EXHIBIT 4.6
PREFERRED SHIP MORTGAGE
ON THE WHOLE OF THE
MAJESTIC STAR
(Official Number 1057517)
THE MAJESTIC STAR CASINO, LLC
c/o The Majestic Star Casino, LLC
One Buffington Harbor Drive
Gary, Indiana 46406-3000
Attention: Chief Operating and Financial Officer
In Favor of
IBJ WHITEHALL BANK & TRUST COMPANY
in its capacity as Trustee under
that certain Indenture dated as of
June 18, 1999 between Trustee,
The Majestic Star Casino Capital Corp. and
The Majestic Star Casino, LLC
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust Administration
Dated as of June 18, 1999
Discharge Amount: $130,000,000 Together
With Interest, Expenses, Fees
and Performance of Mortgage Covenants
PREFERRED SHIP MORTGAGE
This PREFERRED SHIP MORTGAGE (hereinafter called the "Mortgage") on the
whole of the Vessel as hereinafter defined, which is dated as of June 18, 1999,
is provided and made by The Majestic Star Casino, LLC, an Indiana limited
liability company, whose mailing address is c/o The Majestic Star Casino, LLC,
One Buffington Harbor Drive, Gary, Indiana 46406-3000, Attention: Chief
Operating and Financial Officer (hereinafter called "Mortgagor") to IBJ
Whitehall Bank & Trust Company, One State Street Place, New York, NY, 10004,
Attention: Michael Daly, a national banking association, as Trustee (the
"Mortgagee") under that certain Indenture (the "Indenture") dated as of June 18,
1999 by and between the Issuers and any future Guarantors referred to therein
and the Mortgagee. Capitalized terms not otherwise defined herein shall have
the meaning set forth for such terms in the Indenture.
WHEREAS:
1. The Mortgagor is the sole owner of the whole of the vessel, MAJESTIC
STAR, Official Number 1057517, having its hailing port as the Port of Buffington
Harbor, Gary, Indiana. The Vessel is documented under the laws and flag of the
United States.
2. The Mortgagor has duly authorized the creation of an issue of 10 7/8%
Senior Secured Notes due 2006 (the "Notes"), as more fully described in the
Indenture.
3. In order to secure (i) the due and punctual payment of the principal
of, and interest on, the Notes and the payment of any fees, expenses and all
other amounts at any time and from time to time payable by the Mortgagor with
respect to the Notes, or under the Indenture, the Registration Rights Agreement
or any of the Security Documents (collectively, the "Transaction Documents") and
(ii) all the obligations of the Mortgagor under the Mortgage (all such
obligations recited in subsections (i) and (ii) of this Recital 3 being the
"Secured Obligations" of the Mortgagor) the Mortgagor has duly authorized the
execution and delivery of this Preferred Ship Mortgage under and pursuant to 46
United States Code, Sections 31301 through 31343, as amended from time to time
(the "Ship Mortgage Act").
4. For purposes of this Mortgage and in order to comply with Section
31321(b)(3) of the Ship Mortgage Act, the parties to this Mortgage hereby
declare that the maximum amount of Indebtedness that is now or will in the
future be owed under the Secured Obligations at any one time
2
is $130,000,000, plus interest, expenses and fees incurred by the Trustee and/or
the Holders and performance of the covenants of this Mortgage and the
Transaction Documents.
5. The interest of the Mortgagor in the Vessel (as defined below) and the
interest mortgaged by this Mortgage is that of one-hundred percent (100%)
absolute and sole ownership.
NOW, THEREFORE, in consideration of the premises and the purchase of the
Notes and in order to secure the payment of the Secured Obligations and the
performance and observance of all of the agreements, covenants and provisions
contained in this Mortgage and in each other Transaction Document, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the MORTGAGOR HAS GRANTED, CONVEYED, MORTGAGED, PLEDGED,
CONFIRMED, ASSIGNED, TRANSFERRED AND SET OVER, AND BY THESE PRESENTS DOES HEREBY
GRANT, CONVEY, MORTGAGE, PLEDGE, CONFIRM, ASSIGN, TRANSFER AND SET OVER UNTO THE
MORTGAGEE in its capacity as the Trustee for the benefit of the Holders, the
WHOLE of the vessel described in Recital 1 above, together with all of its
boilers, engines, machinery, masts, spars, boats, cables, motors, tools,
anchors, chains, booms, cranes, rigs, pumps, pipe, tanks, tackle, apparel,
furniture, fixtures, rigging, supplies, fittings and machinery equipment
including, but not limited to, communication systems, visual and electronic
surveillance systems and transportation systems, tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, fuel,
and any other electronic equipment of every nature used in connection with the
operation of the Vessel, all machinery, equipment, engines, appliances and
fixtures for generating or distributing air, water, heat, electricity, light,
fuel or refrigeration, or for ventilating or sanitary purposes, or for the
exclusion of vermin or insects, or safes, built-in furniture and installations,
shelving, lockers, partitions, door stops, vaults, motors, elevators, dumb-
waiters, hoses and brackets and boxes for the same, fire sprinklers, alarm,
surveillance and security systems, computers, drapes, drapery rods and brackets,
mirrors, mantles, screens, linoleum, carpets and carpeting, plumbing, bathtubs,
sinks, basins, pipes, faucets, water closets, laundry equipment, washers,
dryers, ice-boxes and heating units, all kitchen and restaurant equipment,
utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals, water
heaters, incinerators, furniture, fixtures and furnishings, all cocktail lounge
supplies, including, but not limited to, bars, glassware, bottles and tables
used in connection with the Vessel, beauty and barber equipment, and maintenance
supplies used in connection with the Vessel, all specifically designed
installations and furnishings and all furniture, furnishings and personal
property of every nature whatsoever now or hereafter owned by Mortgagor or in
which Mortgagor has any rights or interest in and located in or on, or attached
to, or used or intended to be used or which are now or may hereafter be
appropriated for use on or in connection with the operation of the Vessel or in
3
connection with any construction being conducted or which may be conducted
thereon, and all extensions, additions, accessions, improvements, betterments,
renewals, substitutions and replacement to any of the foregoing, all of which
(to the fullest extent permitted by law) shall be conclusively deemed
appurtenances to the Vessel, and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made in
or to the Vessel, or any part thereof, or in or to her equipment and
appurtenances aforesaid (each of the foregoing individually, a "Vessel" and,
collectively, the "Vessel"); provided, that the term "Vessel" shall not include
--------
Excluded Assets, and no Excluded Assets shall be subject to the Lien created by
the Mortgage.
