for the benefit of the holders of the Notes.
D. Collateral Assignment by and among CM-LA in favor of First
Union Bank of Connecticut as trustee for the benefit of the holders of the
Notes.
E. Contracting Party's Consent to Assignment for the benefit of
First Union Bank of Connecticut, as trustee for the benefit of the holders of
the Notes.
F. Stock Pledge and Security Agreement by JCC in favor of First
Union Bank of Connecticut as trustee for the benefit of the holders of the
Notes.
G. Cash Collateral and Disbursement Agreement by and among the
Disbursement Agent, First Union Bank of Connecticut, as trustee for the
benefit of the holders of the Notes, the Independent Construction Consultant
and CM-LA.
H. Accounts Pledge Agreement by CM-LA as Debtor in favor of
First Union Bank of Connecticut, as trustee for the benefit of the holders of
the Notes, and the Agent.
I. I have examined UCC-1 filings which were necessary for
confirmation of the transactions contemplated by the Indenture, Notes and
Purchase Agreement.
J. First Preferred Ship Mortgage granted by CM-LA in favor of
First Union Bank of Connecticut as trustee for the benefit of the holders of
the Notes on the M/V Mary's Prize, Official Number 1028011.
K. First Preferred Ship Mortgage granted by Casino Magic of
Louisiana, Corp. in favor of First Union Bank of Connecticut,
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 3
as trustee for the benefit of the holders of the Notes on the
M/V Crescent City Queen, Official Number 1028319.
L. Title Commitments dated July 19, 1996 issued by Louisiana
Title to JCC, No. LT 16190-A, B, C and D, covering property in Bossier/Caddo
Parishes, Louisiana.
M. Indemnity Agreement between Stewart Title Company, JCC, CM-LA
and Casino Magic Corp.
N. Indenture by CM-LA as issuer, JCC as guarantor and First
Union Bank of Connecticut as trustee for the benefit of the holders of the
Notes, and the forms of Notes attached thereto.
O. Department of Transportation, U. S. Coast Guard, General
Index or Abstract of Title for M/V Crescent City Queen, Official Number
1028319 dated the 19th day of August, 1996.
P. Department of Transportation, U. S. Coast Guard, General
Index or Abstract of Title for M/V Mary's Prize dated the 29th day of July,
1996.
Q. Louisiana Uniform Commercial Code Certificate of Search on
Business Name "Casino Magic of Louisiana, Corp.".
R. Louisiana Uniform Commercial Code Certificate of Search on
Business Name "Jefferson Casino Corporation".
Documents shown in (L) through (R) are collectively referred to as "the
Transaction Documents". The documents reflected in (A) through (K) above are
collectively referred to as "the Collateral Documents". All documents listed
above are collectively called Documents.
Basing the opinions set forth in this Opinion on "our knowledge", the
words "our knowledge" signify that, in the course of our representation of
CM-LA and JCC, no facts have come to our attention that would give us actual
knowledge or actual notice that any such opinions or other matters are not
accurate or that any of the Documents are not accurate and complete. Except
as otherwise stated in this Opinion, we have undertaken no investigation or
verification of such matters. Further, the words "our knowledge" and similar
language used in this Opinion are intended to be limited to the actual
knowledge of the attorneys within our firm who have been directly involved in
representing CM-LA and JCC in connection with the Indebtedness or who we
reasonably believe have knowledge of the affairs of CM-LA and JCC.
In reaching the opinions set forth below, we have assumed, and to our
knowledge there are no facts inconsistent with, the following:
(1) Each of the parties to the Documents, other than CM-LA and
JCC, has or will duly and validly execute and deliver each
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 4
such instrument, document, and agreement to be executed in
connection with Casino Magic - Bossier City to which such party is a
signatory, and such parties' obligations set forth in the Documents are its
legal, valid and binding obligations, enforceable in accordance with their
respective terms.
(2) Each person, other than CM-LA and JCC, executing any of the
Documents, whether individually or on behalf of an entity, is duly authorized
to do so.
(3) Each natural person executing any of the Documents is
legally competent do to so.
