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Exhibit 10.1    
    

August 28,
2003 

Ultimate
Electronics, Inc.

321 West 84th Avenue, Suite A

Thornton, Colorado 80260

Attn: Chief Financial Officer 

	Re:
	Second Amended and Restated Loan and Security Agreement with Ultimate Electronics, Inc., et al.—Maximum Permitted Capital Expenditures for
One Year Period Continuing Through January 31, 2004

Gentlemen:

        Reference
is hereby made to that certain Second Amended and Restated Loan and Security Agreement, dated as of September 28, 2001, executed by Ultimate Electronics, Inc., a
Delaware corporation ("Ultimate"), the other entities party thereto indicated to be a "Borrower" (together with Ultimate,
"Borrowers"), Wells Fargo Retail Finance, LLC, a Delaware limited liability company ("WFRF"), as the
arranger and administrative agent ("Agent") and WFRF as a Lender (as amended from time to time, "Loan
Agreement"). Unless otherwise indicated, all terms used herein shall have the same meanings as in the Loan Agreement. PNC Bank, National Association and WFRF are the current
"Lenders" party to the Loan Agreement ("Lenders"). 

        Each
of the Borrowers has requested that Lenders agree with Borrowers that despite the present wording of Section 7.22 of the Loan
Agreement, that for the period beginning February 1, 2003, and continuing through January 31, 2004 ("Subject Period"), the maximum
aggregate amount of capital expenditures (exclusive of capitalized leased financing incurred for financing the acquisition of real
estate in connection with the opening of a new store located on such real estate) Borrowers may make is $48,000,000 ("Maximum Capital Expenditure
Amount"). 

        Subject
to the terms and conditions of this letter, Lenders hereby agree with Borrowers that $48,000,000 shall constitute the Maximum Capital Expenditure Amount for the Subject Period. 

        The
foregoing agreement by Lenders to modify Section 7.22 of the Loan Agreement (i) shall not waive or affect any past,
present or future violation or violations of any provision of Loan Agreement, and (ii) shall not directly or indirectly in any way whatsoever either: (a) impair, prejudice or otherwise
adversely affect either Agent's or Lenders' right at any time to exercise any right, privilege, or remedy in connection with the Loan Agreement, any other Loan Document, or any other contract or
instrument, or (b) amend or alter any other provision of the Loan Agreement, any other Loan Document, or any other contract or instrument, or (c) constitute any course of dealing or
other basis for altering any obligation of any Borrower or any right, privilege or remedy of Agent or Lenders under the Loan Agreement, any other Loan Document, or any other contract or instrument. 

        Except
as expressly set forth herein, all of the other terms, provisions and conditions of the Loan Agreement and the other Loan Documents shall remain and continue in full force and
effect. 

        Lenders
reserve all of their rights, privileges and remedies under the Loan Agreement, each other Loan Document, and any other contracts or instruments executed by any Borrower and/or
for the benefit of any Lender. In order to induce Lenders to execute this letter, Borrowers accept and agree to each provision of this letter. 

        Notwithstanding
any provision of this letter to the contrary, this letter shall not be directly or indirectly effective against Lenders for any purpose unless and until Agent receives
the original of this 

 

letter
which has been duly signed by Ultimate, as Administrative Borrower for itself and the other Borrowers. 

	

 	
 	

Yours very truly,
	

 	
 	

WELLS FARGO RETAIL FINANCE, LLC
	

 	
 	

By:	
 	

/s/  JENNIFER BLANCHETTE      

	 	 	Its:	 	Assistant Vice President
	

 	
 	

PNC BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	

/s/  ILENE SILBERMAN      

	 	 	Its:	 	Vice President

	

Agreed and Accepted:	
 	

 
	

ULTIMATE ELECTRONICS, INC.

Administrative Borrower for Itself and the other Borrowers	
 	

 
	

By:	
 	

/s/  ALAN E. KESSOCK      
	
 	

 
	Its:	 	CFO and SVP—Finance	 	 

2

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Exhibit 10.1Exhibit
4.1

 

MANDALAY
RESORT GROUP,

as Issuer

and

THE
BANK OF NEW YORK,

as Trustee

INDENTURE

Dated as of November 25, 2003

6 3/8% Senior Notes due 2011

 

 

 

 

 

CROSS-REFERENCE TABLE*

	
  TIA Section

  	
  Indenture Section

  
	
  310(a)(1)

  	
  7.10

  
	
  (a)(2)

  	
  7.10

  
	
  (a)(3)

  	
  N.A.

  
	
  (a)(4)

  	
  N.A.

  
	
  (a)(5)

  	
  7.10

  
	
  (b)

  	
  7.08; 7.10; 12.02

  
	
  (c)

  	
  N.A.

  
	
  311(a)

  	
  7.11

  
	
  (b)

  	
  7.11

  
	
  (c)

  	
  N.A.

  
	
  312(a)

  	
  2.05

  
	
  (b)

  	
  12.03

  
	
  (c)

  	
  12.03

  
	
  313(a)

  	
  7.06

  
	
  (b)

  	
  7.06

  
	
  (c)

  	
  7.06; 12.02

  
	
  (d)

  	
  7.06

  
	
  314(a)

  	
  4.07; 12.02

  
	
  (b)

  	
  N.A.

  
	
  (c)(1)

  	
  12.04

  
	
  (c)(2)

  	
  12.04

  
	
  (c)(3)

  	
  N.A.

  
	
  (d)

  	
  N.A.

  
	
  (e)

  	
  12.05

  
	
  (f)

  	
  N.A.

  
	
  315(a)

  	
  7.01(b)

  
	
  (b)

  	
  7.05; 12.02

  
	
  (c)

  	
  7.01(a)

  
	
  (d)

  	
  7.01(c)

  
	
  (e)

  	
  6.11

  
	
  316(a)(last sentence)

  	
  12.06

  
	
  (a)(1)(A)

  	
  6.05

  
	
  (a)(1)(B)

  	
  6.04

  
	
  (a)(2)

  	
  N.A.

  
	
  (b)

  	
  6.07

  

 

N.A. means Not
Applicable.

*This Cross-Reference Table is not part of the Indenture.

 

 

 

	
  317(a)(1)

  	
  6.08

  
	
  (a)(2)

  	
  6.09

  
	
  (b)

  	
  2.04

  
	
  318(a)

  	
  12.01

  
	
  (b)

  	
  N.A.

  
	
  (c)

  	
  10.01

  

 

N.A. means Not
Applicable.

*This Cross-Reference Table is not part of the Indenture.

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  
	
  ARTICLE
  ONE

  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  Definitions.

  	
   

  
	
  SECTION
  1.02.

  	
  Incorporation
  by Reference of Trust Indenture Act.

  	
   

  
	
  SECTION 1.03.

  	
  Rules of
  Construction.

  	
   

  
	
   

  	
   

  
	
  ARTICLE TWO

  THE
  SECURITIES

  
	
   

  	
   

  
	
  SECTION 2.01.

  	
  Forms Generally.

  	
   

  
	
  SECTION
  2.02.

  	
  Execution
  and Authentication; Aggregate Principal Amount; Delivery.

  	
   

  
	
  SECTION
  2.03.

  	
  Registrar
  and Paying Agent.

  	
   

  
	
  SECTION
  2.04.

  	
  Paying
  Agent To Hold Money in Trust.

  	
   

  
	
  SECTION 2.05.

  	
  Securityholder
  Lists.

  	
   

  
	
  SECTION 2.06.

  	
  Transfer and
  Exchange.

  	
   

  
	
  SECTION 2.07.

  	
  Replacement
  Securities.

  	
   

  
	
  SECTION 2.08.

  	
  Outstanding
  Securities.

  	
   

  
	
  SECTION 2.09.

  	
  Temporary
  Securities.

  	
   

  
	
  SECTION 2.10.

  	
  Cancellation.

  	
   

  
	
  SECTION 2.11.

  	
  Defaulted Interest.

  	
   

  
	
  SECTION
  2.12.

  	
  Mandatory
  Disposition of Securities Pursuant to Gaming Laws.

  	
   

  
	
  SECTION 2.13.

  	
  CUSIP Numbers.

  	
   

  
	
  SECTION 2.14.

  	
  Restrictive
  Legends.

  	
   

  
	
  SECTION
  2.15.

  	
  Book-Entry
  Provisions For Global Security.

  	
   

  
	
  SECTION
  2.16.

  	
  Special
  Transfer Provisions.

  	
   

  
				

 

 

i

 

 

	
   

  	
   

  
	
  ARTICLE
  THREE

  [RESERVED]

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  FOUR

  COVENANTS

  	
   

  
	
   

  	
   

  
	
  SECTION 4.01.

  	
  Payment of
  Securities.

  	
   

  
	
  SECTION 4.02.

  	
  Corporate
  Existence.

  	
   

  
	
  SECTION
  4.03.

  	
  Payment
  of Taxes and Other Claims.

  	
   

  
	
  SECTION 4.04.

  	
  Maintenance
  of Properties.

  	
   

  
	
  SECTION
  4.05.

  	
  Maintenance
  of Office or Agency.

  	
   

  
	
  SECTION
  4.06.

  	
  Compliance
  Certificate; Notice of Default.

  	
   

  
	
  SECTION 4.07.

  	
  Reports.

  	
   

  
	
  SECTION
  4.08.

  	
  Waiver
  of Stay, Extension of Usury Laws.

  	
   

  
	
  SECTION 4.09.

  	
  Limitation on
  Liens.

  	
   

  
	
  SECTION
  4.10.

  	
  Limitation
  on Sale and Lease-Back Transactions.

  	
   

  
	
  SECTION
  4.11.

  	
  Defeasance
  of Certain obligations.

  	
   

  
	
  SECTION 4.12.

  	
  Change of Control.

  	
   

  
	
   

  	
   

  
	
  ARTICLE FIVE

  SUCCESSOR
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  ARTICLE SIX

  DEFAULTS
  AND REMEDIES

  	
   

  
	
   

  	
   

  
	
  SECTION 6.01.

  	
  Events of Default.

  	
   

  
	
  SECTION 6.02.

  	
  Acceleration.

  	
   

  
	
  SECTION 6.03.

  	
  Other Remedies.

  	
   

  
	
  SECTION 6.04.

  	
  Waiver of Past
  Defaults.

  	
   

  
	
  SECTION 6.05.

  	
  Control by
  Majority.

  	
   

  
	
  SECTION 6.06.

  	
  Limitation on
  Suits.

  	
   

  
	
  SECTION
  6.07.

  	
  Rights
  of Holders To Receive Payment.

  	
   

  
	
  SECTION
  6.08.

  	
  Collection
  Suit by Trustee.

  	
   

  
	
  SECTION
  6.09.

  	
  Trustee
  May File Proofs of Claim.

  	
   

  
	
  SECTION 6.10.

  	
  Priorities.

  	
   

  
	
  SECTION 6.11.

  	
  Undertaking for
  Costs.

  	
   

  

 

 

ii

 

 

	
   

  	
   

  
	
  ARTICLE
  SEVEN

  TRUSTEE

  	
   

  
	
   

  	
   

  
	
  SECTION 7.01.

  	
  Duties of Trustee.

  	
   

  
	
  SECTION 7.02.

  	
  Rights of Trustee.

  	
   

  
	
  SECTION
  7.03.

  	
  Individual
  Rights of Trustee.

  	
   

  
	
  SECTION 7.04.

  	
  Trustee’s
  Disclaimer.

  	
   

  
	
  SECTION 7.05.

  	
  Notice of Defaults.

  	
   

  
	
  SECTION 7.06.

  	
  Reports by Trustee.

  	
   

  
	
  SECTION
  7.07.

  	
  Compensation
  and Indemnity.

  	
   

  
	
  SECTION 7.08.

  	
  Replacement of
  Trustee.

  	
   

  
	
  SECTION
  7.09.

  	
  Successor
  Trustee by Merger, Etc.

  	
   

  
	
  SECTION
  7.10.

  	
  Eligibility;
  Disqualification.

  	
   

  
	
  SECTION
  7.11.

  	
  Preferential
  Collection of Claims Against Company.

  	
   

  
	
  SECTION 7.12.

  	
  Authenticating
  Agent.

  	
   

  
	
   

  	
   

  
	
  ARTICLE EIGHT

  DISCHARGE
  OF INDENTURE

  	
   

  
	
   

  	
   

  
	
  SECTION
  8.01.

  	
  Termination
  of Company’s obligations.

  	
   

  
	
  SECTION
  8.02.

  	
  Application
  of Trust Money.

  	
   

  
	
  SECTION 8.03.

  	
  Repayment to
  the Company.

  	
   

  
	
  SECTION 8.04.

  	
  Reinstatement.

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  NINE

  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  
	
  SECTION
  9.01.

  	
  Without
  Consent of Holders.

  	
   

  
	
  SECTION 9.02.

  	
  With Consent of
  Holders.

  	
   

  
	
  SECTION
  9.03.

  	
  Compliance
  with Trust Indenture Act.

  	
   

  
	
  SECTION
  9.04.

  	
  Revocation
  and Effect of Consents.

  	
   

  
	
  SECTION
  9.05.

  	
  Notation
  on or Exchange of Securities.

  	
   

  
	
  SECTION
  9.06.

  	
  Trustee
  To Sign Amendments, Etc.

  	
   

  
	
   

  	
   

  
	
  ARTICLE TEN

  MEETINGS
  OF SECURITYHOLDERS

  	
   

  
	
   

  	
   

  
	
  SECTION
  10.01.

  	
  Purposes
  for Which Meetings May Be Called.

  	
   

  

 

 

iii

 

 

	
  SECTION
  10.02.

  	
  Manner of
  Calling Meetings.

  	
   

  
	
  SECTION
  10.03.

  	
  Call
  of Meetings by Company or Holders.

  	
   

  
	
  SECTION
  10.04.

  	
  Who
  May Attend and Vote at Meetings.

  	
   

  
	
  SECTION
  10.05.

  	
  Regulations
  May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment.

  	
   

  
	
  SECTION
  10.06.

  	
  Voting
  at the Meeting and Record To Be Kept.

  	
   

  
	
  SECTION
  10.07.

  	
  Exercise
  of Rights of Trustee or Securityholders May Not Be Hindered or Delayed by
  Call of Meeting.

  	
   

  
	
   

  	
   

  
	
  ARTICLE ELEVEN

  REDEMPTION

  	
   

  
	
   

  	
   

  
	
  SECTION 11.01.

  	
  Notices to Trustee.

  	
   

  
	
  SECTION
  11.02.

  	
  Selection
  of Securities To Be Redeemed.

  	
   

  
	
  SECTION 11.03.

  	
  Notice of
  Redemption.

  	
   

  
	
  SECTION
  11.04.

  	
  Effect
  of Notice of Redemption.

  	
   

  
	
  SECTION
  11.05.

  	
  Deposit of
  Redemption Price.

  	
   

  
	
  SECTION
  11.06.

  	
  Securities
  Redeemed in Part.

  	
   

  
	
   

  	
   

  
	
  ARTICLE TWELVE

  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  SECTION
  12.01.

  	
  Trust
  Indenture Act Controls.

  	
   

  
	
  SECTION 12.02.

  	
  Notices.

  	
   

  
	
  SECTION
  12.03.

  	
  Communication
  by Holders with Other Holders.

  	
   

  
	
  SECTION
  12.04.

  	
  Certificates
  and Opinion as to Conditions Precedent.

  	
   

  
	
  SECTION
  12.05.

  	
  Statements
  Required in Certificate or Opinion.

  	
   

  
	
  SECTION
  12.06.

  	
  When
  Treasury Securities Disregarded.

  	
   

  
	
  SECTION
  12.07.

  	
  Rules
  by Paying Agent, Registrar.

  	
   

  
	
  SECTION 12.08.

  	
  Legal Holidays.

  	
   

  
	
  SECTION 12.09.

  	
  Governing Law.

  	
   

  
	
  SECTION
  12.10.

  	
  No
  Adverse Interpretation of Other Agreements.

  	
   

  
	
  SECTION
  12.11.

  	
  No Recourse
  Against Others.

  	
   

  
	
  SECTION 12.12.

  	
  Successors.

  	
   

  
	
  SECTION 12.13.

  	
  Duplicate
  Originals.

  	
   

  
	
  SECTION 12.14.

  	
  Severability.

  	
   

  
	
  SECTION
  12.15.

  	
  Effect
  of Headings, Table of Contents, Etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A         —  Form of Initial Security

  	
   

  
	
  Exhibit B          —  Form of Exchange Security

  	
   

  

 

 

iv

 

 

	
  Exhibit C          —  Form of Certificate To Be Delivered in
  Connection with Transfers to Non-QIB Accredited Investors

  	
   

  
	
  Exhibit D          —  Form of Certificate To Be Delivered in
  Connection with Transfers Pursuant to Regulation S

  	
   

  

 

 

v

 

INDENTURE, dated as of
November 25, 2003, between Mandalay Resort Group, a Nevada corporation
(“Company”), and The Bank of New York, a New York banking corporation, as Trustee
(“Trustee”).

RECITALS

The Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of its 6 3/8% Series A Senior Notes due 2011 and the issuance of
6 3/8% Series B Senior Notes due 2011 to be exchanged for the Initial
Securities (as defined herein).

All things necessary to make
this Indenture a valid agreement of the Company, in accordance with its terms,
have been done.