TO HAVE AND TO HOLD all and singular the above mortgaged and described
property unto the Mortgagee and its successors and assigns, to its and its
successors' and assigns' own use, benefit and behoof forever under the terms
herein set forth to secure the performance and observance of and compliance with
the covenants, terms and conditions in the Secured Obligations.
PROVIDED, HOWEVER, and these presents are conditioned that, if the
Mortgagor or any of its successors or assigns shall pay or cause to be paid the
Secured Obligations in accordance with the terms hereof and of the other
Transaction Documents, and shall perform and observe all of the agreements,
covenants and provisions contained herein and in the other Transaction
Documents, this Mortgage and the estate and rights hereby granted shall cease to
be binding and be void, otherwise to remain in full force and effect.
The terms and conditions of this Mortgage are as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MORTGAGOR
The Mortgagor hereby represents, warrants, covenants and agrees with
Mortgagee as follows:
1.01. Subject to applicable grace or cure periods (if any), the
Mortgagor will pay the Secured Obligations payable by it and will observe,
perform and comply with the covenants, terms and conditions herein and in the
other Transaction Documents, expressed or implied, on its part to be observed,
performed or complied with.
4
1.02. Mortgagor was duly organized and is now duly existing as a
limited liability company under the laws of the State of Indiana; it is duly
authorized to mortgage the Vessel; all action necessary and required by law for
the execution and delivery of this Mortgage has been duly and effectively taken;
and the Mortgagor has and shall at all times maintain its existence and right to
carry on its business. The Mortgagor is and will remain a citizen of the United
States of America within the meaning of Title 46, Section 802 of the United
States Code, entitled to own and document the Vessel under the laws of the
United States of America and operate the Vessel in the coastwise trade.
1.03. The Mortgagor lawfully owns the whole of and is lawfully
possessed of the Vessel free from any Lien or taxes whatsoever, except for
Permitted Liens and Liens for current crew wages, salvage and those Liens which
arise during normal operations and which are not yet past due and which will be
paid in the ordinary course of business (collectively, the "Permitted
Encumbrances") 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.
1.04. The Vessel is duly documented in the name of the Mortgagor under
the laws and flag of the United States of America, with the National Vessel
Documentation Center, entitled to engage in operations conducted by the
Mortgagor, and the Mortgagor will, at its own expense, cause the Vessel to
remain so documented. The Mortgagor will cause this Mortgage immediately after
its execution and delivery, to be filed for recordation with the National Vessel
Documentation Center in accordance with the Ship Mortgage Act and will comply
with and satisfy all of the provisions of the Untied States law and all other
provisions and requirements of law from time to time in force so as to establish
and maintain the Lien of this Mortgage, as at any time amended, supplemented or
assigned, as a valid and enforceable preferred ship mortgage under the Ship
Mortgage Act upon the Vessel and upon all additions, improvements and
replacements hereafter made on or to the Vessel or any part thereof for the
amount of the Secured Obligations. The Mortgagor shall promptly pay and
discharge all United States Coast Guard fees and expenses in connection with the
recordation of this Mortgage and any supplement or amendment thereto.
1.05. The Mortgagor will not cause or permit the Vessel to be operated
in any manner contrary to law and the Mortgagor will not engage in any unlawful
act or violate any law or 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 documentation of the Vessel under the laws and
regulations of the United States of America and will at all times keep the
Vessel duly documented thereunder.
5
Mortgagor will never operate the Vessel outside the navigation limits of the
insurance carried pursuant to Article I, Section 1.16 of this Mortgage.
1.06. The Mortgagor shall comply with and satisfy all applicable laws
and regulations of the United States and the State of Indiana or any other
jurisdiction in which the Vessel is or may be operating pursuant to the terms of
the Indenture, specifically including, but not limited to, the provisions of any
applicable laws.
1.07. The Mortgagor will pay and discharge when due and payable from
time to time, all taxes, assessments, governmental charges, fines and penalties
lawfully imposed on the Vessel or any income therefrom, subject to the proviso
of Section 1.10.
1.08. Neither the Mortgagor, 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 be placed or imposed or continued upon the Vessel any Lien
whatsoever other than Permitted Encumbrances.
1.09. The Mortgagor will place, and at all times, will retain a
properly certified copy of the Mortgage on board the Vessel with her papers and
will cause such certified copy in the Vessel's Certificate of Documentation to
be exhibited to (i) any and all persons having business therewith which might
give rise to any Lien thereon other than Permitted Encumbrances and (ii) to any
representative of the Mortgagee; and will place and keep prominently displayed a
framed printed notice in plain type reading as follows:
NOTICE OF MORTGAGE
This Vessel is covered by a Preferred Ship Mortgage under 46
U.S.C. Section 31301, et seq., to IBJ Whitehall Bank & Trust
------
Company, as Trustee for the Holders under an Indenture dated as
of June 18, 1999 with the Majestic Star Casino, LLC and The
Majestic Star Casino Capital Corp. Under the terms of said
Mortgage, neither the Mortgagor, any charterer, the Master of
this Vessel, nor any other person has any right, power or
authority to create, incur or permit to be imposed upon this
Vessel any Lien whatsoever other than Permitted Encumbrances (as
defined in such Preferred Ship Mortgage).