(4) All signatures of parties other than CM-LA and JCC on the
Documents are genuine.
(5) We have relied on the representations and warranties as to
factual matters made by CM-LA, JCC and their officers as being true and
complete.
(6) Documents submitted to us as originals are authentic, all
Documents submitted to us as certified or photostatic copies conform to the
original document, and all public records reviewed are accurate and complete.
(7) The terms and conditions of the Notes and Indenture as
reflected in the Documents have not been amended, modified or supplemented by
any other agreement or understanding of the parties or waiver of any of the
material provisions of the Documents.
(8) The terms of the Indenture and the Notes will apply to and
prevail over conflicting provisions in the Collateral Documents.
(9) The Trustee is a properly appointed trustee pursuant to the
TIA.
(10) That CM-LA has and will continue to timely perform all of
the conditions and requirements of and under its Certificate of Preliminary
Approval from the Louisiana Riverboat Gaming Commission; its operator's
license from the Department of Public Safety and Correction, Office of State
Police Riverboat Gaming Enforcement Division and all other conditions and
requirements imposed by the Louisiana Gaming Control Board and its rules and
regulations in Louisiana.
We have no knowledge that any of the assumptions are untrue, but have
performed no investigation or verification of such assumption.
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 5
Based on and subject to the assumptions, exceptions, limitations, and
qualifications set forth herein, it is our opinion that:
a. CM-LA and JCC each have the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Transaction Documents to which it is a party; each of the Transaction
Documents to which it is a party has been duly authorized, executed and
delivered by or on behalf of CM-LA and JCC, as the case may be.
b. All necessary corporate action has been taken to authorize
the execution, delivery and performance under the Documents by CM-LA and JCC.
The individual or individuals who have executed the Documents on behalf of
CM-LA and JCC have the authority to bind CM-LA and JCC to the terms and
conditions and to the performance of their obligations under the Documents.
c. No authorization, consent, approval or other action by, and
no further notice to or filing with, any state or federal court, governmental
authority or regulatory body, including the Louisiana Department of Public
Safety and Corrections, Riverboat Gaming Enforcement Division of the Office of
State Police ("Division"), the Louisiana Riverboat Gaming Commission
("Commission") or the Louisiana Gaming Control Board ("Board"), is required
for the due execution, performance, validity, enforceability, and delivery by
CM-LA and JCC of the Documents except as may be limited by Sections AAA, BBB,
CCC, and DDD of this opinion.
d. The Collateral Documents governed by the laws of the State of
Louisiana, have been duly executed and delivered by the CM-LA and JCC, to the
extent they are a party thereto and (assuming the due authorization, execution
and
delivery by the other parties thereto) constitute legally valid
and binding obligations of CM-LA or JCC, as the case may be, enforceable
against CM-LA or JCC, as the case may be, in accordance with their respective
terms except as enforceability may be limited by Louisiana gaming law and
applicable bankruptcy, insolvency, reorganization, moratorium on similar laws
affecting the enforcement of creditors' rights generally and general
principals of equity regardless of whether such enforcement may be sought in a
proceeding in equity or at law.
e. The Mortgage creates (1) a valid mortgage lien on the
portions of the Mortgaged Property described therein consisting of immovable
property and all fixtures (component parts), (2) a valid pledge lien of the
right to receive proceeds attributable to the insurance loss of such Mortgaged
Property and (3) a valid collateral assignment lien on the
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 6
presently existing and anticipated future leases of such
Mortgaged Property and the rents therefrom (collectively the "Louisiana
Mortgage Lien"), all in favor of the Trustee for the ratable benefit of the
holders of the Notes, as the security intended to be created by the Mortgage
for the payment of the obligations under the Indenture, the Notes and the
Guarantee. The Mortgage is in appropriate form for recording in the immovable
property records of a Louisiana parish. The Mortgage has been filed in the
mortgage records of the Clerks of Court of Bossier and Caddo Parishes,
Louisiana; by such recordation, the Louisiana Mortgage Lien created by the
Mortgage has been duly perfected; and such recordation is the only action,
recording or filing necessary to perfect the validity of the Louisiana
Mortgage Lien and
f. The M/V Crescent City Queen and the M/V Mary's Prize are
documented in the name of CM-LA. The Ship Mortgages constitute valid
preferred mortgage liens on the Vessels (including all appurtenances thereof)
pursuant to Chapter 313 of Title 46 of the United States Code (the "Ship
Act"), prior to all other liens other than those expressly granted priority
under the Ship Act over the lien of such preferred mortgages or tort
claimants.