NOW, THEREFORE, THIS
INDENTURE WITNESSETH:

For and in consideration of
the premises and the purchase of the Securities by the Holders (as hereinafter
defined) thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of the Holders of the Securities, as follows:

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.                                                                 Definitions.

“Additional Securities”
shall mean Securities issued under this Indenture after the Issue Date in
accordance with Section 2.02.

“Affiliate” of any specified
Person means any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control”
(including, with correlative meaning, the term “controlling,” “controlled by”
and “under common control with”) as used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by agreement or
otherwise.

“Authenticating Agent” shall
have the meaning provided in Section 7.12.

“Bankruptcy Law” shall have
the meaning provided in Section 6.01.

“Board of Directors” means
the Board of Directors of the Company or any committee of such Board.

 

 

 

“Board Resolution” means a
copy of a resolution certified by the Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Trustee.

“Capital lease obligation”
means, at the time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time be so required
to be capitalized on the balance sheet in accordance with GAAP.

“Capital Stock” means, with
respect to any Person, any and all shares, interests, participations, rights in
or other equivalents (however designated) of such Person’s capital stock, and
any rights (other than debt securities convertible into capital stock),
warrants or options exchangeable for or convertible into such capital stock.

“Certificated Securities”
means Securities in definitive registered form.

“Change of Control” means
the occurrence of any of the following events: 
(a) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have “beneficial ownership” of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Stock of the Company; or
(b) the Company consolidates with, or merges with or into, another Person
or sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person or any Person consolidates with,
or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee corporation or its parent corporation and
(ii) immediately after such transaction no “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have “beneficial ownership” of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Stock of the surviving or
transferee corporation, as applicable; or (c) during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board (together with any new directors whose election by the Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office.

 

 

2

 

 

“Company” means the party
named as such in this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and thereafter means the successor.

“Consolidated Net Tangible
Assets” means the total amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (i) all current
liabilities (excluding any thereof which are by their terms extendible or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed) and (ii) all
goodwill, trade names, trademarks, patents, purchased technology, unamortized
debt discount and other like intangible assets, all as set forth on the most
recent quarterly balance sheet of the Company and its consolidated subsidiaries
and computed in accordance with generally accepted accounting principles.

“Consolidated Property”
means any property of the Company or its subsidiaries.

“Credit Facilities” means,
with respect to the Company, any one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such receivables)
or letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time.

“Custodian” shall have the
meaning provided in Section 6.01.

“Debt” of any Person means
(a) any indebtedness of such Person, contingent or otherwise, in respect of
borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit, or representing
the balance deferred and unpaid of the purchase price of any property, including
any such indebtedness incurred in connection with the acquisition by such
Person or any of its subsidiaries of any other business or entity, if and to
the extent such indebtedness would appear as a liability upon a balance sheet
of such Person prepared in accordance with generally accepted accounting
principles, including for such purpose Capital lease obligations, and (b) any
guaranty, endorsement (other than for collection or deposit in the ordinary course
of business), discount with recourse, agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire or to supply or advance funds with
respect to, or to become liable with respect to (directly or indirectly), any
indebtedness, obligation, liability or dividend of any Person, but shall not
include indebtedness or amounts owed (except to banks or other financial
institutions) for compensation to employees, or for goods or materials
purchased, or services utilized, in the ordinary course of business of such
Person.  Notwithstanding anything to the
contrary in the foregoing, “Debt” shall not include (i) any contracts
providing for the completion of construction or other pay-

 

 

3

 

 

ment or performance with
respect to the construction, maintenance or improvement of property or
equipment of the Company or its Affiliates or (ii) any contracts providing
for the obligation to advance funds, property or services on behalf of an
Affiliate of the Company in order to maintain the financial condition of such
Affiliate, in each case, including Existing and Permitted Completion Guarantees
and Make-Well Agreements.

“Default” means any event
that is, or after notice or passage of time or both would be, an Event of
Default.

“Depositary” shall mean The
Depository Trust Company.

“Detroit Joint Venture”
means the Michigan limited liability company governed by an Operating
Agreement, dated October 7, 1997, by and between Circus Circus Michigan,
Inc., a wholly owned subsidiary of the Company, and Atwater Casino Group,
L.L.C.

“Disqualified Stock” means,
with respect to any Person, any Capital Stock of such Person which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable (in each case, other than into common stock of the
Company), pursuant to a sinking fund obligation or otherwise, or is
exchangeable for Debt, or is redeemable at the option of the holder thereof, in
whole or in part, on or prior to the final maturity date of the specified
security.  Notwithstanding the
foregoing, in no event shall Capital Stock that is considered Disqualified
Stock solely by reason of such Capital Stock being convertible at the option of
the holder of such Capital Stock into other Capital Stock (other than
Disqualified Stock) constitute Disqualified Stock.

“Event of Default” shall
have the meaning provided in Section 6.01.

“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

“Exchange Securities” shall
mean (i) the 6 3/8% Series B Senior Notes due 2011 to be issued from
time to time pursuant to this Indenture in connection with the Exchange Offer
(as defined in the Registration Rights Agreement) and (ii) the Additional
Securities, if any, issued (x) without the Private Placement Legend or (y)
pursuant to a registration rights agreement substantially similar to the
Registration Rights Agreement.

“Existing and Permitted
Completion Guarantees and Make-Well Agreements” means (i) that certain
Company Guaranty by the Company in favor of Bank of America National Trust and
Savings Association dated as of June 30, 1999, and any other contract
providing for the completion of construction or other payment or performance
with respect to the construction, maintenance or improvement of property or
equipment of the Detroit Joint Ven-

 

 

4

 

 

ture, or (ii) any
“make-well,” “keep-well” or other agreement or arrangement of whatever nature
providing for the obligation to advance funds, property or services on behalf
of the Detroit Joint Venture, or given for the purpose of assuring or holding
harmless any governmental entity or agency and/or lender against loss with respect
to any obligation of the Detroit Joint Venture.

“Funded Debt” means all Debt
of the Company that (i) matures by its terms, or is renewable at the
option of any obligor thereon to a date, more than one year after the date of
original issuance of such Debt and (ii) ranks at least equal in right of
payment  with
the Securities.

“GAAP” means generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board
or of such other entity as has been approved by a significant segment of the
accounting profession, which are in effect from time to time.

“Gaming Authority” means the
Nevada Gaming Commission, the Nevada Gaming Control Board, the Mississippi
Gaming Commission, the Illinois Gaming Board and the Michigan Gaming Control
Board, or any similar federal, state or local commission, agency or other
regulatory body which has, or may at any time after the date of this Indenture
have, jurisdiction over the gaming activities of the Company or a subsidiary of
the Company (or any joint venture in which the Company or a subsidiary of the
Company is a participant) or any successor thereto.

“Gaming Laws” means the
gaming laws of a jurisdiction or jurisdictions to which the Company or a
subsidiary of the Company (or any joint venture in which the Company or a
subsidiary of the Company is a participant) is, or may at any time after the
date of this Indenture be, subject.

“Global Security” shall have
the meaning provided in Section 2.01.

“Holder” or “Securityholder”
means the Person in whose name a Security is registered on the Registrar’s
books.

“Indenture” means this
Indenture as amended or supplemented from time to time.

“Initial Purchasers” means
Banc of America Securities LLC, Citigroup Global Markets Inc., Deutsche Bank
Securities Inc., Credit Suisse First Boston LLC, J.P. Morgan Securities Inc.,
SG Cowen Securities Corporation, Credit Lyonnais Securities (USA) Inc., Scotia

 

 

5

 

 

Capital (USA) Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Mizuho International plc. and
Wells Fargo Securities, LLC.

“Initial Securities” shall
mean the 6 3/8% Series A Senior Notes due 2011 issued from time to time
under this Indenture, including those issued on the Issue Date.

“Interest Rate Protection
obligations” means, with respect to any Person, the obligations of such Person
under (i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates.

“Issue Date” means November
25, 2003.

“Institutional Accredited Investor” means an
institutional accredited investor as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act

“Joint Venture” means (i)
with respect to properties located in the United States, any partnership,
corporation or other entity, in which up to and including 50% of the
partnership interests, outstanding voting stock or other equity interests are
owned, directly or indirectly, by the Company and/or one or more subsidiaries,
and (ii) with respect to properties located outside the United States, any
partnership, corporation or other entity in which up to and including 60% of
the partnership interests, outstanding voting stock or other equity interests
are owned, directly or indirectly, by the Company and/or one or more subsidiaries.

“Legal Holiday” shall have
the meaning provided in Section 12.08.

“Lien” means any mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, security
interest, lien (statutory or other), or preference, priority or other security
or similar agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).

“Non-U.S. Person” means a Person who is not a U.S.
person, as defined in Regulation S under the Securities Act.

“obligations” means any
principal, interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any Debt.

“Officer” means the Chairman
of the Board, the Vice Chairman of the Board, the President, any Executive Vice
President, any Vice President, the Chief Financial Officer, the Treasurer, the
Secretary or the Controller of the Company.

 

 

6

 

 

“Officers’ Certificate”
means a certificate signed by two Officers or by an Officer and an Assistant
Treasurer, Assistant Secretary or Assistant Controller of the Company.  See Sections 12.04 and 12.05.  The Trustee shall have no duty or obligation
to investigate the accuracy of such Officers’ Certificate.

“Opinion of Counsel” means a
written opinion from legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel
to the Company or the Trustee.  See
Sections 12.04 and 12.05.

“Paying Agent” shall have
the meaning provided in Section 2.03.

“Person” means any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.

“Physical Securities” shall
have the meaning provided in Section 2.01.

“Predecessor Securities” of
any Security means every previous Security evidencing all or a portion of the
same debt as that evidenced by such particular Security, and, for the purpose
at this definition, any Security authenticated and delivered under Section 2.07
in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the
same debt as the lost, destroyed or stolen Security.

“principal” of a debt
security, including the Securities, means the principal of the security plus,
when appropriate, the premium, if any, on the security.

“Private Placement Legend”
shall have the meaning provided in Section 2.14.

“Project Cost” means, with
respect to any Resort Property, the aggregate costs required to complete such
construction project in accordance with the plans therefor and applicable legal
requirements, as set forth in an Officers’ Certificate submitted to the Trustee,
setting forth in reasonable detail all amounts theretofore expended and any
anticipated costs and expenses estimated to be incurred and reserves to be
established in connection with the construction and development of such future
addition or improvement, including direct costs related thereto such as
construction management, architectural engineering and interior design fees,
site work, utility installations and hook-up fees, construction permits, certificates
and bonds, land acquisition costs and the cost of furniture, fixtures,
furnishings, machinery and equipment, but excluding the following:  principal or interest payments on any Debt
(other than interest which is required to be capitalized in accordance with
GAAP, which shall be included in determining Project Cost), or costs related to
the operation of the Resort Property including, but not limited to,
non-construction supplies and pre-operating payroll.  The Trustee shall have no duty or obligation to investigate the
accuracy of such Officers’ Certificate.

 

 

7

 

 

“QIB” means a qualified institutional buyer as defined
in Rule 144A under the Securities Act.

“Registrar” shall have the
meaning provided in Section 2.03.

“Registration Rights
Agreement” means the Registration Rights Agreement, dated as of November 25,
2003, among the Company and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time in accordance with the
terms thereof.

“Resort Property” means any
property owned or to be owned by the Company or any of its subsidiaries that
is, or will be upon completion, a casino (including a riverboat casino),
casino-hotel, destination resort or a theme park.

“Responsible Officer” shall
mean, when used with respect to the Trustee, any officer within the corporate
trust department of the Trustee, including any vice president, assistant vice
president, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such Person’s knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.

“Restricted Security” shall
have the meaning provided in Section 2.14.

“Rule 144A” means Rule 144A
under the Securities Act.

“Sale and Lease-Back
Transaction” means any arrangement with any Person (other than the Company or a
subsidiary of the Company), or to which any such Person is a party, providing
for the leasing to the Company or a subsidiary of the Company for a period of
more than three years of any Consolidated Property which has been or is to be
sold or transferred by the Company or such subsidiary to such Person or to any
other Person (other than the Company or a subsidiary of the Company) to which
funds have been or are to be advanced by such Person on the security of the
leased property.

“SEC” means the Securities
and Exchange Commission.

“Securities” means the
Initial Securities and the Exchange Securities and more particularly means any
Securities authenticated and delivered under this Indenture.

“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
by the SEC thereunder.

 

 

8

 

 

“subsidiary” of any Person
means (i) any corporation of which at least a majority in interest of the
outstanding stock having by the terms thereof voting power under ordinary
circumstances to elect a majority of the directors of such corporation,
irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency, is at the time, directly or indirectly, owned or
controlled by such Person, or by one or more other corporations a majority in
interest of such stock of which is similarly owned or controlled, or by such Person
and one or more other corporations a majority in interest of such stock of
which is similarly owned or controlled and (ii) any other Person (other than a
corporation, or a partnership, corporation or other entity described in clause
(ii) of the definition of Joint Venture) in which such Person or any
subsidiary, directly or indirectly, has greater than a 50% ownership interest.

“TIA” means the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the
date of this Indenture, except as provided in Section 9.03 hereto.

“Treasury Securities” means
any investment in obligations issued or guaranteed by the United States
government or any agency thereof.

“Trustee” means the party
named as such in this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and thereafter means the successor.

“U.S. Government
obligations” means direct non-cancelable obligations of the United States of
America for the payment of which the full faith and credit of the United States
is pledged.

“Value” means, with respect
to a Sale and Lease-Back Transaction, as of any particular time, the amount
equal to the greater of (i) the net proceeds of the sale or transfer of
property leased pursuant to such Sale and Lease-Back Transaction or (ii) the
fair value, in the opinion of the Board of Directors as evidenced by a board
resolution, of such property at the time of entering into such Sale and
Lease-Back Transaction.

“Voting Stock” means, with
respect to any Person, securities of any class or classes of Capital Stock in
such Person entitling the holders thereof to vote in the election of members of
the board of directors of such Person.

“wholly owned” means with
respect to any subsidiary of any Person of which at least 99% of the
outstanding Capital Stock is owned by such Person or another wholly owned
subsidiary of such Person.  For purposes
of this definition, any directors’ qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the ownership
of a subsidiary.

 

 

9

 

 

SECTION 1.02.                                                                 Incorporation by Reference
of Trust Indenture Act.

Whenever this Indenture
refers to a provision of the TIA, the provision is incorporated by reference in
and made a part of this Indenture.  The
following TIA terms used in this Indenture have the following meanings:

“Commission” means the SEC.

“indenture securities” means
the Securities.

“indenture security holder”
means a Securityholder or Holder.

“indenture to be qualified”
means this Indenture.

“indenture trustee” or
“institutional trustee” means the Trustee.

“obligor” on the indenture
securities means the Company.

All other TIA terms used in
this Indenture that are defined by the TIA, defined by TIA reference to another
statute or defined by SEC rule have the meanings assigned to them.

SECTION
1.03.                                                                 Rules of Construction.

Unless the context otherwise
requires:

(1)           a
term has the meaning assigned to it;

(2)           an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;

(3)           “or”
is not exclusive;

(4)           words
in the singular include the plural, and in the plural include the singular; and

(5)           provisions
apply to successive events and transactions.

 

 

10

 

 

ARTICLE TWO

THE SECURITIES

SECTION 2.01.                                                                 Forms Generally.

The Initial Securities
issued from time to time and the Trustee’s certificate of authentication
relating thereto shall be substantially in the form of Exhibit A.  Initial Securities may be issued in an
unlimited aggregate principal amount, of which $250,000,000 will be issued on
the Issue Date.  The Exchange Securities
issued from time to time and the Trustee’s certificate of authentication
relating thereto shall be substantially in the form of Exhibit B.  Exchange Securities may also be issued in an
unlimited aggregate principal amount. 
The Securities may have notations, legends or endorsements required by
law, stock exchange rule or Depositary rule or usage.  The Company and the Trustee shall approve the form of the
Securities and any notation, legend or endorsement on them.  If required, the Securities may bear the
appropriate legend regarding any original issue discount for federal income tax
purposes.  Each Security shall be dated
the date of its authentication.

The terms and provisions
contained in the Securities, annexed hereto as Exhibit A and Exhibit
B, shall constitute, and are hereby expressly made, a part of this Indenture
and, to the extent applicable, the Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions
and to be bound thereby.

Securities offered and sold
in reliance on Rule 144A or Regulation S shall be issued initially in
the form of one or more permanent global Securities in registered form,
substantially in the form set forth in Exhibit A (the “Global
Security”), deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided, and shall bear the legend set forth in Section 2.14.  The aggregate principal amount of the Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depositary, as hereinafter
provided.

Securities issued in
exchange for interests in a Global Security pursuant to Section 2.15 may be
issued in the form of permanent Certificated Securities in registered form in
substantially the form set forth in Exhibits A and B (the “Physical
Securities”).

SECTION 2.02.                                                                 Execution and
Authentication; Aggregate Principal Amount; Delivery.

Two Officers shall sign the
Securities for the Company by original or facsimile signature.

 

 

11

 

 

If an Officer whose
signature is on a Security no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.

A Security shall not be
valid until the Trustee manually signs the certificate of authentication on the
Security.  The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.

Upon a written order of the
Company signed by two Officers or by an Officer and an Assistant Treasurer of
the Company, the Trustee shall authenticate the Securities.