1.10. Except for the Lien of this Mortgage, the Mortgagor will not
suffer to be continued any Lien other than Permitted Encumbrances and in due
course and in any event within thirty (30)
6
days after the same becomes due and payable 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 encumbered by such Lien to be released or
discharged from any Lien therefor; provided, however, that the Mortgagor shall
have the right to contest, at its own expense, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity (or the
applicability to the Mortgagor, the Vessel or this Mortgage) of any tax,
assessment, governmental charge, fine, penalty or Lien (other than this
Mortgage, any Transaction Document or any other document or instrument securing
any of the Secured Obligations or creating a Lien in favor of the Trustee and/or
the Holders); provided further that (a) the Mortgagor gives the Mortgagee timely
notice of its intention to contest the same, (b) the commencement of such
proceedings shall suspend the collection or enforcement of the matter under
contest, or, if the commencement of such proceedings does not suspend such
collection or enforcement, the Mortgagor shall have made payment of any item
sought to be collected with or without protest, (c) there shall be no impairment
of the Lien of this Mortgage or any other Transaction Document or undue
interference with the normal conduct of the Mortgagor's riverboat gaming
operation on the Vessel, (d) neither the Vessel, nor any part thereof or
interest therein, would be in any immediate danger of being sold, forfeited or
lost, (e) neither the Mortgagee nor any Holder would be potentially subjected to
criminal, or in imminent danger of civil, liability for failure to comply
therewith pending the outcome of such proceedings, (f) in the case of taxes,
assessments, charges, fines, penalties or other impositions, the Mortgagor shall
have either (i) paid the amount in dispute prior to instituting such contest, in
which event the notice requirement of clause (a) above shall be satisfied by
giving notice prior to initiating such contest rather than prior to making
payment, or (ii) furnished reasonable security during the pendency of such
proceedings, and (g) if such contest be finally resolved against the Mortgagor,
the Mortgagor shall promptly pay the amount required to be paid, together with
all interest and penalties accrued thereon, or comply with the applicable
requirement. The Mortgagor shall indemnify and save the Mortgagee and each
Holder harmless from and against any liability, loss, damage, cost or expense of
any kind (including reasonable attorneys fees and expenses) that may be imposed
upon the Mortgagee or such Holder in connection with any such contest and any
determination resulting therefrom.
1.11. (a) If a complaint be filed against the Vessel or the Vessel be
otherwise attached, arrested, levied upon or taken into custody under process or
color of legal authority for any cause whatsoever, the Mortgagor will promptly
notify the Mortgagee by telecopier or by telephone that is confirmed in writing,
at the address specified in Section 3.5 of this Mortgage, and within seven (7)
days from the time of such complaint, attachment, arrest or seizure will cause
the Vessel to be
7
released and all Liens thereon, other than Permitted Encumbrances, to be
discharged and will promptly notify the Mortgagee hereof in the manner
aforesaid.
(b) If the Mortgagor shall fail or neglect to furnish proper
security or otherwise to release the Vessel from complaint, arrest, levy,
seizure or attachment, within such seven day period, the Mortgagee or any person
acting on behalf of the Mortgagee may furnish security to release the Vessel and
by so doing shall not be deemed to cure the default of the Mortgagor and
Mortgagor does hereby authorize and empower the Mortgagee, in the name of the
Mortgagor, or its successors or assigns, to apply for and receive possession and
to take possession of such Vessel with all the rights and powers that the
Mortgagor, or its successors or assigns might have, possess or exercise in any
such event; and this power of attorney shall be irrevocable and may be exercised
not only by the Mortgagee hereinabove named but also by any one such appointee
or the appointees of the Mortgagee, with full power of substitution, to the same
extent as if the said appointee or appointees had been named as one of the
attorneys above named by express designation.
1.12. (a). The Mortgagor will at all times and without cost or expense
to the Mortgagee maintain and preserve, or cause to be maintained and preserved,
the Vessel in good running order and repair, so that the Vessel shall be,
insofar as due diligence can make her so, tight, staunch, strong and well and
sufficiently tackled, appareled, furnished, equipped and in every respect
seaworthy and in compliance with all applicable United States Coast Guard
requirements.
(b) The Mortgagee shall have the right at any time, on
reasonable notice, to inspect or survey the Vessel to ascertain its condition
and to satisfy itself that the Vessel is being properly repaired and maintained,
and the Mortgagor shall cause to be made all such repairs, without expense to
the Mortgagee, as such inspection or survey may show to be required. The
Mortgagor shall also permit the Mortgagee to inspect the Vessel's logs whenever
requested, on reasonable notice, and shall furnish the Mortgagee with full
information regarding any material casualties or other accidents or damage to
the Vessel.
(c) The Vessel shall, and the Mortgagor covenants that she will,
at all times comply with all applicable laws, treaties and conventions of the
United States, and rules and regulations issued thereunder, and shall have on
board as and when required thereby valid certificates showing compliance
therewith.
8
(d) The Mortgagor 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 of the Mortgagee.
1.13. The Mortgagor will permit the Mortgagee or any agents or
representatives thereof from time to time, upon prior reasonable notice, full
and complete access to the Vessel for the purpose of inspecting the Vessel and
her papers and, at the reasonable request of the Mortgagee, the Mortgagor will
deliver for inspection copies of any and all contracts and documents relating to
the Vessel, whether on board or not.
1.14. The Mortgagor will not transfer or change the flag of the Vessel
unless and until, upon thirty (30) days' prior written notice to the Mortgagee,
all filings, recordations or other actions necessary to perfect and protect the
Lien created by this Mortgage and to enable the Mortgagee to exercise and
enforce its rights and remedies hereunder with respect to the Vessel after
giving effect to such transfer or change of flag shall have been completed
(including, without limitation, opinions of counsel as to the perfected status
of the Mortgagee after giving effect to such transfer or change of flag).
1.15. Except to the extent expressly permitted by the Indenture, the
Mortgagor will not sell, mortgage, charter or in any way transfer the Vessel or
any interest therein 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. Any such sale,
mortgage, charter or transfer of the Vessel or any interest therein shall be
subject to the provisions of this Mortgage and the Lien hereof.
1.16. (a) (i) The Mortgagor shall at all times and at its sole cost
and expense cause to be carried and maintained in respect of the Vessel (and all
additions, improvements and replacements made in and to the Vessel, or any part
thereof) payable in United States Dollars in such amounts against such risks as
are generally covered by marine hull and machinery (including excess value)
insurance, marine protection and indemnity insurance, public and general
liability insurance, in such form (including, without limitation, the form of
the loss payable clause and the designation of named assureds) and with such
insurance companies, underwriters, funds, mutual insurance associations or clubs
as shall be selected by the Mortgagor and are acceptable to Mortgagee.
9
(ii) In the case of all marine hull and machinery
policies, the Mortgagor will cause the Mortgagee to be named an additional
assured and will (and cause its insurance broker to) cause the insurers under
such policies to waive any liability of the Mortgagee and the Holders for
premiums payable under such policies. Such marine hull and machinery insurance
shall cover, among other things, all loss or damage caused by or resulting from
fire, lightning, wind storm, tornado, hail and such other further additional
hazards of whatever kind or nature as now or hereafter may be covered by
standard extended coverage "all risks" endorsements (including, without
limitation, and specifically, piracy, barratry and water damage) of whatsoever
kind. In the case of all protection and indemnity insurance, the Mortgagor will
cause the Mortgagee, to be named as an additional assured. Notwithstanding the
foregoing, at no time shall there be recourse against the Mortgagee or the
Holders under such policies for payment of any premium, club call, assessment,
advance or commission.
