<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 4, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- ------------
Commission File No. 1-12962
LAKES GAMING, INC.
------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1913991
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
130 Cheshire Lane
Minnetonka, Minnesota 55305
--------------------- -----
(Address of principal executive offices) (Zip Code)
(612) 449-9092
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of May 11, 1999, there were 10,584,282 shares of Common Stock, $0.01 par
value per share, outstanding.
Page 1 of 33
<PAGE> 2
LAKES GAMING, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE OF
FORM 10-Q
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of 3
April 4, 1999 and January 3, 1999
Consolidated Statements of Earnings 4
for the three months ended April 4, 1999
and March 29, 1998
Consolidated Statements of Cash Flows 5
for the three months ended April 4, 1999
and March 29, 1998
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND 11
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 18
ITEM 6. Exhibits and Reports On Form 8-K 27
</TABLE>
- 2 -
<PAGE> 3
LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 4, 1999 JANUARY 3, 1999
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $63,567 $56,774
Current installments of notes receivable 8,917 8,561
Accounts receivable 15,397 15,217
Deferred income taxes 7,370 7,370
Other current assets 1,429 756
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Total Current Assets 96,680 88,678
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Property and Equipment-Net 1,433 1,265
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Other Assets:
Land held for development 35,030 26,647
Notes receivable-less current installments 22,909 25,118
Cash and cash equivalents-restricted 4,992 4,992
Investments in and notes from unconsolidated affiliates 8,501 8,590
Casino development costs 4,412 4,846
Securities available for sale 1,033 1,033
Other long-term assets 313 200
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Total Other Assets 77,190 71,426
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TOTAL ASSETS $175,303 $161,369
=============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $409 $ -
Income taxes payable 16,864 10,811
Litigation and claims accrual 9,633 10,554
Other accrued expenses 4,390 4,625
- -------------------------------------------------------------------------------------------------------------
Total Current Liabilities 31,296 25,990
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Long-term Liabilities:
Long-term debt-less current installments 975 975
Deferred income taxes 2,733 2,733
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Total Long-Term Liabilities 3,708 3,708
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TOTAL LIABILITIES 35,004 29,698
- -------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares;
10,576 and 10,584 common shares issued and outstanding
at April 4, 1999, and January 3, 1999, respectively 106 106
Additional paid-in-capital 130,995 130,929
Accumulated other comprehensive earnings 636 636
Retained Earnings 8,562 -
- -------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 140,299 131,671
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $175,303 $161,369
=============================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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<PAGE> 4
LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
APRIL 4, 1999 MARCH 29, 1998
------------- --------------
(UNAUDITED)
<S> <C> <C>
REVENUES:
Management fee income $15,109 $23,030
COSTS AND EXPENSES:
Selling, general and administrative 1,709 4,876
Depreciation and amortization 476 371
- --------------------------------------------------------------------------------------------
Total Costs and Expenses 2,186 5,247
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EARNINGS FROM OPERATIONS 12,923 17,783
- --------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 1,635 1,338
Interest expense (24) (24)
Equity in loss of unconsolidated affiliates (255) (48)
Other 411 199
- --------------------------------------------------------------------------------------------
Total other income, net 1,767 1,465
- --------------------------------------------------------------------------------------------
Earnings before income taxes 14,691 19,248
Provision for income taxes 6,128 7,545
- --------------------------------------------------------------------------------------------
NET EARNINGS $8,562 $11,703
============================================================================================
BASIC EARNINGS PER SHARE $0.81 $1.11
============================================================================================
DILUTED EARNINGS PER SHARE $0.80 $1.08
============================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,578 10,496
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS 104 378
============================================================================================
WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 10,682 10,874
============================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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<PAGE> 5
LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
APRIL 4, 1999 MARCH 29, 1998
------------- --------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $8,562 $11,703
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 476 371
Changes in operating assets and liabilities:
Current Assets (852) (6,297)
Income taxes 6,053 7,545
Accounts payable 408 -
Accrued expenses (1,156) 1,829
Other 255 48
- ----------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 13,746 15,199
- ----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Payments for property and equipment (200) -
Proceeds from sale of property and equipment - 682
Advances under notes receivable - (2,023)
Proceeds from repayment of notes receivable 1,852 1,216
Increase in restricted cash - (4,017)
Payments for land held for development (8,383) (4,099)
Increase in other long-term assets (288) (476)
- ----------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (7,019) (8,717)
- ----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Distribution to Grand - (6,414)
Proceeds from issuance of common stock 67 -
Payments on long-term debt - (13)
- ----------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities 67 (6,427)
- ----------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 6,794 55
Cash and cash equivalents - beginning of period 56,774 33,208
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $63,567 $33,263
====================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $24 $ -
Income taxes 245 -
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
- 5 -
<PAGE> 6
LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. UNAUDITED FINANCIAL STATEMENTS:
Lakes Gaming, Inc., a Minnesota corporation ("Lakes" or the "Company") was
established as a public corporation on December 31,1998, via a distribution (the
"Distribution") of its common stock, par value $.01 per share (the "Common
Stock") to the shareholders of Grand Casinos, Inc. ("Grand"). Pursuant to the
terms of a Distribution Agreement entered into between Grand and Lakes and dated
as of December 31, 1998 (the "Distribution Agreement"), Grand shareholders
received .25 shares of Lakes common stock for each share held in Grand.
Historical references to the Company which predate the Distribution give pro
forma effect to the Distribution as if it had already occurred.
Immediately following the Distribution, Grand merged with a subsidiary of Park
Place Entertainment Corporation, a Delaware corporation ("Park Place"), pursuant
to which Grand became a wholly owned subsidiary of Park Place (the "Merger").
Grand shareholders received one share of Park Place common stock in the Merger
for each share they held in Grand. The Merger and Distribution received all
necessary shareholder and regulatory approvals and was completed on December 31,
1998. Grand obtained a ruling from the Internal Revenue Service (IRS) that the
Distribution qualified as a tax-free transaction, solely with respect to Grand
shareholders except to the extent that Grand shareholders received cash in lieu
of fractional shares.
Lakes manages Indian-owned casinos and owns certain other assets related to
potential gaming-related development. The Company manages two Indian-owned
casinos in Louisiana and previously managed two Minnesota casinos through April
4, 1998 and November 30, 1998, respectively.
MANAGEMENT CONTRACTS OF LIMITED DURATION
The ownership, management and operation of gaming facilities are subject to
extensive federal, state, provincial, tribal and/or local laws, regulation, and
ordinances, which are administered by the relevant regulatory agency or agencies
in each jurisdiction. These laws, regulations and ordinances vary from
jurisdiction to jurisdiction, but generally concern the responsibility,
financial stability and character of the owners and managers of gaming
operations as well as persons financially interested or involved in gaming
operations.
The Company is prohibited by the Indian Gaming Regulatory Act ("IGRA") from
having an ownership interest in any casino it manages for Indian tribes. The
management contracts for the various Indian-owned casinos that the Company
manages for Indian tribes generally have terms of seven years. Management
contracts for the two previously managed Minnesota casinos, Grand Casino Mille
Lacs and Grand Casino Hinckley concluded during 1998.
- 6 -
<PAGE> 7
LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Management contracts for Grand Casino Avoyelles and Grand Casino Coushatta
expire June 3, 2001 and January 16, 2002, respectively. There can be no
assurance that the Louisiana management contracts will be renewed upon
expiration or approved by the National Indian Gaming Commission ("NIGC") upon
any such renewal. The failure to renew the Company's management contracts would
result in the loss of revenues to the Company derived from such contracts, which
would have a material adverse effect on the Company's results of operations. The
Coushatta Tribe and the Tunica-Biloxi Tribe each entered into tribal-state
compacts with the State of Louisiana on September 29, 1992. These compacts were
approved in November 1992 by the Secretary of the Interior. Each compact expires
in November 1999, but will automatically renew for an additional seven-year term
unless either the tribe or the State of Louisiana delivers to the other written
notice of non-renewal at least 180 days prior to the applicable expiration date.
The Company's management agreements with the Tunica-Biloxi Tribe and the
Coushatta Tribe expire after November 1999. In the event the compacts are not
renewed, legal gaming will not be permitted at Grand Casino Avoyelles or Grand
Casino Coushatta. There can be no assurance that these compacts will be renewed
on acceptable terms and conditions.
The accompanying unaudited consolidated financial statements include the
accounts of Lakes and its wholly-owned and majority-owned subsidiaries.
Investments in unconsolidated affiliates representing between 20% and 50% of
voting interests are accounted for on the equity method. All material
intercompany balances and transactions have been eliminated in consolidation.
The consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles for interim financial
information, in accordance with the rules and regulations of the Securities and
Exchange Commission. Pursuant to such rules and regulations, certain financial
information and footnote disclosures normally included in the consolidated
financial statements have been condensed or omitted. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for fair presentation have been included.
Operating results for the three months ended April 4, 1999, are not necessarily
indicative of the results that may be expected for the fiscal year ending
January 2, 2000.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended January 3, 1999.
- 7 -
<PAGE> 8
LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. COMMITMENTS AND CONTINGENCIES:
LEASES
The Company leases certain property and equipment under non-cancelable operating
leases. Future minimum lease payments, excluding contingent rentals, due under
non-cancelable operating leases as of April 4, 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
Operating Leases
----------------
<S> <C>
1999 $ 2,762
2000 3,225
2001 2,981
2002 3,109
2003 3,176
Thereafter 47,550
--------
$ 62,803
========
</TABLE>
As a condition to the Merger, the Company has agreed to exercise its call option
to purchase the Shark Club property in Las Vegas, Nevada, not prior to April 9,
2000 and not later than January 10, 2001. The option purchase price would be
approximately $10.1 million.
The Company also has an option to purchase the Travelodge property in Las Vegas,
Nevada for the purchase price of $30 million on October 31, 2017, and an option
to purchase the Cable property in Las Vegas, Nevada for the purchase price of
$18 million any time prior to October 31, 2000.
Loan Guaranty Agreements
The Company has guaranteed a loan and security agreement entered into by the
Tunica-Biloxi Tribe of Louisiana for $16.5 million for the purpose of purchasing
a hotel and additional casino equipment. The agreement extends through 2000, and
as of April 4, 1999, the amount outstanding was $5.9 million.
On May 1, 1997, the Company entered into a guaranty agreement related to a loan
agreement entered into by the Coushatta Tribe of Louisiana in the amount of
$25.0 million, for the purpose of constructing a hotel and acquiring additional
casino equipment. The guaranty will remain in effect until the loan is paid. The
loan term is approximately five years. As of April 4, 1999, $22.8 million has
been advanced, and is outstanding.
- 8 -
<PAGE> 9
LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Company has entered into a guaranty agreement related to a construction loan
agreement entered into by Nevada Resort Properties Polo Plaza Limited
Partnership. The guaranty will remain in effect until the loan is paid. The
maturity date is October 31, 2000, and as of April 4, 1999, the outstanding
principal balance was $6.2 million.
The Company provided a limited guaranty for the purpose of financing
Stratosphere Corporation ("Stratosphere") hotel and casino equipment subject to
a maximum limitation amount of $8.7 million.
Indemnification Agreement
As a part of the Transaction, the Company has agreed to indemnify Grand against
all costs, expenses and liabilities incurred in connection with or arising out
of certain pending and threatened claims and legal proceedings to which Grand
and certain of its subsidiaries are likely to be parties. The Company's
indemnification obligations include the obligation to provide the defense of all
claims made in proceedings against Grand and to pay all related settlements and
judgments.
As security to support Lakes' indemnification obligations to Grand under each of
the Distribution Agreement and the Agreement and Plan of Merger dated as of June
30, 1998, by and among Hilton Hotels Corporation, Park Place, Gaming Acquisition
Corporation, Lakes and Grand (the "Merger Agreement"), and as a condition to the
consummation of the Merger, Lakes has agreed to deposit, in trust for the
benefit of Grand, as a wholly owned subsidiary of Park Place, an aggregate of
$30 million, to cover various commitments and contingencies related to or
arising out of, Grand's non-Mississippi business and assets (including by way of
example, but not limitation, tribal loan guarantees, real property lease
guarantees for Lakes' subsidiaries and director and executive officer indemnity
obligations) consisting of four annual installments of $7.5 million, during the
four-year period subsequent to the Effective Date of the Merger. Any surplus
proceeds remaining after all the secured obligations are indefeasibly paid in
full and discharged shall be paid over to Lakes.
As part of the indemnification agreement, Lakes has agreed that it will not
declare or pay any dividends, make any distribution of Lakes' equity interests,
or otherwise purchase, redeem, defease or retire for value any equity interests
in Lakes without the written consent of Park Place.
- 9 -
<PAGE> 10
LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
STRATOSPHERE CORPORATION
In January 1997, Stratosphere and its wholly owned operating subsidiary filed
for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On November 7,
1997, Stratosphere filed its second amended proposed plan of reorganization, the
("Second Amended Plan") which was declared effective on October 14, 1998. Prior
to the effectiveness of the Second Amended Plan, Grand owned approximately 37%
of the issued and outstanding common stock of Stratosphere. Under the Second
Amended Plan, all shares of Stratosphere common stock that were outstanding
prior to the effective date of the Second Amended Plan have been canceled. In
addition, the secured portion of Stratosphere's first mortgage notes that were
outstanding prior to the effective date have been exchanged for a total of
2,030,000 shares of new common stock. Pursuant to the terms of the Distribution
Agreement, Lakes assumed, among other liabilities, certain known and contingent
liabilities associated with all pending, threatened or future litigation related
to the Stratosphere litigation described below. Although Lakes assumed such
liabilities, because Grand remains liable for claims by plaintiffs in such
litigation and for indemnifying Grand's former officers and directors with
respect to such litigation, Lakes agreed, under the terms of the Merger
Agreement, to indemnify Grand and Grand's current and former officers and
directors against such liabilities.
- 10 -
<PAGE> 11
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Lakes was established as a public corporation on December 31, 1998, via a
distribution of its common stock, par value $.01 per share to the shareholders
of Grand.
Pursuant to the terms of the Distribution Agreement entered into between Grand
and Lakes and dated as of December 31, 1998, Grand shareholders received .25
shares of Lakes Common Stock for each share held in Grand. Historical references
to the Company which predate the distribution give pro forma effect to the
Distribution as if it had already occurred.
Immediately following the Distribution, Grand merged with a subsidiary of Park
Place pursuant to which Grand became a wholly owned subsidiary of Park Place
(the "Merger"). Grand shareholders received one share of Park Place common stock
in the Merger for each share they held in Grand.
As a result of the Distribution, Lakes operates the Indian casino management
business and holds various other assets previously owned by Grand. The Company's
revenues are derived almost exclusively from management fees. Lakes manages two
land-based, Indian-owned casinos in Louisiana: Grand Casino Avoyelles, in
Marksville, Louisiana ("Grand Casino Avoyelles"), owned by the Tunica-Biloxi
Tribe of Louisiana (the "Tunica-Biloxi Tribe") and Grand Casino Coushatta, in
Kinder, Louisiana ("Grand Casino Coushatta"), owned by the Coushatta Tribe of
Louisiana (the "Coushatta Tribe"). Both management contracts expire seven years
from the date the casino opened.
For a portion of fiscal 1998, and prior to the Distribution, Grand also had
management contracts for Indian-owned casinos located at Grand Casino Hinckley
and Grand Casino Mille Lacs in Minnesota. The management contract at Grand
Casino Mille Lacs expired at the end of the first quarter of 1998, and the
management of Grand Casino Hinckley ended in December 1998, with the buyout of
the remaining contract term.
Lakes develops, constructs and manages casinos and related hotel and
entertainment facilities in emerging and established gaming jurisdictions.
Lakes' revenues are derived from management fee income from Grand Casino
Avoyelles and Grand Casino Coushatta. Lakes commenced operations in September
1990, and opened its first casino, Grand Casino Mille Lacs, in April 1991. Grand
Casino Hinckley commenced operations in May 1992, Grand Casino Avoyelles
commenced operations in June 1994 and Grand Casino Coushatta commenced
operations in January 1995.
- 11 -
<PAGE> 12
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
Pursuant to the Avoyelles and Coushatta management contracts, Lakes receives a
fee based on the net distributable profits (as defined in the contracts)
generated by Grand Casino Avoyelles and Grand Casino Coushatta.
Lakes' limited operating history may not be indicative of Lakes' future
performance. In addition, a comparison of results from year to year may not be
meaningful due to the opening of new facilities during each year. Lakes' growth
strategy contemplates the expansion of existing operations and the pursuit of
opportunities to develop and manage additional gaming facilities. The successful
implementation of this growth strategy is contingent upon the satisfaction of
various conditions, including obtaining governmental approvals, the impact of
increased competition, and the occurrence of certain events, many of which are
beyond the control of Lakes.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended January 3, 1999.
RESULTS OF OPERATIONS
Lakes is prohibited by the IGRA from having an ownership interest in any casino
it manages for Indian tribes. The management contracts for the various
Indian-owned casinos that the Company manages for Indian tribes generally have a
term of seven years. The management contracts for Grand Casino Avoyelles and
Grand Casino Coushatta expire June 3, 2001 and January 16, 2002, respectively.
There can be no assurance that any of these management contracts will be renewed
upon expiration or approved by NIGC upon any such renewal. The failure to renew
the Lakes management contracts would result in the loss of revenues to Lakes
derived from such contracts, which would have an adverse effect on Lakes'
results of operations. The Coushatta Tribe and the Tunica-Biloxi Tribe each
entered into tribal-state compacts with the State of Louisiana on September 29,
1992. These compacts were approved in November 1992 by the Secretary of the
Interior. Each compact expires in November 1999, but will automatically renew
for additional seven year terms unless either the tribe or the State of
Louisiana delivers to the other written notice of non-renewal at least 180 days
prior to the applicable expiration date. Lakes' management agreements with the
Tunica-Biloxi Tribe and the Coushatta Tribe expire after November 1999. In the
event the compacts are not renewed, gaming will not be permitted at Grand Casino
Avoyelles or Grand Casino Coushatta. There can be no assurance that these
compacts will be renewed on terms and conditions acceptable to either of the
tribes.
- 12 -
<PAGE> 13
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
Revenues are calculated in accordance with generally accepted accounting
principles and are presented in a manner consistent with industry practice. Net
distributable profits from Grand Casino Avoyelles and Grand Casino Coushatta are
computed using a modified cash basis of accounting in accordance with the
management contracts. The effect of the use of the modified cash basis of
accounting is to accelerate the write-off of capital equipment and leased
assets, which thereby impacts the timing of net distributable profits.