The Trustee shall
authenticate (i) Initial Securities and (ii) Exchange Securities, in
each case upon a written order of the Company in the form of an Officers’
Certificate of the Company.  Each such
written order shall specify the amount of Securities to be authenticated and
the date on which the Securities are to be authenticated, whether the
Securities are to be Initial Securities or Exchange Securities and whether the
Securities are to be issued as Physical Securities or Global Securities or such
other information as the Trustee may reasonably request.  In addition, with respect to authentication
pursuant to clause (ii) of the first sentence of this paragraph, the first such
written order from the Company shall be accompanied by an Opinion of Counsel of
the Company in a form reasonably satisfactory to the Trustee stating that the
issuance of the Exchange Securities complies with this Indenture and has been
duly authorized by the Company.  The
aggregate principal amount of Securities outstanding at any time is unlimited.

The Securities shall be
issuable only in registered form without coupons and only in minimum
denominations of $1,000 and in integral multiples of $1,000 in denominations
above $1,000.

The Company and the Trustee,
by their execution and authentication, respectively, of the Securities,
expressly agree to the terms and conditions stated therein and to be bound
thereby.

SECTION
2.03.                                                                 Registrar and Paying Agent.

The Company shall maintain
an office or agency where the Securities may be presented for registration of
transfer or for exchange (“Registrar”) and an office or agency where the
Securities may be presented for payment (“Paying Agent”).  At all times the Registrar and the Paying
Agent shall each maintain an office or agency in the State of New York where
the Securities may be presented for the above purposes.  The Registrar shall keep a register of the
Securities and of their registration of transfer and exchange.  The Company may have one or more
co-registrars and one or more additional paying agents for the Securities.  The term “Paying Agent” includes any additional
paying agent.  The term “Registrar”
includes any co-registrar.

 

 

12

 

 

The Company shall enter into
an appropriate agency agreement with any Registrar, Paying Agent or
co-registrar not a party to this Indenture. 
The agreement shall implement the provisions of this Indenture that
relate to such agent.  The Company shall
notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar
or Paying Agent for the Securities, the Trustee shall act as such.

The Company initially
appoints the Trustee as Registrar and Paying Agent.

SECTION
2.04.                                                                 Paying Agent To Hold Money
in Trust.

Subject to the provisions of
Section 8.03 hereof, each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment.  If the Company or a subsidiary of the
Company acts as Paying Agent, it shall, on or before each due date of principal
of or interest on the Securities, segregate the money and hold it as a separate
trust fund.  The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee.  Upon doing so the Paying Agent shall have no
further liability for the money.

SECTION
2.05.                                                                 Securityholder Lists.

The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders and shall
otherwise comply with TIA Section 312(a). 
If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders
relating to such interest payment date or request, as the case may be.

SECTION
2.06.                                                                 Transfer and Exchange.

Where a Security is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the requirements
of Section 8-401(1) of the New York Uniform Commercial Code are met.  Where Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met.  To permit registration of transfers and
exchanges, the Trustee shall authenticate Securities at the Registrar’s
request.  The Company may charge a
reasonable fee for any transfer or exchange but not for any exchange pursuant
to Section 2.09 or 9.05.

 

 

13

 

 

The Company need not issue,
and the Registrar or co-Registrar need not register the transfer or exchange
of, (i) any Security during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption of the Securities
for redemption under Section 11.02 and ending at the close of business on the
day of such mailing, or (ii) any Security so selected for redemption in whole
or in part, except the unredeemed portion of any Security being redeemed in
part.

SECTION
2.07.                                                                 Replacement Securities.

If the Holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate and make available for delivery
a replacement Security if the requirements of Section 8-405 of the New
York Uniform Commercial Code are met. 
Before any Security is replaced, an indemnity bond must be provided
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar from
any loss which any of them may suffer if a Security is replaced.  The Company may charge for its expenses in
replacing a Security.  Every replacement
Security shall constitute a contractual obligation of the Company and shall be
entitled to all the benefits of this Indenture equally with all other
Securities issued hereunder.

SECTION
2.08.                                                                 Outstanding Securities.

Securities outstanding at
any time are all the Securities that have been authenticated by the Trustee
except for those canceled by it and those described in this Section.  Subject to the provisions of Section 12.06
hereof, a Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.  If a
Security is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser.

If the Paying Agent holds on
the maturity date money sufficient to pay Securities payable on that date, then
on and after that date such Securities shall cease to be outstanding and
interest on them shall cease to accrue.

SECTION
2.09.                                                                 Temporary Securities.

Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities upon a written order of the Company signed by
two Officers of the Company.  Temporary
Securities shall be substantially in the form of definitive Securities, but may
have variations that the Company considers appropriate for temporary Securities.  Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities.

 

 

14

 

 

SECTION 2.10.                                                                 Cancellation.

The Company at any time may
deliver Securities to the Trustee for cancellation.  The Registrar and the Paying Agent shall cancel and dispose of
any Securities surrendered to them for registration of transfer, exchange,
payment or cancellation in accordance with their customary procedures.  The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation.

SECTION 2.11.                                                                 Defaulted Interest.

If the Company defaults in a
payment of interest on the Securities, it shall pay the defaulted interest to
the Persons who are Securityholders on a subsequent special record date.  After the deposit by the Company with the
Trustee of money sufficient to pay such defaulted interest, the Company shall
fix the record date and payment date. 
At least 15 days before the record date, the Company shall mail to each
Securityholder, with a copy to the Trustee, a notice that states the record
date, the payment date, and the amount of defaulted interest to be paid.  The Company may pay defaulted interest in
any other lawful manner.

SECTION 2.12.                                                                 Mandatory Disposition of
Securities Pursuant to Gaming Laws.

Each Holder and beneficial
owner of Securities, by accepting or otherwise acquiring an interest in the
Securities, shall be deemed to have agreed that if the Gaming Authority of any
jurisdiction in which the Company or any of its subsidiaries (or any Joint
Venture in which the Company or a subsidiary of the Company is a participant)
now or hereafter conducts or proposes to conduct gaming requires that a Person
who is a Holder or beneficial owner of Securities must be licensed, qualified
or found suitable, or comply with any other requirement under applicable Gaming
Laws, such Holder or beneficial owner shall apply for a license, qualification
or a finding of suitability or comply with such other requirement, as the case
may be, within the prescribed time period. 
The Trustee shall have no duty to conduct or perform any due diligence
or investigation to determine whether any Holder must comply with any
applicable Gaming Laws.  If such Holder or
beneficial owner fails to apply to be, or fails to become, licensed or qualified,
is found unsuitable under applicable gaming laws or fails to comply with any
other requirement, as the case may be (a “failure of compliance”), then the
Company shall have the right, at its option, (i) to require such Person to
dispose of its Securities or beneficial interest therein within 30 days of
receipt of notice of the Company’s election or such earlier date as may be
requested or prescribed by the Gaming Authority or (ii) to redeem such
Securities (which redemption may be less than 30 days following the notice of
redemption if so requested or prescribed by the Gaming Authority) at a
redemption price equal to the lesser of (A) such Person’s cost, (B) 100% of the
principal amount thereof, plus accrued and unpaid interest to the earlier of
the redemption date and the date of any failure of compliance, or (C) such
other amount as may be required by applicable law or by order

 

 

15

 

 

of any Gaming
Authority.  The Company shall notify the
Trustee in writing of any such redemption as soon as practicable.  The Company and the Trustee shall not be
responsible for any costs or expenses any such Holder or beneficial owner may
incur in connection with its application for a license, qualification or a
finding of suitability or its compliance with any other requirement of a Gaming
Authority.  Immediately upon the
imposition by a Gaming Authority of a requirement that a Holder or beneficial
owner of Securities dispose of Securities, such Holder or beneficial owner
shall, to the extent required by applicable Gaming Laws, have no further right
(i) to exercise, directly or indirectly, through any trustee, nominee or any
other Person or entity, any right conferred by the Securities or (ii) to
receive any interest, dividends or any other distributions or payments with
respect to the Securities or any remuneration in any form with respect to the
Securities from the Company or the Trustee, except the redemption price
referred to in this Section 2.12.

SECTION 2.13.                                                                 CUSIP Numbers.

The Company in issuing the
Securities may use “CUSIP” numbers (if then generally in use), and, if so, the
Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Securities,
and any such redemption shall not be affected by any defect in or omission of
such numbers.  The Company will promptly
notify the Trustee of any change in the “CUSIP” numbers.

SECTION
2.14.                                                                 Restrictive Legends.

Each Global Security and
Physical Security that constitutes an Initial Security shall bear the following
legend (the “Private Placement Legend”) (each, a “Restricted Security”) on the
face thereof until after the second anniversary of the later of the date of
issuance of such Security and the last date on which the Company or any
Affiliate of the Company was the owner of such Security (or any predecessor
security) (or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder) (or such longer period of
time as may be required under the Securities Act or applicable state securities
laws in the opinion of counsel for the Company, unless otherwise agreed by the
Company and the Holder thereof):

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5
OF THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH

 

 

16

 

 

REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.  EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF MANDALAY RESORT GROUP (“MANDALAY”) THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b)  IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF MANDALAY SO
REQUESTS), (2) TO MANDALAY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.

Each Global Security shall
also bear the following legends on the face thereof:

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION

 

 

17

 

 

OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE GOVERNING THIS
NOTE.

SECTION 2.15.                                                                 Book-Entry Provisions For
Global Security.

(a)  The
Global Securities initially shall (i) be registered in the name of the
Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee
as custodian for such Depositary and (iii) bear legends as set forth in Section
2.14.

Members of, or participants
in, the Depositary (“Agent Members”) shall have no rights under this Indenture
with respect to any Global Security held on their behalf by the Depositary, or
the Trustee as its custodian, or under the Global Securities, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent
of the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Security.

(b) 
Transfers of a Global Security shall be limited to transfers in whole,
but not in part, to the Depositary, its successors or their respective
nominees.  Interests of beneficial
owners in a Global Security may be transferred or exchanged for Physical
Securities in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.16.  In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Security if (i) the
Depositary notifies the Company and

 

 

18

 

 

the Trustee that it is
unwilling or unable to continue as Depositary for the Global Securities and a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depositary to issue Physical
Securities.

(c)  In
connection with any transfer or exchange of a portion of the beneficial
interest in a Global Security to beneficial owners pursuant to paragraph (b),
the Registrar shall (if one or more Physical Securities are to be issued) reflect
on its books and records the date and a decrease in the principal amount of
such Global Security in an amount equal to the principal amount of the
beneficial interest in the Global Security to be transferred, and the Company
shall execute and prepare and the Trustee shall authenticate and deliver one or
more Physical Securities of like tenor and amount.

(d)  In
connection with the transfer of an entire Global Security to beneficial owners
pursuant to paragraph (b), such Global Security shall be deemed to be
surrendered to the Trustee for cancellation, and the Company shall execute and
prepare and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depositary in exchange for its beneficial interest in
the Global Security, an equal aggregate principal amount of Physical Securities
of authorized denominations registered in the name of such beneficial
owners.  The Trustee is not responsible
for any delay in said delivery as it is contingent upon the Depositary’s
delivery of information and the co-delivery of the Physical Securities.

(e)  Any
Physical Security constituting a Restricted Security delivered in exchange for
an interest in a Global Security pursuant to paragraph (b) or (c) shall, except
as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.16, bear the
legend regarding transfer restrictions applicable to the Physical Securities
set forth in Section 2.14.

(f)  The
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.

SECTION
2.16.                                                                 Special Transfer Provisions.

(a)  Transfers
to Non-QIB Institutional Accredited Investors and Non-U.S. Persons.  The following provisions shall apply with
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to any Institutional Accredited Investor that is not a
QIB or to any Non-U.S. Person:

                      (i)      the Registrar shall register the transfer
of any Security constituting a Restricted Security, whether or not such
Security bears the Private Placement Legend, if (x) the requested transfer is
after the second anniversary of the date of issuance of

 

 

19

 

 

such Security (provided, however,
that, to the knowledge of the Registrar, neither the Company nor any Affiliate
of the Company has held any beneficial interest in such Security, or portion
thereof, at any time on or within two years prior to the date of transfer of
such Security) or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the proposed transferee has delivered to the Registrar a certificate substantially
in the form of Exhibit C and any legal opinions and certifications
required thereby or (2) in the case of a transfer to a Non-U.S. Person,
the proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D; and

                     (ii)      if the proposed transferor is an Agent
Member holding a beneficial interest in the Global Security, upon receipt by
the Registrar of (x) the certificate, if any, required by paragraph (i) above
and (y) written instructions given in accordance with the Depositary’s and the
Registrar’s procedures,

whereupon (a) the
Registrar shall reflect on its books and records the date and (if the transfer
does not involve a transfer of outstanding Physical Securities) a decrease in
the principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
(b) the Company shall execute and the Trustee shall authenticate and
deliver one or more Physical Securities of like tenor and amount.

(b)  Transfers
to QIBs.  The following provisions
shall apply with respect to the registration of any proposed transfer of a
Security constituting a Restricted Security to a QIB (excluding transfers to
Non-U.S. Persons):

                      (i)      the Registrar shall register the transfer
if such transfer is being made by a proposed transferor who has checked the box
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that the sale has been made in compliance
with the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Security stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing the
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and

                     (ii)      if the proposed transferee is an Agent
Member, and the Securities to be transferred consist of Physical Securities
which after transfer are to be evidenced by an

 

 

20

 

 

interest in a Global Security, upon receipt by the
Registrar of written instructions given in accordance with the Depositary’s and
the Registrar’s procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of such Global
Security in an amount equal to the principal amount of the Physical Securities
to be transferred, and the Trustee shall cancel the Physical Securities so transferred.

(c)  Private
Placement Legend.  Upon the
transfer, exchange or replacement of Securities not bearing the Private
Placement Legend, the Registrar shall deliver Securities that do not bear the
Private Placement Legend.  Upon the
transfer, exchange or replacement of Securities bearing the Private Placement
Legend, the Registrar shall deliver only Securities that bear the Private
Placement Legend unless (i) the requested transfer is after the second
anniversary of the date of issuance of such Securities (provided, however,
that, to the knowledge of the Registrar, neither the Company nor any Affiliate
of the Company has held any beneficial interest in such Security, or portion
thereof, at any time on or within two years prior to the date of transfer of
such Security), or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.

(d)  General.  By its acceptance of any Security bearing
the Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.

The Registrar shall retain
copies of all letters, notices and other written communications received
pursuant to Section 2.15 or this Section 2.16. 
The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time during
the Registrar’s normal business hours upon the giving of reasonable written
notice to the Registrar.

The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Security (including any
transfers between or among Agent Members or beneficial owners of interests in
any Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so if
and when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.

(e)  Transfers
of Securities Held by Affiliates. 
Any certificate (i) evidencing a Security that has been transferred
to an Affiliate of the Company after the date of issuance of

 

 

21

 

 

such Security, as evidenced
by a notation on the Assignment Form for such transfer or in the representation
letter delivered in respect thereof, or (ii) evidencing a Security that
has been acquired from an Affiliate (other than by an Affiliate) in a
transaction or a chain of transactions not involving any public offering,
shall, until two years after the last date on which either the Company or any
Affiliate of the Company was an owner of such Security, in each case, bear a
legend in substantially the form set forth in Section 2.14, unless
otherwise agreed by the Company (with written notice thereof to the Trustee).

ARTICLE THREE

[RESERVED]

ARTICLE FOUR

COVENANTS

SECTION
4.01.                                                                 Payment of Securities.

The Company shall pay by
10:00 a.m. New York City time, the principal of and interest on the
Securities on the dates and in the manner provided in the Securities.  An installment of principal of or interest
on the Securities shall be considered paid on the date it is due if the Trustee
or Paying Agent holds on that date money designated for and sufficient to pay
the installment.

The Company shall pay
interest on overdue principal at the rate borne by the Securities; it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.

SECTION
4.02.                                                                 Corporate Existence.

Subject to Article Five, the
Company will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate, partnership
or other existence of each subsidiary in accordance with the respective
organizational documents of each subsidiary and the rights (charter and
statutory), licenses and franchises of the Company and its subsidiaries; provided,
however, that the Company shall not be required to preserve, with
respect to itself, any right, license or franchise, and with respect to the
subsidiaries, any such existence, right, license or franchise, if the Board of
Directors, or the board of directors or managing partners of the subsidiary
concerned, shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company or any subsidiary and that the
loss thereof is not disadvantageous in any material respect to the Holders.

 

 

22

 

SECTION
4.03.                                                                 Payment of Taxes and Other
Claims.

The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any subsidiary or upon the income, profits or
property of the Company or any subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any subsidiary; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings; and provided, further, that the Company shall not be
required to cause to be paid or discharged any such tax, assessment, charge or
claim if the Board of Directors, or the board of directors or managing partners
of the subsidiary concerned, shall determine that such payment is not
advantageous to the conduct of the business of the Company or any subsidiary
and that the failure so to pay or discharge is not disadvantageous in any
material respect to the Holders.

SECTION
4.04.                                                                 Maintenance of Properties.

The Company will cause all
properties used in the conduct of its business or the business of any
subsidiary to be maintained and kept in such condition, repair and working
order as in the judgment of the Company may be necessary, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section
shall prevent the Company from discontinuing the operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or of the board of
directors or managing partners of the subsidiary concerned, desirable in the
conduct of the business of the Company or any subsidiary and not
disadvantageous in any material respect to the Holders; and provided, further,
that property may be disposed of in the ordinary course of the business of the
Company or its subsidiaries at the discretion of the appropriate officers of
the Company and its subsidiaries.