(iii) The Mortgagor will cause the firm of insurance
brokers referenced in this Section 1.16 of this Mortgage to agree to advise the
Mortgagee forthwith by telecopier to its address specified in Section 3.5 of
this Mortgage, of any lapse of any such insurance by expiration, termination,
failure to renew or otherwise and of any default in payment of any premium and
of any other act or omission on the part of the Mortgagor of which such brokers
have knowledge and which might invalidate or render unenforceable, in whole or
in part, any insurance on the Vessel. Absent actual knowledge, the Mortgagee
shall not be deemed to have knowledge of any such lapse of insurance in the
absence of receipt of notice from such brokers. The Mortgagor also will cause
such brokers to agree to mark their records and to advise the Mortgagee, by
telecopier, addressed as provided above in this subsection, at least five (5)
business days prior to the expiration date of any insurance carried pursuant to
this Mortgage, that such insurance has been renewed or replaced with new
insurance that complies with the provisions of this Section 1.16. In addition,
Mortgagor shall endeavor to or use its best efforts to cause each insurance
company, underwriter, club or fund (or an authorized agent thereof) with respect
to all insurance required hereby to agree in writing for the benefit of the
Mortgagee that each policy or contract issued by such insurance company,
underwriter, club or fund shall not lapse, cancel for any reason whatsoever
without at least thirty (30) days prior written notice to the Mortgagee by
telecopier as provided above in this subsection 1.16 and that any loss payable
thereunder shall be payable notwithstanding any act or negligence, breach of
warranty or otherwise.
(iv) The Mortgagor, at its sole cost and expense, shall
furnish to the Mortgagee, simultaneously with the execution and delivery of this
Mortgage, and thereafter within one hundred twenty (120) days after the end of
each fiscal year, a detailed report, in form and substance
10
satisfactory to the Mortgagee, (which shall set forth, without limitation with
respect to each type of insurance coverage, each policy or certificate of entry,
its form, its number, its amount, each direct or indirect or participating
insurer or underwriter, the type of risk covered and the expiration date),
signed by a firm of independent insurance brokers appointed by the Mortgagor and
acceptable to the Mortgagee as to the type and form of insurance and identity of
broker, with respect to the insurance carried and maintained in respect of the
Vessel, together with the written opinion of such brokers, in form and substance
satisfactory to the Mortgagee, as to the compliance of such insurance with the
provisions of this Section 1.16.
(v) All insurance provided hereunder (except workmen's
compensation) shall name Mortgagee as a named assured under a standard "non-
contributory mortgagee" endorsement or its equivalent, which shall be acceptable
to Mortgagee.
(b) For the purposes of insurance against total loss, the
Vessel, its equipment, appurtenances, etc., shall be insured for a declared
value in an amount not less than the fair market value thereof as determined by
an independent appraiser appointed by the Mortgagor and acceptable to Mortgagee
as to amounts and identity of appraiser, and for purposes of insurance against
liability, such coverage shall be in the highest amount from time to time
commercially reasonable for similar vessels engaged in the business of passenger
cruising and gaming in northern Indiana. Protection and indemnity insurance (as
well as insurance against liability for pollution) in respect of the Vessel
shall be in the highest amount from time to time commercially reasonable for
vessels of the same type, size, age and flag as the Vessel, but in any event,
shall be in an amount for each occurrence of not less than the declared value of
the Vessel under its hull and machinery insurance.
(c) Mortgagor shall (i) pay as they become due all premiums for
the insurance required hereunder, and (ii) not later than thirty (30) days prior
to the expiration of each such policy, deliver a renewal policy or a duplicate
original thereof and a certificate of insurance certified to Mortgagee by the
insurer as being a true copy evidencing the insurance required to be provided
hereunder, marked "premium paid" or accompanied by such other evidence of
payment as shall be satisfactory to Mortgagee in its sole discretion.
(d) If Mortgagor shall be in default of its obligations to so
insure or deliver any such prepaid policy or policies and insurance to Mortgagee
in accordance with the provisions hereof, Mortgagee, at its option and without
notice, may effect such insurance from year to year, and pay the premium or
premiums therefor, and, in such event, the amount of all such premium or
premiums (i) shall be deemed to be Indebtedness secured hereby and (ii) shall be
immediately due and payable,
11
on demand, together with interest thereon at the rate of interest which is equal
to the sum of the fixed interest rate payable on the Notes and one (1.00%)
percent (the "Interest Rate"), from date of any such payment by Mortgagee to the
date of repayment to Mortgagee.
(e) Mortgagor promptly shall comply with, and shall cause the Vessel to
comply with (i) all of the provisions of each such insurance policy and (ii) all
of the requirements of the insurers thereunder applicable to Mortgagor or to the
Vessel or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration or repair of the Vessel, even if such compliance would
necessitate structural changes or improvements or would result in interference
with the use or enjoyment of the Vessel or any portion thereof. If Mortgagor
shall use the Vessel or any portion thereof in any manner which would permit the
insurer to cancel the insurance required to be provided hereunder, Mortgagor
immediately shall obtain a substitute policy which shall be satisfactory to
Mortgagee and which shall be effective on or prior to the date on which any such
other insurance policy shall be canceled. Furthermore, if any insurance required
to be provided hereunder shall expire, be withdrawn, become void by breach of
any condition thereof by Mortgagor, or become void or questionable by reason of
the failure or impairment of the capital of any insurer, or if for any other
reason whatsoever any such insurance shall become unsatisfactory to Mortgagee,
Mortgagor immediately shall obtain new or additional insurance which shall be
satisfactory to Mortgagee in its sole discretion. Mortgagor shall not take out
any separate or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to Mortgagee in all
respects.
(f) Unless otherwise required by the Mortgagee, although the following
insurance is payable to the Mortgagee, (i) any loss under any insurance on the
Vessel with respect to protection and indemnity risks and public liability may
be paid directly to the Mortgagor to reimburse it for any loss, damage or
expense incurred by it and covered by such insurance or directly to the person
to whom any liability covered by such insurance has been incurred and (ii) in
the case of any loss (other than (A) a loss covered by clause (i) of this
subsection or by Section 1.16 (g) or (B) a loss in excess of $1,000,000 per
occurrence) under any insurance with respect to the Vessel involving any damage
to the Vessel, the Mortgagee may pay directly for the repair, salvage or other
charges involved or may pay the Mortgagor directly so long as the Mortgagor
shall use such funds to repair the loss or damage or pay all of the salvage or
other charges.