THREE MONTHS ENDED APRIL 4, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH 29,
1998
Revenues
Grand Casino Avoyelles and Grand Casino Coushatta generated $15.1 million in
management fee income during the three months ended April 4, 1999. Grand Casino
Mille Lacs, Grand Casino Hinckley, Grand Casino Avoyelles and Grand Casino
Coushatta generated $23 million in management fee income during the three months
ended March 29, 1998. Gross revenue increases at Grand Casino Avoyelles and
Grand Casino Coushatta partially offset the fact that the management contracts
for Grand Casino Mille Lacs and Grand Casino Hinckley ended during 1998.
Contributing to the increases were a 223-room hotel at Grand Casino Coushatta,
which opened in November of 1998 along with a 28,000 square foot casino
expansion at Coushatta which opened in December of 1999, and a special events
center and RV resort at Grand Casino Avoyelles, which opened during the first
quarter of 1998.
Costs and Expenses
Total costs and expenses were $2.2 million for the three months ended April 4,
1999, compared to $5.2 million for the same period in the prior year. Selling,
general, and administrative expenses decreased in the amount of $3.2 million
from $4.9 million for the three months ended March 29, 1998 to $1.7 million for
the three months ended April 4, 1999 due primarily to fewer legal costs and
project write-offs.
Other
Interest income was $1.6 million and $1.3 million for the three months ended
April 4, 1999 and March 29, 1998, respectively.
- 13 -
<PAGE> 14
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
Earnings per Common Share and Net Earnings
For the three months ended April 4, 1999 basic and diluted earnings per common
share were $.80 and $.81, respectively. This compares to basic and diluted
earnings of $1.11 and $1.08 per share for the three months ended March 29, 1998.
Earnings decreased $3.1 million to $8.6 million for the three months ended April
4, 1999 compared to the same period in the prior year. This decrease is
primarily due to the expiration of the management contracts for Grand Casino
Mille Lacs and Grand Casino Hinckley during 1998. Total revenues during the
period ended March 29, 1998, under these expired contracts was $8.9 million. The
Company's current year period revenues and earnings do not include contributions
from these operations.
CAPITAL RESOURCES, CAPITAL SPENDING, AND LIQUIDITY
At April 4, 1999 Lakes had $68.6 million in restricted and unrestricted cash and
cash equivalents. The cash balances are planned to be used for loans to current
tribal partners to help develop existing operations, the pursuit of additional
business opportunities, and potential settlement of pending litigation matters.
For the three months ended April 4, 1999 and March 29, 1998 net cash provided by
operating activities totaled $13.7 and $15.2 million, respectively. For the same
periods, net cash used in investing activities totaled $7 million and $8.7
million, respectively. For the three months ended April 4, 1999 and March 29,
1998, proceeds from repayment of notes receivable amounted to $1.9 and $1.2
million, respectively. Advances under notes receivable amounted to $0 and $2
million for the three months ended April 4, 1999 and March 29, 1998. Also during
these periods, payments for land held for development amounted to $8.4 and $4.1
million, respectively, and restricted cash, increased $0 and $4 million,
respectively.
As security to support Lakes' indemnification obligations to Grand under each of
the Distribution Agreement and the Merger Agreement, and as a condition to the
consummation of the Merger, Lakes agreed to deposit, in trust for the benefit of
Grand, as a wholly owned subsidiary of Park Place, an aggregate of $30 million,
to cover various commitments and contingencies related to or arising out of,
Grand's non-Mississippi business and assets (including by way of illustration
and not limitation, tribal loan guarantees, real property lease guarantees for
Lakes' subsidiaries and director and executive officer indemnity obligations),
consisting of four annual installments of $7.5 million, on each annual
anniversary of the Distribution and Merger. Lakes' ability to satisfy this
funding obligation is materially dependent upon the continued success of its
operations and the general risks inherent in its business. In the event Lakes is
unable to satisfy its funding obligation, it would be in breach of its agreement
with Grand, possibly subjecting itself to additional liability for contract
damages, which could have a material adverse effect on Lakes' business and
results of operations.
- 14 -
<PAGE> 15
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
YEAR 2000
Lakes is currently working to fully determine and resolve the potential impact
of the Year 2000 on the processing of date-sensitive information by its
computerized information systems. The Year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of Lakes' programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the Year 2000,
which could result in miscalculations or system failures.
Lakes and its managed properties have a Year 2000 program, the objective of
which is to determine and assess the risks of the Year 2000 issue, and plan and
institute mitigating actions to minimize those risks. Pursuant to the Lakes Year
2000 program, the Company has established an internal review team to monitor and
facilitate efficient Year 2000 compliance. Lakes is currently in the process of
upgrading its financial reporting systems, IT based and otherwise, to ensure
that they are year 2000 compliant. Lakes' vendors and consultants have
represented to management that the new systems meet year 2000 requirements.
Lakes' standard for compliance requires that for a computer system or business
process to be Year 2000 compliant, it must be designed to operate without error
in dates and date-related data prior to, on and after January 1, 2000. Between
now and the Year 2000, Lakes will proceed through its various phases of
assessment, detailed planning, implementation, testing and management. Lakes
expects to be fully Year 2000 compliant by third quarter 1999.
Generally, Lakes is confident that the implementation of its Year 2000 program
in conjunction with the replacement of all of Lakes' financial reporting systems
will resolve any IT system compliance issues. Lakes has not currently identified
any material non-IT system Year 2000 issues. Throughout the remainder of 1999,
Lakes will continually review its progress against its Year 2000 plans and
determine what contingency plans are feasible and appropriate to reduce its
exposure to Year 2000 related issues.
Based on Lakes' current assessment, the costs of addressing potential problems
at Lakes and its managed properties are estimated at $1.3 million. However, the
historical and estimated costs relating to the resolution of Lakes' Year 2000
compliance issues cannot be fully and finally determined at this time. If
significant customers or vendors identify Year 2000 issues in the future and are
unable to resolve such issues in a timely manner, it could result in a material
financial risk. Lakes has initiated formal communications with all of its
material suppliers to determine the extent to which Lakes' interface systems are
vulnerable to those third parties' failures to resolve their own Year 2000
issues. Lakes plans to devote the necessary resources to resolve all significant
Year 2000 issues in a timely manner.
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<PAGE> 16
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
While Lakes fully anticipates achieving Year 2000 compliance well in advance of
January 1, 2000 there are certain risks which exist with respect to Lakes'
business and the Year 2000. Those risks range from slight delays and
inefficiencies in processing data and carrying out accounting and financial
functions to, in a most reasonably likely worst case scenario, extensive and
costly inability to process data, provide vital accounting functions and
communicate with customers and suppliers. As of the date of this filing, Lakes
has not finalized a contingency plan to address the failure to be Year 2000
compliant.
SEASONALITY
The Company believes that the operation of all casinos managed by the Company
are affected by seasonal factors, including holidays, weather and travel
conditions.
REGULATION AND TAXES
The Company is subject to extensive regulation by state gaming authorities. The
Company will also be subject to regulation, which may or may not be similar to
current state regulations, by the appropriate authorities in any other
jurisdiction where it may conduct gaming activities in the future. Changes in
applicable laws or regulations could have an adverse effect on the Company.
The gaming industry represents a significant source of tax revenues. From time
to time, various federal legislators and officials have proposed changes in tax
law, or in the administration of such law, affecting the gaming industry. It is
not possible to determine the likelihood of possible changes in tax law or in
the administration of such law. Such changes, if adopted, could have a material
adverse effect on the Company's results of operations and financial results.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this integrated
Quarterly Report on Form 10-Q and other materials filed or to be filed by the
Company with the Securities and Exchange Commission (as well as information
included in oral statements or other written statements made or to be made by
the Company) contain statements that are forward-looking, such as plans for
future expansion and other business development activities as well as other
statements regarding capital spending, financing sources and the effects of
regulation (including gaming and tax regulation) and competition.
Such forward-looking information involves important risks and uncertainties that
could significantly affect the anticipated results in the future and,
accordingly, actual results may differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.
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<PAGE> 17
LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
These risks and uncertainties include, but are not limited to, those relating to
development and construction activities, dependence upon existing management,
pending litigation, domestic or global economic conditions and changes in
federal or state tax laws or the administration of such laws and changes in
gaming laws or regulations (including the legalization of gaming in certain
jurisdictions). For further information regarding the risks and uncertainties,
see the "Business Risk Factors" section of the Company's Annual Report on
Form 10-K for the year ended January 3, 1999.
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<PAGE> 18
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following summaries describe certain known legal proceedings to which Grand
is a party and which Lakes has assumed, and/or must indemnify Grand, in
connection with the Distribution.
STRATOSPHERE SHAREHOLDERS LITIGATION - FEDERAL COURT
In August 1996, a complaint was filed in the U.S. District Court for the
District of Nevada Michael Ceasar, et al v. Stratosphere Corporation, et al
against Stratosphere and others, including Grand. The complaint was filed as
a class action, and sought relief on behalf of Stratosphere shareholders who
purchased their stock between December 19, 1995 and July 22, 1996. The complaint
included allegations of misrepresentations, federal securities law violations
and various state law claims.
In August through October 1996, several other nearly identical complaints were
filed by various plaintiffs in the U.S. District Court for the District of
Nevada.
The defendants in the actions submitted motions requesting that all of the
actions be consolidated. Those motions were granted in January 1997, and the
consolidated action is entitled In re: Stratosphere Corporation Securities
Litigation Master File No. CV-S-96-00708 PMP (RLH).
In February 1997, the plaintiffs filed a consolidated and amended complaint
naming various defendants, including Grand and certain current and former
officers and directors of Grand. The amended complaint includes claims under
federal securities laws and Nevada laws based on acts alleged to have occurred
between December 19, 1995 and July 22, 1996.
In February 1997, various defendants, including Grand and Grand's officers and
directors named as defendants, submitted motions to dismiss the amended
complaint. Those motions were made on various grounds, including Grand's claim
that the amended complaint failed to state a valid cause of action against Grand
and Grand's officers and directors.
In May 1997, the court dismissed the amended complaint. The dismissal order did
not allow the plaintiffs to further amend their complaint in an attempt to state
a valid cause of action.
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LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
In June 1997, the plaintiffs asked the court to reconsider its dismissal order,
and to allow the plaintiffs to submit a second amended complaint in an attempt
to state a valid cause of action. In July 1997, the court allowed the plaintiffs
to submit a second amended complaint.
In August 1997, the plaintiffs filed a second amended complaint. In September
1997, certain of the defendants, including Grand and Grand's officers and
directors named as defendants, submitted a motion to dismiss the second amended
complaint. The motion was based on various grounds, including Grand's claim that
the second amended complaint failed to state a valid cause of action against
Grand and those officers and directors.
In April 1998, the Court granted Grand's motion to dismiss, in part, and denied
the motion in part. Thus, the plaintiffs are pursuing the claims in the second
amended complaint that survived the motion to dismiss.
In June 1998, certain of the defendants, including Grand and Grand's officers
and directors named as defendants, submitted a motion for summary judgment
seeking an order that such defendants are entitled to judgment as a matter of
law. In December 1998, the plaintiffs completed fact discovery related to the
issues raised by the summary judgment motion. Expert discovery was completed in
March of 1999. Defendants' reply papers will be filed on June 1, 1999 and
thereafter the Court will set a hearing and rule on the motion.
STRATOSPHERE SHAREHOLDERS LITIGATION - NEVADA STATE COURT
In August 1996, a complaint was filed in the District Court for Clark County,
Nevada Victor M. Opitz, et al v. Robert E. Stupak, et al Case No. A363019
against various defendants, including Grand. The complaint seeks relief on
behalf of Stratosphere Corporation shareholders who purchased stock between
December 19, 1995 and July 22, 1996. The complaint alleges misrepresentations,
state securities law violations and other state claims.
Grand and certain defendants submitted motions to dismiss or stay the state
court action pending resolution of the federal court action described above. The
court has stayed further proceedings pending the resolution of In re:
Stratosphere Securities Litigation.
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LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
GRAND CASINOS, INC. SHAREHOLDERS LITIGATION
In September and October 1996, two actions were filed by Grand shareholders in
the U.S. District Court for the District of Minnesota against Grand and certain
of Grand's current and former directors and officers.
The complaints allege misrepresentations, federal securities law violations and
other claims in connection with the Stratosphere project.
The actions have been consolidated as In re: Grand Casinos, Inc. Securities
Litigation Master File No. 4-96-890 and the plaintiffs filed a consolidated
complaint. The defendants submitted a motion to dismiss the consolidated
complaint, based in part on Grand's claim that the consolidated complaint failed
to properly state a cause of action.
In December 1997, the court granted Grand's motion to dismiss in part, and
denied the motion in part. Thus, the plaintiffs are pursuing the claims in the
consolidated complaint that survived Grand's motion to dismiss. Discovery in the
action has begun.
The defendants have submitted a motion for summary judgment seeking an order
that the defendants are entitled to judgment as a matter of law. In December
1998, the plaintiffs completed fact discovery related to the issues raised by
the summary judgement motion. Expert discovery was completed in March of 1999.
The parties are currently engaged in some follow-up discovery pertaining to the
summary judgment motion. Defendants reply papers will be filed on June 1, 1999,
and thereafter the Court will set a hearing and rule on the motion.
In early February 1999, the plaintiffs filed a motion for leave to amend the
complaint in this action to include, as defendants in the case, both the Company
and Park Place. The motion for leave to amend the complaint has been granted and
Lakes has filed its answer. Lakes will defend this action vigorously.
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<PAGE> 21
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
DERIVATIVE LITIGATION
In February 1997, certain shareholders of Grand brought an action in the
Hennepin County, Minnesota District Court Lloyd Drilling, et al v. Lyle
Berman, et al Court File No. MC97-002807 against certain current and
former officers and director of Grand. The plaintiffs allege that those officers
and directors breached certain fiduciary duties to the shareholders of Grand as
a result of certain transactions involving the Stratosphere project. Pursuant to
Minnesota law, Grand's Board of Directors appointed an independent special
litigation committee to evaluate whether Grand should pursue the claims made in
the action against the officers and directors. The special litigation committee
completed its evaluation in December 1997, and filed a report with the court
recommending that such claims not be pursued.
Grand provided the defense for Grand's current and former officers and directors
who are defendants in the action pursuant to Grand's indemnification obligations
to such defendants.
In January 1998, Grand submitted a motion for summary judgment based on the
special litigation committee's report. In May 1998, the court granted the
motion, thereby dismissing the plaintiffs' claims. In August 1998, the
plaintiffs appealed the Court's ruling. On March 9, 1999, the Minnesota Court of
Appeals affirmed the dismissal of the plaintiffs' claims. The plaintiffs have
sought further review of the ruling by the Minnesota Supreme Court. The Court
has not yet indicated whether it will grant review.
SLOT MACHINE LITIGATION
In April 1994, William H. Poulos brought an action in the U.S. District Court
for the Middle District of Florida, Orlando Division William H. Poulos, et al v.
Caesars World, Inc. et al Case No. 39-478-CIV-ORL-22 in which various parties
(including Grand) alleged to operate casinos or be slot machine manufacturers
were named as defendants. The plaintiff sought to have the action certified as a
class action.
A subsequently filed Action William Ahearn, et al v. Caesars World, Inc. et al
Case No. 94-532-CIV-ORL-22 made similar allegations and was consolidated with
the Poulos action.
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<PAGE> 22
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
Both actions included claims under the federal Racketeering-Influenced and
Corrupt Organizations Act and under state law, and sought compensatory and
punitive damages. The plaintiffs claimed that the defendants are involved in a
scheme to induce people to play electronic video poker and slot machines based
on false beliefs regarding how such machines operate and the extent to which a
player is likely to win on any given play.
In December 1994, the consolidated actions were transferred to the U.S. District
Court for the District of Nevada.
In September 1995, Larry Schreier brought an action in the U.S. District Court
for the District of Nevada Larry Schreier, et al v. Caesars World, Inc. et al
Case No. CV-95-00923-DWH(RJJ).
The plaintiffs' allegations in the Schreier action were similar to those made by
the plaintiffs in the Poulos and Ahearn actions, except that Schreier claimed to
represent a more precisely defined class of plaintiffs than Poulos or Ahearn.
In December 1996, the court ordered the Poulos, Ahearn and Schreier actions
consolidated under the title William H. Poulos, et al v. Caesars World, Inc., et
al Case No. CV-S-94-11236-DAE(RJJ) (Base File), and required the
plaintiffs to file a consolidated and amended complaint. In February 1997, the
plaintiffs filed a consolidated and amended complaint.
In March 1997, various defendants (including Grand) filed motions to dismiss or
stay the consolidated action until the plaintiffs submitted their claims to
gaming authorities and those authorities considered the claims submitted by the
plaintiffs.
In December 1997, the court denied all of the motions submitted by the
defendants, and ordered the plaintiffs to file a new consolidated and amended
complaint. That complaint has been filed. Grand has filed its answer to the new
complaint.
The plaintiffs have filed a motion seeking an order certifying the action as a
class action. Grand and certain of the defendants have opposed the motion. The
Court has not ruled on the motion.
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<PAGE> 23
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
STRATOSPHERE NOTEHOLDER COMMITTEE BANKRUPTCY COURT ACTION
In June 1997, the Official Committee of Noteholders (the "Committee") in the
Chapter 11 bankruptcy proceeding for Stratosphere filed a motion with the U.S.
Bankruptcy Court for the District of Nevada (the "Bankruptcy Court") by which
the Committee sought Bankruptcy Court approval for assumption (on behalf of
Stratosphere's bankruptcy estate) of the March 1995 Standby Equity Commitment
(the "Standby Equity Commitment") between Stratosphere and Grand.
In the motion, the Committee sought Bankruptcy Court authorization to compel
Grand to fund up to $60 million in "capital contributions" to Stratosphere over
three years, based on the Committee's claim that such "contributions" are
required by the Standby Equity Commitment.
Grand opposed the Committee's motion. Grand asserted, in its opposition to the
Committee's motion, that the Standby Equity Commitment is not enforceable in the
Stratosphere bankruptcy proceeding as a matter of law.
The Bankruptcy Court held a preliminary hearing on the Committee's motion in
June 1997, and an evidentiary hearing in February 1998 on the issues raised by
the Committee's motion and Grand's opposition to that motion. In February 1998,
the Bankruptcy Court denied the Committee's motion, and determined that the
Standby Equity Commitment cannot be assumed (or enforced) by Stratosphere under
applicable bankruptcy law.
STANDBY EQUITY COMMITMENT LITIGATION
In September 1997, the Stratosphere Trustee under the indenture pursuant to
which Stratosphere issued its first mortgage notes filed a complaint in the U.S.
District Court for the District of Nevada IBJ Schroeder Bank & Trust Company,
Inc. v. Grand Casinos, Inc. File No. CV-S-97-01252-DWH (RJJ) naming Grand as
defendant.