SECTION
4.05.                                                                 Maintenance of Office or
Agency.

The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served.  Unless the Trustee
serves as Paying Agent or Registrar, the Company will give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency.  If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surren-

 

 

23

 

 

ders, notices and demands
may be made or served at the address of the Trustee set forth in Section 12.02.

The
Company may also from time to time designate one or more other offices or
agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes.

SECTION 4.06.                                                                 Compliance Certificate;
Notice of Default.

The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers’ Certificate (one of the signers of which shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Company) stating whether or not the signers know of any default by the
Company in performing its covenants hereunder, without regard to notice
requirements or periods of grace, in Sections 4.02, 4.03, 4.04, 4.05, 4.09 and
4.10.  If they do know of such a
default, the certificate shall describe the default in detail.

The Company shall deliver to
the Trustee, as soon as possible and in any event within five days after the
Company becomes aware of the occurrence of any Event of Default or an event
which, with notice or the lapse of time or both, would constitute an Event of
Default, an Officers’ Certificate setting forth the details of such Event of
Default or default and the action which the Company proposes to take with
respect thereto.

SECTION 4.07.                                                                 Reports.

The Company shall file with
the Trustee within 15 days after it files them with the SEC copies of the quarterly
and annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act.  The Company also shall comply with the other provisions of TIA
Section 314(a).

So long as any of the
Securities remain outstanding the Company shall cause to be mailed to the
Holders at their addresses appearing in the register of Securities maintained
by the Registrar all annual, quarterly or other reports which the Company mails
or causes to be mailed to its stockholders generally, concurrently with such
mailing to stockholders, and will cause to be disclosed in such annual reports
as of the date of the most recent financial statements in each such report the
amount available for dividends and other payments pursuant to the most
restrictive covenant therefor as of such date.

 

 

24

 

 

Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’
Certificates).

SECTION 4.08.                                                                 Waiver of Stay, Extension of
Usury Laws.

The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in an manner whatsoever claim, and will resist any and all
efforts to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the interest on the Securities as
contemplated herein, whenever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

SECTION 4.09.                                                                 Limitation on Liens.

Nothing in this Indenture or
in the Securities shall in any way restrict or prevent the Company or any of
its subsidiaries from incurring any Debt; provided, however, that
neither the Company nor any of its subsidiaries may issue, assume or guarantee
any Debt secured by a Lien upon any Consolidated Property without securing the
Securities equally and ratably with (or prior to) such Debt so long as such
Debt shall be so secured, except that this restriction will not apply to:

(a)  Liens existing on the date of issuance of
the Securities;

(b)  Liens affecting property of a corporation or
other entity existing at the time it becomes a subsidiary of the Company or at
the time of acquisition through a merger, consolidation or otherwise by the
Company or any subsidiary of the Company;

(c)  Liens on property existing at the time of
acquisition thereof or incurred to secure payment of all or a part of the
purchase price thereof or to secure Debt incurred prior to, at the time of or
within 24 months after the acquisition thereof, for the purpose of financing
all or part of the purchase price thereof;

(d)  Liens on any property to secure all or part
of the cost of improvements or construction thereon or Debt incurred to provide
funds for that purpose in a principal amount not exceeding the cost of those
improvements or construction;

 

 

25

 

 

(e)  Liens to secure Debt of a subsidiary of the
Company to the Company or to a subsidiary of the Company;

(f)  Liens to secure Debt of the Company, the
proceeds of which are used substantially simultaneously with the incurrence of
such Debt to retire Funded Debt;

(g)  purchase money security Liens on personal
property;

(h)  Liens securing Debt of the Company, the
proceeds of which are used within 24 months of the incurrence of such Debt for
the Project Cost of the construction and development or improvement of a Resort
Property;

(i)  Liens on the stock, partnership or other
equity interest of the Company or any subsidiary in any Joint Venture or any
subsidiary which owns an equity interest in the Joint Venture to secure Debt, provided
the amount of such Debt is contributed and/or advanced solely to such Joint
Venture;

(j)  Liens securing debt under the Credit
Facilities;

(k)  Liens in favor of any government or
governmental body, including the United States or any state thereof, or any
department, agency, instrumentality or political subdivision of any such
jurisdiction, including, without limitation, Liens to secure Debt of the
pollution control or industrial revenue bond type;

(l)  Liens required by any contract or statute in
order to permit the Company or a subsidiary of the Company to perform any
contract or subcontract made by it or any subsidiary with or at the request of
a governmental entity, including the United States or any state, or any
department, agency or instrumentality or political subdivision of any such
jurisdiction;

(m)  mechanic’s, materialman’s, carrier’s or
other like Liens, arising in the ordinary course of business;

(n)  Liens for taxes or assessments and similar
charges either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Company or a subsidiary of the
Company shall have set aside adequate reserves on its books;

(o)  zoning restrictions, easements, licenses,
covenants, reservations, restrictions on the use of real property and minor irregularities
of title incident thereto which do not in the aggregate materially detract from
the value of the property or assets of the Company and its subsidiaries taken
as a whole or impair the use of such property in the operation of the Company’s
or any of its subsidiaries business; and

 

 

26

 

 

(p)  any extension, renewal, replacement or
refinancing of any Lien referred to in the foregoing clauses (a) through (j)
inclusive or of any Debt secured thereby; provided that the principal
amount of Debt secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal, replacement or refinancing, and
that such extension, renewal, replacement or refinancing Lien shall be limited
to all or part, of substantially the same property which secured the Lien extended,
renewed, replaced or refinanced (plus improvements on such property).

Notwithstanding the
foregoing provisions of this Section 4.09, the Company and any one or more of
its subsidiaries may, without securing the Securities, issue, assume or
guarantee Debt which would otherwise be subject to the foregoing restrictions
in an aggregate principal amount which, together with all other such Debt of
the Company and its subsidiaries which would otherwise be subject to the
foregoing restrictions (not including Debt permitted to be secured under
clauses (a) through (j) inclusive above) and the aggregate Value of Sale and
Lease-Back Transactions (other than those in connection with which the Company
has voluntarily retired Funded Debt) does not at any one time exceed 15% of
Consolidated Net Tangible Assets of the Company and its consolidated
subsidiaries.

SECTION 4.10.                                                                 Limitation on Sale and
Lease-Back Transactions.

Neither the Company nor any
of its subsidiaries shall enter into any Sale and Lease-Back Transaction
unless either (a) the Company or such subsidiary would be entitled, pursuant to
the provisions of Section 4.09, to incur Debt in a principal amount equal to or
exceeding the Value of such Sale and Lease-Back Transaction, secured by a
Lien on the property to be leased, without equally and ratably securing the
Securities or (b) the Company (and in any such case the Company covenants and
agrees that it will do so) within 120 days after the effective date of such
Sale and Lease-Back Transaction (whether made by the Company or a
subsidiary of the Company) applies to the voluntary retirement of its Funded
Debt an amount equal to the Value of the Sale and Lease-Back Transaction less
the principal amount of other Funded Debt voluntarily retired by the Company
within four months after the effective date of such arrangement, excluding
retirements of Funded Debt as a result of conversions or pursuant to mandatory
sinking fund or prepayment provisions or by payment at maturity.

SECTION
4.11.                                                                 Defeasance of Certain
obligations.

The Company may omit to
comply with any term, provision or condition set forth in Sections 4.03, 4.04,
4.09, 4.10 and 4.12 and Article Five and Section 6.01(3) and (7) (with respect
to Sections 4.03, 4.04, 4.09, 4.10 and 4.12 and Article Five) and, in each case
with respect to any series of Securities, such omission shall be deemed not to
be an Event of Default; provided that the following conditions have been
satisfied with respect to such series:

 

 

27

 

 

(1)           the
Company has irrevocably deposited or caused to be deposited with the Trustee,
as trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities, (A) money in an amount,
or (B) U.S. Government obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will, without
consideration of any reinvestment of such interest, provide not later than the
opening of business on the relevant due date, money in an amount, or (C) a
combination thereof, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee at the expense of the Company, sufficient to
pay and discharge the principal of, and each installment of interest on, such
series of Securities then outstanding on the date of maturity of such principal
or installment of interest or on the redemption date, as the case may be;

(2)           such
deposit shall not cause the Trustee with respect to the Securities to have a
conflicting interest for purposes of the TIA with respect to the Securities;

(3)           such
deposit will not result in a breach or violation of, or constitute a default
under, this Indenture;

(4)           no
Event of Default or event that with the giving of notice or lapse of time, or
both, would become an Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit and no Event of
Default under Section 6.01(5) or Section 6.01(6) or event which with the giving
of notice or lapse of time, or both, would become an Event of Default under
Section 6.01(5) or Section 6.01(6) shall have occurred and be continuing at any
time during the period ending on the 91st day after such date or, if longer,
ending on the day following the expiration of the longest preference period
applicable to the Company in respect of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);

(5)           the
deposit shall not result in the Company, the Trustee or the trust becoming or
being deemed to be an “investment company” under the Investment Company Act of
1940;

(6)           the
Company has delivered to the Trustee an Opinion of Counsel, reasonably
satisfactory to the Trustee, to the effect that (i) Holders of the Securities
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such deposit and defeasance had
not occurred and (ii) (A) the trust funds will not be subject to any rights of
holders of Debt under the Credit Facilities, and (B) after the passage of 90
days following the deposit, the trust funds will not be

 

 

28

 

 

subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; provided that if a court were to rule under
any such law in any case or proceeding that the trust funds remained property
of the Company, no opinion need be given as to the effect of such laws on the
trust funds except the following: (x) assuming such trust funds remained in the
Trustee’s possession prior to such court ruling to the extent not paid to
Holders of the Securities, the Trustee will hold, for the benefit of the
Holders of the Securities, a valid and perfected security interest in such
trust funds that is not avoidable in bankruptcy or otherwise and (y) no
property, rights in property or other interests granted to the Trustee for the
benefit of the Holders of the Securities or to the Holders of the Securities in
exchange for or with respect to any of such trust funds will be subject to any
prior rights of holders of Debt under the Credit Facilities; and

(7)           the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for herein
relating to the defeasance contemplated by this Section have been complied
with.

SECTION 4.12.                                                                 Change of Control.

(a)  Following the occurrence of a Change of Control (the date of such
occurrence being the “Change of Control Date”), the Company shall, within 30
days after the Change of Control Date, make an offer to purchase (a “Change of
Control Offer”) all of the then outstanding Securities at a purchase price (the
“Change of Control Purchase Price”) in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
purchase date. The Company shall be required to purchase all Securities
properly tendered in the Change of Control Offer and not withdrawn.  The Change of Control Offer shall remain
open for 20 days and until the close of business on the Change of Control
Payment Date (as defined below).

(b)  Within
45 days following the date upon which the Change of Control occurred, the
Company shall mail, or cause the Trustee to mail, by first class mail, a notice
to each Holder at such Holder’s last registered address, with a copy to the
Trustee, if applicable, which notice shall govern the terms of the Change of
Control Offer.  The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Change of Control Offer.  Such notice shall state:

                      (i)      that the Change of Control Offer is being
made pursuant to this Section 4.12 and that all Securities tendered and not
withdrawn shall be accepted for payment;

                     (ii)      the purchase price (including the amount
of accrued interest) and the purchase date (which shall be no earlier than 30
days nor later than 45 days from the

 

 

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date such notice is mailed, other than as may be
required by law) (the “Change of Control Payment Date”);

                    (iii)      that any Security not tendered shall
continue to accrue interest;

                    (iv)      that, unless the Company defaults in
making payment therefor, any Security accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;

                     (v)      that Holders electing to have a Security
purchased pursuant to a Change of Control Offer shall be required to surrender
the Security, with the form entitled “Option of Holder to Elect Purchase” on
the reverse of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third business
day prior to the Change of Control Payment Date;

                    (vi)      that Holders shall be entitled to withdraw
their election if the Paying Agent receives, not later than the second business
day prior to the Change of Control Payment Date, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Securities purchased;

                   (vii)      that Holders whose Securities are
purchased only in part shall be issued new Securities in a principal amount
equal to the unpurchased portion of the Securities surrendered; provided,
however, that each Security purchased and each new Security issued shall
be in an original principal amount of $1,000 or integral multiples thereof; and

                  (viii)      the circumstances and relevant facts
regarding such Change of Control.

On the Change of Control
Payment Date, the Company shall, to the extent permitted by law,
(i) accept for payment all Securities or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Securities or portions thereof so tendered and
(iii) deliver, or cause to be delivered, to the Trustee for cancellation
the Securities so accepted together with an Officers’ Certificate stating that
such Securities or portions thereof have been tendered to and purchased by the
Company.  The Paying Agent will promptly
either (x) pay to the Holder against presentation and surrender (or, in
the case of partial payment, endorsement) of the Global Securities or
(y) in the case of Certificated Securities, mail to each Holder of
Securities the Change of Control Payment for such Securities, and the Trustee
will promptly authenticate and deliver to the Holder of the Global Securities a
new Global Security or Securities or, in the case of Certificated Securities,
mail to each Holder

 

 

30

 

 

new Certificated Securities,
as applicable, equal in principal amount to any unpurchased portion of the
Securities surrendered, if any, provided that each new Certificated Security
will be in a principal amount of $1,000 or an integral multiple thereof.  The Company will notify the Trustee and the
Holders of the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

Neither the Board of
Directors of the Company nor the Trustee may waive the provisions of this
Section 4.12 relating to the Company’s obligation to make a Change of Control
Offer or a Holder’s right to redemption upon a Change of Control.

The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Securities
pursuant to a Change of Control Offer. 
To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Section 4.12, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under the provisions of this Section 4.12 by
virtue thereof.

ARTICLE FIVE

SUCCESSOR CORPORATION

The Company shall not
consolidate with or merge into any other Person or sell, assign, transfer or
convey its properties and assets substantially as an entirety to any Person
unless:

(1)           either
the Company shall be the continuing corporation, or the Person (if other than
the Company) formed by such consolidation or into which the Company is merged
or to which the properties and assets of the Company substantially as an
entirety are transferred shall be a corporation, partnership or trust organized
and existing under the laws of the United States of America or any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture;

(2)           immediately
after giving effect to such transaction, no Default or Event of Default exists;
and

(3)           the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.

 

 

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The successor corporation
formed by such consolidation or into which the Company is merged or to which such
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor corporation had been named as the Company herein, and
thereafter the predecessor corporation shall be relieved of all obligations and
covenants under the Indenture and the Securities, and in the event of such
transfer any such predecessor corporation may be dissolved and liquidated.

ARTICLE SIX

DEFAULTS AND REMEDIES

SECTION 6.01.                                                                 Events of Default.

An “Event of Default” with
respect to the Securities occurs if:

(1)           the
Company defaults in the payment of interest on the Securities when the same
becomes due and payable and the default continues for a period of 30 days; or

(2)           the
Company defaults in the payment of principal of or premium, if any, on the
Securities when due at maturity, upon redemption, pursuant to an offer to
purchase required under this Indenture pursuant to Section 4.12 or otherwise by
acceleration or otherwise; or

(3)           the
Company fails to perform, or breaches, any covenant in this Indenture and the
default continues for the period and after the notice specified below; or

(4)           an
event or events of default, as defined in any one or more mortgages, indentures
or instruments under which there may be issued, or by which there may be
secured or evidenced, any Debt of the Company or a subsidiary, whether such
Debt now exists or shall hereafter be created, shall happen and shall entitle
the holders of such Debt to declare an aggregate principal amount of at least
$10,000,000 of such Debt due and payable and such event of default shall not
have been cured or waived in accordance with the provisions of such instrument,
or such Debt shall not have been discharged, within a period of 30 days after
there shall have been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of such series of Securities then outstanding a written notice
specifying such event or events of default and requiring the Company to cause
such event of default to be cured or such Debt to be discharged and stating
that such notice is a “Notice of Default” hereunder; provided, however,
that the

 

 

32

 

 

Company is not in good faith
contesting in appropriate proceedings the occurrence of such an event of
default; or

(5)           a
court of competent jurisdiction enters a judgment, decree or order for relief
in respect of the Company or any Subsidiary in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly filed a
petition seeking reorganization, arrangement, adjustment or composition in
respect of the Company or any subsidiary, (B) appoint a Custodian of the
Company or any subsidiary or for any substantial part of its property or (C)
order the winding-up or liquidation of its affairs; and such judgment, decree
or order shall remain unstayed and in effect for a period of 60 consecutive days;
or any bankruptcy or insolvency petition or application is filed, or any
bankruptcy or insolvency proceeding is commenced, against the Company or any
subsidiary and such petition, application or proceeding is not dismissed within
60 days; or any warrant of attachment is issued against any substantial portion
of the property of the Company or any subsidiary which is not released within
60 days of service; or

(6)           the
Company or any subsidiary shall (A) become insolvent, (B) generally
fail to pay its debts as they become due, (C) make any general assignment
for the benefit of creditors, (D) admit in writing its inability to pay
its debts generally as they become due, (E) commence a voluntary case or
proceeding under any Bankruptcy Law, (F) consent to the entry of a
judgment, decree or order for relief in an involuntary case or proceeding under
any Bankruptcy Law, (G) consent to the institution of bankruptcy or insolvency
against it, (H) apply for, consent to or acquiesce in the appointment of or
taking possession by a Custodian of the Company or any subsidiary or for any
substantial part of its property or (I) take any corporate action in furtherance
of any of the foregoing; or

(7)           the
Company fails to comply with its obligations described in Section 4.12 of this
Indenture.