(g) In the event of an actual, constructive or compromised total loss of
the Vessel, all insurance or other payments for such loss shall be paid to the
Mortgagee to be distributed or
12
disbursed in accordance with the agreements between the parties and to the
extent of the respective interests of the Mortgagor and Mortgagee, as they may
appear.
(h) The Mortgagor will cause all policies and certificates of entry with
respect to insurance required hereby to contain a loss payable clause which
shall (i) in the case of protection and indemnity insurance and public liability
insurance, provide for payment to the Mortgagor or its order unless and until
the underwriters or associations receive notice from the Mortgagee that there
has occurred and is continuing an Event of Default hereunder, in which event all
payments shall be made to the Mortgagee and (ii) in the case of all other
insurance, provide for payment in accordance with the terms of subsections (f)
and (g) of this Section 1.16. In addition, the Mortgagor will, at its own cost
and expense, assign to the Mortgagee all of the Mortgagor's right, title and
interest in and to each policy and contract of insurance (including all entries
in protection and indemnity associations) with respect to the insurance required
hereby and furnish, or cause its brokers to furnish, written notice of such
assignment to all insurers, underwriters, clubs and associations with respect to
such insurance.
(i) 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 Mortgagor 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 Mortgagor or its agent, may
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.
(j) If the Vessel or any portion thereof shall be damaged, destroyed or
injured by fire or any other casualty (whether insured or uninsured) in an
amount in excess of $500,000, Mortgagor shall give immediate written notice
thereof to Mortgagee.
(k) The Mortgagor shall deliver to the Mortgagee copies of all cover
notes, binders, policies and certificates of entry in protection and indemnity
associations, and all endorsements and riders amendatory thereof, in respect of
insurance maintained in connection with the Vessel.
(l) The Mortgagor agrees that it will not do or permit or willingly allow
to be done any act by which any insurance required by the terms of this Mortgage
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
13
transport any cargo which is not permitted by the policies in force, without
having previously insured the Vessel by additional coverage to extend to such
voyages, risks or cargoes.
1.17. The Mortgagor will reimburse the Mortgagee promptly, with interest at
a rate equal to the Interest Rate, for any and all expenditures which the
Mortgagee may from time to time make, lay out or expend in providing such
protection in respect of insurance, discharge or purchase of Liens, taxes, dues,
assessments, governmental charges, fines and penalties lawfully imposed,
repairs, attorneys' fees and other matters as the Mortgagor is obligated herein
to provide, but fails to provide. Such obligation of the Mortgagor to reimburse
the Mortgagee shall be an additional Indebtedness due from the Mortgagor,
secured by this Mortgage, and shall be payable by the Mortgagor on demand. The
Mortgagee, though privileged so to do, shall be under no obligation to the
Mortgagor to make any such expenditures, nor shall the making thereof relieve
the Mortgagor of any default in that respect.
1.18. Mortgagor agrees to execute all additional documents, instruments,
UCC Financing Statements and other agreements necessary and appropriate, to keep
this Mortgage in effect, to better reflect the true intent of this Mortgage, and
to consummate fully all the transactions contemplated by the Notes and the
Indenture, hereby.
1.19. The Mortgagor will fully perform any and all charter parties which
are or may be entered into with respect to the Vessel.
1.20. In the event that at any time and from time to time this Mortgage,
any other Transaction Document or any provisions hereof or thereof shall be
deemed invalidated in whole or in part by reason of any present or future law or
any decision of any court, 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 and each other Transaction Document,
then the Mortgagor, forthwith upon the reasonable request of the Mortgagee, will
execute and deliver, on its own behalf, such other and further assurances and
documents as may be reasonably necessary to more effectively subject the Vessel
to secure the payment of the Secured Obligations, as provided in this Mortgage
and each other Transaction Document and the performance of the terms and
provisions of this Mortgage and each other Transaction Document and do such
things as the Mortgagee in its sole discretion may reasonably deem to be
necessary to carry out the true intent of this Mortgage.
14
1.21. In the event of the requisition (whether of title or use),
condemnation, sequestration, seizure or forfeiture of the Vessel by any
governmental or purported authority or by anyone else, any payments in respect
thereof shall be paid to the Mortgagee and applied in accordance with the terms
of Section 1.16(g).
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
2.01. In case any one or more of the following events, herein termed
"Events of Default", shall have occurred and be continuing:
(a) if any "Event of Default", as said term is defined in the
Indenture, shall have occurred and be continuing; or
(b) if the Mortgagor shall default in the use and punctual
performance or observance of any of the provisions of Sections 1.02, 1.04, 1.05,
1.10, 1.14, 1.15 and 1.16 of Article I hereof; or
(c) if the Mortgagor shall fail to perform or observe any other
term, covenant or agreement contained in this Mortgage on its part to be
performed or observed and if such failure shall remain unremedied for the lesser
of the cure period provided for herein and thirty (30) days after written notice
thereof shall have been given to the Mortgagor by the Mortgagee (who shall not
be deemed to have knowledge of an Event of Default unless actually known by the
Mortgagee); or
(d) if any representation and warranty made in this Mortgage is
untrue in any material respect as of the time when the same shall have been
made;
then, in each and every such case, the Mortgagee shall have the right
to:
(1) declare immediately due and payable all of the Secured
Obligations (in which case all of the same shall be immediately
due), bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for the Secured Obligations and
collect the same out of any and all property of the Mortgagor,
whether covered by this Mortgage or otherwise;
15
(2) exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of applicable
law, including, but not limited to, the provisions of the Ship
Mortgage Act;
(3) take and enter into possession of the Vessel, at any time,
wherever the same may be, without legal process (except to the
extent required by applicable law), and, except to the extent
caused by the Mortgagee's gross negligence or bad faith, without
being responsible for loss or damage, and the Mortgagor or other
person in possession forthwith upon demand of the Mortgagee,
shall surrender to the Mortgagee possession of the Vessel, and
the Mortgagee may, without being responsible for loss or damage,
except to the extent caused by the Mortgagee's gross negligence
or bad faith, 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, 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 of 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 (4) 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 at any dock, pier or other
premises of the Mortgagor without charge, or to dock her at any
other place at the cost and expense of the Mortgagor; and/or
(4) take and enter into possession of the Vessel, upon reasonable
notice, wherever the same may be, without legal process (except
to the extent required by applicable law), and if it seems
desirable to the Mortgagee and without being responsible for loss
or damage, except to the extent caused by the Mortgagee's gross
negligence or bad faith, sell the Vessel, at any place and at
such time as the Mortgagee may specify and in such manner and
such place (whether by public or private sale) as the Mortgagee
may deem advisable (without necessity of bringing the Vessel to
the place designated for such sale), free from any claim by the
Mortgagor in admiralty, in equity,
16
at law or by statute, after first giving notice of the time and
place of any public sale with a general description of the
property in the following manner:
(a) by publishing such notice for ten consecutive days in a
daily newspaper of general circulation published in Gary, Indiana;
(b) if the place of sale should not be Gary, Indiana, then also
by publication of a similar notice in a daily newspaper, if any, published at
the place of sale; and
(c) by mailing a similar notice to the Mortgagor at its last
known address on the day of first publication and notice of the time and place
of any private sale by mailing such notice to the Mortgagor at its last known
address.