The complaint alleges that Grand failed to perform under the Standby Equity
Commitment entered into between Stratosphere and Grand in connection with
Stratosphere's issuance of such first mortgage notes in March 1995. The
complaint seeks an order compelling specific performance of what the Committee
claims are Grand's obligations under the Standby Equity Commitment.
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<PAGE> 24
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
The Stratosphere Trustee filed the complaint in its alleged capacity as a third
party beneficiary under the Standby Equity Commitment. Pursuant to the Second
Amended Plan, a new limited liability company (the "Stratosphere LLC") was
formed to pursue certain alleged claims and causes of action that Stratosphere
and other parties may have against numerous third parties, including Grand
and/or officers and/or directors of Grand. The Stratosphere LLC has been
substituted for IBJ Schroeder Bank & Trust Company, Inc. in this proceeding.
Discovery and motion practice is pending and Lakes will continue to defend this
lawsuit diligently.
STRATOSPHERE PLAN OF REORGANIZATION
The Second Amended Plan includes the formation of the Stratosphere LLC which was
formed to pursue certain alleged claims and causes of action that Stratosphere
and other persons may have against numerous third-parties, including Grand
and/or officers and/or directors of Grand. The Second Amended Plan contemplates
capitalizing the Stratosphere LLC with an investment of $5 million.
STRATOSPHERE PREFERENCE ACTION
In April 1998, Stratosphere served on Grand and Grand Media & Electronics
Distributing, Inc., a wholly owned subsidiary of Grand ("Grand Media"), a
complaint in the Stratosphere bankruptcy case seeking recovery of certain
amounts paid by Stratosphere to (i) Grand as management fees and for costs and
expenses under a management agreement between Stratosphere and Grand, and (ii)
Grand Media for electronic equipment purchased by Stratosphere from Grand Media.
Stratosphere claims in its complaint that such amounts are recoverable by
Stratosphere as preferential payments under bankruptcy law.
In May 1998, Grand responded to Stratosphere's complaint. That response denies
that Stratosphere is entitled to recover the amounts described in the complaint.
Discovery is proceeding.
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<PAGE> 25
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
TULALIP TRIBES LITIGATION
In 1995, Grand entered into discussions with Seven Arrows, L.L.C. ("Seven
Arrows"), a Delaware limited liability company, regarding possible participation
by Grand in a proposed casino resort development on land in the State of
Washington held in trust by the United States for the Tulalip Tribes. Grand and
Seven Arrows entered into a letter of intent providing for the negotiation of a
revision to the Seven Arrows limited liability company agreement by which Grand
(or a subsidiary of Grand) would become a member of Seven Arrows. Those
negotiations were not completed, and no revision to the limited liability
company agreement was signed.
During the negotiations, Grand entered into an agreement (the "Advance
Agreement") with Seven Arrows and the Tulalip Tribes. The Advance Agreement
provided for the loan by Grand and Seven Arrows of certain amounts to the
Tulalip Tribes upon the satisfaction of certain conditions. Grand contends that
those conditions were never satisfied. Neither Grand nor Seven Arrows advanced
any amount under the Advance Agreement.
In April 1996, the Tulalip Tribes brought a legal action in Tulalip Tribal Court
Tulalip Tribes of Washington v. Seven Arrows LLC, et al. Case No.
TUL-Ci4/96-499 against Seven Arrows and Grand. The action sought various
remedies, including (i) a declaration that a lease and sublease between the
Tulalip Tribes and Seven Arrows for the land on which the casino resort was
proposed were rightfully terminated; (ii) damages for breach of the lease, the
sublease, and the Advance Agreement; and (iii) a declaration that the lease,
sublease, and Advance Agreement are void.
Because Grand was not a party to the lease or the sublease, Grand contended in
the tribal court action that the only claim against Grand was for breach of the
Advance Agreement; that Grand did not breach the Advance Agreement; and that any
damages sustained by the Tulalip Tribes as a result of any such breach are not
material.
In May 1996, Seven Arrows and Grand brought a legal action in the U.S. District
Court for the Western District of Washington Seven Arrows LLC, et al. v.
Tulalip Tribes of Washington - - Case No. C96-0709Z against the Tulalip
Tribes, Seven Arrows sought in that action certain remedies against the Tulalip
Tribes, including damages, and Grand sought rescission of the Advance Agreement.
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<PAGE> 26
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
Since June 1996, Seven Arrows, Grand and the Tulalip Tribes have been engaged in
disputes in both the tribal court and the federal court regarding which court
has jurisdiction over the various claims made in the two legal actions. In July
1998, Seven Arrows, Grand, and the Tulalip Tribes entered into a partial
settlement agreement that resolved the jurisdictional dispute. In accordance
with the partial settlement agreement, all claims between the parties must now
be submitted to and decided by the federal court.
Pursuant to the partial settlement agreement, Seven Arrows filed a second
amended complaint in the federal action. Among other things, Seven Arrows seeks
damages from the Tulalip Tribes for lost profits of up to $15 million and for
recovery of sums paid to the Tribes between $2 and $3 million. Grand is not a
party to the second amended complaint.
On September 30, 1998, the Tulalip Tribes answered, counterclaimed against Seven
Arrows, and filed and served a complaint in the pending federal action against
Grand. The complaint against Grand contains several counts, including (i) a
request for judgment declaring that the Tribe's termination of the agreements
was effective and quieting title in the land; (ii) a claim for breach of
contract and breach of the implied covenant of good faith that alleges that
Grand is liable on the lease, sublease, and Advance Agreement based upon (a)
Grand's alleged status as a partner of Seven Arrows; (b) Grand's alleged status
as managing and operating agent of Seven Arrows; and (c) Grand's execution of
the Advance Agreement (iii) a claim for negligent misrepresentation claiming, in
essence, that representations of Grand personnel induced the Tribes to continue
to honor the lease, sublease, and Advance Agreement and thereby to incur
expenses they would not have incurred otherwise; (iv) a claim that Grand, by
purporting to act for and with the authority of Seven Arrows, stands as
warrantor and surety of Seven Arrows' obligations; and (v) a claim for estoppel.
Each claim for damages seeks the sum of $856,000 for out-of-pocket expenses and
for "lost profits damages" in an amount to be proved at trial.
Grand answered this complaint on January 15, 1999. Grand does not oppose the
Tribe's effort to quiet title to its land (the first claim). Grand denies that
it is factually or legally liable for the obligations or liabilities of Seven
Arrows under the lease and sublease. Grand continues to contend that, as to the
Tribe, its obligations, if any, are limited to those stated in the Advance
Agreement; that it did not breach the Advance Agreement; and that the Tribe's
damages for such breach, if any, are minimal (the second, fourth, and fifth
claims). Grand denies that it is liable for negligent misrepresentation (the
third claim). Grand also filed a counterclaim against the Tribe on January 15,
1999, seeking rescission of the Advance Agreement and damages from the Tribe
based upon the Tribe's breach of contract and breach of the covenant of good
faith and fair dealing. The Tribe denies the counterclaim.
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LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
On December 22, 1998, Seven Arrows answered the counterclaim of the Tribe and
asserted a complaint against the Company. Seven Arrows' complaint against Grand
alleges (a) that Grand agreed in writing not to take or omit any action that
would excuse the Tribe from its obligations to Seven Arrows or that would cause
Seven Arrows to be liable to the Tribe; (b) that if the Tribe's allegations are
correct, Grand acted as an agent of Seven Arrows and, as such, owed Seven Arrows
a fiduciary duty; and (c) that if the Tribe's allegations are correct, Grand was
a "partner" of Seven Arrows and, as such, owed Seven Arrows a fiduciary duty. If
the Tribe's allegations regarding certain acts, omissions, or representations of
the Company are correct and, as a result, Seven Arrows does not recover against
the Tribe, then Seven Arrows alleges that Grand is liable either for breach of
contract or breach of fiduciary duty in an amount equal to the amount Seven
Arrows would have recovered from the Tribe absent such acts, omissions, or
representations. Grand has answered Seven Arrows' complaint, denying the
allegations in their entirety and asserting counter claims against Seven Arrows.
Discovery has begun and a three-week bench trial has been set to commence
November 1, 1999. Grand's liability for damages to all parties in the aggregate
cannot exceed $15 million pursuant to the partial settlement agreement.
OTHER LITIGATION
The Company has recorded a reserve assessment related to various of the above
items. The reserve is reflected as a litigation and claims accrual on the
accompanying consolidated balance sheet as of April 4, 1999.
Grand and Lakes are involved in various other inquiries, administrative
proceedings, and litigation relating to contracts and other matters arising in
the normal course of business. While any proceeding or litigation has an element
of uncertainty, management currently believes that the final outcome of these
matters is not likely to have a material adverse effect upon Grand's or the
Company's consolidated financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Description
10.1 Release and Assumption Agreement dated as of December 31,
1998, among Hibernia National Bank, the Coushatta Tribe of
Louisiana, the Coushatta Tribe of Louisiana Building
Authority, Grand Casinos of Louisiana, Inc. - Coushatta,
Grand Casinos, Inc., Lakes Gaming, Inc., a Minnesota
corporation and a subsidiary of Grand and Grand Casinos of
Louisiana, LLC - Coushatta, a Minnesota limited liability
company and a subsidiary of Lakes.
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LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
Exhibits Description
-------- -----------
10.2 Commercial Guaranty Agreement made and entered into
effective as of February 15, 1999, by Lakes Gaming, Inc., a
Minnesota corporation and Grand Casinos of Louisiana, LLC -
Coushatta, a Minnesota limited liability company in favor of
Hibernia National Bank, guaranteeing the Indebtedness (as
defined) of the Coushatta Tribe of Louisiana and the
Coushatta Tribe of Louisiana Building Authority.
10.3 Subordination Agreement Granted by Lakes Gaming, Inc., a
Minnesota corporation, in favor of Hibernia National Bank
entered into as of February 15, 1999.
10.4 Subordination Agreement Granted by Grand Casinos of
Louisiana, LLC, a Minnesota limited liability company in
favor of Hibernia National Bank entered into as of February
15, 1999.
10.5 Dominion Account Agreement dated as of May 1, 1997, between
the Coushatta Tribe of Louisiana, a federally recognized
Indian tribe, the Coushatta Tribe of Louisiana Building
Authority, an instrumentality of the Coushatta Tribe, Grand
Casinos of Louisiana, Inc. - Coushatta, a Minnesota
corporation, Grand Casinos, Inc., a Minnesota corporation,
the Cottonport Bank, a bank chartered under the laws of the
State of Louisiana, and Hibernia National Bank, a national
banking association.
10.6 Subordination Agreement Granted by Lakes Gaming, Inc., a
Minnesota corporation, in favor of Hibernia National Bank
entered into as of February 15, 1999.
10.7 Subordination Agreement granted by Grand Casinos of
Louisiana, LLC - Coushatta, a Minnesota limited liability
company, in favor of Hibernia National Bank entered into as
of February 15, 1999.
10.8 Dominion Account Agreement, dated effective as of December
17, 1997, between the Coushatta Tribe of Louisiana, a
federally recognized Indian tribe, Grand Casinos of
Louisiana, Inc. - Coushatta, a Minnesota corporation, Grand
Casinos, Inc. a Minnesota corporation, the Cottonport Bank,
a bank chartered under the laws of the State of Louisiana,
and Hibernia National Bank, a national banking association.
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LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
Exhibits Description
-------- -----------
10.9 Intercreditor Agreement dated as of February 4, 1998,
between Hibernia National Bank and Grand Casinos of
Louisiana, Inc. - Coushatta and Grand Casinos, Inc.
10.10 Counterpart Signature Page, dated as of February 15, 1999,
to that certain Intercreditor Agreement dated as of February
4, 1998 (the First Intercreditor Agreement), by and among
Hibernia National Bank, Grand Casinos, Inc. and Grand
Casinos of Louisiana, Inc. - Coushatta; entered into
pursuant to Section 2 of that certain Release and Assumption
Agreement dated as of December 31, 1998, by and among the
Hibernia National Bank, Grand Casinos, Inc., Grand Casinos
of Louisiana, Inc. - Coushatta, the Coushatta Tribe of
Louisiana, the Coushatta Tribe of Louisiana Building
Authority, Lakes Gaming, Inc. and Grand Casinos of
Louisiana, LLC - Coushatta.
10.11 Subordination Agreement granted by Lakes Gaming, Inc., a
Minnesota Corporation, in favor of Hibernia National Bank
entered into as of February 15, 1999.
10.12 Subordination Agreement granted by Grand Casinos of
Louisiana, LLC - Coushatta, a Minnesota Limited Liability
Company, in favor of Hibernia National Bank entered into as
of February 15, 1999.
10.13 Dominion Account Agreement, dated effective as of December
18, 1998, between the Coushatta Tribe of Louisiana, a
federally recognized Indian tribe, Grand Casinos of
Louisiana, LLC - Coushatta, a Minnesota limited liability
company, Lakes Gaming, Inc., a Minnesota corporation, the
Cottonport Bank, a bank chartered under the laws of the
State of Louisiana, and Hibernia National Bank, a national
banking association.
10.14 Second Intercreditor Agreement dated as of December 18,
1998, between Hibernia National Bank, Grand Casinos of
Louisiana, Inc. - Coushatta and Grand Casinos, Inc.
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<PAGE> 30
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
Exhibits Description
-------- -----------
10.15 Counterpart Signature Page, dated as of February 15, 1999,
to that certain Second Intercreditor Agreement dated as of
December 18, 1998 (the Second Intercreditor Agreement), by
and among Hibernia National Bank, Grand Casinos, Inc. and
Grand Casinos of Louisiana, Inc. - Coushatta; entered into
pursuant to Section 2 of that certain Release and Assumption
Agreement dated as of December 31, 1998, by and among the
Hibernia National Bank, Grand Casinos, Inc., Grand Casinos
of Louisiana, Inc. - Coushatta, the Coushatta Tribe of
Louisiana, the Coushatta Tribe of Louisiana Building
Authority, Lakes Gaming, Inc. and Grand Casinos of
Louisiana, LLC - Coushatta.
10.16 Release and Assumption Agreement dated as of December
31,1998, among Cottonport Bank, the Tunica-Biloxi Tribe of
Louisiana, Grand Casinos of Louisiana, Inc. - Tunica-Biloxi
, Grand Casinos, Inc., Lakes Gaming, Inc., a Minnesota
corporation and a subsidiary of Grand and Grand Casinos of
Louisiana, LLC - Tunica-Biloxi, a Minnesota limited
liability company and a subsidiary of Lakes Gaming, Inc.
10.17 Commercial Guaranty Agreement made and entered into
effective as of February 15, 1999, by Lakes Gaming, Inc., a
Minnesota corporation and Grand Casinos of Louisiana, LLC -
Tunica-Biloxi, a Minnesota limited liability company in
favor of the Cottonport Bank, guaranteeing the Indebtedness
(as defined) of the Tunica-Biloxi Tribe of Louisiana.
10.18 Subordination Agreement granted by Lakes Gaming, Inc., a
Minnesota corporation, in favor of the Cottonport Bank
entered into as of February 15, 1999.
10.19 Subordination Agreement granted by Grand Casinos of
Louisiana, LLC - Tunica-Biloxi, a Minnesota limited
liability company, in favor of the Cottonport Bank entered
into as of February 15, 1999.
10.20 Non-competition Agreement made and entered into as of
December 31, 1998, by and between Thomas J. Brosig and Park
Place Entertainment Corporation (f/k/a Gaming Co., Inc.), a
Delaware corporation.
10.21 Non-competition Agreement made and entered into as of
December 31, 1998, by and between Lyle Berman and Park Place
Entertainment Corporation (f/k/a Gaming Co., Inc.) a
Delaware corporation.
27 Financial Data Schedule (for SEC use only)
- 30 -
<PAGE> 31
LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)
(b) Reports on Form 8-K
(i) A Form 8-K, Item 5. Other Events; and Item 7. Financial
Statements, Pro Forma Financial Information and Exhibits, was
filed on January 8, 1999.
(ii) A Form 8-K, Item 5. Other Events; and Item 7. Financial
Statements, Pro Forma Financial Information and Exhibits, was
filed on March 16, 1999.
- 31 -
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 13, 1999 LAKES GAMING, INC.
------------------
Registrant
/S/ THOMAS J. BROSIG
--------------------
Thomas J. Brosig
President
/S/ TIMOTHY J. COPE
-------------------
Timothy J. Cope
Executive Vice President and
Chief Financial Officer
- 32 -
<PAGE> 1
EXHIBIT 10.1
RELEASE AND ASSUMPTION AGREEMENT
This RELEASE AND ASSUMPTION AGREEMENT (the "Agreement") dated
as of December 31, 1998, among Hibernia National Bank ("Bank"), the Coushatta
Tribe of Louisiana (the "Tribe"), the Coushatta Tribe of Louisiana Building
Authority (the "Authority"), Grand Casinos of Louisiana, Inc. -- Coushatta
("GCI"), Grand Casinos, Inc. ("Grand"), Lakes Gaming, Inc., a Minnesota
corporation and a subsidiary of Grand ("Lakes") and Grand Casinos of Louisiana,
LLC-Coushatta, a Minnesota limited liability company and a subsidiary of Lakes
("GCI LLC").