The term “Bankruptcy Law”
means Title 11, U.S. Code or any similar federal or state law for the relief of
debtors.  The term “Custodian” means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

A default under clause (3)
(other than a Default under Section 4.02 or Article Five which Default shall be
an Event of Default without the notice or passage of time specified in this
paragraph) is not an Event of Default with respect to the Securities until the
Trustee or the Holders of at least 25% in principal amount of the Securities
then outstanding notify the Company (with a copy to the Trustee) of the default
and the Company does not cure the default within 30 days after receipt of the
notice.  The notice must specify the
default, demand that it be remedied and state that the notice is a “Notice of Default.”

 

 

33

 

 

SECTION 6.02.                                                                 Acceleration.

If an Event of Default
(other than as specified in clauses (5) and (6) of Section 6.01 above) relating
to the Securities occurs and is continuing, the Trustee by notice in writing to
the Company, or the Holders of not less than 25% in principal amount of the
Securities then outstanding by notice in writing to the Company and the
Trustee, may declare the unpaid principal (but in no event more than the
maximum amount of principal and interest thereon allowed by law) to be due and
payable immediately.  Upon any such
declaration such principal and interest shall be payable immediately.  If an Event of Default specified in Section
6.01(5) or (6) occurs, the principal amount and accrued interest on the
Securities shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

At any time after such a
declaration of acceleration has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Securities then outstanding, by written notice to the Company and the Trustee,
may rescind and annul such declaration as to the Securities and its consequences
if:

(1)           the
Company has paid or deposited with the Trustee a sum sufficient to pay

(A)          the principal of the Securities that has become due
otherwise than by such declaration of acceleration (together with interest, if
any, payable thereon); and

(B)           all sums paid by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee and its
agents, attorneys and counsel; and

(2)           all
existing Events of Default relating to the Securities have been cured or waived
and the rescission would not conflict with any judgment or decree.

SECTION 6.03.                                                                 Other Remedies.

If an Event of Default
relating to the Securities occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on such series of Securities or to enforce the performance
of any provisions of the Securities or this Indenture.

The Trustee may maintain a
proceeding even if it does not possess any of the Securities or does not
produce any of them in the proceeding. 
A delay or omission by the

 

 

34

 

 

Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. 
No remedy is exclusive of any other remedy.  All available remedies are cumulative to the extent permitted by
law.

SECTION
6.04.                                                                 Waiver of Past Defaults.

Subject to Section 9.02, the
Holders of a majority in principal amount of the Securities then outstanding by
notice to the Trustee may waive an existing Default or Event of Default with
respect to the Securities and its consequences.  When a Default or Event of Default is waived, it is cured and
stops continuing.

SECTION 6.05.                                                                 Control by Majority.

The
Holders of a majority in principal amount of the Securities then outstanding
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it with respect to any default under the Securities.  However, subject to Section 7.01, the Trustee may refuse to follow
any direction that conflicts with any rule of law or this Indenture, that is
unduly prejudicial to the rights of another Holder of the Securities, or that
would involve the Trustee in personal liability.

SECTION 6.06.                                                                 Limitation on Suits.

A Holder of the Securities
may not pursue any remedy with respect to this Indenture or any of the Securities
unless:

(1)           the
Holder gives to the Trustee written notice of a continuing Event of Default
with respect to such series;

(2)           the
Holders of at least 25% in principal amount of the Securities then outstanding
make a written request to the Trustee to pursue the remedy;

(3)           such
Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;

(4)           the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and

(5)           during
such 60-day period the Holders of a majority of principal amount of such series
of Securities then outstanding do not give the Trustee a direction inconsistent
with the request.

 

 

35

 

 

A Holder of the Securities
may not use this Indenture to prejudice the rights of another Holder of the
Securities or to obtain a preference or priority over another Holder of the
Securities.

SECTION
6.07.                                                                 Rights of Holders To Receive
Payment.

Notwithstanding any other
provision of this Indenture, the right of any Holder of a Security to receive
payment of principal of or interest on the Security on or after the respective
due dates expressed in the Security or to bring suit for the enforcement of any
such payment on or after such respective dates shall not be impaired or
affected without the consent of the Holder.

SECTION
6.08.                                                                 Collection Suit by Trustee.

If an Event of Default in
payment of interest or principal specified in Section 6.01(1) or (2) occurs and
is continuing with respect to the Securities, the Trustee may recover judgment
in its own name and as trustee of an express trust against the Company for the
whole amount of principal (or such portion of the principal as may be specified
as due upon acceleration at that time in the terms of the Securities) and
interest, if any, remaining unpaid on the Securities then outstanding.

SECTION
6.09.                                                                 Trustee May File Proofs of
Claim.

The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, its creditors or its
property.

SECTION 6.10.                                                                 Priorities.

If the Trustee collects any
money pursuant to this Article with respect to the Securities, it shall pay out
the money in the following order:

First:  to the Trustee for amounts due under Section
7.07;

Second:  to Securityholders for amounts due and
unpaid on the Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal and interest, respectively; and

Third:  to the Company.

 

 

36

 

 

The Trustee may fix a record
date and payment date for any payment to Holders of the Securities pursuant to
this Section.  The Trustee shall notify
the Company in writing reasonably in advance of any such record date and
payment date.

SECTION
6.11.                                                                 Undertaking for Costs.

In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.  This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of
more than 10% in principal amount of the Securities then outstanding.

ARTICLE SEVEN

TRUSTEE

The Trustee hereby accepts
the trust imposed upon it by this Indenture and covenants and agrees to perform
the same, as herein expressed.

SECTION 7.01.                                                                 Duties of Trustee.

(a)  If an
Event of Default has occurred and is known to the Trustee (and is not cured),
the Trustee shall exercise its rights and powers and use the same degree of
care and skill in their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such Person’s own affairs.

(b)  Except
during the continuance of an Event of Default:

(1)           The
Trustee need perform only those duties that are specifically set forth in this
Indenture or in the TIA and no covenants or obligations shall be implied in
this Indenture which bind the Trustee.

(2)           In
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. 
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or

 

 

37

 

 

not they conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).

(c)  The
Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:

(1)           This
paragraph does not limit the effect of paragraph (b) of this Section;

(2)           The
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

(3)           The
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to
Section 6.05.

(4)           The
Trustee shall, subject to Section 7.08, comply with any order or directive
of a Gaming Authority that the Trustee submit an application for any license,
finding of suitability or other approval pursuant to any Gaming Law and will
cooperate fully and completely in any proceeding related to such application; provided,
however, that if the Trustee’s resignation is pending, the failure to
comply with this Section 7.01(b)(4) shall not be a violation of this Indenture.

(d)  Every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b) and (c) of this Section.

(e)  The
Trustee may refuse to perform any duty or exercise any right or power unless it
receives security and indemnity satisfactory to it against any loss, liability
or expense.

(f)  The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.

SECTION 7.02.                                                                 Rights of Trustee.

(a)  The
Trustee may conclusively rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or
matter stated in the document.

(b)  Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. 
The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

 

 

38

 

 

(c)  The
Trustee may act through its attorneys or agents (which shall not include its
employees) and shall not be responsible for the misconduct or negligence of any
agent appointed with due care.

(d)  The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or power.

(e)  No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
satisfactory indemnity against such risk or liability is not reasonably assured
to it.

(f)  The
Trustee may consult with counsel of its selection and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

(g)  The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity satisfactory to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.

(h)  The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
matter inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney at the
sole cost of the Company and shall incur no liability or additional liability
of any kind by reason of such inquiry or investigation.

(i)  The
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the principal corporate trust office of the Trustee, and such
notice references the Securities and this Indenture.

(j)  The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be

 

 

39

 

 

enforceable by, the Trustee
in each of its capacities hereunder, and to each agent, custodian and other
Person employed to act hereunder.

(k)  The
Trustee may request that the Company deliver an Officers’ Certificate setting
forth the names of individuals and/or titles of officers authorized at such
time to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any Person authorized to sign an Officers’
Certificate, including any Person specified as so authorized in any such
certificate previously delivered and not superseded.

SECTION
7.03.                                                                 Individual Rights of Trustee.

The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its subsidiaries or Affiliates with
the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar or co-registrar may do the same with
like rights.  However, the Trustee must
comply with Sections 7.10 and 7.11.

SECTION
7.04.                                                                 Trustee’s Disclaimer.

The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company’s use of the proceeds
from the Securities, and it shall not be responsible for any statement in the
Securities other than its certificate of authentication.

SECTION 7.05.                                                                 Notice of Defaults.

If a Default occurs with
respect to the Securities and is continuing and if it is known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Holder of the
Securities, notice of the Default within 90 days after it occurs.  Except in the case of a default in the
payment of principal of or interest on the Securities, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Securities.

SECTION 7.06.                                                                 Reports by Trustee.

Within 60 days after each
June 15 beginning with the June 15 following the date of this
Indenture, the Trustee shall mail to each Securityholder a brief report dated
as of such June 15 that complies with TIA Section 313(a) if required by
such Section 313(a).  The Trustee also
shall comply with TIA Section 313(b).

A copy of each report at the
time of its mailing to Securityholders shall be filed with the SEC and each
stock exchange on which the Securities are listed.  The Company shall

 

 

40

 

 

promptly notify the Trustee
when the Securities are listed on any stock exchange or of any delisting
thereof.

To
the extent reasonably requested in writing by the Company, the Trustee shall
cooperate with the Gaming Authorities in order to provide such Gaming
Authorities with any information and documentation that they may request and as
otherwise required by law.

SECTION
7.07.                                                                 Compensation and Indemnity.

The Company shall pay to the
Trustee from time to time such compensation for its services as shall be agreed
in writing by the Company and the Trustee. 
The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. 
Such expense may include the reasonable compensation and expenses of the
Trustee’s agents and counsel.  The
Company shall indemnify each of the Trustee and any predecessor Trustee against
any and all loss, damage, claim (whether asserted by the Company, a Holder or
any other Person), liability or expense, including taxes (other than taxes
based on the income of the Trustee) incurred by it, without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust.  The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity.  The Company shall defend the
claim and the Trustee shall cooperate in the defense.  The Trustee may have separate counsel of its selection and the
Company shall pay the reasonable fees and expenses of such counsel.  The Company need not pay for any settlement
made without its consent.  The Company
need not reimburse any expense or indemnify against any loss or liability
incurred by the Trustee through negligence or bad faith.

To secure the Company’s
payment obligations in this Section, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee, except
that held in trust to pay principal and interest on particular Securities.

When the Trustee incurs
expenses or renders services in connection with an Event of Default specified
in Section 6.01(5) or Section 6.01(6), the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable federal or state bankruptcy, insolvency or other similar law.

The provisions of this
Section shall survive the termination of this Indenture.

SECTION
7.08.                                                                 Replacement of Trustee.

The Trustee may resign by so
notifying the Company in writing.  The
Holders of a majority in principal amount of the Securities then outstanding
may remove the Trustee with respect to the Securities by so notifying the
removed Trustee and may appoint a succes-

 

 

41

 

 

sor Trustee with the
Company’s consent. The Company may remove the Trustee with respect to the
Securities if:

(1)           the
Trustee fails to comply with Section 7.10;

(2)           the
Trustee is adjudged a bankrupt or an insolvent;

(3)           a
receiver or other public officer takes charge of the Trustee or its property;
or

(4)           the
Trustee becomes incapable of acting.

If, as to the Securities,
the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trustee
for that series.

A successor Trustee as to
any series of Securities shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. 
Immediately after that, the retiring Trustee shall, upon payment of its
charges, promptly transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture as to the Securities.  A successor Trustee shall mail notice of its
succession to the Holders of the Securities.

If a successor Trustee as to
the Securities does not take office within 45 days after the retiring Trustee
resigns or is removed, then (i) the retiring Trustee or the Company may
petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Trustee and (ii) the Holders of a majority
in principal amount of the Securities then outstanding may petition any court
of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to
comply with Section 7.10 with respect to the Securities, any Holder of the
Securities who satisfies the requirements of TIA Section 310(b) may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee for the Securities.

In case of appointment
hereunder of a successor Trustee with respect to the Securities, the Company,
the retiring Trustee and each successor Trustee with respect to the Securities
shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or

 

 

42

 

 

those series to which the
appointment of such successor Trustee relates, (2) shall contain such
provisions as shall be necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary or
desirable to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; provided, however, that
nothing herein or in such supplemental Indenture shall constitute such Trustee
co-trustees of the same trust and that each such Trustee shall be a trustee of
a trust hereunder separate and apart from any trust hereunder and administered
by any other such Trustee.

Upon the execution and
delivery of such supplemental Indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.

SECTION
7.09.                                                                 Successor Trustee by Merger,
Etc.

If the Trustee as to the
Securities consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust assets to, another corporation, the
resulting, surviving or transferee corporation shall, if such resulting,
surviving or transferee corporation is otherwise eligible hereunder, without
any further act, be the successor Trustee as to the Securities.

SECTION
7.10.                                                                 Eligibility;
Disqualification.

The Securities shall always
have a Trustee who satisfies the requirements of TIA Section 310(a).  The Trustee as to the Securities shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. 
The Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9).

SECTION 7.11.                                                                 Preferential Collection of
Claims Against Company.

The Trustee shall comply
with TIA Section 311(a), excluding any creditor relationship listed in TIA
Section 311(b).  A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.

 

 

43

 

 

SECTION
7.12.                                                                 Authenticating Agent.

If the Company so requests,
there shall be an Authenticating Agent appointed by the Trustee with power to
act on its behalf and subject to its direction in the authentication and
delivery of the Securities in connection with the exchange or registration of
transfer thereof as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by the relevant Sections
hereof to authenticate and deliver the Securities, and such Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as though authenticated by the Trustee
hereunder, and for all purposes of this Indenture, the authentication and
delivery of such Securities by the Authenticating Agent pursuant to this
Section shall be deemed to be the authentication and delivery of such
Securities “by the Trustee.” 
Notwithstanding anything to the contrary contained in Section 2.02, or
in any other Section hereof, all authentication in connection with exchange or
registration of transfer thereof shall be effected either by the Trustee or an
Authenticating Agent and such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States or
of any State, with a combined capital and surplus of at least $5,000,000 and
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authority.  If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect herein specified in
this Section.  If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the purposes of this Section the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.

Any corporation into which
any Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of any
Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the Authenticating Agent or such successor
corporation.

Any Authenticating Agent may
at any time resign by giving written notice of resignation to the Trustee and
to the Company.  The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation
or upon such a termination, or in case at any time any Authenticating Agent
shall cease to be eligible under this Section, the Trustee shall promptly
appoint a successor Authenticating Agent, shall give written notice of such
appointment to the Company and shall mail notice of such appointment

 

 

 

44

 

 

to all Holders of the
Securities as the names and addresses of such Holders appear on the register of
Securities, and shall publish notices of such appointment at least once in a
newspaper of general circulation in the place where such successor
Authenticating Agent has its principal office.

Any Authenticating Agent by
the acceptance of its appointment shall be deemed to have agreed with the
Trustee that:  it will perform and carry
out the duties of an Authenticating Agent as herein set forth, including,
without limitation, the duties to authenticate and deliver the Securities when
presented to it in connection with exchanges or registrations of transfer
thereof; it will furnish from time to time, as requested by the Trustee, appropriate
records of all transactions carried out by it as Authenticating Agent and will
furnish the Trustee such other information and reports as the Trustee may
reasonably require; it is eligible for appointment as Authenticating Agent
under this Section and will notify the Trustee promptly in writing if it shall
cease to be so qualified; and it will indemnify the Trustee against any loss,
liability or expense incurred by the Trustee and will defend any claim asserted
against the Trustee by reason of any act or failure to act of the
Authenticating Agent but it shall have no liability for any action taken by it
at the specific written direction of the Trustee.

The Company agrees that it
will pay to the Authenticating Agent from time to time reasonable compensation
for its services.

The provisions of Sections
7.02, 7.03 and 7.04 shall bind and inure to the benefit of any Authenticating
Agent to the same extent that they bind and inure to the benefit of the Trustee.

If an appointment is made
pursuant to this Section, the Securities may have endorsed thereon, in addition
to the Trustee’s certificate of authentication, an alternate certificate of
authentication in the following form:

This is one of the
Securities referred to in the within mentioned Indenture.

	
   

  	
   

  	
  THE BANK OF NEW YORK,

  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  As Authenticating Agent

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

 

45

 

 

ARTICLE EIGHT

DISCHARGE OF INDENTURE

SECTION
8.01.                                                                 Termination of Company’s
Obligations.