(d) The notice provisions contained in this Section are not
exclusive, and to the extent that Mortgagee elects to foreclose or enforce its
interests in a court of admiralty, Mortgagee will comply with the notice
provisions required by any applicable federal statutes and procedural rules.
(e) Mortgagor hereby consents to the appointment of a consent
keeper or substitute custodian by Mortgagee with the cost thereof to be a cost
of the sale to be paid from the proceeds of the sale or by Mortgagor.
2.02. Any sale of the Vessel made in pursuance of this Mortgage shall
operate to divest all right, title and interest of any nature whatsoever of the
Mortgagor therein and thereto and shall bar any claim from the Mortgagor, 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 property of the sale, or as to the
application of the proceeds thereof. In the case of any such sale, the Mortgagee
shall be entitled to bid for the purchase of the Vessel and, for the purpose of
making settlement or payment for the property purchased, to use and apply the
Secured Obligations 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 with respect to the Secured Obligations after allowing for the costs
and expense 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 with respect to the Secured Obligations. At any such sale,
the Mortgagee may bid
17
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.
2.03. The Mortgagee is hereby appointed attorney-in-fact of the Mortgagor
to execute and deliver to any purchaser aforesaid, and is hereby vested with
full power and authority to make, in the name and on behalf of the Mortgagor, a
good conveyance of the title to the Vessel so sold. In the event of any sale of
the Vessel under any power herein contained, the Mortgagor will, if and when
required by the Mortgagee, execute such form of conveyance of the Vessel and
other related documents as the Mortgagee may direct or approve.
2.04. The Mortgagor hereby irrevocably appoints the Mortgagee attorney-in-
fact in the name of the Mortgagor with full authority in the place and stead of
the Mortgagor from time to time upon the occurrence and during the continuance
of an Event of Default, to demand, collect, receive, compromise and sue for, so
far as may be permitted by law, all freights, hire, earnings, issues, revenues,
income and profits of the Vessel and all amounts due from underwriters under any
insurance thereon as payments of losses or as return 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 occurrence of any Event
of Default, or in respect of any insurance thereon, from any person whomsoever,
and to make, give and execute in the name of the Mortgagor acquittances,
receipts, releases or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of the Mortgagor all checks,
notes, drafts, warrants, agreements and other instruments in writing with
respect to the foregoing, or in respect of any actions in law or in equity, in
contract or in negligence, against third parties, to file suit against said
third parties for damage sustained by the Vessel while under the care and
custody of said third parties and prosecute through judgment or settlement, the
Mortgagee to have by assignments, all rights and remedies that would be afforded
to the Mortgagor under principles and theories of privity, standing and
jurisdiction.
2.05. Whenever any right to enter and take possession of the Vessel
accrues to the Mortgagee, it may require the Mortgagor to deliver, and the
Mortgagor shall on demand, at its own cost and expense, deliver 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 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.
2.06. Upon the occurrence and during the continuance of an Event of
Default, the Mortgagor authorizes and empowers the Mortgagee or its appointees
or any of them to appear in the
18
name of the Mortgagor, 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 to them or any of them may seem
proper towards the defense of such suit and the purchase or discharge of such
Lien, and all expenditures made or incurred by them or any of them for the
purpose of such defense or purchase or discharge shall be a debt due from the
Mortgagor, its successors and assigns, to the Mortgagee, and shall be secured by
the Lien of this Mortgage in like manner and extent as if the amount and
description thereof were written herein.
2.07. The Mortgagor covenants that, at any time that any Secured
Obligations shall be due and payable (whether by acceleration or otherwise), the
Mortgagee may demand the payment thereof; and in case the Mortgagor shall fail
to pay the same forthwith upon such demand, the Mortgagee shall be entitled to
recover judgment for the whole amount so due and unpaid together with such
further amounts as shall be sufficient to cover the reasonable compensation to
the Mortgagee's agents, attorneys and counsel and any necessary advances,
expenses and liabilities made or incurred by it hereunder. All moneys collected
by the Mortgagee under this Section 2.07 shall be applied by the Mortgagee in
accordance with the provisions of Section 2.11.
2.08. Each and every power and remedy herein given to the Mortgagee shall
be cumulative and shall be in addition to every other power and remedy herein
given or now or hereafter existing at law, in equity, in admiralty or by
statute, and each and every power and remedy whether herein given or otherwise
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by the Mortgagee, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other power or remedy. No
delay or omission by the Mortgagee in the exercise of any right or power or in
the pursuance of any remedy accruing upon any Event of Default shall impair any
such right, power or remedy or be construed to be a waiver of any 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 Secured
Obligations after any Event of Default or of any payment on account of any past
Event of 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.
2.09. If at any time after an Event of Default and prior to the actual sale
of the Vessel by the Mortgagee or prior to any foreclosure proceedings, the
Mortgagor offers completely to cure all Events of Default and to pay all
expenses, advances and damages to the Mortgagee consequent on such Events of
Default, with interest at the Interest Rate, then the Mortgagee may, but shall
be under
19
no obligation to, accept such offer, cure and payment and restore the Mortgagor
to its former position, but such action shall not affect any subsequent Event of
Default or impair any rights consequent thereon.