WITNESSETH:
WHEREAS, Bank, entered into that certain Commercial Loan
Agreement dated May 1, 1997 (the "Hotel Loan Agreement") under the terms of
which the Bank agreed to loan to the Tribe and the Authority up to
$25,000,000.00 (the "Hotel Loan") to be used to construct and furnish a hotel
facility, to purchase new gaming equipment, and to make certain renovations, all
as more fully set forth therein;
WHEREAS, in connection with the Hotel Loan, Grand and GCI
executed in favor of the Bank that certain Commercial Guaranty Agreement dated
May 1, 1997 (the "Hotel Loan Guaranty") under the terms of which Grand and GCI
guaranteed up to the maximum sum of $25,000,000.00 of the Hotel Loan Obligations
(herein defined);
WHEREAS, in connection with the Hotel Loan Agreement, Grand
and GCI executed the Hotel Loan Subordination Agreements (herein defined);
WHEREAS, the Bank and the Tribe entered into that certain
Commercial Loan Agreement dated December 17, 1997 (the "First Equipment Loan
Agreement"), under the terms of which the Bank agreed to loan to the Tribe up to
$6,000,000.00 (the "First Equipment Loan") to purchase new gaming equipment and
other assets;
WHEREAS, in connection with the First Equipment Loan
Agreement, Grand and GCI executed the First Equipment Loan Subordination
Agreements (herein defined);
WHEREAS, in connection with the Hotel Loan and the First
Equipment Loan, the Bank, GCI and Grand entered into that certain Intercreditor
Agreement dated as of February 4, 1998 (the "First Intercreditor Agreement");
WHEREAS, the Bank and the Tribe entered into that certain
Commercial Loan Agreement dated as of December 18, 1998 (the "Second Equipment
Loan Agreement"), under the terms of which the Bank agreed to loan to the Tribe
up to $15,000,000.00 (the "Second Equipment Loan") to purchase new gaming
equipment and other assets and to sometime before September 30, 1999, refinance
the First Equipment Loan;
WHEREAS, in connection with the Second Equipment Loan
Agreement, Grand and GCI executed the Second Equipment Loan Subordination
Agreements (herein defined);
<PAGE> 2
WHEREAS, in connection with the Hotel Loan, the First
Equipment Loan and the Second Equipment Loan, the Bank, GCI and Grand entered
into that certain Second Intercreditor Agreement dated as of December 18, 1998
(the "Second Intercreditor Agreement");
WHEREAS, capitalized terms used herein shall have the meanings
ascribed thereto in the Second Intercreditor Agreement unless otherwise defined
herein;
WHEREAS, pursuant to that certain Merger Agreement dated June
30, 1998 (the "Merger Agreement") among Grand, Lakes, Hilton Hotels Corporation,
a Delaware corporation ("Hilton"), Park Place Entertainment Corporation , a
Delaware corporation and a subsidiary of Hilton ("Park Place"), Gaming
Acquisition Corporation, a Minnesota corporation and a subsidiary of Park Place
(the "Merger Subsidiary"), such parties intend to cause the following
transactions to occur effective as of closing on December 31,1998 (collectively,
the "Grand Transactions"):
(a) all right, title, interest, duties and obligations of Grand and GCI
in, to and under: (i) the Management Agreement (as defined in the Hotel Loan
Agreement), (ii) the Indemnity Agreement, (iii) the Indemnity Collateral
Documents, and (iv) any other security agreements, mortgages, deeds of trust,
contracts, agreements, instruments and documents of whatever nature between or
among the Tribe and/or the Authority and either or both of Grand and/or GCI,
including, without limitation, any debts, liabilities or other obligations owing
by the Tribe and/or the Authority to either or both of Grand and/or GCI, shall
be forever and absolutely assigned to and assumed by Lakes or GCI LLC, as
applicable (the "Assignment Transaction");
(b) GCI shall merge with and into Lakes, with Lakes remaining as the
surviving entity (the "GCI-Lakes Merger");
(c) Hilton will spin-off 100% of the capital stock of Park Place to its
public shareholders;
(d) Grand will spin-off 100% of the capital stock of Lakes to its
public shareholders; and
(e) the Merger Subsidiary shall merge with and into Grand, with Grand
remaining as the surviving entity (the "Park Place-Grand Merger");
WHEREAS, the Tribe has consented to the Grand Transactions and
Grand, GCI, Lakes and GCI LLC are also requesting the consent of the Bank to the
Grand Transactions and to amend the Loan Documents (herein defined) as set forth
herein, including without limitation, the release of GCI from and assumption by
GCI LLC of all obligations of GCI to the Bank under the applicable Loan
Documents to which it is a party; and
WHEREAS, the Bank is willing to grant such consent pursuant to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the Bank,
the Tribe, the Authority, GCI, Grand, Lakes and GCI LLC agree as follows:
SECTION 1. CONSENT AND WAIVER. The Bank hereby consents to the Grand
Transactions (as described hereinabove) and waives any and all provisions
(including, without limitation, any change in control provisions) contained in
the Loan Documents that would restrict or otherwise give rise to an event of
default under the Loan Documents on account of the Grand Transactions. As used
herein the term
2
<PAGE> 3
"Loan Documents" shall individually or collectively, as the
context may require, mean the First Equipment Loan Agreement, the First
Equipment Loan Collateral Documents, the First Equipment Loan Subordination
Agreements, the Second Equipment Loan Agreements, the Second Equipment Loan
Collateral Documents, the Second Equipment Loan Subordination Agreement, the
Hotel Loan Agreement, the Hotel Loan Collateral Documents, the Hotel Loan
Guaranty, the Hotel Loan Subordination Agreements, the First Intercreditor
Agreement, the Second Intercreditor Agreement and all other instruments,
documents and agreements related thereto.
SECTION 2. RELEASE OF GCI AND REAFFIRMATION BY GRAND. Upon the
occurrence of the Release Effective Date (as hereinafter defined), the Bank
shall be deemed to have (a) forever released GCI from all debts, liabilities and
obligations whatsoever now or hereafter owing to the Bank under any of the Loan
Documents, including, without limitation, the Hotel Loan Guaranty, and (b)
terminated each of the First Equipment Loan Subordination Agreements, the Second
Equipment Loan Subordination Agreements and the Hotel Loan Subordination
Agreements (collectively, the "Existing Subordination Agreements") to which GCI
is a party thereto. Grand hereby confirms that each and all of the obligations
of Grand under the Loan Documents, including, without limitation, the Hotel Loan
Guaranty, remain, and will remain, in full force and effect in accordance with
their original terms, without waiver or modification, notwithstanding the
completion of the Grand Transaction. If the Release Effective Date has not
occurred on or before February 1, 1999, the same shall, at the option of the
Bank, constitute a breach of the Hotel Loan Guaranties.
The "Release Effective Date" shall be defined as and be deemed to have occurred
on the date that each of the following agreements and documents shall have been
executed and delivered to the Bank, each in form and substance acceptable to the
Bank (collectively, the "Release Documents"):
(aa) An acknowledgment and certification of Park Place that (i) the
release of Grand from Grand's obligations under the Loan Documents is not a
condition to the completion of the Park Place-Grand Merger, (ii) the Park
Place-Grand Merger has been legally effectuated and Grand has become the
wholly-owned subsidiary of Park Place, and (iii) no material adverse change has
occurred with respect to the post-merger pro forma financial statements of Grand
set forth in that certain Form S-4 Registration Statement of Park Place and
Grand and filed with the Securities and Exchange Commission on October 23, 1998;
(bb) An opinion of counsel of Grand, GCI, Lakes and GCI LLC (which
counsel shall be acceptable to the Bank) that (i) each of such entities (1) is
duly organized and existing under the laws of the state of its incorporation or
organization, and (2) has duly executed and deliver, and has taken all corporate
action necessary to authorize the execution, delivery and performance of, such
documents to the extent it is a party thereto; and (ii) the completion of the
Park Place-Grand Merger in accordance with applicable Minnesota law and the
Merger Agreement will not in and of itself create a defense to enforcement of
the Hotel Loan Guaranty with respect to Grand under Minnesota law;
(cc) Evidence that the Assignment Transaction has been completed;
(dd) Evidence that all Louisiana gaming approvals required in
connection with the Assignment Transaction have been obtained by Lakes and/or
GCI LLC, as applicable;
3
<PAGE> 4
(ee) An opinion rendered by Ropes & Gray that the approval of the
Bureau of Indian Affairs to the transactions contemplated herein is not required
or advised;
(ff) The Lakes Guaranty and the Lakes Subordinations;
(gg) The GCI LLC Guaranty and the GCI LLC Suboridinations;
(hh) Payment of the costs and expenses by the Bank required by
Section 8.8 hereof.
(ii) Lakes and GCI LLC shall each have executed a counterpart signature
page to the Second Intercreditor Agreement to to incorporate and reflect the
release of GCI, the assumption by Lakes LLC and the addition of the GCI LLC
Guaranty, the GCI LLC Subordination, the Lakes Guaranty and Lakes
Subordinations.
SECTION 3. ASSUMPTION OF GCI OBLIGATIONS. GCI LLC hereby
unconditionally assumes each and every debt, liability and obligation of
whatever nature owing by GCI to the Bank under the Loan Documents, including,
without limitation, the Hotel Loan Guaranty, to the same extent as though GCI
LLC was originally a party thereto. In furtherance thereof, GCI LLC shall
execute and deliver to the Bank prior to the Release Effective Date such
additional documents as may be necessary to evidence or effectuate such
assumption, including, without limitation, the following:
(a) a Commercial Loan Guaranty pursuant to which GCI LLC shall guaranty
the payment of the Hotel Loan on terms and conditions substantially
similar to the Hotel Loan Guaranty (the "GCI LLC Guaranty"); and
(b) a Subordination Agreement pursuant to which GCI LLC shall grant
debt subordinations to the Bank on terms substantially similar to the
Existing Subordination Agreements (the "GCI LLC Subordinations").
SECTION 4. GUARANTY AND SUBORDINATION OF LAKES. To induce the Bank to
enter into this Agreement, Lakes hereby agrees to execute and deliver to the
Bank prior to the Release Effective Date the following:
(a) a Commercial Loan Guaranty, pursuant to which Lakes shall guaranty
the payment of the Hotel Loan on terms and conditions substantially
similar to the Hotel Loan Guaranty (the "Lakes Guaranty"); and
(b) a Subordination Agreement, pursuant to which Lakes shall grant debt
subordinations to the Bank on terms substantially similar to the
Existing Subordination Agreements (the "Lakes Subordinations").
SECTION 5. FURTHER ASSURANCES. Each of the parties hereto agrees that
upon the request of any other party it shall execute and deliver such additional
agreements and documents as may be reasonably necessary to effectuate the
intents and purposes of this Agreement,.
4
<PAGE> 5
SECTION 6. EFFECT OF THIS AGREEMENT.
6.1 The foregoing provisions shall supersede any provisions to
the contrary contained in the Loan Documents. Except as expressly set forth
hereinabove, this Agreement shall not alter, change or modify the terms of or
the effects of the Loan Documents.
6.2 This Agreement shall not be binding upon the parties
hereto and shall not become effective (the "Effective Date") until such time as
(a) the Bank, the Tribe, the Authority, Grand, GCI, Lakes and GCI LLC have
signed this Agreement and (b) Grand shall have delivered to the Bank by
facsimile or otherwise a written notice confirming that the proposed Park
Place-Grand Merger has been commenced and is in a position to concurrently close
with the transactions contemplated by this Agreement.
SECTION 7. MISCELLANEOUS.
7.1 Notices. Except as otherwise provided herein, any notice
or demand which, by provision of this Agreement, is required or permitted to be
given or served by a party shall be deemed to have been sufficiently given and
served for all purposes: (a) (if mailed) seven (7) calendar days after being
deposited, postage prepaid, in the United States Mail, registered or certified
mail; or (b) (if delivered by express courier) one Business Day after being
delivered to such courier; or (c) (if delivered in person) the same day as
delivery or until another address or addresses are given in writing by a party
to the other parties as follows:
To GCI LLC: Grand Casinos of Louisiana, LLC.- Coushatta
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-7064
To Lakes: Lakes Gaming, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-7064
To Grand: Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-7064
To Bank: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 71101
Attention: Legal Administration Department
Fax: (318) 674-3758
5
<PAGE> 6
To Tribe: The Coushatta Tribe of Louisiana
P.O. Box 818
Elton, LA 70532
Attention: Lovelin Poncho
Fax: (318) 584-2998
7.2 Governing Law. This Agreement shall be construed in
accordance with and governed the laws of the State of Louisiana.
7.3. Severability. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof.
7.4 Captions. Captions herein are for convenience only and
shall not be deemed part of this Agreement.
7.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns.
7.6 Amendments. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.
7.7 Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
7.8 Expenses. All attorneys fees, costs and expenses of the
Bank associated with the preparation, execution and delivery of this Agreement
and the Release Documents shall be jointly and severally paid by Grand, GCI,
Lakes and GCI LLC prior to the Release Effective Date.
[The remainder of this page has been intentionally left blank--signature pages
follow.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
HIBERNIA NATIONAL BANK
By: /s/ Christopher K. Haskew
--------------------------
Christopher K. Haskew
Assistant Vice President
COUSHATTA TRIBE OF LOUISIANA
By: /s/ Lovelin Poncho
-------------------
Lovelin Poncho
Chairman
COUSHATTA TRIBE OF LOUISIANA
BUILDING AUTHORITY
By: /s/ Lovelin Poncho
--------------------
Lovelin Poncho
Chairman
<PAGE> 8
GRAND CASINOS OF LOUISIANA, INC. -
COUSHATTA
By: /s/ Timothy Cope
--------------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS OF LOUISIANA, LLC -
COUSHATTA
By: /s/ Timothy Cope
--------------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
--------------------------------------------------
Timothy Cope, its Chief Financial Officer
LAKES GAMING, INC.
By: /s/ Timothy Cope
--------------------------------------------------
Timothy Cope, its Chief Financial Officer
<PAGE> 9
EXHIBIT A
(ATTACH LAKES AMENDMENT TO INTERCREDITOR AGREEMENT)
<PAGE> 1
EXHIBIT 10.2
COMMERCIAL GUARANTY AGREEMENT
This Commercial Guaranty Agreement (this "Agreement") is made
and entered into effective as of February 15, 1999 (the "Effective Date"), by
LAKES GAMING, INC., a Minnesota corporation (herein sometimes referred to as
"Lakes"), GRAND CASINOS OF LOUISIANA, LLC - COUSHATTA, a Minnesota limited
liability company (herein sometimes referred to as "Grand Casinos/Coushatta")
[Lakes and Grand Casinos/Coushatta are herein referred to individually as a
"Guarantor" and collectively as the "Guarantors"]) in favor of HIBERNIA NATIONAL
BANK (the "Lender"), guaranteeing the Indebtedness (as hereinafter defined) of
the COUSHATTA TRIBE OF LOUISIANA and the COUSHATTA TRIBE OF LOUISIANA BUILDING
AUTHORITY (collectively the "Borrower" whether one or more).
W I T N E S S E T H:
FOR VALUE RECEIVED, and in consideration of and for credit and
financial accommodations extended, to be extended, or continued to or for the
account of the above named Borrower, each of the undersigned Guarantors, whether
one or more, hereby jointly, severally and solidarily, agrees as follows:
SECTION 1. Guaranty of Borrower's Indebtedness. Each Guarantor does
hereby absolutely and unconditionally guarantee the prompt and punctual payment
of all of the indebtedness, including principal, interest, attorneys' fees and
other amounts, of the Borrower to Lender incurred by the Borrower: (a) pursuant
to that certain Commercial Loan Agreement dated as of May 1, 1997, between
Borrower, as borrower, and Lender, as lender, under the terms of which Lender
agreed to loan to Borrower the principal sum of Twenty- Five Million and No/100
Dollars ($25,000,000.00), as amended by that certain First Amendment to
Commercial Loan Agreement dated ________, 1998, and by that certain Second
Amendment to Commercial Loan Agreement dated ________, 1998 (collectively, the
"Loan Agreement"); and (b) pursuant to that certain Promissory Note (the "Note")
also dated as of May 1, 1997, executed by the Borrower in favor of the Lender in
the original principal amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00) in connection with the Loan Agreement, as amended by that
certain First Allonge to Promissory Note dated ________, 1998 and as amended by
that certain Second Allonge to Promissory Note dated ________, 1998 (all such
indebtedness referred to herein as the "Indebtedness"). Notwithstanding anything
to the contrary contained herein, the maximum amount of Indebtedness secured
hereby is Twenty-Five Million and No/100 Dollars ($25,000,000.00) (the "Maximum
Amount").
SECTION 2. Joint, Several and Solidary Liability. Each Guarantor
further agrees that its obligations and liabilities for the prompt and punctual
payment, performance and satisfaction or purchase of all of Borrower's
Indebtedness shall be on a "joint and several" and "solidary" basis with
Borrower to the same degree and extent as if Guarantor had been and/or will be a
co-borrower, co-principal obligor and/or co-maker of all of Borrower's
Indebtedness, up to the Maximum Amount. In the event that there is more than one
guarantor under this Agreement, or in the event that there are other guarantors,
endorsers, or sureties of all or any portion of Borrower's Indebtedness,
Guarantor's obligations and liabilities hereunder shall be on
GUARANTY -- PAGE 1
<PAGE> 2
a "joint and several" and "solidary" basis along with such other guarantor or
guarantors, endorsers and/or sureties.
SECTION 3. Duration. This Agreement and each Guarantor's obligations
and liabilities hereunder shall remain in full force and effect until such time
as all of Borrower's Indebtedness shall be paid, performed and/or satisfied in
full, in principal, interests costs and attorney's fees, and the Loan Agreement
terminated.
SECTION 4. Default by Borrower.
A. Should an Event of Default as defined in the Loan Agreement
occur, Lender shall notify each of the Guarantors of such an
event. Guarantors shall have the right (but not the
obligation) to attempt to remedy an Event of Default within
the time periods specified in the Loan Agreement. Such notice
shall be given to Guarantors concurrently with notice thereof
being given to the Borrower under the Loan Agreement.
Guarantors may attempt to remedy such an Event of Default and,
if Guarantors cure such an Event of Default, Lender will
accept such a cure thereof by Guarantors.
B. Should an Event of Default as defined in the Loan Agreement
occur and not be timely cured, each Guarantor unconditionally
and absolutely agrees to pay within one-hundred and twenty
days after Lender notifies the Guarantors of such an Event of
Default the full unpaid amount of all of Borrower's
Indebtedness guaranteed hereunder. Such payment or payments
shall be made at Lender's offices as specified in the Loan
Agreement immediately following demand by Lender. Each
Guarantor hereby waives notice of acceptance of this Agreement
and of any Indebtedness to which it applies or may apply. Each
Guarantor further waives presentment and demand for payment of
Borrower's Indebtedness, notice of dishonor, notice of
intention to accelerate, protest and notice of protest,
collection or institution of any suit or other action by
Lender in collection. Each Guarantor additionally waives any
and all rights and pleas of division and discussion as
provided under Louisiana law, as well as, to the degree
applicable, any similar rights as may be provided under the
laws of any other state.
SECTION 5. Guarantor's Subordination of Rights. In the event that a
Guarantor should for any reason (A) advance or lend monies to Borrower, whether
or not such funds are used by Borrower to make payment(s) under Borrower's
Indebtedness, and/or (B) make any payment(s) to Lender or others for and on
behalf of Borrower under Borrower's Indebtedness, and/or (C) make any payment to
Lender in total or partial satisfaction of Guarantor's obligations and
liabilities under this Agreement, each such Guarantor hereby agrees that any and
all rights that Guarantor may have or acquire to collect from or to be
reimbursed by Borrower (or from or by any other guarantor, endorser or surety of
Borrower's Indebtedness), whether Guarantor's rights of collection or
reimbursement arise by way of subrogation to the rights of Lender or otherwise,
shall in all respects, whether or not Borrower is presently or subsequently
becomes insolvent, be subordinate, inferior and junior to the rights of Lender
to collect and enforce payment, performance and
GUARANTY -- PAGE 2
<PAGE> 3
satisfaction of Borrower's then remaining Indebtedness, until such time as
Borrower's Indebtedness is fully paid and satisfied. So long as no Event of
Default as defined in the Loan Agreement exists, Guarantor may be repaid by
Borrower as to any subordinated debt permitted by the Loan Agreement. In the
event of Borrower's insolvency or consequent liquidation of Borrower's assets,
through bankruptcy, by an assignment for the benefit of creditors, by voluntary
liquidation, or otherwise, the assets of Borrower applicable to the payment of
claims of both Lender and Guarantor shall be paid to Lender and shall be first
applied by Lender to Borrower's then remaining Indebtedness. Notwithstanding
the foregoing, unless and until Lender notifies Guarantors of an Event of
Default pursuant to Section 4(A), each Guarantor may continue to receive from
the Borrower any scheduled payments due under existing indebtedness owed by the
Borrower to the Guarantors.