g. The (1) execution of the Stock Pledge and Security Agreement
by JCC, (2) filing of JCC's Financing Statements in the Office of the
Louisiana Secretary of State and the payment of fees due in respect thereof
and (3) obtaining and maintaining possession of any instruments not
constituting part of chattel paper in accordance with Article 9 of the UCC, or
the taking and maintaining of possession of any certificated securities in
accordance with Article 8, have caused the Trustee, for the ratable benefit of
the holders of the Notes, to have, as security for the payment of obligations
under the Indenture, the Notes and the Guarantee, a valid and perfected
security interest or lien in that portion of the Collateral located in
Louisiana and described therein and intended to be created by such Documents,
all of which are capable of being perfected by the filing of a UCC-1 Financing
Statement in favor of the Trustee or by being held in the possession of the
Trustee, as the case may be, and the actions, recordings and filings described
in clauses (1) and (2) are the only actions, recordings and filings necessary
to publish notice of the validity of such security interests or liens
resulting from such filing and to perfect such security interests or liens as
may be perfected by filing, and the possession described in (3) is the only
action necessary to perfect such security interest as may be perfected by
possession.
h. The (1) execution of the Security Agreement by CM-LA, (2)
filing of CM-LA's Financing Statements in the Office of any parish Clerk of
Court in Louisiana and the filing by that
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 7
Clerk of Court in the office of the Louisiana Secretary of
State and (3) payment of fees due in respect thereof, caused the Trustee, for
the ratable benefit of the holders of the Notes, to have, as security for the
payment of obligations under the Indenture, the Notes and the Guarantee, a
valid and perfected security interest or lien in that portion of the
Collateral located in Louisiana and described therein and intended to be
created by such Documents all of which are perfected by the filing of a UCC-1
Financing Statement in favor of the Trustee, and the actions, recordings, and
filings described in clauses (1), (2) and (3) are the only actions, recordings
and filings necessary to publish notice of the validity of such security
interests or liens resulting from such filing and to perfect such security
interests or liens as may be perfected by filing.
i. Assuming the Disbursement Agent will duly comply with
requirements of Section 2 of the Disbursement Agreement, the Trustee for the
benefit of Noteholders, shall at all times through the payments of the Notes
in full will possess a valid and perfected first priority security interest in
the "Accounts" created under the Disbursement Agreement (other than the
Disbursed Funds Account") and all funds, assets, or other investments credited
thereto or deposited therein.
j. The Collateral Assignment executed by CM-LA and the Trustee
creates a valid and binding assignment of CM-LA's right, title and interest in
all of the agreements subject to such Collateral Assignment upon proper
execution of the Contracting Party's Consent to Assignment.
k. The (1) deposit of the proceeds from the sale of the Notes
into the Interest Reserve Account, the Operating Reserve Account, the
Construction Disbursement Account and the Completion Reserve Account, (2)
execution of the Cash Collateral and Disbursement Agreement and the Account
Pledge Agreement by CM-LA and (3) filing of CM-LA's Financing Statements in
any parish Clerk of Court in Louisiana and the filing by that Clerk of Court
in the Office of the Louisiana Secretary of State, caused the Trustee, for the
ratable benefit of the holders of the Notes, to have, as security for the
payment of obligations under the Indenture, the Notes and the Guarantee, a
valid and perfected security interest or lien in the proceeds from the sale of
the Notes deposited in the Interest Reserve Account, the Operating Reserve
Account, the Construction Disbursement Account, and the Completion Reserve
Account, and the investment of such proceeds and the actions and filings
described in clauses (1), (2) and (3) are the only actions and filings
necessary to publish notice of the validity of such security interests or
liens and to
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 8
perfect such security interest or liens as may be perfected by
filing.