The Company may terminate
its obligations under the Securities and this Indenture, except those
obligations referred to in the immediately succeeding paragraph, if:

(a)  all Securities previously authenticated and
delivered (other than mutilated, destroyed, lost or stolen Securities which
have been replaced or the Securities which are paid for pursuant to Section
4.01 or the Securities for whose payment money or securities have theretofore
been held in trust and thereafter repaid to the Company, as provided in Section
8.03) have been delivered to the Trustee for cancellation and the Company has
paid all sums payable by it hereunder with respect to such series; or

(b)  (1) the Securities mature within one year or
all of them are to be called for redemption within one year after arrangements
satisfactory to the Trustee for giving the notice of redemption; and

(b)  (2) the Company has irrevocably deposited or
caused to be deposited with the Trustee, during such one-year period, as trust
funds in trust, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such series of Securities, (A) money in an
amount, or (B) U.S. Government obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will,
without consideration of any reinvestment of such interest, provide not later
than the opening of business on the relevant due date, money in an amount, or
(C) a combination thereof, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, sufficient to pay and discharge the principal
of, and each installment of interest on, such series of Securities then
outstanding on the date of maturity of such principal or installment of
interest or the redemption date, as the case may be; or

(c)  (1) the Company has irrevocably deposited or
caused to be deposited with the Trustee, as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of
the Securities, (A) money in an amount, or (B) U.S. Government
obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will, without consideration of any
reinvestment of such interest, provide not later than 10:00 a.m., New York
City time, on the relevant due date, money in an amount, or (C) a
combination thereof, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, sufficient to pay and

 

 

46

 

 

discharge
the principal of and each installment of interest on such series of Securities
then outstanding on the date of maturity of such principal or installment of
interest, or, on the redemption date, as the case may be; and

(2)  the Company delivers to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in clause (c) and in Section 4.11 relating to
the satisfaction and discharge of this Indenture with respect to such series of
Securities have been complied with.

Notwithstanding the
foregoing clause (c), prior to the end of the 90-day period referred to in
clause (6)(ii) of Section 4.11, none of the Company’s obligations under this
Indenture shall be discharged, and subsequent to the end of the 90-day period
only the Company’s obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01,
4.02, 7.07, 7.08, 8.03 and 8.04 shall survive until such series of Securities
are no longer outstanding.  Thereafter,
the Company’s obligations in Sections 7.07, 8.03 and 8.04 shall survive; provided,
that the Company shall pay any taxes or other costs and expenses incurred by
any trust created pursuant to this Article Eight.

After any such irrevocable
deposit and after satisfaction of all the conditions of this Section 8.01, the
Trustee, upon the Company’s request, shall acknowledge in writing the discharge
of the Company’s obligations under the Securities and this Indenture, except
for those surviving obligations specified above.  The Trustee shall not be responsible for any calculations made by
the Company in connection with the deposit of funds pursuant to clauses (b)(2)
or (c)(1) of this Section 8.01.

The Company shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government obligations deposited pursuant to this
Section 8.01 or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of outstanding Securities.

SECTION
8.02.                                                                 Application of Trust Money.

The Trustee or Paying Agent
shall, with respect to the Securities, hold in trust money or U.S. Government
obligations deposited with it pursuant to Section 8.01, and shall apply the
deposited money and the money from U.S. Government obligations in accordance
with this Indenture, to the payment of principal of and interest on the
Securities.

SECTION
8.03.                                                                 Repayment to the Company.

Subject to Section 8.02, the
Trustee and the Paying Agent shall promptly pay to the Company upon written
request any excess money or U.S. Government obligations held by

 

 

47

 

 

them at any time and
thereupon shall be relieved from all liability with respect to such money.  The Trustee and the Paying Agent shall pay
to the Company upon written request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided, however,
that the Company shall, if requested by the Trustee or such Paying Agent, give
the Trustee or such Paying Agent satisfactory indemnification against any and
all liability which may be incurred by it by reason of such payment; and provided,
further, that the Trustee or such Paying Agent before being required to
make any payment shall at the expense of the Company cause to be published once
in a newspaper or newspapers printed in the English language, customarily
published at least five days a week and of general circulation in the City of
Las Vegas, Nevada and in the Borough of Manhattan, The City of New York and
mail to each Securityholder entitled to such money notice that such money
remains unclaimed and that, after a date specified therein which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Company.  After payment to the Company, Securityholders
entitled to such money must look to the Company for payment as general
creditors unless an applicable law designates another Person.

SECTION 8.04.                                                                 Reinstatement.

If the Trustee or Paying
Agent is unable to apply any money or U.S. Government obligations in accordance
with Section 8.01 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government
obligations in accordance with Section 8.01; provided, however,
that if the Company has made any payment of interest on or principal of the
Securities because of the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of the Securities to receive such
payment from the money or U.S. Government obligations held by the Trustee or
Paying Agent.

ARTICLE NINE

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION
9.01.                                                                 Without Consent of Holders.

The Company and the Trustee
may amend or supplement this Indenture or the Securities without notice to or
consent of any Holder:

(1)           to
cure any ambiguity, defect or inconsistency;

 

 

48

 

 

(2)           to
comply with Article Five;

(3)           to
provide for uncertificated Securities in addition to or in place of
Certificated Securities;

(4)           to
comply with any requirements of the SEC in connection with the qualification of
this Indenture under the TIA; or

(5)           to
make any change that does not adversely affect the rights of any
Securityholder.

SECTION
9.02.                                                                 With Consent of Holders.

The Company and the Trustee
may amend or supplement this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Securities affected by
such amendment or supplement.  The Holders
of a majority delivered to the Trustee in principal amount of the Securities
then outstanding may also waive compliance in a particular instance by the
Company with any provision of this Indenture with respect to the Securities; provided,
however, that without the consent of each Securityholder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section 6.04, may
not:

(1)           reduce
the amount of Securities whose Holders must consent to an amendment, supplement
or waiver;

(2)           reduce
the rate, or extend the time for payment of interest on, any Security in a
manner adverse to the Holders thereof;

(3)           reduce
the principal of, or extend the fixed maturity or fixed redemption date of any
Securities, in a manner adverse to the Holders thereof;

(4)           waive
a default in the payment of the principal of, or interest on, any Security;

(5)           waive
a default upon the occurrence of a Change of Control under Section 4.12;

(6)           affect
the ranking of the Securities;

(7)           make
any Security payable in money other than that stated in the Security; or

(8)           make
any changes in Section 6.04, 6.07 and 9.02.

 

 

49

 

 

It shall not be necessary
for the consent of the Holders under this Section to approve the particular
form of any proposed amendment or waiver, but it shall be sufficient if such
consent approves the substance thereof.

After an amendment or waiver
under this Section becomes effective, the Company shall mail to Holders of the
Securities affected thereby a notice briefly describing the amendment or
waiver.

SECTION
9.03.                                                                 Compliance with Trust
Indenture Act.

Every amendment to or
supplement of this Indenture or the Securities shall comply with the TIA as
then in effect.

SECTION
9.04.                                                                 Revocation and Effect of Consents.

Until an amendment,
supplement or waiver becomes effective, a consent to such amendment, supplement
or waiver by a Holder of a Security shall bind the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder’s Security, even if notation of the consent is not made
on any Security.  However, any such
Holder or subsequent Holder may revoke the consent as to his Security or
portion of a Security if the Trustee receives notice of revocation before the
date the amendment, supplement or waiver becomes effective.

The Company may, but shall
not be obligated to, set a record date for the purpose of determining the
identity of Holders entitled to consent to any amendment, supplement or waiver
permitted by this Indenture.  If a
record date is fixed, the Holders of the Securities outstanding on such record
date, and no other Holders, shall be entitled to consent to such amendment,
supplement or waiver or revoke any consent previously given, whether or not
such Holders remain Holders after such record date.  No consent shall be valid or effective for more than 90 days
after such record date unless consents from Holders of the principal amount of
the Securities required hereunder for such amendment, supplement or waiver to
be effective shall have also been given and not revoked within such 90-day
period.

After an amendment, supplement
or waiver becomes effective, it shall bind the Holder of every Security unless
it makes a change described in clause (1), (2), (3), (4), (5), (6) or (7) of
Section 9.02.  In that case the
amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder’s Security.

 

 

50

 

 

SECTION
9.05.                                                                 Notation on or Exchange of
Securities.

If an amendment, supplement
or waiver changes the terms of a Security, the Company may require the Holder
of the Security to deliver it to the Trustee. 
The Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. 
Alternatively, if the Company so determines, the Company in exchange for
the Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms.

SECTION
9.06.                                                                 Trustee To Sign Amendments,
Etc.

The Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affect the rights of the
Trustee.  If it does, the Trustee may
but need not sign it.  The Company may
not sign an amendment or supplement until the Board of Directors approves
it.  The Trustee, subject to Sections
7.01 and 7.02, shall be fully protected in relying on an Opinion of Counsel and
an Officers’ Certificate, each stating that any amendment, supplement or waiver
is authorized by this Indenture and complies with the provisions of this
Article Nine.

ARTICLE TEN

MEETINGS OF SECURITYHOLDERS

SECTION 10.01.                                                           Purposes for Which Meetings
May Be Called.

A meeting of Holders of the
Securities may be called at any time and from time to time pursuant to the
provisions of this Article Ten for any of the following purposes:

(a)  to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to waive or to consent to
the waiving of any Default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by Securityholders pursuant
to any of the provisions of Article Six;

(b)  to remove the Trustee or appoint a successor
Trustee pursuant to the provisions of Article Seven;

(c)  to consent to an amendment, supplement or
waiver pursuant to the provisions of Section 9.02; or

(d)  to take any action (i) authorized to be
taken by or on behalf of the Holders of any specified aggregate principal amount
of such series of Securities under any other provision of this Indenture, or
authorized or permitted by law or (ii) which the

 

 

51

 

 

Trustee
deems necessary or appropriate in connection with the administration of this
Indenture.

SECTION
10.02.                                                           Manner of Calling Meetings.

The Trustee may at any time
call a meeting of Holders of the Securities to take any action specified in
Section 10.01, to be held at such time and at such place in the City of Las
Vegas, Nevada, or in the Borough of Manhattan, The City of New York, as the
Trustee shall determine.  Notice of
every meeting of Holders of the Securities, setting forth the time and place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed by the Trustee, first-class postage prepaid, to the
Company, and to the Holders of the Securities at their last addresses as they
shall appear on the registration books of the Registrar, not less than ten nor
more than 60 days prior to the date fixed for the meeting.

Any meeting of Holders of
the Securities shall be valid without notice if all Holders of the Securities
then outstanding are present in Person or by proxy, or if notice is waived
before or after the meeting by all Holders of the Securities then outstanding,
if the Company and the Trustee are either present by duly authorized
representative or have, before or after the meeting waived notice.

SECTION 10.03.                                                           Call of Meetings by Company
or Holders

In case at any time the Company,
pursuant to resolution of its Board of Directors, or the Holders of not less
than 25% in aggregate principal amount of the Securities then outstanding shall
have requested the Trustee to call a meeting of Securityholders, either
separately or jointly, to take any action specified in Section 10.01, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within 20 days of receipt of such request, then the Company or the
Holders of such series of Securities in the amount above specified may
determine the time and place in the City of Las Vegas, Nevada, or in the
Borough of Manhattan, The City of New York, for such meeting and may call such
meeting for the purpose of taking such action, by mailing or causing to be
mailed notice thereof as provided in Section 10.02, or by causing notice
thereof to be published at least once in each of two successive calendar weeks
(on any day of the week) in a newspaper or newspapers printed in the English language,
customarily published at least five days a week and of general circulation in
the City of Las Vegas, Nevada and in the Borough of Manhattan, The City of New
York, the first such publication to be not less than 10 nor more than 60 days
prior to the date fixed for the meeting.

 

 

52

 

 

SECTION
10.04.                                                           Who May Attend and Vote at
Meetings.

To be entitled to vote at
any meeting of Securityholders, a Person shall (a) be a registered Holder of
one or more Securities, or (b) be a Person appointed by an instrument in
writing as proxy for the registered Holder or Holders of Securities.  The only Persons who shall be entitled to be
present or to speak at any meeting of Securityholders shall be the Persons
entitled to vote at such meeting and their counsel and any representative of
the Trustee and its counsel and any representatives of the Company and its
counsel.

SECTION 10.05.                                                           Regulations May Be Made by
Trustee; Conduct of the Meeting; Voting Rights; Adjournment.

Notwithstanding any other
provision of this Indenture, the Trustee may make such reasonable regulations
as it may deem advisable for any meeting of Securityholders, in regard to proof
of the holding of Securities and of the appointment of proxies, and in regard
to the appointment and duties of inspectors of votes, and submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall think
appropriate.  Such regulations may fix a
record date and time for determining the Holders of record of Securities entitled
to vote at such meeting, in which case those and only those Persons who are
Holders of Securities at the record date and time so fixed, or their proxies,
shall be entitled to vote at such meeting whether or not they shall be such
Holders at the time of the meeting.

The Trustee shall, by an
instrument in writing, appoint a temporary chairman of the meeting, unless the
meeting shall have been called by the Company or by Securityholders as provided
in Section 10.03, in which case the Company or the Securityholders calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairman.  A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Holders of a
majority in principal amount of the Securities represented at the meeting and
entitled to vote.

At any meeting each
Securityholder or proxy shall be entitled to one vote for each $1,000 principal
amount of Securities held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any
Securities challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding.  The
chairman of the meeting shall have no right to vote other than by virtue of
Securities held by him or instruments in writing as aforesaid duly designating
him as the Person to vote on behalf of other Securityholders.  At any meeting of Securityholders, the
presence of Persons holding or representing any number of Securities shall be
sufficient for a quorum.  Any meeting of
Securityholders duly called pursuant to the provisions of Section 10.02 or
Section 10.03 may be adjourned from time to time by vote of the Holders of a
majority in aggregate principal amount of the Securities represented at the
meeting and entitled to vote, and the meeting may be held as so adjourned
without further notice.

 

 

53

 

 

SECTION 10.06.                                                           Voting at the Meeting and
Record To Be Kept.

The vote upon any resolution
submitted to any meeting of Securityholders shall be by written ballots on
which shall be subscribed the signatures of the Holders of Securities or of
their representatives by proxy and the principal amount of the Securities voted
by the ballot.  The permanent chairman
of the meeting shall appoint two inspectors of votes, who shall count all votes
cast at the meeting for or against any resolution and who shall make and file
with the secretary of the meeting their verified written reports in duplicate
of all votes cast at the meeting.  A
record in duplicate of the proceedings of each meeting of Securityholders shall
be prepared by the secretary of the meeting and there shall be attached to such
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more Persons having knowledge of the
facts, setting forth a copy of the notice of the meeting and showing that such
notice was mailed as provided in Section 10.02 or published as provided in
Section 10.03.  The record shall be
signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.

Any record so signed and
verified shall be conclusive evidence of the matters therein stated.

SECTION 10.07.                                                           Exercise of Rights of
Trustee or Securityholders May Not Be Hindered or Delayed by Call of Meeting.

Nothing in this Article Ten
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Securityholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise
of any right or rights conferred upon or reserved to the Trustee or to the
Securityholders under any of the provisions of this Indenture or of the
Securities.

ARTICLE ELEVEN

REDEMPTION

SECTION 11.01.                                                           Notices to Trustee.

If the Company elects to
redeem the Securities pursuant to any optional redemption provisions thereof,
it shall notify the Trustee of the redemption date and the principal amount of
the Securities to be redeemed.

The Company shall give each
notice provided for in this Section in an Officers’ Certificate at least 45
days before the redemption date (unless a shorter notice period shall be

 

 

54

 

 

satisfactory to the
Trustee), which notice shall specify the provisions of such Security pursuant
to which the Company elects to redeem such Securities.

If the Company elects to
reduce the principal amount of the Securities to be redeemed pursuant to
mandatory redemption provisions thereof, it shall notify the Trustee of the
amount of, and the basis for, any such reduction.  If the Company elects to credit against any such mandatory
redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall deliver such Securities with such notice.

SECTION 11.02.                                                           Selection of Securities To
Be Redeemed.

If
less than all of the Securities are to be redeemed, the Trustee shall select
the Securities to be redeemed by a method that complies with the requirements
of any exchange on which the Securities are listed, or, if the Securities are
not listed on an exchange, on a pro rata basis or by lot.  The Trustee shall make the selection not more
than 75 days and not less than 30 days before the redemption date from the
Securities outstanding and not previously called for redemption.  Securities and portions thereof that the
Trustee selects shall be in amounts equal to the minimum authorized
denomination for the Securities to be redeemed or any integral multiple
thereof.  Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.  The
Trustee shall notify the Company promptly in writing of the Securities or portions
of Securities to be called for redemption.

SECTION
11.03.                                                           Notice of Redemption.

Except as otherwise provided
as to the Securities, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail a notice of redemption to each Holder
with a copy to the Trustee whose Securities are to be redeemed.

The notice shall identify
the Securities to be redeemed and shall state:

(1)           the
redemption date;

(2)           the
redemption price fixed in accordance with the terms of the Securities to be
redeemed, plus accrued interest, if any, to the date fixed for redemption (the
“redemption price”);

(3)           if
any Security is being redeemed in part, the portion of the principal amount of
such Security to be redeemed and that, after the redemption date, upon
surrender of such Security, a new Security or Securities in principal amount
equal to the unredeemed portion will be issued;

(4)           the
name and address of the Paying Agent;

 

 

55

 

 

(5)           that
Securities called for redemption must be surrendered to the Paying Agent to
collect the redemption price;

(6)           that,
unless the Company defaults in payment of the redemption price, interest on
Securities called for redemption ceases to accrue on and after the redemption
date;

(7)           the
paragraph of the Securities pursuant to which such Securities called for
redemption are being redeemed; and

(8)           the
CUSIP number, if any, of the Securities to be redeemed.