SECTION 6. Covenants Relating to the Indebtedness. No course of dealing
between Lender and Borrower (or any other Guarantor, surety or endorser of
Borrower's Indebtedness), nor any failure or delay on the part of Lender to
exercise any of Lender's rights and remedies, or any other agreement or
agreements by and between Lender and Borrower (or any other Guarantor, surety or
endorser) shall have the effect of impairing or releasing any Guarantor's
obligations and liabilities to Lender or of waiving any of Lender's rights and
remedies. Any partial exercise of any rights and remedies granted to Lender
shall furthermore not constitute a waiver of any of Lender's other rights and
remedies, it being each Guarantor's intent and agreement that Lender's rights
and remedies shall be cumulative in nature. Each Guarantor further agrees that,
should Borrower default under any of Borrower's Indebtedness, any waiver or
forbearance on the part of Lender to pursue the rights and remedies available to
Lender shall be binding upon Lender only to the extent that Lender specifically
agrees to such waiver or forbearance in writing. A waiver or forbearance on the
part of Lender as to one event of default shall not constitute a waiver or
forbearance as to any other default.
SECTION 7. No Release of Guarantor. Each Guarantor's obligations and
liabilities under this Agreement shall not be released, impaired, reduced or
otherwise affected by, and shall continue in full force and effect,
notwithstanding the occurrence of any event, including without limitation any
one or more of the following events:
A. Insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution or
lack of authority (whether corporate, partnership or
trust) of Borrower (or any person acting on
Borrower's behalf), or any other guarantor, surety or
endorser of any of Borrower's Indebtedness;
B. Partial payment or payments of any amount due and/or
outstanding under any of Borrower's Indebtedness;
C. Any payment by Borrower or any other party to Lender
is held to constitute a preferential transfer or a
fraudulent conveyance under any applicable law, or
for any reason, Lender is required to refund such
payment or pay such amount to Borrower or to any
other person;
GUARANTY -- PAGE 3
<PAGE> 4
D. Any dissolution of Borrower or any sale, lease or
transfer of all or any part of Borrower's assets;
and/or
E. Any failure of Lender to notify Guarantor of the
acceptance of this Agreement or of the making of
loans or other extensions of credit in reliance on
this Agreement.
This Agreement and each Guarantor's obligations and liabilities hereunder shall
continue to be effective, and/or shall automatically and retroactively be
reinstated if a release or discharge has occurred, as the case may be, if at any
time any payment or part thereof to Lender with respect to any of Borrower's
Indebtedness is rescindedor must otherwise be restored by Lender pursuant to 25
U.S.C. 81 et seq. or to any insolvency, bankruptcy, reorganization,
receivership, or any other debt relief granted to Borrower or to any other
party. In the event that Lender must rescind or restore any payment received by
Lender in satisfaction of Borrower's Indebtedness, any prior release or
discharge from the terms of this Agreement given to Guarantor shall be without
effect, and this Agreement and each Guarantor's obligations and liabilities
hereunder shall automatically be renewed or reinstated and shall remain in full
force and effect to the same degree and extent as if such a release or discharge
was never granted. It is the intention of Lender and each Guarantor that
Guarantor's obligations and liabilities hereunder shall not be discharged except
by Guarantor's full and complete performance of such obligations and liabilities
and then only to the extent of such performance.
SECTION 8. Representations and Warranties. Each Guarantor
represents and warrants to the Lender that:
A. To the best of its knowledge, the execution and
delivery of this Agreement will not result in any
violation of, or be in conflict with, or constitute a
default under any mortgage, indenture, deed of trust,
security agreement, lease, contract, agreement,
instrument, obligation, judgment, decree, order,
statute, regulation, or rule applicable to such
Guarantor;
B. This Agreement is valid, enforceable, and binding
upon the Guarantor in accordance with its terms,
conditions, and provisions; and
C. Each Guarantor has received and reviewed an executed
copy of the Loan Agreement.
SECTION 9. Enforcement of Guarantor's Obligations and Liabilities.
Subject to the provision of Section 4 hereof, each Guarantor agrees that
following the occurrence of an Event of Default as defined in the Loan
Agreement, should Lender deem it necessary to file an appropriate collection
action to enforce Guarantor's obligations and liabilities under this Agreement,
Lender may commence such a civil action against Guarantor without the necessity
of first (i) attempting to collect Borrower's Indebtedness from Borrower or from
any other guarantor, surety or endorser, whether through filing of suit or
otherwise, (ii) attempting to exercise against any collateral directly or
indirectly securing repayment of any of Borrower's Indebtedness, whether through
the filing of an appropriate foreclosure action or otherwise, or (iii) including
Borrower or any other guarantor, surety or endorser of any of Borrower's
Indebtedness as an additional party
GUARANTY -- PAGE 4
<PAGE> 5
defendant in such a collection action against Guarantor. If there is more than
one guarantor under this Agreement, each Guarantor additionally agrees that
Lender may file an appropriate collection and/or enforcement action against any
one or more of them, without impairing the rights of Lender against any other
Guarantor under this Agreement. In the event that Lender should ever deem it
necessary to refer this Agreement to an attorney-at-law for the purpose of
enforcing Guarantor's obligations and liabilities hereunder, or of protecting or
preserving Lender's rights hereunder, each Guarantor agrees to reimburse Lender
for the reasonable fees of such an attorney. Each Guarantor additionally agrees
that Lender shall not be liable for failure to use diligence in the collection
of any of Borrower's Indebtedness or any collateral security therefor, or in
creating or preserving the liability of any person liable on any such
Indebtedness, or in creating, perfecting or preserving any security for any such
Indebtedness.
SECTION 10. Environmental Condition. Neither Guarantor is obligated
pursuant to this Agreement to remediate any environmental or other condition
located in, or on the Property (as defined in the Loan Agreement).
SECTION 11. No Changes. Lender shall not alter, change or amend the
Loan Agreement, the Note or the other documents executed by the Borrower and/ or
Lender in connection therewith, without the prior written consent of the
Guarantors.
SECTION 12. Additional Documents. Upon the reasonable request of
Lender, each Guarantor will, at any time, and from time to time, duly execute
and deliver to Lender any and all such further instruments and documents, and
supply such additional information, as may be necessary or advisable in the
opinion of Lender, to further evidence or perfect this Agreement, provided that
the foregoing does not expand the scope of the Guarantors' obligation or limit
Guarantors' rights hereunder.
SECTION 13. Transfer of Indebtedness.
A. This Agreement is for the benefit of Lender and for
such other person or persons as may from time to time
become or be the holders of any of Borrower's
Indebtedness hereby guaranteed and this Agreement
shall be transferrable and negotiable, with the same
force and effect and to the same extent as Borrower's
Indebtedness may be transferrable, it being
understood that, upon the transfer or assignment by
Lender of any of Borrower's Indebtedness hereby
guaranteed, the legal holder of such Indebtedness
shall have all of the rights granted to Lender under
this Agreement.
B. Each Guarantor hereby recognizes and agrees that
Lender may, from time to time, one or more times,
transfer any portion (but not all) of Borrower's
Indebtedness to one or more third parties provided
that the Lender retains a portion of the
Indebtedness. Such transfers may include, but are not
limited to, sales of a participation interest in such
Indebtedness in favor of one or more third party
lenders, provided that the Lender remains the lead or
agent bank. Each Guarantor specifically agrees and
consents to all such transfers and assignments and
each Guarantor further waives any
GUARANTY -- PAGE 5
<PAGE> 6
subsequent notice of and right to consent to any such
transfers and assignments as may be provided under
applicable Louisiana law. Each Guarantor additionally
agrees that the purchaser of a participation interest
in Borrower's Indebtedness will be considered as the
absolute owner of a percentage interest of such
Indebtedness and that such a purchaser will have all
of the rights granted to the purchaser under any
participation agreement governing the sale of such a
participation interest.
SECTION 14. Notice. Lender agrees to deliver to each Guarantor a copy
of each and every written notice Lender is required to deliver to Borrower under
the Loan Agreement and the Loan Documents (as that term is defined in the Loan
Agreement). Lender shall deliver such notices to the Guarantors in the manner
required by the Loan Agreement, to the following address:
Lakes Gaming, Inc.
130 Chesire Lane
Minnetonka, MN 55305
Grand Casinos of Louisiana, LLC - Coushatta
Post Office Box 1510
Kinder, LA 70648
SECTION 15. Subrogation. In the event Guarantors, or any of them, pays
to Lender all sums due under Borrower's Indebtedness up to the Maximum Amount,
then immediately upon such payment, the paying Guarantor or Guarantors, as the
case may be, shall automatically subrogate to any and all rights and remedies
available to Lender against Borrower under the Loan Agreement and the Loan
Documents.
SECTION 16. Miscellaneous.
A. Construction. The provisions of this Agreement shall be in
addition to and cumulative of, and not in substitution, novation or discharge
of, any and all prior or contemporaneous guaranty or other agreements by
Guarantor (or any one or more of them), in favor of Lender or assigned to Lender
by others, all of which shall be construed as complementing each other. Nothing
herein contained shall prevent Lender from enforcing any and all such other
guaranties or agreements in accordance with their respective terms.
B. Amendment. No amendment, modification, consent or waiver of
any provision of this Agreement, and no consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing signed by a
duly authorized officer of Lender, and then shall be effective only to the
specific instance and for the specific purpose for which given.
C. Successors and Assigns Bound. Each Guarantor's obligations
and liabilities under this Agreement shall be binding upon Guarantor's
successors, heirs, legatees, devisees, administrators, executors and assigns.
The rights and remedies granted to Lender under this Agreement shall also inure
to
GUARANTY -- PAGE 6
<PAGE> 7
the benefit of Lender's successors and assigns, as well as to any and all
subsequent holder or holders of any of Borrower's Indebtedness subject to this
Agreement.
D. Caption Headings. Caption headings of the sections of this
Agreement are for convenience purposes only and are not to be used to interpret
or to define their provisions. In this Agreement, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.
E. Governing Law. This Agreement shall be governed and
construed in accordance with the substantive laws of the State of Louisiana.
F. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Agreement
shall be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
G. Consent to Jurisdiction. EACH GUARANTOR HEREBY IRREVOCABLY
CONSENTS TO THE JURISDICTION OF THE STATE COURTS OF LOUISIANA AND THE FEDERAL
COURTS IN LOUISIANA, AND AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR
BROUGHT TO ENFORCE THE PROVISIONS OF THIS AGREEMENT MAY BE BROUGHT IN ANY COURT
HAVING SUBJECT MATTER JURISDICTION.
IN WITNESS WHEREOF, each Guarantor has executed this Agreement in favor
of Lender on the date shown below the following signatures, but effective as of
the Effective Date.
WITNESSES: LAKES GAMING, INC
By:/s/ Timothy Cope
- ---------------- ----------------
Timothy Cope, Its Chief Financial Officer
- ---------------- Date: March 5, 1999
GRAND CASINOS OF LOUISIANA, LLC -- COUSHATTA
By:/s/ Timothy Cope
- ---------------- ----------------
Timothy Cope, Its Chief Financial Officer
- ---------------- Date: March 5, 1999
ACCEPTED:
GUARANTY -- PAGE 7
<PAGE> 8
HIBERNIA NATIONAL BANK
By:
---------------------------
---------------------------
Date:
--------------------------
GUARANTY -- PAGE 8
<PAGE> 9
STATE OF MINNESOTA,
COUNTY OF __________.
On this day of , 1998, before me
appeared TIMOTHY COPE, to me known, who, being by me duly sworn, did say:
That he is the Chief Financial Officer of LAKES GAMING, INC.,
a Minnesota corporation, and that the foregoing instrument was signed in behalf
of said corporation by authority of its Board of Directors, and said Appearer
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------
NOTARY PUBLIC in and for
-------------------.
STATE OF MINNESOTA,
COUNTY OF __________.
On this day of , 1998, before me
appeared TIMOTHY COPE, to me known, who, being by me duly sworn, did say:
That he is the Chief Financial Officer of GRAND CASINOS OF
LOUISIANA, LLC-- COUSHATTA, a Minnesota limited liability company, and that the
foregoing instrument was signed in behalf of said limited liability company by
authority of its Members, and said Appearer acknowledged said instrument to be
the free act and deed of said limited liability company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
NOTARY PUBLIC in and for
-------------------.
<PAGE> 1
EXHIBIT 10.3
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY LAKES GAMING, INC.,
IN FAVOR OF HIBERNIA NATIONAL BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999 (the "Effective Date"), by:
LAKES GAMING, INC. (hereinafter referred to as "Lakes
Gaming"), a Minnesota corporation, whose permanent
mailing address is 130 Chesire Lane, Minnetonka,
Minnesota, 55305, represented herein by Timothy Cope,
its duly authorized Chief Financial Officer.
Lakes Gaming hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Coushatta Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, and/or the Coushatta Tribe of Louisiana Building Authority (the
"Authority"), an instrumentality of the Tribe (the "Tribe and the
Authority are sometimes collectively referred to as the "Borrowers" and
individually as a "Borrower") to Lakes Gaming, whether such debts,
liabilities and obligations now exist or are hereafter incurred or
arise, or whether the obligation of the Borrowers thereon be direct,
contingent, primary, secondary, joint and several, or otherwise, and
irrespective of whether such debts, liabilities or obligations are
evidenced by note, contract, open account or otherwise, and
irrespective of the person or entity in whose favor such debts or
liabilities may, at their inception, have been, or may hereafter be
created, or the manner in which they have been or may hereafter be
acquired by Lakes Gaming, including, without limitation, the following
documents in which Lakes Gaming acquired interests pursuant to that
certain dated executed by Grand Casinos,
Inc., a Minnesota corporation, and by Grand Casinos of Louisiana,
Inc.-Coushatta, a Minnesota corporation, (collectively the "Grand
Entities") in favor of Lakes Gaming and Grand Casinos of Louisiana,
LLC- Coushatta:
(a) That certain Indemnity Agreement dated as of May 1, 1997,
between the Borrowers in favor of Grand Casinos and Grand
Casinos of Louisiana, Inc.- Coushatta (collectively the "Grand
Entities");
(b) That certain Mortgage, Assignment of Leases and Rents and
Security Agreement dated as of May 1, 1997, executed by the
Authority in favor of the Grand Entities;
(c) An Assignment of Construction Contract of Borrower dated as of
May 1, 1997, executed by the Tribe in favor of the Grand
Entities; and
(d) An Assignment of Architect's Contract of Borrower dated as of
May 1, 1997, executed by the Tribe in favor of the Grand
Entities.
SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
2. For and in consideration of the Hibernia Indebtedness (herein defined)
under the Hibernia Documents (herein defined), and in order to induce
the Hibernia National Bank ("Hibernia"), acting in its discretion in
each instance, to make loans or otherwise to give, grant or extend
credit at any time or times to the Borrowers under the Hibernia
Documents, Lakes Gaming hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by
each Borrower of the Subordinated Claims, together with any
and all interest accrued or to accrue thereon, to the payment
to Hibernia of any and all debts, liabilities and obligations
for which each Borrower may now or hereafter be under
obligation to Hibernia (the "Hibernia Indebtedness"), under:
(i) that certain Commercial Loan Agreement dated as of
May 1, 1997, between Hibernia, as lender, and the
Borrowers, as co-borrowers, as amended by that
certain First Amendment to Commercial Loan Agreement
dated , 1998, and by that certain Second
Amendment to Commercial Loan Agreement dated
, 1998 (herein referred to as the "Loan
Agreement");
(ii) that certain Promissory Note dated as of May 1, 1997,
executed by the Borrowers in favor of Hibernia in the
original principal sum of $25,000,000.00 as amended
by that certain First Allonge to Promissory Note
dated , 1998 and as amended by that certain
Second Allonge to Promissory Note dated ,
1998 (herein referred to as the "Note");
(iii) that certain Dominion Account Agreement dated as of
May 1, 1997, executed by the Tribe and Grand Casinos
of Louisiana, Inc.- Coushatta in favor of Hibernia,
which agreement encumbers the proceeds from the
gaming operations at the Tribe's casino operations as
well as the Casino Bank Accounts which are more fully
described therein (the "Dominion Account Agreement")
(iv) that certain Commercial Security Agreement dated as
of May 1, 1997, executed by the Borrowers, as
debtors, in favor of Hibernia, as secured party,
which agreement covers certain equipment referred to
therein (the "Security Agreement");
(v) that certain Non-Standard Financing Statement
executed by the Borrowers, as the debtors, in favor
of the Hibernia, as the secured party, on or about
May 1, 1997, regarding the Collateral (as defined in
the aforesaid Dominion Account) which instrument has
been recorded in the public records of Allen Parish,
Louisiana, together with any subsequent financing
statements executed by the Borrowers in connection
with the security interests granted in the Security
Agreement (the "Financing Statements"); and
SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
(vi) that certain "Agreement Restricting the Transfer or
Encumbrance of Property" dated as of May 1, 1997,
which was executed by the Borrowers in favor of
Hibernia which instrument has been recorded in the
public records of Allen Parish, Louisiana (the
"Negative Pledge").
(the Loan Agreement, Note, Dominion Account
Agreement, Security Agreement, Financing Statements
and the Negative Pledge are sometimes collectively
referred to as the "Hibernia Documents")
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Borrowers
thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of whether such debts
or liabilities be evidenced by note, contract, open account or
otherwise).