In addition to the assumptions set forth above, the opinions set forth
above are also subject to the following qualifications:
I. We express herein no opinion with respect to the Indenture,
First Mortgage Notes, Purchase Agreement or Registration Rights Agreement to
be executed other than the authority of CM-LA and JCC to execute and deliver
these documents.
II. We express no opinions as to the laws of any jurisdiction
other than the laws of the State of Louisiana and the laws of the United
States of America. We assume no obligation to supplement this Opinion if any
applicable laws change after the date of this Opinion, or if we become aware
of any facts that might change the opinions expressed above after the date of
this Opinion.
III. In rendering such opinion, counsel has relied as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of CM-LA and JCC and certificates or other written
statements of officers of departments of various jurisdictions having custody
of documents respecting the existence or good standing of CM-LA.
We confirm that:
(i) we do not have any financial interest in the Project, or the
Agreement, other than fees for legal services performed by us, payment for
which has been provided;
(ii) other than as counsel for CM-LA and JCC, we have no
interest in them and do not serve as a director, officer or employee of CM-LA
and/or JCC. We have no undisclosed interest in the subject matter of this
Opinion.
The following are Exceptions, Qualifications, Limitations and
Assumptions:
AAA. We know that the Louisiana gaming licenses, permits and
approvals are issued only for a limited term and are by nature revocable
privileges and that the maintenance of a license is subject to a continuing
approval of the issuing agencies.
BBB. The enforceability of the obligations under the Collateral
Documents may be limited by the applications of the Louisiana gaming laws and
of general principals and materiality, reasonableness, fair dealing and good
faith and we express no
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 9
opinion regarding the availability of the remedy of specific
performance, self-help, or any other equitable remedy or relief to enforce any
right under the Collateral Documents or any other agreement or document.
CCC. We call it to your attention the fact that further filing,
re-filing, recordation, registration, or re-registration may be required to
preserve and maintain to the extent established and perfected the security
interests in the Vessels. These subsequent requirements may include, among
others, filing required to be made by CM-LA to change its location and
application for approval of the United States Maritime Administration prior to
the sale of stock, security or ownership interest in CM-LA or the company that
would result from CM-LA's failure to meet the requirements of 46 U.S.C. 802.
DDD. With respect to the Ship Mortgages, we express no opinion
as to (1) the right of Trustee to operate the Vessels; (2) the validity,
creation or perfection of any lien purported to be granted, created or
perfected under the Ship Mortgages other than under Title 46, United States
Code, Chapter 313; (3) the right to enforce the Ship Mortgages in any court
other than the appropriate U. S. District Court; (4) the right to sail the
Vessels pursuant to a Power of Attorney; (5) the right of unlimited access to
the Vessels, and (6) whether the Ship Mortgages create a lien on rates,
leases, rents, earnings, revenues and proceeds arising out of gaming
operations, such lien may not be governed by 46 U.S.C. Chapter 313 nor by
Louisiana law.
EEE. Insofar as they relate to the creation, perfection and
effect of perfection or non-perfection of a security interest, in personal
(movable) property, the opinions set forth in this letter are limited to
collateral which is governed by Louisiana law for the creation, perfection and
effect of perfection or non-perfection of a security interest in personal
(movable) property, as set forth in the Louisiana UCC. We express no opinion
as to laws of any other states other than the State of Louisiana by the
creation, perfection and effect of perfection or non-perfection of a security
interest in collateral subject to the laws of any other state or the United
States except for the Ship Mortgages. We note that the Trustee's rights to
enforce a lien and foreclose on, possess and/or exercise any rights or
remedies with respect to any collateral pursuant to the terms of the
Collateral Documents maybe limited, prescribed and prohibited under the gaming
laws of the State of Louisiana and the rights of the Trustee are subject to
these gaming laws with respect to any assignment, transfer, enforcement,
foreclosure, sale, inspection and/or possession. In this connection we note
that the gaming laws require that the transfer of a gaming
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 10
license or a transfer by any person who owns five (5%) percent
or more of the economic interest of such gaming license along with the
approval for the proposed transferee must be approved by the Louisiana Gaming
Control Board before such transfer shall be effective. Additionally, we note
that the gaming laws provides that a gaming license is revocable and can be
issued for only a maximum five (5) year term. With respect to any security
interest in a gaming license or approvals required therefor, we express no
opinion as to any general intangible which by its terms cannot be transferred,
prohibits the transfer thereof, or in which Louisiana law prohibits the
transfer of a security interest.