2.10. In case the Mortgagee shall have proceeded to enforce any right,
power or remedy under this Mortgage by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall be restored to their former positions and
rights hereunder with respect to the property subject or intended to be subject
to this Mortgage and all rights, remedies and powers of the Mortgagee shall
continue as if no such proceedings had been taken.
2.11. The proceeds of any sale of the Vessel and the net earnings of any
charter operation or other use of the Vessel by the Mortgagee under any of the
powers herein specified in this Article II, as well as any and all other moneys
received by the Mortgagee pursuant to or under any of the provisions of Article
I hereof or this Article II or in any proceedings pursuant to this Article II,
shall be held and applied by the Mortgagee from time to time as set forth in the
Indenture, any other provision in this Mortgage to the contrary notwithstanding.
In the event that the proceeds and amounts referred to above received by the
Mortgagee are insufficient to pay in full all Secured Obligations, the Mortgagee
shall be entitled to collect the balance from the Mortgagor or from any other
person or entity liable therefor.
2.12. Unless and until one or more Events of Default shall occur and be
continuing, the Mortgagor (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 therefrom by the Mortgagee, to dispose of, free from the
Lien hereof, any boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, cables, chains, tackle, apparel, furniture, fittings, equipment
or any other appurtenances of the Vessel that are no longer useful, necessary,
profitable or advantageous in the operation of the Vessel, by first or
simultaneously replacing the same by new boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel,
furniture, fittings, equipment or other appurtenances of not less than equal
value, which shall forthwith become subject to the Lien of this Mortgage as a
preferred ship mortgage thereon unless otherwise permitted by the Indenture.
ARTICLE III
SUNDRY PROVISIONS
20
3.01. All of the covenants, promises, stipulations and agreements of the
Mortgagor in this Mortgage contained shall bind the Mortgagor and its successors
and assigns and shall inure to the benefit of the Mortgagee and its successors
and assigns (including successor trustees under the Indenture). In the event of
any assignment of this Mortgage, the term "Mortgagee" as used in this Mortgage
shall be deemed to mean any such assignee.
3.02. 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 such agent or agents as it may appoint, and the
act or acts of such agent or agents when taken shall constitute the act of the
Mortgagee hereunder. Without limitation of the foregoing, in each instance where
the Mortgagee has engaged a consultant to advise the Mortgagee in connection
with the exercise of any such rights, powers and authority, the Mortgagee shall
be entitled to rely upon the advice of such consultant and when so relying shall
conclusively be deemed to have acted in a reasonable manner.
3.03. In the event that any provision of this Mortgage shall be deemed
invalid or unenforceable by reason of any present or future law or any decision
of any court of competent jurisdiction, the validity and enforceability of any
other provision hereof shall not be affected thereby. Any such invalidity or
unenforceability of any provision of this Mortgage in any jurisdiction or nation
shall not render such provision invalid or unenforceable under the laws of any
other jurisdiction or nation.
3.04. 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 of this Mortgage or portion hereof shall be construed to waive the
preferred status of this Mortgage, then such provision to such extent shall be
void and of no effect and shall cease to be a part of this Mortgage without
affecting the remaining provisions, which shall remain in full force and effect.
3.05. The Mortgagor irrevocably submits itself to the non-exclusive
jurisdiction of the State of New York or federal court sitting in New York and
any appellate court of any thereof, for the purposes of any suit, action or
other proceeding arising out of, or relating to, this Mortgage or any of the
transactions contemplated hereby, hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard in such New York state or
federal court and hereby, to the fullest extent it may effectively do so,
irrevocably waives, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such suit, action or proceeding any claim that it is not
personally
21
subject to the jurisdiction of the above-named courts for any reason whatsoever,
that such suit, action or proceeding is brought in an inconvenient forum, that
the venue of such suit, action or proceeding is improper or that this Mortgage
or the subject matter hereof may not be enforced in or by such courts. The
Mortgagor hereby irrevocably consents to the service of any and all process in
any suit, action or proceeding by the mailing (certified mail, return receipt
requested) or delivery of copies of such process to the Mortgagor at The
Majestic Star Casino, LLC, an Indiana limited liability company, whose mailing
address is c/o The Majestic Star Casino, LLC, One Buffington Harbor Drive, Gary,
IN 46406-3000, Attention: Chief Operating and Financial Officer. The Mortgagor
agrees that all notices to the Mortgagee hereunder shall be validly given only
if delivered at or mailed (certified mail, return receipt requested) to the
Mortgagee at IBJ Whitehall Bank & Trust Company, One State Street , New York,
NY, 10004, Attention: Michael Daly. The Mortgagor further agrees that a final
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section 3.05 shall affect the right of the
Mortgagee to serve legal process in any other manner permitted by law or affect
the right of the Mortgagee to bring any action or proceeding against the
Mortgagor or its property in the courts of any other jurisdiction. This
Mortgage, and all of the rights and obligations of the parties hereunder, and
the their respective successors and assigns, shall be governed by Title 46,
United States Code, Chapters 301 and 313 and the Federal Maritime Laws of the
United States of America and, only to the extent not addressed thereby, by the
laws of the State of Indiana.
3.06. 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.
3.07. The term "Dollars" or the symbol as used herein shall mean Dollars in
any coin or currency of the United States of America which at the time of
payment shall be legal tender for public and private debts.
3.08. If the Mortgagor shall pay and discharge all Secured Obligations
secured hereby by well and truly paying or causing to be paid all Secured
Obligations, as and when the same become due and payable, and if the Mortgagor
shall also pay or cause to be paid all other sums payable hereunder by the
Mortgagor, then this Mortgage and the Lien, rights and interest granted
hereunder shall cease, determine and become null and void, and the Mortgagee
shall, at the request and cost and expense of the Mortgagor, execute and deliver
such instrument or instruments of satisfaction as may be reasonably necessary to
satisfy and discharge the Lien hereof; and forthwith the estate, right,
22
title and interest of the Mortgagee in and to all property subject to this
Mortgage shall thereupon cease, determine and become null and void.
3.09. The powers conferred on the Mortgagee by this Mortgage are solely to
protect its interest and the interests of the Holders in the Vessel and shall
not impose any duty upon it to exercise such provisions. Except for the safe
custody of any part of the Vessel in its possession (subject to standards of
care governing the Mortgagee hereunder) and the accounting for moneys actually
received by it hereunder, the Mortgagee shall have no duty as to any part of the
Vessel whether or not the Mortgagee or any Holder has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to the
Vessel.