(b) Not to ask, demand, sue for, take or receive all or any part
of the Subordinated Claims, or any interest thereon, unless or
until that portion of the Hibernia Indebtedness then due shall
have been fully paid and discharged; provided however, unless
and until Hibernia notifies Lakes Gaming at the address noted
above that an Event of Default has occurred under the terms of
the Loan Agreement, Lakes Gaming may continue to receive
scheduled payments from the Tribe under the Subordinated
Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement,
each and every amount so paid shall be held in trust by Lakes
Gaming on behalf of Hibernia and Lakes Gaming will promptly
pay such amounts to Hibernia to be credited and applied to any
Hibernia Indebtedness (principal and/or interest) then owing
to Hibernia by the Borrowers whether matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the assets of each Borrower
securing payment of the Subordinated Claims shall be and
remain inferior and subordinate to any liens, security
interests, judgment liens, charges or other encumbrances upon
the assets of each Borrower securing payment of the Hibernia
Indebtedness;
(e) If Lakes Gaming forecloses upon any of the Subordinated Claims
or obtains possession of the property of a Borrower in lieu of
foreclosure, all assets of each such Borrower or proceeds
thereof obtained thereby shall be held in trust by Lakes
Gaming on behalf of Hibernia and Lakes Gaming will promptly
pay such amounts to Hibernia to be credited and applied to any
Hibernia Indebtedness (principal and/or interest) then owing
to Hibernia by the Borrowers, whether matured or unmatured;
SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
(f) That, upon any distribution of the assets or readjustment of
indebtedness of either Borrower whether by reason of
reorganization, liquidation, dissolution, bankruptcy,
receivership, assignment for the benefit of creditors, or any
other action or proceeding involving the readjustment of all
or any of the Subordinated Claims, or the application of
assets of either Borrower to the payment or liquidation
thereof, either in whole or in part, Hibernia shall be
entitled to receive payment in full of any and all of the
Hibernia Indebtedness then owing to Hibernia by such Borrower
prior to the payment of all or any portion of the Subordinated
Claims; and
(g) Not to transfer, assign, encumber or subordinate at any time
while this Agreement remains in effect, any right, claim or
interest of any kind in or to any of the Subordinated Claims,
either principal or interest, unless such is done expressly
subject to the terms and provisions of this Agreement.
4. This Agreement is complete and effective upon execution by Lakes Gaming
and delivery of this Agreement to Hibernia.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Lakes Gaming and its legal representatives,
successors or assigns, until all of the Hibernia Indebtedness has been
paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Hibernia and Lakes Gaming.
8. Hibernia will not alter, modify or amend any of the Hibernia Documents
with the prior written consent of Lakes Gaming, which consent will not
be unreasonably withheld.
IN WITNESS WHEREOF, the undersigned has executed this Agreement before
the undersigned witnesses on the date shown below, but effective as of the
Effective Date.
WITNESSES: LAKES GAMING, INC.
- ------------------------------
By: /s/ Timothy Cope
--------------------
Timothy Cope, Its Chief
Financial Officer
- ------------------------------ Date: March 5, 1999
ACCEPTED:
SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 5
HIBERNIA NATIONAL BANK
By
------------------------------------------
, its
------------- ----------------
Date:
---------------------------------------
SUBORDINATION AGREEMENT -- PAGE 5
<PAGE> 6
STATE OF MINNESOTA,
COUNTY OF .
On this day of , 1999, before me
appeared TIMOTHY COPE, to me known, who, being by me duly sworn, did say:
That he is the Chief Financial Officer of LAKES GAMING, INC.,
Minnesota corporation, and that the foregoing instrument was signed in behalf of
said corporation by authority of its Managers and Members, and said Appearer
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------------
NOTARY PUBLIC in and for
.
-------------------
SUBORDINATION AGREEMENT -- PAGE 6
<PAGE> 1
EXHIBIT 10.4
- --------------------------------------------------------------------------------
SUBORDINATION AGREEMENT
GRANTED BYGRAND CASINOS OF LOUISIANA, LLC,
IN FAVOR OF HIBERNIA NATIONAL BANK
- --------------------------------------------------------------------------------
This Subordination Agreement (the "Agreement") is entered into as
of February 15, 1999 (the "Effective Date"), by:
GRAND CASINOS OF LOUISIANA, LLC (hereinafter referred to as
"Coushatta LLC"), a Minnesota limited liability
company, whose permanent mailing address is 130
Chesire Lane, Minnetonka, Minnesota, 55305,
represented herein by Timothy Cope, its duly
authorized Chief Financial Officer.
Couhsatta LLC hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Coushatta Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, and/or the Coushatta Tribe of Louisiana Building Authority (the
"Authority"), an instrumentality of the Tribe (the "Tribe and the
Authority are sometimes collectively referred to as the "Borrowers" and
individually as a "Borrower") to Couhsatta LLC, whether such debts,
liabilities and obligations now exist or are hereafter incurred or
arise, or whether the obligation of the Borrowers thereon be direct,
contingent, primary, secondary, joint and several, or otherwise, and
irrespective of whether such debts, liabilities or obligations are
evidenced by note, contract, open account or otherwise, and
irrespective of the person or entity in whose favor such debts or
liabilities may, at their inception, have been, or may hereafter be
created, or the manner in which they have been or may hereafter be
acquired by Lakes Gaming, including, without limitation, the following
documents in which Lakes Gaming acquired interests pursuant to that
certain ___________ dated ________________ executed by Grand Casinos,
Inc., a Minnesota corporation, and by Grand Casinos of Louisiana,
Inc.-Coushatta, a Minnesota corporation, (collectively the "Grand
Entities") in favor of Lakes Gaming, Inc., a Minnesota corporation, and
Coushatta LLC:
(a) That certain Indemnity Agreement dated as of May 1, 1997, between
the Borrowers in favor of Grand Casinos and Grand Casinos of
Louisiana, Inc.- Coushatta (collectively the "Grand Entities");
(b) That certain Mortgage, Assignment of Leases and Rents and Security
Agreement dated as of May 1, 1997, executed by the Authority in
favor of the Grand Entities;
(c) An Assignment of Construction Contract of Borrower dated as of May
1, 1997, executed by the Tribe in favor of the Grand Entities; and
SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
(d) An Assignment of Architect's Contract of Borrower dated as of May
1, 1997, executed by the Tribe in favor of the Grand Entities.
2. For and in consideration of the Hibernia Indebtedness (herein defined)
under the Hibernia Documents (herein defined), and in order to induce
the Hibernia National Bank ("Hibernia"), acting in its discretion in
each instance, to make loans or otherwise to give, grant or extend
credit at any time or times to the Borrowers under the Hibernia
Documents, Coushatta LLC hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by each
Borrower of the Subordinated Claims, together with any and all
interest accrued or to accrue thereon, to the payment to Hibernia
of any and all debts, liabilities and obligations for which each
Borrower may now or hereafter be under obligation to Hibernia (the
"Hibernia Indebtedness"), under:
(i) that certain Commercial Loan Agreement dated as of May 1,
1997, between Hibernia, as lender, and the Borrowers, as
co-borrowers, as amended by that certain First Amendment
to Commercial Loan Agreement dated ________, 1998, and by
that certain Second Amendment to Commercial Loan Agreement
dated ________, 1998 (herein referred to as the "Loan
Agreement");
(ii) that certain Promissory Note dated as of May 1, 1997,
executed by the Borrowers in favor of Hibernia in the
original principal sum of $25,000,000.00 as amended by
that certain First Allonge to Promissory Note dated
________, 1998 and as amended by that certain Second
Allonge to Promissory Note dated ________, 1998 (herein
referred to as the "Note");
(iii) that certain Dominion Account Agreement dated as of May 1,
1997, executed by the Tribe and Grand Casinos of
Louisiana, Inc.- Coushatta in favor of Hibernia, which
agreement encumbers the proceeds from the gaming
operations at the Tribe's casino operations as well as the
Casino Bank Accounts which are more fully described
therein (the "Dominion Account Agreement")
(iv) that certain Commercial Security Agreement dated as of May
1, 1997, executed by the Borrowers, as debtors, in favor
of Hibernia, as secured party, which agreement covers
certain equipment referred to therein (the "Security
Agreement");
(v) that certain Non-Standard Financing Statement executed by
the Borrowers, as the debtors, in favor of the Hibernia,
as the
SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
secured party, on or about May 1, 1997, regarding the
Collateral (as defined in the aforesaid Dominion Account)
which instrument has been recorded in the public records
of Allen Parish, Louisiana, together with any subsequent
financing statements executed by the Borrowers in
connection with the security interests granted in the
Security Agreement (the "Financing Statements"); and
(vi) that certain "Agreement Restricting the Transfer or
Encumbrance of Property" dated as of May 1, 1997, which
was executed by the Borrowers in favor of Hibernia which
instrument has been recorded in the public records of
Allen Parish, Louisiana (the "Negative Pledge").
(the Loan Agreement, Note, Dominion Account Agreement,
Security Agreement, Financing Statements and the Negative
Pledge are sometimes collectively referred to as the
"Hibernia Documents")
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Borrowers
thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of whether such debts or
liabilities be evidenced by note, contract, open account or
otherwise).
(b) Not to ask, demand, sue for, take or receive all or any part of
the Subordinated Claims, or any interest thereon, unless or until
that portion of the Hibernia Indebtedness then due shall have been
fully paid and discharged; provided however, unless and until
Hibernia notifies Coushatta LLC at the address noted above that an
Event of Default has occurred under the terms of the Loan
Agreement, Coushatta LLC may continue to receive scheduled
payments from the Tribe under the Subordinated Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement, each
and every amount so paid shall be held in trust by Coushatta LLC
on behalf of Hibernia and Coushatta LLC will promptly pay such
amounts to Hibernia to be credited and applied to any Hibernia
Indebtedness (principal and/or interest) then owing to Hibernia by
the Borrowers whether matured or unmatured;
(d) That any liens, security interests, judgments liens, charges or
other encumbrances upon the assets of each Borrower securing
payment of the Subordinated Claims shall be and remain inferior
and subordinate to any liens, security interests, judgment liens,
charges or other
SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
encumbrances upon the assets of each Borrower securing payment of
the Hibernia Indebtedness;
(e) If Coushatta LLC forecloses upon any of the Subordinated Claims or
obtains possession of the property of a Borrower in lieu of
foreclosure, all assets of each such Borrower or proceeds thereof
obtained thereby shall be held in trust by Coushatta LLC on behalf
of Hibernia and Coushatta LLC will promptly pay such amounts to
Hibernia to be credited and applied to any Hibernia Indebtedness
(principal and/or interest) then owing to Hibernia by the
Borrowers, whether matured or unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of either Borrower whether by reason of
reorganization, liquidation, dissolution, bankruptcy,
receivership, assignment for the benefit of creditors, or any
other action or proceeding involving the readjustment of all or
any of the Subordinated Claims, or the application of assets of
either Borrower to the payment or liquidation thereof, either in
whole or in part, Hibernia shall be entitled to receive payment in
full of any and all of the Hibernia Indebtedness then owing to
Hibernia by such Borrower prior to the payment of all or any
portion of the Subordinated Claims; and
(g) Not to transfer, assign, encumber or subordinate at any time while
this Agreement remains in effect, any right, claim or interest of
any kind in or to any of the Subordinated Claims, either principal
or interest, unless such is done expressly subject to the terms
and provisions of this Agreement.
4. This Agreement is complete and effective upon execution by Coushatta
LLC and delivery of this Agreement to Hibernia.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Coushatta LLC and its legal representatives,
successors or assigns, until all of the Hibernia Indebtedness has been
paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Hibernia and Coushatta LLC.
8. Hibernia will not alter, modify or amend any of the Hibernia Documents
with the prior written consent of Coushatta LLC, which consent will not
be unreasonably withheld.
SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned has executed this Agreement before
the undersigned witnesses on the date shown below, but effective as of the
Effective Date.
WITNESSES: GRAND CASINOS OF LOUISIANA, LLC
- ------------------------------
By: /s/ Timothy Cope
---------------------------------
Timothy Cope, Its Chief Financial
Officer
- ------------------------------ Date: March 5, 1999
ACCEPTED:
HIBERNIA NATIONAL BANK
By
----------------------------------------
, its
------------ ----------------
Date:
---------------------------------
SUBORDINATION AGREEMENT -- PAGE 5
<PAGE> 6
STATE OF MINNESOTA,
COUNTY OF __________.
On this day of , 1999, before me
appeared TIMOTHY COPE, to me known, who, being by me duly sworn, did say:
That he is the Chief Financial Officer of GRAND CASINOS OF
LOUISIANA, LLC, Minnesota limited liability company, and that the foregoing
instrument was signed in behalf of said corporation by authority of its Managers
and Members, and said Appearer acknowledged said instrument to be the free act
and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-----------------------------------------
NOTARY PUBLIC in and for
-------------------.
SUBORDINATION AGREEMENT -- PAGE 6
<PAGE> 1
EXHIBIT 10.5
DOMINION ACCOUNT AGREEMENT
THIS DOMINION ACCOUNT AGREEMENT (the "Agreement"), dated as of May 1,
1997 (the "Effective Date"), between the COUSHATTA TRIBE OF LOUISIANA (the
"Tribe"), a federally recognized Indian tribe, the COUSHATTA TRIBE OF LOUISIANA
BUILDING AUTHORITY (the "Authority"), an instrumentality of the Tribe, GRAND
CASINOS OF LOUISIANA, INC. -- COUSHATTA, a Minnesota corporation (the
"Manager"), GRAND CASINOS, INC., a Minnesota corporation ("Grand Casinos"), THE
COTTONPORT BANK ("Cottonport Bank"), a bank chartered under the laws of the
State of Louisiana, and HIBERNIA NATIONAL BANK, a national banking association (
"Hibernia");
WITNESSETH:
WHEREAS, the Tribe has the inherent power to conduct and regulate
gaming on its lands, subject only to the restrictions imposed by the Indian
Gaming Regulatory Act, Public Law 100-497 (the "IGRA"); and
WHEREAS, in accordance with the IGRA, the Tribe has adopted its Gaming
Ordinance No. 92-01 (the "Ordinance"), and has entered into a Tribal-State
Compact for the Conduct of Class III Gaming with the State of Louisiana; and
WHEREAS, under the Ordinance, the Tribe operates a gaming facility (the
"Casino") on its lands; and
WHEREAS, pursuant to that certain Amended and Restated Management &
Construction Agreement, dated as of February 25, 1992, (the "Management
Agreement"), the Tribe has engaged the Manager to manage the Casino and to
collect the receipts, pay the operating expenses and to distribute the income
thereof; and
WHEREAS, the Tribe intends to construct and operate a hotel and related
facilities, including utility connections and other necessary infrastructure, on
fee land which is held in trust for the benefit of the Tribe and which is
adjacent to the Casino; and
WHEREAS, the Tribe and the Authority, as borrowers, and Hibernia , as
lender, have entered into that certain Commercial Loan Agreement dated as of the
Effective Date (the "Loan Agreement"), under the terms of which Hibernia agreed
to loan to the Tribe and the Authority sums not to exceed $25,000,000 to, among
other things, construct and furnish the aforesaid hotel (the "Hotel"), to
purchase additional gaming equipment, and to renovate and/or construct additions
to the Casino and the RV Park operated in conjunction with the Casino; and
WHEREAS, the Manager and Grand Casinos (herein defined) have guaranteed
the payment of the Note (herein defined); and
DOMINION ACCOUNT AGREEMENT - PAGE 1
<PAGE> 2
WHEREAS, the Tribe and the Manager desire to enter into this Agreement
in order to grant to Hibernia a security interest in the Gross Receipts (as
defined herein) and to provide for the receipt and deposit of the Gross Receipts
into the Casino Bank Accounts and the payment therefrom of certain sums to
Hibernia; and
WHEREAS, the parties hereto are willing to enter into this Agreement
and to undertake the duties set forth herein upon the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Unless the context otherwise requires, capitalized terms
which are not defined herein shall have the meaning ascribed to them in the Loan
Agreement.
Section 1.2 Defined Terms. The following terms when used herein shall
have the following meanings:
"Business Day" means a day other than (i) a Saturday or Sunday (ii) any
day on which banks located in the State of Louisiana are required or authorized
by law to remain closed.
"Casino Bank Accounts" means all of the bank accounts specified or
contemplated in Section 5.10 of the Management Contract, including without
limitation, the General Account, the Expense Account and the Contingency Reserve
Fund.
"Collateral" means the Gross Receipts and the Casino Bank Accounts and
the funds deposited or credited thereto from time to time.
"Contingency Reserve Fund" means that certain Account No.
________________________ owned and maintained by the Tribe with the Cottonport
Bank as the Contingency Reserve Fund pursuant to Section 5.10.4 of the
Management Contract.
"Entities" collectively means the Tribe and the Manager and "Entity"
means any one of the Entities.
"Enterprise" means the operation of the Casino by the Tribe and the
Manager pursuant to the Management Contract.
"Expense Account" means that certain Account No.
_________________________ owned and maintained by the Tribe with the Cottonport
Bank as the Expense Account pursuant to Section 5.10.2 of the Management
Contract.
DOMINION ACCOUNT AGREEMENT - PAGE 2
<PAGE> 3
"General Account" means that certain Account No. ______________________
owned and maintained by the Tribe with the Cottonport Bank as the General
Account pursuant to Section 5.10 of the Management Contract.
"Gross Receipts" has the meaning ascribed to it in Section 2.9 of the
Management Agreement; provided however, the term shall include all revenues
received by the Enterprise from the operations of the Hotel.
"Management Committee" has the meaning ascribed to it in Section 2.11
of the Management Contract.
"Net Profits" shall have the meaning ascribed to it in Section 2.14 of
the Management Contract.
"Note" means that certain promissory note dated as of the Effective
Date executed by Tribe and the Authority in favor of Hibernia in the principal
amount of up to Twenty-Five Million and No/100 Dollars ($25,000,000.00),
together with all substitute or replacement notes therefor, as well as all
renewals, extensions, modifications, refinancings, consolidations and
substitutions of and for such a note.
"Obligations" the indebtedness evidenced by the Note, including
principal, interest, costs, expenses and attorneys' fees and all other fees and
charges, together with all other indebtedness and costs and expenses for which
the Tribe is responsible under this Agreement or for which the Tribe or the
Authority is responsible under any of the Related Documents.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Related Documents" means and include individually, collectively,
interchangeably and without limitation the Note, the Loan Agreement, guaranties,
security agreements, financing statements and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection with
the Obligations.
ARTICLE 2
COVENANTS
Unless Hibernia's prior written consent to the contrary is obtained,
each of the Entities will at all times comply with the covenants contained in
this Article 2, from the date hereof and continuing thereafter for so long as
the Obligations, or any portion thereof, are outstanding.
Section 2.1 MAINTENANCE OF CASINO BANK ACCOUNTS. The Entities, acting
through the Management Committee, shall maintain the Casino Bank Accounts with
the Cottonport Bank in accordance with the terms of the Management Contract.
DOMINION ACCOUNT AGREEMENT - PAGE 3
<PAGE> 4
Section 2.2 DEPOSIT OF GROSS RECEIPTS. The Entities, acting through the
Management Committee, shall deposit all Gross Receipts into the General Account
maintained with the Cottonport Bank in accordance with the terms of the
Management Contract.
Section 2.3 CHARACTERIZATION OF PAYMENTS. All payments and transfers to
Hibernia which are referred to in Article 3 of this Agreement shall be deemed to
be, and treated and paid as, Operating Expenses under the terms of the
Management Agreement.