FFF. We express no opinion as to the enforceability of (1) any
provision of the Collateral Documents purporting to establish any evidentiary
standard or to waive either legality as a defense to the performance of a
contract, obligations or any other defenses to such performance which cannot,
as a matter of law, be effectively waived; (2) any indemnity provisions
contained in the Collateral Documents; (3) the right of the Trustee or other
party for compensation for services as keeper or receiver without appointment
and approval by the appropriate judicial proceeding; (4) any provisions in the
Collateral Documents purporting to establish jurisdiction or venue with
respect to the parties thereto; (5) any waiver of jury trial contained in the
Collateral Documents; (6) any provisions which confer self-help or equitable
remedies; (7) any provisions which establish methods for service of process or
notice of sale contains any submissions or consents to jurisdictions or
otherwise restricts limits or denies access to courts or to legal or equitable
remedies (8) any provision which allows or authorizes the delay or omission of
enforcement of any remedy, indemnity or consent judgment to the extent the
delay or mission is contrary to a course of dealing or conduct established by
the parties, (9) any provision which establishes non-culpability for actions
taken by or on behalf of any party thereto or any other person, (10) any
provision which provides for the appointment of a receiver or consent guardian
to the extent the appointment of a receiver or consent guardian is governed by
applicable statutory requirements and to the extent of such provision of any
of the Documents may not be in compliance with any such statutory
requirements, (11) any provision which provides for the grant of an
irrevocable power of attorney, (12) any provision which restricts or prohibits
the further encumbrance of any property other than insofar as failure to
comply with any such provision may constitute an Event of Default, (13) any
provision which defines rights relating to exculpation, subrogation (other
than the waiver thereof), waiver or ratification of future acts, trespass,
conversions, negligence or fraud, (14) any provision which permits the Trustee
to accelerate the maturity of the Notes evidenced and
Casino Magic of Louisiana, Corp.
January 28, 1997
Page 11
governed by the Collateral Documents without notice to Casino
Magic of Louisiana or JCC, (15) any provision which establishes standards for
commercial reasonableness as to the extent such standards are manifestly
unreasonable, (16) any provision which prohibits the amendment of any
agreements other than with respect to the creation of an Event of Default or
(17) any provision which provides for the severability of any provision of any
of the Documents where the severed provision is material to such Documents.
GGG. Perfection of the Lien and perfection of a security
interest in movable collateral may lapse by passage of time under Louisiana
Law and may require additional filing or re-filings to extend the perfection
of these liens.
HHH. In light of such exceptions and assumptions as those set
forth above, we note that certain provisions of the Documents are or may be
unenforceable in whole or in part under the laws of the State of Louisiana,
but the inclusion of such provisions does not affect the validity of the
Collateral Documents and the Collateral Documents contain adequate provisions
for enforcing payment of the obligations secured by the Documents and for the
realization of the principal rights and benefits afforded thereby.
The foregoing opinions are for your exclusive reliance and no other
person shall be entitled to rely upon the opinions herein expressed. Without
our prior written consent, this letter may not be quoted in whole or in part
or otherwise referred to in any documents and may not be furnished to any
other person or entity, except that you may furnish copies hereof (a) to your
independent auditors and attorneys, (b) to any state or federal authority
having regulatory jurisdiction over you, including, as noted above, through
the filing of this opinion as an exhibit to the Registration Statement or (c)
pursuant to order or legal process of any court or government agency; or (d)
in connection with any legal action to which you are a party arising out of
the above transactions.
Sincerely,
/s/ Hoffman Sutterfield Ensenat
HOFFMAN SUTTERFIELD ENSENAT
DKR/lla