3.10. The provisions of Article 9 of the Indenture regarding amendments are
specifically incorporated in this Mortgage by reference, with the same force and
effect as if the same were set out in this Mortgage in full. All references in
such incorporated provisions to "Company" shall without further reference mean
and refer to the Mortgagor; and all references in such incorporated provisions
to "this Indenture" shall without further reference mean and refer to this
Mortgage; and all references in such incorporated provisions to "Trustee" shall
without further reference mean and refer to Mortgagee.
3.11. In the event that the provisions of this Mortgage shall conflict with
or be inconsistent with the provisions of the Indenture, the terms and
provisions of the Indenture shall control and govern the obligations, rights and
responsibilities of the parties hereto.
3.12. The Mortgagee and Mortgagor hereby acknowledge and agree, for the
benefit of the Lender under the Credit Facility, that, during any period that
obligations or commitments are outstanding under the Credit Facility, the
exercise of the rights and remedies of the Trustee hereunder are or will be
subject to the terms of the Intercreditor Agreement. In the event of any
inconsistency between the terms hereof and the Intercreditor Agreement, the
Intercreditor Agreement shall control.
3.13. The Mortgagor hereby agrees to indemnify and defend Mortgagee, and
its directors, officers, agents and employees, and each Holder and saves each of
them harmless from and against any and all liability, loss, damages, judgments,
claims and expenses, including reasonable attorneys' fees and expenses,
disbursements, bond expenses, printing and automated document preparation and
retention expenses and other ordinary litigation expenses, incurred in
connection with any action or
23
proceeding to foreclose this Mortgage or in or to which the Mortgagee or any
Holder may be made a party due to the existence of this Mortgage or to which
action or proceeding the Mortgagee or any Holder may become a party for the
purpose of protecting the Vessel or the Lien of this Mortgage. All sums paid by
the Mortgagee or any Holder to prosecute or defend the rights herein set forth
shall be deemed a part of the Secured Obligations and shall be paid by the
Mortgagor to the Mortgagee or such Holder within ten days after written demand,
and if not paid within that period, shall accrue interest from and including the
date of disbursement or advance by the Mortgagee or such Holder to and including
the date of payment by the Mortgagor at the Interest Rate.
3.14. Notwithstanding any other provision herein to the contrary, no sale,
charter, transfer or other disposition of the Vessel or any interest therein may
be made to any entity not a citizen of the United States within the meaning of
Section 2 of the Shipping Act of 1916, as amended, without the approval of the
Secretary of Transportation of the United States.
3.15. (a) The Mortgagee acknowledges, understands and agrees that the
Gaming Laws may impose certain licensing or transaction approval
requirements prior to the exercise of the rights and remedies
granted to it under the Mortgage with respect to the Vessel
subject to the Gaming Laws.
(b) If any consent under the Gaming Laws is required in connection
with the taking of any of the actions which may be taken by the
Mortgagee in the exercise of its rights hereunder, then
Mortgagor agrees to use its reasonable best efforts to secure
such consent and to cooperate with the Trustee in obtaining any
such consent. Upon the occurrence and during the continuation of
any Event of Default, Mortgagor shall promptly execute and/or
cause the execution of all applications, certificates,
instruments, and other documents and papers that the Mortgagee
may be required to file in order to obtain any necessary
approvals under the Gaming Laws, and if Mortgagor fails or
refuses to execute such documents, the Trustee or the clerk of
the court with jurisdiction may execute such documents on behalf
of Mortgagor.
(c) Notwithstanding any other provision of this Mortgage to the
contrary, nothing in this Mortgage shall (i) effect any transfer
of any ownership interest (within the meaning of 68 Indiana
Administrative Code 5) in Mortgagor or (ii) effect any transfer,
sale, purchase, lease or hypothecation of, or any borrowing or
loaning of money against, or any establishment of any voting
24
trust agreement or other similar agreement with respect to (all
within the meaning of Indiana Code 4-33-4-21), any certificate
of suitability or any owner's license heretofore or hereafter
issued to any person, including Mortgagor, under any of the
Gaming Laws, including Indiana Code 4-33.
3.16. All representations, warranties, covenants and agreements herein
contained or made in writing in connection with this Mortgage shall survive the
execution of this Mortgage and shall continue in full force and effect until all
sums secured hereby shall have been paid in full and the same shall bind and
inure to the benefit of the respective successors and assigns of the Mortgagor
and the Mortgagee.
3.17. All notices or demands to or upon the respective parties hereto to be
effective shall be in writing (including by telex or facsimile transmission),
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when actually delivered, or in the case of telex notice, when
sent answer back received, or in the case of facsimile transmission, when
received and telephonically confirmed, addressed as follows or to such other
address as may be hereafter notified by the respective parties hereto or any
assignee thereof or successor thereto:
Mortgagor: The Majestic Star Casino, LLC
c/o The Majestic Star Casino, LLC
One Buffington Harbor Drive
Gary, Indiana 46406-3000
Attention: Chief Operating and Financial Officer
Telecopier: 219-944-9137
Mortgagee: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Telecopier: 212-858-2952
Attention: Michael Daly
25
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly
executed as of the day and year first above written.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc., its manager
BY:________________________________________
Don H. Barden
President
Barden Development, Inc.
Manager-The Majestic Star Casino, LLC
26
ACKNOWLEDGMENT
STATE OF INDIANA
COUNTY OF LAKE
BE IT KNOWN, that on June __, 1999, personally appeared before me, Don H.
Barden, who, being duly sworn, did depose and say:
That he is the President of Barden Development, Inc., the Manager of The
Majestic Star Casino, LLC, the limited liability company described in and which
executed the foregoing Preferred Ship Mortgage; that by order of the Board of
Directors of said Manager, he signed his name thereto and acknowledged to me
that he executed said Preferred Ship Mortgage as such officer of said
corporation on behalf of The Majestic Star Casino, LLC; and that the same is the
free and voluntary act and deed of said corporation, and of himself as such
officer thereof, for the uses and purposes therein expressed.
_______________________________
Don H. Barden
Sworn to and Subscribed Before
me this _____ day of June, 1999.
_______________________________
Notary Public
27