Section 2.4 LIMITATIONS OF MONTHLY DISTRIBUTIONS. No distributions,
transfers or payments shall be made from the Casino Bank Accounts to the
Entities or to Grand Casinos until the last Business Day of each calendar month.
Further, on the last Business Day of each calendar month, no distributions,
transfers or payments shall be made directly or indirectly from the Casino Bank
Accounts to the Entities or to Grand Casinos unless and until all Certificates
for Payment which have been previously submitted to the Cottonport Bank pursuant
to Section 3.1 hereof have been fully paid. The foregoing prohibition applies to
any and all distributions, transfers or payments from the Casino Bank Accounts
to the Entities or to Grand Casinos, including, without limitation, any
distribution of Net Profits, repayments of principal or interest for loans made
by the Manager or Grand Casinos to the Tribe, the payment of any management
fees, or the transfer of funds from the Casino Bank Accounts to any other
accounts maintained by the any of the Entities.
Section 2.5 LIMITATIONS UPON DISTRIBUTIONS UPON DEFAULT. Upon the
occurrence of an Event of Default under the provisions of the Loan Agreement and
so long as the same remains unremedied in the opinion of Hibernia, no
distributions, transfers or payments shall be made directly or indirectly from
the Casino Bank Accounts to the Entities or to Grand Casinos, including without
limitation, any distribution of Net Profits, repayments of principal or interest
for loans made by the Manager or Grand Casinos to the Tribe, the payment of any
management fees, or the transfer of funds from the Casino Bank Accounts to any
other accounts maintained by any of the Entities with the Cottonport Bank.
Section 2.6 NO TERMINATION OF OR CHANGE IN THE MANAGEMENT CONTRACT. The
Entities will maintain the Management Contract until all of the Obligations have
been paid in full. The Entities shall not amend, modify, alter or change the
terms of the Management Contract without Hibernia's prior written consent which
consent will not be unreasonably withheld or delayed.
Section 2.7 FINANCIAL INFORMATION. The Entities shall comply with the
financial reporting requirements set forth in Section 9.1 of the Loan Agreement.
ARTICLE 3
AUTHORIZED TRANSFERS FROM
THE CASINO BANK ACCOUNTS
Section 3.1 PAYMENTS DUE UNDER THE LOAN AGREEMENT AND THE NOTE. The
Tribe and the Authority have agreed to make certain monthly payments to Hibernia
as set forth in the Loan Agreement and the Note. In order to receive any such
payment, Hibernia shall forward to the Entities and the Cottonport Bank by
facsimile transmission or by any of the other means by which notice may be given
as
DOMINION ACCOUNT AGREEMENT - PAGE 4
<PAGE> 5
specified in Section 8.1 hereof, a Certificate for Payment in the form set forth
in Exhibit No. 1 attached hereto. The Tribe and the Manager hereby authorize and
direct the Cottonport Bank upon its receipt of each such Certificate for Payment
to transfer funds from the Expense Account to Hibernia in the amounts specified
in each such certificate. The Tribe and the Authority shall have the right to
pay the Note in accordance with its terms even though Hibernia fails to timely
forward such a Certificate for Payment.
Section 3.2 TRANSFERS FROM OTHER ACCOUNTS. In the event the funds in
the Expense Account are insufficient to meet the requirements of Section 3.1,
the Cottonport Bank is authorized and directed to withdraw and transfer from any
other Casino Bank Account maintained by the Entities with the Cottonport Bank,
including without limitation, the General Account or the Contingency Reserve
Fund, funds in an amount or amounts necessary to pay fully any such
requirements.
Section 3.3 METHOD OF TRANSFER. The Cottonport Bank shall make the
transfers authorized in Sections 3.1 to the extent funds are credited to the
Casino Bank Accounts. Unless otherwise requested by Hibernia, any transfer from
the Cottonport Bank to Hibernia pursuant to this Article 3 shall be made by wire
transfer to:
Hibernia National Bank
ABA Routing No. 065000090
333 Travis Street
Shreveport, LA 71101
Attn: Chris Haskew or Penny Pate
If a Certificate for Payment is received by the Cottonport Bank at or prior to
10:00 a.m. Central Time on a Business Day, the Cottonport Bank shall make
payments as directed by Hibernia in the Certificate for Payment by or before
2:00 p.m. Central Time, on the same Business Day. If any such Certificate for
Payment is received by the Cottonport Bank after 2:00 p.m., Central Time on a
Business Day, the Cottonport Bank will make payment as directed by Hibernia in
the Certificate for Payment on or before 2:00 p.m. Central Time on the next
succeeding Business Day.
Section 3.4 BANK STATEMENTS. The Cottonport Bank is hereby authorized
and directed by the Entities to forward to Hibernia copies of the monthly
statements regarding the Casino Bank Accounts concurrently with the distribution
of such monthly statements of the Casino Bank Accounts to the Manager and/or the
Tribe.
Section 3.5 TERMINATION. (a) The authorizations and directions made in
this Article 3 to the Cottonport Bank are absolute and irrevocable and shall
terminate only upon the Cottonport Bank's receipt of a Termination Certificate
in a form similar to Exhibit No. 2 attached hereto which has been duly signed by
Hibernia and delivered to the Cottonport Bank and the Entities. Until such time
as the Cottonport Bank has received such a Termination Certificate, the
Cottonport Bank shall continue to transfer funds from the Casino Bank Accounts
in accordance with the terms hereof and to otherwise comply with the provisions
of this Agreement.
DOMINION ACCOUNT AGREEMENT - PAGE 5
<PAGE> 6
(b) In the Certificate for Payment submitted for the final
payments due under the Obligations, Hibernia will state that such a certificate
is the final Certificate for Payment to be submitted to the Cottonport Bank
under this Agreement. Upon payment and satisfaction of all of the Obligations,
Hibernia shall execute and deliver a Termination Certificate to the Cottonport
Bank and the Entities. If all of the Obligations have been paid in full and
Hibernia has not executed and delivered the Termination Certificate, the Tribe
will notify Hibernia in writing and within twenty (20) days of its receipt of
such notice, Hibernia shall execute and deliver the Termination Certificate to
the Cottonport Bank and the Entities.
ARTICLE 4
PLEDGE AND GRANT OF SECURITY INTERESTS
Section 4.1. GRANT OF SECURITY INTEREST. As security for the payment
and performance of all of the Obligations, each Entity hereby pledges to
Hibernia, and grants to Hibernia a continuing security interest in, all of the
right, title and interest of each Entity in and to the Collateral, whether now
or hereafter owned, existing, arising or acquired, including without limitation,
the Casino Bank Accounts and all funds currently or hereafter deposited therein
or credited thereto.
Section 4.2 DURATION. The security interests granted herein in the
Collateral in favor of Hibernia will continue until such time as all of the
Obligations have been fully paid and satisfied and this Agreement has been
canceled or terminated by Hibernia under a written cancellation instrument,
which instrument Hibernia will execute and deliver to the Entities concurrently
with the Termination Certificate; provided, however, the security interests
granted herein shall terminate as to specified funds previously on deposit in
the Casino Bank Accounts if and when such funds are distributed to the Entities
in accordance with the terms of the Management Agreement and this Agreement.
ARTICLE 5
COTTONPORT BANK'S
REPRESENTATIONS AND AGREEMENTS
Section 5.1 COTTONPORT BANK'S REPRESENTATIONS. Cottonport Bank hereby
warrants and represents to Hibernia that: (a) the Casino Bank Accounts exist and
the accounts numbers specified herein with respect to the Casino Bank Accounts
are correct; (b) the Tribe is the sole owner of the Casino Bank Accounts as
reflected in the records of the Cottonport Bank; and (c) Cottonport Bank has not
received notice from any third party, other than Hibernia, that any such third
party has taken or claims a security interest in the Casino Bank Accounts.
Section 5.2 RECEIPT OF NOTICE. The Cottonport Bank hereby acknowledges
that this Agreement constitutes sufficient notice under La. R. S. 10:9-305(4)
that the Tribe has pledged and granted to Hibernia a security interest to
Hibernia in and to Casino Bank Accounts.
DOMINION ACCOUNT AGREEMENT - PAGE 6
<PAGE> 7
Section 5.3 SUBORDINATION. The Cottonport Bank hereby subordinates to
the security interest granted herein to Hibernia any right of offset or any
other security interest that the Cottonport Bank has, or may hereafter obtain,
in and to the Casino Bank Accounts.
Section 5.4 NOTICES TO HIBERNIA. The Cottonport Bank will notify
Hibernia immediately in the event the account numbers for the Casino Bank
Accounts change. Further, the Cottonport Bank will notify Hibernia immediately
upon the Cottonport Bank's receipt of a notice of a claim of a security interest
asserted, or lien filed, by any Person in and to the Casino Bank Accounts.
Section 5.5 ACCEPTANCE. By execution of this Agreement, the Cottonport
Bank accepts its obligations hereunder, but only upon the express terms and
conditions set forth in this Agreement. Cottonport Bank undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement, including the instructions set forth in Article 3.
ARTICLE 6
AGREEMENTS REGARDING THE COTTONPORT BANK
The Entities and Hibernia agree that the following provisions shall
control with respect to the rights, duties, liabilities and privileges of the
Cottonport Bank:
Section 6.1 PERFORMANCE BY OTHERS. The Cottonport Bank shall have no
duty to see that any duties or obligations herein or elsewhere imposed on any
other parties are performed or honored.
Section 6.2 RECITALS. The Cottonport Bank shall not be responsible for
any recital herein or in any other instrument or certificate described in this
Agreement, or for the validity of execution by any party to any such
instruments, or for the validity of any representations set forth in any such
agreements.
Section 6.3 RELIANCE BY COTTONPORT BANK. As to the existence or
non-existence of any fact or as to the sufficiency or validity of any instrument
or certificate, or as to its authorization to perform any act described herein,
the Cottonport Bank shall be entitled to rely upon any written notice signed by
a representative of the parties to this Agreement. Further, Cottonport Bank acts
as depository and transfer agent only, and is not responsible, or liable in any
manner whatsoever, for the sufficiency, correctness, genuineness or validity of
the subject matter of a Certificate of Payment, or any part thereof; provided,
however, the Cottonport Bank shall have the obligation to confirm the validity
and authenticity of a Certificate of Payment if it has a reasonable basis for
concluding that such a certificate was not issued by Hibernia.
Section 6.4 FAILURE OF PERFORMANCE BY COTTONPORT BANK. In the event
that the Cottonport Bank fails to comply with its obligations hereunder, the
Entities, at the request of Hibernia, shall move
DOMINION ACCOUNT AGREEMENT - PAGE 7
<PAGE> 8
custody of the Casino Bank Accounts to another financial institution mutually
acceptable to the Entities and Hibernia.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default under this Agreement:
(a) Any of the Entities shall breach any of their respective
covenants or agreements set forth herein; or
(b) Any of the Entities shall revoke, alter or modify, or attempt
to revoke, alter or modify, any direction or instruction given or required to be
given to Cottonport Bank pursuant to Article 3 hereof; or
(c) An Event of Default, as defined in the Loan Agreement, shall
occur.
Section 7.2 REMEDIES ON DEFAULT. Whenever an Event of Default shall
have occurred and be continuing, Hibernia shall be entitled to exercise all of
the rights and remedies available to a secured party under the Commercial Laws
- -- Secured Transactions as set forth in La. R.S. 10-9:901 et seq., all rights
and remedies under any Obligation, all rights and remedies available to it under
the Related Agreement and all rights and remedies available to it under this
Agreement, including, without limitation, the right, from time to time, without
demand or notice of any kind, to:
(a) direct the Cottonport Bank to freeze the balances of the
Casino Bank Accounts and not permit any further withdrawals or transfers
therefrom unless otherwise instructed by Hibernia to do so;
(b) take any action that Hibernia may deem necessary or desirable
in order to realize on the Collateral, including, the authority to endorse in
the name of the Tribe without recourse to the Tribe any checks, drafts, notes or
other instruments or documents received in payment of or on account of the Gross
Receipts; and
(c) exercise any and all other rights, remedies and privileges it
may have under this Agreement and under any Obligation.
Any proceeds received by Hibernia from the exercise of any remedy shall be
applied by Hibernia (i) first to the payment by Hibernia of all expenses of the
exercise of such remedies, including the reasonable attorneys' fees and legal
expenses incurred in connection therewith by Hibernia, (ii) second, to the
payment of the Obligations in such order and in such manner as Hibernia may, in
its discretion, determine, and (iii) third, any surplus after such application
shall be delivered to the Enterprise, except as otherwise required by law or as
a court of competent jurisdiction may direct. The Entities agree to pay all
reasonable expenses incurred
DOMINION ACCOUNT AGREEMENT - PAGE 8
<PAGE> 9
by Hibernia in connection with the exercise of any remedy hereunder, including
the reasonable attorneys' fees incurred in connection therewith by Hibernia.
Section 7.3 OFFSET. In addition to the remedies set forth in Section
7.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, the Tribe and the Manager hereby irrevocably authorize the
Cottonport Bank, as agent for Hibernia until Cottonport Bank receives a
Termination Certificate, to set off all sums owing by the Tribe to Hibernia
against the Casino Bank Account and to forward transfer such sums to Hibernia.
Such right shall exist whether or not Hibernia shall have made any demand
hereunder or under any Obligation.
Section 7.4. WAIVERS; REMEDIES. Any waiver given by Hibernia hereunder
shall be effective only in the specific instance and for the specific purpose
given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to Hibernia. All rights and
remedies of Hibernia shall be cumulative and may be exercised singly in any
order or concurrently, at Hibernia's option, and the exercise or enforcement of
any such right or remedy shall neither be a condition to nor a bar to the
exercise or enforcement of any other.
ARTICLE 8
MISCELLANEOUS
Section 8.1. NOTICES. Except as otherwise provided herein, any notice
or demand which, by provision of this Agreement, is required or permitted to be
given or served by Hibernia to or on any of the Entities or the Cottonport Bank
shall be deemed to have been sufficiently given and served for all purposes: (a)
(if mailed) seven (7) calendar days after being deposited, postage prepaid, in
the United States Mail, registered or certified mail; or (b) (if delivered by
express courier) one Business Day after being delivered to such courier; or (c)
(if delivered in person) the same day as delivery or until another address or
addresses are given in writing by a party to Hibernia as follows:
To the Tribe Coushatta Tribe of Louisiana
and the Post Office Box 818
Authority: Elton, Louisiana 70532
Attention: Lovelin Poncho, Tribal Chairman
Fax: (318) 584-2998
Coushatta Tribe of Louisiana Building Authority
Post Office Box 818
Elton, Louisiana 70532
Attention: Chairman
Fax: (318) 584-2998
With a simultaneous copy in each instance to:
Mr. F. Jefferson Millican
Millican, Cassidy & Riley
DOMINION ACCOUNT AGREEMENT - PAGE 9
<PAGE> 10
Post Office Drawer 1225
Jennings, Louisiana 70546
Fax: (318) 824-8728
Ms. LynDee Wells
Dorsey & Whitney, L.L.P.
1191 2nd Avenue, Suite 1440
Seattle, Washington 98101
Fax: (206) 654-5500
To Manager Grand Casinos of Louisiana, Inc.- Coushatta
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: General Counsel
Fax: (612) 449-9353
To Grand Grand Casinos, Inc.
Casinos 130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: General Counsel
Fax: (612) 449-9353
To Hibernia: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 7110
Attention: Legal Administration Department
Fax: (318) 674-3758
To Cottonport The Cottonport Bank
Bank: 144 South Main Street
Marksville, Louisiana 71351
Attention: Mr. Dwayne Harper
Fax No. (318) 253-4472
Section 8.2. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Louisiana.
Section 8.3. SEVERABILITY. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof; provided, however that where the provisions of any such applicable law
may be waived, they hereby are waived by the Entities to the fullest extent
permitted by law to the end that this Agreement shall be deemed to be a valid
and binding agreement in accordance with its terms.
DOMINION ACCOUNT AGREEMENT - PAGE 10
<PAGE> 11
Section 8.4. SURVIVAL. The warranties, representations, covenants and
agreements set forth herein shall survive the execution and delivery of this
Agreement and shall continue in full force and effect until all Obligations
shall have been paid and performed in full.
Section 8.5. COSTS AND EXPENSES; INDEMNITY. The Tribe will pay or
reimburse Hibernia on demand for all out-of-pocket expenses (including in each
case all filing and recording fees and taxes and all reasonable fees and
expenses of counsel) incurred by Hibernia in connection with the creation,
perfection, protection, satisfaction, foreclosure or enforcement of the liens
created hereby and the preparation, administration, continuance, amendment or
enforcement of this Agreement, and all such costs and expenses shall be part of
the Obligations secured by this Agreement. The Tribe shall indemnify and hold
Hibernia harmless from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement) or
Hibernia's actions pursuant hereto other than those claims, losses and
liabilities resulting from Hibernia's gross negligence or intentional
misconduct. Any liability of the Tribe to indemnify and hold Hibernia harmless
pursuant to the preceding sentence shall be part of the Obligations secured by
this Agreement. The obligations of the Tribe under this Section 8.5 shall
survive any termination of this Agreement.
Section 8.6. CAPTIONS. Captions herein are for convenience only and
shall not be deemed part of this Agreement.
Section 8.7 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns.
Section 8.8 AMENDMENTS. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.
Section 8.9. SOVEREIGN IMMUNITY WAIVER; ARBITRATION; SUBMISSION TO
JURISDICTION, JURY TRIAL WAIVER. This Agreement constitutes a Loan Document as
defined in the Loan Agreement. As such and without limiting the scope of the
Loan Agreement, the provisions of Section 15.10 of the Loan Agreement apply to
this Agreement and are incorporated herein by reference.
Section 8.10 COMPLIANCE WITH 25 U.S.C. Section 81.
In compliance with 25 U.S.C. Section 81, the residence and
occupation of the parties is stated as follows:
Party in interest: COUSHATTA TRIBE OF LOUISIANA
Residence: P.O. Box 818
Elton, LA 70532
Occupation: A federally recognized Indian Tribe
Party in interest: THE COTTONPORT BANK
Residence: 144 South Main Street
DOMINION ACCOUNT AGREEMENT - PAGE 11
<PAGE> 12
Marksville, LA 71351
Occupation: Commercial bank
Party in interest: HIBERNIA NATIONAL BANK
Residence: 333 Travis Street
Shreveport, LA 71101
Occupation: Commercial bank
Party in interest: GRAND CASINOS OF LOUISIANA, INC.- COUSHATTA
Residence: 130 Chesire Lane
Minnetonka, Minnesota 55305
Occupation: A Minnesota corporation
Party in interest: GRAND CASINOS, INC.