At the Company’s request,
the Trustee shall give the notice of redemption in the Company’s name and at
its expense; provided, however, that the Company shall have
delivered to the Trustee, at least 45 days prior to the redemption date, an Officers’
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding
paragraph.  The notice mailed in the
manner herein provided shall be conclusively presumed to have been duly given
whether or not the Holder receives such notice.  In any case, failure to give such notice by mail or any defect in
the notice of the Holder of any Security shall not affect the validity of the
proceeding for the redemption of any other Security.

SECTION
11.04.                                                           Effect of Notice of
Redemption.

Once notice of redemption is
mailed in accordance with Section 11.03 hereof, Securities called for
redemption become due and payable on the redemption date for the redemption
price.  Upon surrender to the Paying
Agent, such Securities will be paid at the redemption price.

SECTION
11.05.                                                           Deposit of Redemption Price.

On or before
10:00 a.m., New York City time, on the redemption date, the Company shall
deposit with the Paying Agent (or, if the Company or any subsidiary is the
Paying Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of all Securities called for redemption on that date other
than Securities which have previously been delivered by the Company to the
Trustee for cancellation.  The Paying
Agent shall return to the Company any money not required for that purpose.

SECTION
11.06.                                                           Securities Redeemed in Part.

Upon surrender of a Security
that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the Holder at the expense of the Company a new Secu-

 

 

56

 

 

rity of like series equal in
principal amount to the unredeemed portion of the Security surrendered.

ARTICLE TWELVE

MISCELLANEOUS

SECTION
12.01.                                                           Trust Indenture Act Controls.

If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA or the TIA as amended
after the date hereof, the required provision shall control.

SECTION 12.02.                                                           Notices.

Any notice or communication
shall be sufficiently given if in writing and delivered in Person or mailed by
first-class mail postage prepaid, addressed as follows:

if to the Company:

Mandalay Resort Group

3950 Las Vegas Boulevard
South

Las Vegas, Nevada  89119

Attention:  General Counsel

if to the Trustee:

The Bank of New York

101 Barclay Street, Floor 8W

New York, New York  10286

Attention:  Corporate Trust Administration

Re:  Mandalay Resort Group

The Company or the Trustee
by notice to the other may designate additional or different addresses for subsequent
notices or communications.

Any notice or communication
mailed to a Securityholder shall be mailed by first-class mail, postage
prepaid, to such Holder at such Holder’s address as it appears on the register
maintained by the Registrar and shall be sufficiently given to such Holder if
so mailed within the time prescribed.

Failure to mail a notice or
communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.  If a notice or commu-

 

 

57

 

 

nication is mailed in the
manner provided above, it shall be deemed to have been duly given two days
after the date of mailing, whether or not the addressee receives it.

SECTION 12.03.                                                           Communication by Holders
with Other Holders.

Securityholders may
communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA Section 312(c).

SECTION 12.04.                                                           Certificates and Opinion as
to Conditions Precedent.

Upon any request or
application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:

(1)           an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and

(2)           an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.

SECTION 12.05.                                                           Statements Required in
Certificate or Opinion.

Each Officers’ Certificate
or Opinion of Counsel with respect to compliance with a condition or covenant
provided for in this Indenture shall include:

(1)           a
statement that the Person making such Officers’ Certificate or Opinion of
Counsel has read such covenant or condition;

(2)           a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such Officers’ Certificate
of Opinion of Counsel are based;

(3)           a
statement that, in the opinion of such Person, such Person has made such
examination or investigation as is necessary to enable such Person to express
an informed opinion as to whether or not such covenant or condition has been complied
with; and

(4)           a
statement as to whether or not in the opinion of such Person, such condition or
covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers’
Certificate.

 

 

58

 

 

SECTION
12.06.                                                           When Treasury Securities
Disregarded.

In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by an Affiliate
shall be disregarded, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which a Responsible Officer of the Trustee actually knows are
so owned shall be so disregarded.

SECTION 12.07.                                                           Rules by Paying Agent,
Registrar.

The Paying Agent or
Registrar each may make reasonable rules for its functions.

SECTION 12.08.                                                           Legal Holidays.

A “Legal Holiday” is a
Saturday, a Sunday, a legal holiday or a day on which banking institutions are
not required to be open.  If a payment
date is a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.

SECTION 12.09.                                                           Governing Law.

This Indenture and the
Securities shall be governed by and construed in accordance with the laws of
the State of New York, without regard to conflicts of laws principles thereof.

SECTION 12.10.                                                           No Adverse Interpretation of
Other Agreements.

This Indenture may not be
used to interpret another indenture, loan or debt agreement of the Company or
any subsidiary.  Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.

SECTION
12.11.                                                           No Recourse Against Others.

A past, present or future
director, officer, employee, stockholder or incorporator, as such, of the
Company or any successor corporation shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation.  Each Securityholder by accepting
a Security waives and releases all such liability.  The waiver and release are part of the consideration of issuance
of the Securities.  The waiver may not
be effective to waive liabilities under the federal securities laws and it is
the view of the SEC that such a waiver is against public policy.

 

 

59

 

 

SECTION 12.12.                                                           Successors.

All agreements of the
Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this Indenture
shall bind its successor.

SECTION
12.13.                                                           Duplicate Originals.

The parties may sign any
number of copies of this Indenture. 
Each signed copy shall be an original, but all of them together
represent the same agreement.

SECTION 12.14.                                                           Severability.

In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

SECTION 12.15.                                                           Effect of Headings, Table of
Contents, Etc.

The Article and Section
headings herein and the table of contents are for convenience only and shall
not affect the construction thereof.

 

 

60

 

IN WITNESS WHEREOF, the
Company and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized, all as of the day and year first
above written.

	
   

  	
  SIGNATURES

  
	
   

  	
   

  	
   

  
	
   

  	
  MANDALAY
  RESORT GROUP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Glenn W. Schaeffer

  
	
   

  	
  Name:

  	
  Glenn W. Schaeffer

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK,

  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Stacey B. Poindexter

  
	
   

  	
  Name:

  	
  Stacey B. Poindexter

  
	
   

  	
  Title:

  	
  Assistant Treasurer

  

 

 

 

EXHIBIT A

	
  REGISTERED

  PRINCIPAL AMOUNT

  $

  	
  CUSIP NO.

  
	
   

  	
  NO.

  

 

MANDALAY RESORT GROUP

6 3/8% SERIES A SENIOR

NOTE DUE 2011

THE SECURITY (OR ITS
PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.  EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF MANDALAY RESORT GROUP (“MANDALAY”) THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b)  IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF MANDALAY SO
REQUESTS), (2) TO MANDALAY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.

UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSI-

 

 

A-1

 

 

TARY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE
INDENTURE GOVERNING THIS NOTE.

MANDALAY RESORT GROUP, a
Nevada corporation (the “Company,” which term shall include any successor under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, the principal sum of
$                     on
December 15, 2011, and to pay interest thereon at the rate of 6 3/8% per annum,
until the entire principal amount hereof is paid or duly provided for.  This Note is one of a duly authorized series
issued by the Company designated as the 6 3/8% Series A Senior Notes due
2011” (herein called the “Notes”).

1.             Interest.

The Company will pay
interest semiannually on June 15 and December 15 of each year (each, an
“Interest Payment Date”) commencing June 15, 2004.  Interest on the Notes will accrue from the
most recent date to which interest has been paid, unless the date hereof is a
date to which interest has been paid, in which case from the date of the Note,
or, if no interest has been paid, from November 25, 2003.  Notwithstanding the foregoing, when there is
no existing default in the payment of interest on the Notes, if the date hereof
is after a Record Date, as that term is defined below, and before the next
succeeding Interest Payment Date, this Note shall bear interest from such
Interest Payment Date; provided, however, that if the Company
shall default in the payment of interest due on such Interest Payment Date,
then this Note shall bear interest from the next preceding Interest Payment
Date to which interest

 

 

A-2

 

 

has been paid, or, if no
interest has been paid on the Notes, from November 25, 2003.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

2.             Method of Payment.

The Company will pay
interest on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the May 31 or November
30 preceding the June 15 or December 15, as the case may be, on which the
Interest Payment Date occurs (each, a “Record Date”).  Holders must surrender Notes to a Paying Agent to collect
principal payments.  The Company will
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts.  However, the Company may pay principal and
any interest by its check payable in such money.  It may mail an interest check to a holder’s registered address.

3.             Paying Agent and Registrar.

Initially, the Trustee will
act as Paying Agent and Registrar.  The
Company may change any Paying Agent, Registrar or co-registrar without
notice.  The Company or any of its subsidiaries
may act as Paying Agent, Registrar or co-registrar.

4.             Indenture.

The Company issued the Notes
under an Indenture dated as of November 25, 2003, between the Company and the
Trustee (the “Indenture”).  The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended, as in effect on the date of the Indenture.  The Notes are subject to all such terms and
Holders are referred to the Indenture and such Act for a statement of
them.  Terms used herein which are
defined in the Indenture shall have the respective meanings assigned to them in
the Indenture.

5.             Redemption.

a.  Optional Redemption. 
Except as provided below, the Company may not redeem the Notes prior to
maturity.  Prior to maturity, upon not
less than 30 nor more than 60 days’ notice, the Company may redeem the
Notes in whole but not in part, at a redemption price equal to 100% of the
principal amount thereof plus the Make-Whole Premium, together with accrued and
unpaid interest thereon to the applicable redemption date.

“Make-Whole-Premium” means,
with respect to any Note at any redemption date, the excess, if any, of
(a) the present value of the sum of the principal amount that would be
payable at maturity of such Note and all remaining interest payments (not
including any portion of such payments of interest accrued as of the redemption
date) to and including December 15, 2011, discounted on a semi-annual bond
equivalent basis from December 15, 2011

 

 

A-3

 

 

to the redemption date at a
per annum interest rate equal to the sum of the Treasury Yield (determined on
the Business Day immediately preceding the date of such redemption), plus 50
basis points, over (b) the aggregate principal amount of the Note being
redeemed.

“Treasury Yield” means the
yield to maturity at the time of computation of Treasury Securities with a
constant maturity (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15 (519) which has become publicly available at
least two business days prior to the date fixed for redemption (or, if such
Statistical Release is no longer published, any publicly available source of
similar data)) most nearly equal to the then remaining average life of the
Notes, provided that if the average life of the Notes is not equal to
the constant maturity of a Treasury Security for which a weekly average yield
is given, the Treasury yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of Treasury Securities for which such yields are given, except that if
the average life of the Notes is less than one year, the weekly average yield
on actually traded Treasury Securities adjusted to a constant maturity of one
year shall be used.

b.  Mandatory Redemption.  The
Company will not be required to make any mandatory sinking fund payments in
respect of the Notes.

6.             Offers to Purchase.

Section 4.12 of the
Indenture provides that upon the occurrence of a Change of Control (as defined
in the Indenture) and subject to further limitations contained therein, the
Company will make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.

7.             Denominations, Transfer, Exchange.

The Notes are in registered
form without coupons in denominations of $1,000 and in integral multiples of
$1,000.  A Holder may transfer or
exchange Notes in accordance with the Indenture.  The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture.

8.             Persons Deemed Owners.

The Holder of a Note may be
treated as the owner of it for all purposes.

9.             Unclaimed Money.

If money for the payment of
principal or interest remains unclaimed for two years, the Trustee or Paying
Agent will pay the money back to the Company at its written re-

 

 

A-4

 

 

quest.  After that, Holders entitled to the money
must look to the Company for payment unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.

10.           Discharge Prior to Maturity.

Subject to certain
conditions, if the Company deposits with the Trustee money or U.S. Government
obligations sufficient to pay principal of and accrued interest on the Notes to
maturity, the Company will be discharged (to the extent provided in the
Indenture) from the Indenture and the Notes.

11.           Amendment, Supplement, Waiver.

Subject to certain
exceptions requiring the consent of the Holders of each of the affected Notes,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then outstanding
affected by such amendment, supplement or waiver, and any past default or
compliance with any provision as to the Notes may be waived with the consent of
the Holders of a majority in principal amount of the Notes then
outstanding.  Without the consent of any
Holder, the Company and the Trustee may amend or supplement the Indenture of
the Notes to, among other things, cure any ambiguity, defect or inconsistency
or to provide that the obligations of the Company hereunder may be represented
solely in the records of the Company in addition to or in place of the issue of
Notes or to make any change that does not materially adversely affect the
rights of any Holder.

12.           Restrictive Covenants.

The Notes are general
unsecured obligations of the Company. 
The Indenture does not limit the Company from issuing additional debt
under the Indenture or incurring other unsecured Debt.  It does limit the ability of the Company and
its subsidiaries to grant certain security interests in their property without
equally and ratably securing the Notes and to engage in certain sales and leaseback
transactions, subject to certain important exceptions described therein.  Once a year the Company must report to the
Trustee with respect to its compliance with such limitations.

13.           Successor Corporation.

When a successor corporation
assumes all the obligations of its predecessor under the Notes and the
Indenture, the predecessor corporation will be released from those obligations.

 

 

A-5

 

 

14.           Defaults and Remedies.

An Event of Default is any
one of the following:  (i) failure
of the Company to pay interest when the same becomes due and payable and
default continues for a period of 30 days on the Notes; (ii) failure of
the Company to pay the principal of or premium, if any, on the Notes when due
at maturity, upon redemption, pursuant to an offer to purchase pursuant to the
change of control provision or otherwise by acceleration or otherwise;
(iii) failure of the Company to comply with Section 4.12 in the
Indenture; (iv) failure to perform any other covenant contained in the
Indenture for 30 days after notice (other than a Default under Section 4.02 or
Article Five which Default shall be an Event of Default without the notice or
passage of time specified in this clause); (v) the occurrence of an event
of default, as defined in any one or more mortgages, indentures or instruments
under which there may be issue, or by which there may be secured or evidenced,
any Debt of the Company or a subsidiary whether such Debt now exists or shall
hereafter be created and shall entitle the holders of such Debt to declare an
aggregate principal amount of at least $10,000,000 of such Debt due and
payable, which event of default is not cured or waived in accordance with the
provisions of such instrument, or such Debt is not discharged, within 30 days
after the receipt by the Company of notice from the Trustee or the Holders of
at least 25% in principal amount of such series of Securities then outstanding
of such event of default and requiring the Company to cause such event of
default to be cured or such Debt to be discharged; and (vi) certain events of
bankruptcy, insolvency or reorganization. 
If an Event of Default (other than certain events of bankruptcy,
insolvency or reorganization) relating to the Notes occurs and is continuing,
the Trustee or the Holders of not less than 25% in principal amount of the
Notes then outstanding may declare all the Notes to be due and payable
immediately in accordance with Section 6.02 of the Indenture.  Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. 
The Trustee may require security and indemnity satisfactory to it before
it enforces the Indenture or the Notes. 
Subject to certain limitations, Holders of a majority in principal
amount of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.  The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is
in their interests.

15.           Trustee Dealings with Company.

The Bank of New York, the
Trustee under the Indenture, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
subsidiaries or Affiliates, and may otherwise deal with the Company or its subsidiaries
or Affiliates, as if it were not Trustee.

16.           No Recourse Against Others.

A past, present or future
director, officer, employee, stockholder or incorporator, as such, of the
company or any successor corporation shall not have any liability for any

 

 

A-6

 

 

obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of, or
by reason of such obligations or their creation.  Each Holder by accepting a Note waives and released all such
liability.  The waiver and release are
part of the consideration for the issue of the Notes.

17.           Authentication.

This Note shall not be valid
until the Trustee signs the certificate of authentication at the end of this Note.

18.           Copies of the Indenture.

The Company will furnish to
any Holder upon written request and without charge a copy of the
Indenture.  Requests may be made to:

Mandalay Resort Group

3950 Las Vegas Boulevard South

Las Vegas, Nevada  89119

Attention:  General Counsel

19.           Abbreviations and Defined Terms.

Customary abbreviations may
be used in the name of a Holder of a Note or an assignee, such as:  TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

20.           CUSIP Numbers.

Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company will cause CUSIP numbers to be printed on the Notes as a convenience to
the Holders of the Notes.  No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.

21.           Registration Rights.

Pursuant to a registration
rights agreement by and among the Company and the Initial Purchasers, the
Company will be obligated to consummate an exchange offer pursuant to which the
Holder of this Note shall have the right to exchange this Note for Exchange
Securities (as defined in the Indenture), which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as the Notes.  The
Holders of the Notes shall be entitled to receive certain additional interest
payments in the

 

 

A-7

 

 

event such exchange offer is
not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the registration rights agreement.

22.           Governing Law.

This Note shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to conflict of laws principles thereof.

(Signature Page To Follow)

 

 

A-8

 

 

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by its duly authorized
officers.

	
   

  	
  SIGNATURES

  
	
   

  	
   

  	
   

  
	
   

  	
  MANDALAY
  RESORT GROUP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

 

 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

This is one of the Notes of
the series designated “6 3/8% Series A Senior Notes due 2011,” pursuant to the
Indenture.

	
   

  	
   

  	
  THE
  BANK OF NEW YORK,

  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
  Date of Authentication:

  	
   

  	
   

  

 

 

 

ASSIGNMENT FORM

If you the Holder want to
assign this Note, fill in the form below and have your signature guaranteed by
an Eligible Guarantor Institution (bank, stock broker, savings and loan
association or credit union) with membership in an approved signature guarantee
medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15:

I or we assign and transfer
this Note to:

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

(Print or type name, address
and zip code and social security or tax ID number of assignee)

and irrevocably appoint                                   , agent to
transfer this Note on the books of the Company.  The agent may substitute another to act for him.

	
  Dated:

  	
   

  	
    Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your name
  appears on the other side of this Note)

  	
   

  
	
   

  
	
  Signature Guarantee:

  	
   

  
							

 

In connection with any
transfer of this Note occurring prior to the date which is the earlier of
(i) the date of the declaration by the Commission of the effectiveness of
a registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), covering resales of this Note (which effectiveness shall not
have been suspended or terminated at the date of the transfer) and (ii) the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer:

[Check
One]

(1)  __                                                              to the Company
or a subsidiary thereof; or

(2)  __                                                              pursuant to and
in compliance with Rule 144A under the Securities Act of 1933, as amended; or

 

 

 

(3)  __                                                              to an
institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act of 1933, as amended) that has furnished to the
Trustee a signed letter containing certain representations and agreements (the
form of which letter can be obtained from the Trustee); or

(4)  __                                                              pursuant to the
exemption from registration provided by Rule 144 under the Securities Act of
1933, as amended; or

(5)  __                                                              pursuant to an
effective registration statement under the Securities Act of 1933, as amended;
or

(6)  __                                                              pursuant to
another available exemption from the registration requirements of the
Securities Act of 1933, as amended.

and unless the box below is
checked, the undersigned confirms that such Note is not being transferred to an
“affiliate” of the Company as defined in Rule 144 under the Securities Act of
1933, as amended (an “Affiliate”):

o            The transferee is an Affiliate of
the Company.

Unless one of the items is
checked, the Trustee will refuse to register any of the Notes evidenced by this
certificate in the name of any Person other than the registered Holder thereof;
provided, however, that if item (3), (4) or (6) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in their sole discretion, such written legal opinions, certifications
(including an investment letter in the case of box (3)) and other information
as the Trustee or the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended.

 

 

 

If none of the foregoing
items are checked, the Trustee or Registrar shall not be obligated to register
this Note in the name of any Person other than the Holder hereof unless and until
the conditions to any such transfer of registration set forth herein and in
Section 2.16 of the Indenture shall have been satisfied.

	
  Dated:

  	
   

  	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your name
  appears on the other side of this Note)

  	
   

  
	
   

  
	
  Signature Guarantee:

  	
   

  
							

 

 

 

 

TO
BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents
and warrants that it is purchasing this Note for its own account or an account
with respect to which it exercises sole investment discretion and that it and
any such account is a “qualified institutional buyer” within the meaning of
Rule 144A under the Securities Act of 1933, as amended and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned’s foregoing representations in order to claim the exemption from registration
provided by Rule 144A.

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NOTICE:  To be executed by an executive officer

  

 

EXHIBIT B

	
  REGISTERED

  PRINCIPAL AMOUNT

  $

  	
  CUSIP NO.

  
	
   

  	
  NO.

  

 

MANDALAY RESORT GROUP

6 3/8% SERIES B SENIOR

NOTE DUE 2011

UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR
NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE
INDENTURE GOVERNING THIS NOTE.

MANDALAY RESORT GROUP, a
Nevada corporation (the “Company,” which term shall include any successor under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, the principal sum of $                           on December 15,
2011, and to pay interest thereon at the rate of 6 3/8% per annum, until the
entire principal amount hereof is paid or duly provided for.  This Note is one

 

 

B-1

 

 

of a duly authorized series
issued by the Company designated as the “6 3/8% Series B Senior Notes due
2011” (herein called the “Notes”).

1.             Interest.

The Company will pay
interest semiannually on June 15 and December 15 of each year (each, an
“Interest Payment Date”) commencing June 15, 2004.  Interest on the Notes will accrue from the most recent date to
which interest has been paid, unless the date hereof is a date to which
interest has been paid, in which case from the date of the Note, or, if no
interest has been paid, from November 25, 2003.  Notwithstanding the foregoing, when there is no existing default
in the payment of interest on the Notes, if the date hereof is after a Record
Date, as that term is defined below, and before the next succeeding Interest
Payment Date, this Note shall bear interest from such Interest Payment Date; provided,
however, that if the Company shall default in the payment of interest
due on such Interest Payment Date, then this Note shall bear interest from the
next preceding Interest Payment Date to which interest has been paid, or, if no
interest has been paid on the Notes, from November 25, 2003. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

2.             Method of Payment.

The Company will pay
interest on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the May 31 or November
30 preceding the June 15 or December 15, as the case may be, on which the
Interest Payment Date occurs (each, a “Record Date”).  Holders must surrender Notes to a Paying Agent to collect
principal payments.  The Company will
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts.  However, the Company may pay principal and
any interest by its check payable in such money.  It may mail an interest check to a holder’s registered address.

3.             Paying Agent and Registrar.

Initially, the Trustee will
act as Paying Agent and Registrar.  The
Company may change any Paying Agent, Registrar or co-registrar without
notice.  The Company or any of its subsidiaries
may act as Paying Agent, Registrar or co-registrar.

4.             Indenture.

The Company issued the Notes
under an Indenture dated as of November 25, 2003, between the Company and the
Trustee (the “Indenture”).  The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended, as in effect on the date of the Indenture.  The Notes are subject to all such terms and
Holders are referred to the

 

 

B-2

 

 

Indenture and such Act for a
statement of them.  Terms used herein
which are defined in the Indenture shall have the respective meanings assigned
to them in the Indenture.

5.             Redemption.

a.  Optional Redemption. 
Except as provided below, the Company may not redeem the Notes prior to
maturity.  Prior to maturity, upon not
less than 30 nor more than 60 days’ notice, the Company may redeem the
Notes in whole but not in part, at a redemption price equal to 100% of the
principal amount thereof plus the Make-Whole Premium, together with accrued and
unpaid interest thereon to the applicable redemption date.

“Make-Whole-Premium” means,
with respect to any Note at any redemption date, the excess, if any, of
(a) the present value of the sum of the principal amount that would be
payable at maturity of such Note and all remaining interest payments (not
including any portion of such payments of interest accrued as of the redemption
date) to and including December 15, 2011, discounted on a semi-annual bond
equivalent basis from December 15, 2011 to the redemption date at a per annum
interest rate equal to the sum of the Treasury Yield (determined on the
Business Day immediately preceding the date of such redemption), plus 50 basis
points, over (b) the aggregate principal amount of the Note being
redeemed.

“Treasury Yield” means the
yield to maturity at the time of computation of Treasury Securities with a
constant maturity (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15 (519) which has become publicly available at
least two business days prior to the date fixed for redemption (or, if such
Statistical Release is no longer published, any publicly available source of
similar data)) most nearly equal to the then remaining average life of the
Notes, provided that if the average life of the Notes is not equal to
the constant maturity of a Treasury Security for which a weekly average yield
is given, the Treasury yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of Treasury Securities for which such yields are given, except that if
the average life of the Notes is less than one year, the weekly average yield
on actually traded Treasury Securities adjusted to a constant maturity of one
year shall be used.

b.  Mandatory Redemption.  The
Company will not be required to make any mandatory sinking fund payments in
respect of the Notes.

6.             Offers to Purchase.

Section 4.12 of the
Indenture provides that upon the occurrence of a Change of Control (as defined
in the Indenture) and subject to further limitations contained therein, the Company
will make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.

 

 

B-3

 

 

7.             Denominations, Transfer, Exchange.

The Notes are in registered
form without coupons in denominations of $1,000 and in integral multiples of
$1,000.  A Holder may transfer or
exchange Notes in accordance with the Indenture.  The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture.

8.             Persons Deemed Owners.

The Holder of a Note may be
treated as the owner of it for all purposes.

9.             Unclaimed Money.

If money for the payment of
principal or interest remains unclaimed for two years, the Trustee or Paying
Agent will pay the money back to the Company at its written request.  After that, Holders entitled to the money
must look to the Company for payment unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.

10.           Discharge Prior to Maturity.

Subject to certain
conditions, if the Company deposits with the Trustee money or U.S. Government
obligations sufficient to pay principal of and accrued interest on the Notes to
maturity, the Company will be discharged (to the extent provided in the
Indenture) from the Indenture and the Notes.

11.           Amendment, Supplement, Waiver.

Subject to certain
exceptions requiring the consent of the Holders of each of the affected Notes,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then outstanding
affected by such amendment, supplement or waiver, and any past default or
compliance with any provision as to the Notes may be waived with the consent of
the Holders of a majority in principal amount of the Notes then
outstanding.  Without the consent of any
Holder, the Company and the Trustee may amend or supplement the Indenture of
the Notes to, among other things, cure any ambiguity, defect or inconsistency
or to provide that the obligations of the Company hereunder may be represented
solely in the records of the Company in addition to or in place of the issue of
Notes or to make any change that does not materially adversely affect the
rights of any Holder.

 

 

B-4

 

 

12.           Restrictive Covenants.

The Notes are general
unsecured obligations of the Company. 
The Indenture does not limit the Company from issuing additional debt
under the Indenture or incurring other unsecured Debt.  It does limit the ability of the Company and
its subsidiaries to grant certain security interests in their property without
equally and ratably securing the Notes and to engage in certain sales and
leaseback transactions, subject to certain important exceptions described
therein.  Once a year the Company must
report to the Trustee with respect to its compliance with such limitations.

13.           Successor Corporation.

When a successor corporation
assumes all the obligations of its predecessor under the Notes and the
Indenture, the predecessor corporation will be released from those obligations.

14.           Defaults and Remedies.

An Event of Default is any
one of the following:  (i) failure
of the Company to pay interest when the same becomes due and payable and
default continues for a period of 30 days on the Notes; (ii) failure of
the Company to pay the principal of or premium, if any, on the Notes when due
at maturity, upon redemption, pursuant to an offer to purchase pursuant to the
change of control provision or otherwise by acceleration or otherwise;
(iii) failure of the Company to comply with Section 4.12 in the Indenture;
(iv) failure to perform any other covenant contained in the Indenture for
30 days after notice (other than a Default under Section 4.02 or Article Five
which Default shall be an Event of Default without the notice or passage of
time specified in this clause); (v) the occurrence of an event of default,
as defined in any one or more mortgages, indentures or instruments under which
there may be issued, or by which there may be secured or evidenced any Debt of
the Company or a subsidiary whether such Debt now exists or shall hereafter be
created and shall entitle the holders of such Debt to declare an aggregate
principal amount of at least $10,000,000 of such Debt due and payable, which
event of default is not cured or waived in accordance with the provisions of
such instrument, or such Debt is not discharged, within 30 days after the
receipt by the Company of notice from the Trustee or the Holders of at least
25% in principal amount of such series of Securities then outstanding of such
event of default and requiring the Company to cause such event of default to be
cured or such Debt to be discharged; and (vi) certain events of bankruptcy,
insolvency or reorganization.  If an
Event of Default (other than certain events of bankruptcy, insolvency or
reorganization) relating to the Notes occurs and is continuing, the Trustee or
the Holders of not less than 25% in principal amount of the Notes then
outstanding may declare all the Notes to be due and payable immediately in
accordance with Section 6.02 of the Indenture.  Holders may not enforce the Indenture or the Notes except as
provided in the Indenture.  The Trustee
may require security and indemnity satisfactory to it before it enforces the
Indenture or the Notes.  Subject to
certain limitations, Holders of a majority in prin-

 

 

B-5

 

 

cipal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests.

15.           Trustee Dealings with Company.

The Bank of New York, the
Trustee under the Indenture, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
subsidiaries or Affiliates, and may otherwise deal with the Company or its subsidiaries
or Affiliates, as if it were not Trustee.

16.           No Recourse Against Others.

A past, present or future
director, officer, employee, stockholder or incorporator, as such, of the
company or any successor corporation shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of such obligations or their
creation.  Each Holder by accepting a
Note waives and released all such liability. 
The waiver and release are part of the consideration for the issue of
the Notes.

17.           Authentication.

This Note shall not be valid
until the Trustee signs the certificate of authentication at the end of this
Note.

18.           Copies of the Indenture.

The Company will furnish to
any Holder upon written request and without charge a copy of the
Indenture.  Requests may be made to:

Mandalay Resort Group

3950 Las Vegas Boulevard South

Las Vegas, Nevada  89119

Attention:  General Counsel

19.           Abbreviations and Defined Terms.

Customary abbreviations may
be used in the name of a Holder of a Note or an assignee, such as:  TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

 

 

B-6

 

 

20.           CUSIP Numbers.

Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company will cause CUSIP numbers to be printed on the Notes as a convenience to
the Holders of the Notes.  No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.

21.           Governing Law

This Note shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to conflict of laws principles thereof.

(Signature
Page To Follow)

 

 

B-7

 

 

 

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by its duly authorized
officers.

	
   

  	
  SIGNATURES

  
	
   

  	
   

  	
   

  
	
   

  	
  MANDALAY
  RESORT GROUP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

This is one of the Notes of
the series designated “6 3/8% Series B Senior Notes due 2011,” pursuant to the
Indenture.

	
   

  	
  THE
  BANK OF NEW YORK,

  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Authentication:

  	
   

  	
   

  

 

 

 

ASSIGNMENT FORM

If you the Holder want to
assign this Note, fill in the form below and have your signature guaranteed by
an Eligible Guarantor Institution (bank, stock broker, savings and loan
association or credit union) with membership in an approved signature guarantee
medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15:

I or we assign and transfer
this Note to:

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

(Print or type name, address
and zip code and social security or tax ID number of assignee)

and irrevocably appoint                                   , agent to
transfer this Note on the books of the Company.  The agent may substitute another to act for him.

	
  Dated:

  	
   

  	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your name
  appears on the other side of this Note)

  	
   

  
	
   

  
	
  Signature Guarantee:

  	
   

  
							

 

 

EXHIBIT C

Form of Certificate To Be

Delivered in Connection with

Transfers to Non-QIB
Accredited Investors

[              ], [    ]

Registrar

[                       
]

[                       
]

[                       
]

Ladies
and Gentlemen:

In connection with our
proposed purchase of Series A 6 3/8% Senior Notes due 2011 (the “Notes”) of
Mandalay Resort Group, a Nevada corporation (the “Company”), we confirm that:

1.             We have received a copy of the Offering Memorandum (the
“Offering Memorandum”), dated November 13, 2003 relating to the Notes and such
other information as we deem necessary in order to make our investment
decision.  We acknowledge that we have
read and agreed to the matters stated in the section entitled “Transfer Restrictions”
of such Offering Memorandum.

2.             We understand that any subsequent transfer of the Notes
is subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (the “Indenture”) as described in the Offering Memorandum
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the “Securities Act”),
and all applicable State securities laws.

3.             We understand that the offer and sale of the Notes have
not been registered under the Securities Act, and that the Notes may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. Persons except as permitted in the following sentence.  We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we should
sell any Notes, we will do so only (i) to the Company or any subsidiary
thereof, (ii) inside the United States in accordance with Rule 144A under
the Securities Act to a “qualified institutional buyer” (as defined in Rule
144A promulgated under the Securities Act), (iii) inside the United States
to an institutional “accredited investor” (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the

 

 

C-1

 

 

Trustee
(as defined in the Indenture) a signed letter containing certain representations
and agreements relating to the restrictions on transfer of the Notes (the form
of which letter can be obtained from the Trustee), (iv) outside the United
States in accordance with Rule 904 of Regulation S promulgated under the
Securities Act to non-U.S. Persons, (v) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities
Act, and we further agree to provide to any Person purchasing any of the Notes
from us a notice advising such purchaser that resales of the Notes are restricted
as stated herein.

4.             We understand that, on any proposed resale of any Notes,
we will be required to furnish to the Trustee and the Company such
certification, legal opinions and other information as the Trustee and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions.  We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.

5.             We are an institutional “accredited investor” (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear
the economic risk of our or their investment, as the case may be.

6.             We are acquiring the Notes purchased by us for our
account or for one or more accounts (each of which is an institutional
“accredited investor”) as to each of which we exercise sole investment
discretion.

 

 

C-2

 

 

You, the Company, the
Trustee and others are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name
  of Transferee]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

 

C-3

 

EXHIBIT D

Form of Certificate To Be Delivered

in Connection with Transfers

Pursuant to Regulation S

[             ], [    ]

[                           ]

[                           ]

[                           ]

[                           ]

	
   

  	
  Re:

  	
  Mandalay
  Resort Group (the “Company”) Series A 6 3/8% Senior Notes due 2011 (the “Notes”)

  

 

Ladies
and Gentlemen:

In connection with our
proposed sale of $                      
aggregate principal amount of the Notes, we confirm that such sale has
been effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, we
represent that:

(1)           the offer of the Notes was not made to a Person in the
United States;

(2)           either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any Person acting on our
behalf reasonably believed that the transferee was outside the United States,
or (b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market in an offshore transaction and neither
we nor any Person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;

(3)           no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;

(4)           the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and

(5)           we have advised the transferee of the transfer
restrictions applicable to the Notes.

You, the Company and counsel
for the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested

 

 

D-1

 

 

party in any administrative
or legal proceedings or official inquiry with respect to the matters covered
hereby.  Terms used in this certificate
have the meanings set forth in Regulation S.

	
   

  	
  Very
  truly yours,

  
	
   

  	
  [Name
  of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signature

  

 

 

D-2

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