Residence: 130 Chesire Lane
Minnetonka, Minnesota 55305
Occupation: A Minnesota corporation
Scope of Authority:
The Tribe is authorized to execute the within document by a resolution
adopted by the Tribal Council of the Tribe at a meeting held at Jennings,
Louisiana, on May 1, 1997. The Tribal Council exercises its authority in this
instance because it believes the construction and operation of a hotel in
Kinder, Louisiana, in connection with the Casino, and the financing thereof, to
be in accordance with the long-range economic objectives of the Tribe.
The Authority is authorized to execute the within document by a
resolution adopted by the Board of Commissioners of the Authority at a meeting
at Jennings, Louisiana, on May 1, 1997. The Authority exercises its authority in
this instance because it believes the construction and operation of a hotel
related to the Tribe's Class III gaming facility in Kinder, Louisiana, and the
financing thereof, to be in accordance with the long-range economic objectives
of the Authority and the Tribe.
This document was executed on behalf of the Tribe on or about 2:00 p.m.
on May 1, 1997, at Jennings, Louisiana, on behalf of the Authority, on behalf of
the Grand Casinos on or about 3:30 p.m. on April 29, 1997, at Minnetonka, MN, on
behalf of Manager on or about 3:30 p.m. on April 29, 1997, at Minnetonka, MN, on
behalf of The Cottonport Bank on or about 2:00 p.m. on May 1, 1997, at Jennings,
Louisiana, and on behalf of Hibernia on or about 2:00 p.m. on May 1, 1997, at
Jennings, Louisiana.
This instrument shall terminate upon payment in full of the
indebtedness secured hereby, provided that in any event this instrument shall
expire not later than 50 years from the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
DOMINION ACCOUNT AGREEMENT - PAGE 12
<PAGE> 13
COUSHATTA TRIBE OF LOUISIANA
By: /s/ Lovelin Poncho
------------------------------------------
Lovelin Poncho, Tribal Chairman
COUSHATTA TRIBE OF LOUISIANA
BUILDING AUTHORITY
By: /s/ Lovelin Poncho
------------------------------------------
Lovelin Poncho, its Chairman
HIBERNIA NATIONAL BANK
By: /s/ Christopher K. Haskew
------------------------------------------
Its Assistant V.P.
THE COTTONPORT BANK
By: /s/ Dwayne Harper
------------------------------------------
Its Assistant V.P.
GRAND CASINOS OF LOUISIANA, INC. --
COUSHATTA
By: /s/ Timothy Cope
------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
------------------------------------------
Timothy Cope, its Chief Financial Officer
Attachments:
DOMINION ACCOUNT AGREEMENT - PAGE 13
<PAGE> 14
Exhibit No. 1 - Certificate for Payment
Exhibit No. 2 - Termination Certificate
DOMINION ACCOUNT AGREEMENT - PAGE 14
<PAGE> 15
BIA APPROVAL
THE FOREGOING DOCUMENT IS
APPROVED PURSUANT TO 25 U.S.C. 81:
UNITED STATES DEPARTMENT OF THE INTERIOR,
BUREAU OF INDIAN AFFAIRS:
BY: /S/ BRENDA L. BENNETT
-----------------------------------------
ACTING AREA DIRECTOR OF THE EASTERN AREA OFFICE
OF THE BUREAU OF INDIAN AFFAIRS OF THE SECRETARY
OF THE INTERIOR AND THE COMMISSIONER OF INDIAN AFFAIRS,
ACTING UNDER DELEGATED AUTHORITY.
DOMINION ACCOUNT AGREEMENT - PAGE 15
<PAGE> 1
EXHIBIT 10.6
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY
LAKES GAMING, INC.
IN FAVOR OF HIBERNIA NATIONAL BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999 (the "Effective Date"), by:
LAKES GAMING, INC. (hereinafter referred to as "Lakes
Gaming"), a Minnesota corporation, whose permanent
mailing address is 130 Chesire Lane, Minnetonka,
Minnesota, 55305, represented herein by Timothy Cope,
its duly authorized Chief Financial Officer.
Lakes Gaming hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Coushatta Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, to Lakes Gaming, whether such debts, liabilities and obligations
now exist or are hereafter incurred or arise, or whether the obligation
of the Tribe thereon be direct, contingent, primary, secondary, joint
and several, or otherwise, and irrespective of whether such debts,
liabilities or obligations are evidenced by note, contract, open
account or otherwise, and irrespective of the person or entity in whose
favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Lakes Gaming; provided, however, that the term
"Subordinated Claims" shall not include any such debts, liabilities and
obligations of the Tribe hereafter owing to Lakes Gaming pursuant to
the Hotel Loan Subrogation Rights. The term "Hotel Loan Subrogation
Rights" shall mean those certain subrogation rights that may now or
hereafter be obtained by Lakes Gaming pursuant to that certain
Commercial Guaranty Agreement dated February 15, 1999, executed by
Lakes Gaming in favor of Hibernia National Bank in connection with the
Hotel Loan Agreement (as such term is defined in the Loan Agreement
[herein defined]).
2. For and in consideration of the Hibernia Indebtedness (herein defined)
under the Hibernia Documents (herein defined), and in order to induce
the Hibernia National Bank ("Hibernia"), acting in its discretion in
each instance, to make loans or otherwise to give, grant or extend
credit at any time or times to the Tribe under the Hibernia Documents,
Lakes Gaming hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by
the Tribe of the Subordinated Claims, together with any and
all interest accrued or to accrue thereon, to the payment to
Hibernia of any and all debts, liabilities and obligations for
which the Tribe may now or hereafter be under obligation to
Hibernia (the "Hibernia Indebtedness"), under:
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
(i) that certain Equipment Loan Agreement dated as of
December 18, 1998, between Hibernia, as lender, and
the Tribe (herein referred to as the "Loan
Agreement");
(ii) that certain Equipment Loan Promissory Note dated as
of December 18, 1998, executed by the Tribe in favor
of Hibernia in the original principal sum of
$15,000,000.00 (herein referred to as the "Note");
(iii) that certain Dominion Account Agreement for the
Equipment Loan dated as of December 18, 1998,
executed by the Tribe, Hibernia, and Grand Casinos,
Inc., a Minnesota corporation, Grand Casinos of
Louisiana, Inc. - Coushatta, a Minnesota
corporation, and The Cottonport Bank in favor of
Hibernia, which agreement encumbers the proceeds from
the gaming operations at the Tribe's casino
operations as well as the Casino Bank Accounts which
are more fully described therein (the "Dominion
Account Agreement")
(iv) that certain Commercial Security Agreement dated as
of December 18, 1998, executed by the Tribe, as
debtor, in favor of Hibernia, as secured party, which
agreement covers certain equipment referred to
therein (the "Security Agreement"); and
(v) that certain Non-Standard Financing Statement
executed by the Tribe, as the debtor, in favor of
Hibernia, as the secured party, on or about December
18, 1998, regarding the Collateral (as defined in the
aforesaid Dominion Account) which instrument has or
soon will be recorded in the public records of Allen
Parish, Louisiana, together with any subsequent
financing statements executed by the Tribe in
connection with the security interests granted in the
Security Agreement and/or the Dominion Account
Agreement (the "Financing Statements")
(the Loan Agreement, Note, Dominion Account
Agreement, Security Agreement and the Financing
Statements are sometimes collectively referred to as
the "Hibernia Documents")
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Tribe
thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of whether such debts
or liabilities be evidenced by note, contract, open account or
otherwise).
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
(b) Not to ask, demand, sue for, take or receive all or any part
of the Subordinated Claims, or any interest thereon, unless or
until that portion of the Hibernia Indebtedness then due shall
have been fully paid and discharged; provided however, unless
and until Hibernia notifies Lakes Gaming at the address noted
above that an Event of Default has occurred under the terms of
the Loan Agreement, Lakes Gaming may continue to receive
scheduled payments from the Tribe under the Subordinated
Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement,
each and every amount so paid shall be held in trust by Lakes
Gaming on behalf of Hibernia, and Lakes Gaming will promptly
pay such amounts to Hibernia to be credited and applied to any
Hibernia Indebtedness (principal and/or interest) then owing
to Hibernia by the Tribe whether matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the assets of the Tribe securing
payment of the Subordinated Claims shall be and remain
inferior and subordinate to any liens, security interests,
judgment liens, charges or other encumbrances upon the assets
of the Tribe securing payment of the Hibernia Indebtedness;
(e) If Lakes Gaming forecloses upon any of the Subordinated Claims
or obtains possession of the property of the Tribe in lieu of
foreclosure, all assets of such Tribe or proceeds thereof
obtained thereby shall be held in trust by Lakes Gaming on
behalf of Hibernia, and Lakes Gaming will promptly pay such
amounts to Hibernia to be credited and applied to any Hibernia
Indebtedness (principal and/or interest) then owing to
Hibernia by the Tribe, whether matured or unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of the Tribe whether by reason of reorganization,
liquidation, dissolution, bankruptcy, receivership, assignment
for the benefit of creditors, or any other action or
proceeding involving the readjustment of all or any of the
Subordinated Claims, or the application of assets of the Tribe
to the payment or liquidation thereof, either in whole or in
part, Hibernia shall be entitled to receive payment in full of
any and all of the Hibernia Indebtedness then owing to
Hibernia by such Tribe prior to the payment of all or any
portion of the Subordinated Claims; and
(g) Not to transfer, assign, encumber or subordinate at any time
while this Agreement remains in effect, any right, claim or
interest of any kind in or to any of the Subordinated Claims,
either principal or interest, unless such is done expressly
subject to the terms and provisions of this Agreement.
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
4. This Agreement is complete and effective upon execution by Lakes Gaming
and delivery of this Agreement to Hibernia.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Lakes Gaming and its legal representatives,
successors or assigns, until all of the Hibernia Indebtedness has been
paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Hibernia and Lakes Gaming.
8. Hibernia will not alter, modify or amend any of the Hibernia Documents
without the prior written consent of Lakes Gaming, which consent will
not be unreasonably withheld.
IN WITNESS WHEREOF, the undersigned has executed this Agreement before
the undersigned witnesses on the date shown below, but effective as of the
Effective Date.
WITNESSES: GRAND CASINOS OF LOUISIANA, LLC --
COUSHATTA
- ------------------------------
By: /s/ Timothy Cope
---------------------------------
Timothy Cope, Its Chief Financial
Officer
- ------------------------------ Date: March 5, 1999
ACCEPTED:
HIBERNIA NATIONAL BANK
By
------------------------------------------
, its
------------- ----------------
Date:
---------------------------------------
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 5
STATE OF MINNESOTA,
COUNTY OF .
On this day of , 1999, before me appeared
TIMOTHY COPE, to me known, who, being by me duly sworn, did say:
Lakes Gaming, Inc., a Minnesota corporation, and that the
foregoing instrument was signed in behalf of said corporation by authority of
its Board of Directors, and said Appearer acknowledged said instrument to be the
free act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------------
NOTARY PUBLIC in and for
.
-------------------
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 5
<PAGE> 1
EXHIBIT 10.7
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY
GRAND CASINOS OF LOUISIANA, LLC. -- COUSHATTA
IN FAVOR OF HIBERNIA NATIONAL BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999 (the "Effective Date"), by:
GRAND CASINOS OF LOUISIANA, LLC -- COUSHATTA (hereinafter
referred to as "Grand Casinos"), a Minnesota limited
liability company, whose permanent mailing address is
130 Chesire Lane, Minnetonka, Minnesota, 55305,
represented herein by Timothy Cope, its duly
authorized Chief Financial Officer.
Grand Casinos hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Coushatta Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, to Grand Casinos, whether such debts, liabilities and
obligations now exist or are hereafter incurred or arise, or whether
the obligation of the Tribe thereon be direct, contingent, primary,
secondary, joint and several, or otherwise, and irrespective of whether
such debts, liabilities or obligations are evidenced by note, contract,
open account or otherwise, and irrespective of the person or entity in
whose favor such debts or liabilities may, at their inception, have
been, or may hereafter be created, or the manner in which they have
been or may hereafter be acquired by Grand Casinos; provided, however,
that the term "Subordinated Claims" shall not include any such debts,
liabilities and obligations of the Tribe hereafter owing to Grand
Casinos pursuant to the Hotel Loan Subrogation Rights. The term "Hotel
Loan Subrogation Rights" shall mean those certain subrogation rights
that may now or hereafter be obtained by Grand Casinos pursuant to that
certain Commercial Guaranty Agreement dated February 15, 1999, executed
by Grand Casinos in favor of Hibernia National Bank in connection with
the Hotel Loan Agreement (as such term is defined in the Loan Agreement
[herein defined]).
2. For and in consideration of the Hibernia Indebtedness (herein defined)
under the Hibernia Documents (herein defined), and in order to induce
the Hibernia National Bank ("Hibernia"), acting in its discretion in
each instance, to make loans or otherwise to give, grant or extend
credit at any time or times to the Tribe under the Hibernia Documents,
Grand Casinos hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by
the Tribe of the Subordinated Claims, together with any and
all interest accrued or to accrue thereon, to the payment to
Hibernia of any and all debts, liabilities
EQUIPMENT LOAN/ GRAND CASINOS - COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
and obligations for which the Tribe may now or hereafter be
under obligation to Hibernia (the "Hibernia Indebtedness"),
under:
(i) that certain Equipment Loan Agreement dated as of
December 18, 1998, between Hibernia, as lender, and
the Tribe (herein referred to as the "Loan
Agreement");
(ii) that certain Equipment Loan Promissory Note dated as
of December 18, 1998, executed by the Tribe in favor
of Hibernia in the original principal sum of
$15,000,000.00 (herein referred to as the "Note");
(iii) that certain Dominion Account Agreement for the
Equipment Loan dated as of December 18, 1998,
executed by the Tribe, Hibernia, and Grand Casinos,
Inc., a Minnesota corporation, Grand Casinos of
Louisiana, Inc. - Coushatta, a Minnesota corporation,
and The Cottonport Bank in favor of Hibernia, which
agreement encumbers the proceeds from the gaming
operations at the Tribe's casino operations as well
as the Casino Bank Accounts which are more fully
described therein (the "Dominion Account Agreement")
(iv) that certain Commercial Security Agreement dated as
of December 18, 1998, executed by the Tribe, as
debtor, in favor of Hibernia, as secured party, which
agreement covers certain equipment referred to
therein (the "Security Agreement"); and
(v) that certain Non-Standard Financing Statement
executed by the Tribe, as the debtor, in favor of
Hibernia, as the secured party, on or about December
18, 1998, regarding the Collateral (as defined in the
aforesaid Dominion Account) which instrument has or
soon will be recorded in the public records of Allen
Parish, Louisiana, together with any subsequent
financing statements executed by the Tribe in
connection with the security interests granted in the
Security Agreement and/or the Dominion Account
Agreement (the "Financing Statements")
(the Loan Agreement, Note, Dominion Account
Agreement, Security Agreement and the Financing
Statements are sometimes collectively referred to as
the "Hibernia Documents")
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Tribe
thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of
EQUIPMENT LOAN/ GRAND CASINOS - COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
whether such debts or liabilities be evidenced by note,
contract, open account or otherwise).
(b) Not to ask, demand, sue for, take or receive all or any part
of the Subordinated Claims, or any interest thereon, unless or
until that portion of the Hibernia Indebtedness then due shall
have been fully paid and discharged; provided however, unless
and until Hibernia notifies Grand Casinos at the address noted
above that an Event of Default has occurred under the terms of
the Loan Agreement, Grand Casinos may continue to receive
scheduled payments from the Tribe under the Subordinated
Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement,
each and every amount so paid shall be held in trust by Grand
Casinos on behalf of Hibernia, and Grand Casinos will promptly
pay such amounts to Hibernia to be credited and applied to any
Hibernia Indebtedness (principal and/or interest) then owing
to Hibernia by the Tribe whether matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the assets of the Tribe securing
payment of the Subordinated Claims shall be and remain
inferior and subordinate to any liens, security interests,
judgment liens, charges or other encumbrances upon the assets
of the Tribe securing payment of the Hibernia Indebtedness;
(e) If Grand Casinos forecloses upon any of the Subordinated
Claims or obtains possession of the property of the Tribe in
lieu of foreclosure, all assets of such Tribe or proceeds
thereof obtained thereby shall be held in trust by Grand
Casinos on behalf of Hibernia, and Grand Casinos will promptly
pay such amounts to Hibernia to be credited and applied to any
Hibernia Indebtedness (principal and/or interest) then owing
to Hibernia by the Tribe, whether matured or unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of the Tribe whether by reason of reorganization,
liquidation, dissolution, bankruptcy, receivership, assignment
for the benefit of creditors, or any other action or
proceeding involving the readjustment of all or any of the
Subordinated Claims, or the application of assets of the Tribe
to the payment or liquidation thereof, either in whole or in
part, Hibernia shall be entitled to receive payment in full of
any and all of the Hibernia Indebtedness then owing to
Hibernia by such Tribe prior to the payment of all or any
portion of the Subordinated Claims; and
EQUIPMENT LOAN/ GRAND CASINOS - COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
(g) Not to transfer, assign, encumber or subordinate at any time
while this Agreement remains in effect, any right, claim or
interest of any kind in or to any of the Subordinated Claims,
either principal or interest, unless such is done expressly
subject to the terms and provisions of this Agreement.
4. This Agreement is complete and effective upon execution by Grand
Casinos and delivery of this Agreement to Hibernia.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Grand Casinos and its legal representatives,
successors or assigns, until all of the Hibernia Indebtedness has been
paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Hibernia and Grand Casinos.
8. Hibernia will not alter, modify or amend any of the Hibernia Documents
without the prior written consent of Grand Casinos, which consent will
not be unreasonably withheld.
(The remainder of this page has been intentionally left blank)
EQUIPMENT LOAN/ GRAND CASINOS - COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned has executed this Agreement before
the undersigned witnesses on the date shown below, but effective as of the
Effective Date.
WITNESSES: GRAND CASINOS OF LOUISIANA, LLC --
COUSHATTA
- ------------------------------
By: /s/ Timothy Cope
-----------------------------------
Timothy Cope, Its Chief Financial
Officer
- ------------------------------- Date: March 5, 1999
ACCEPTED:
HIBERNIA NATIONAL BANK
By
------------------------------------------
, its
------------- ----------------
Date:
---------------------------------------
EQUIPMENT LOAN/ GRAND CASINOS - COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 5
<PAGE> 6
STATE OF MINNESOTA,
COUNTY OF .
On this day of , 1999, before
me appeared TIMOTHY COPE, to me known, who, being by me duly sworn, did say:
That he is the Chief Financial Officer of GRAND CASINOS OF
LOUISIANA, LLC -- COUSHATTA., a Minnesota limited liability company, and that
the foregoing instrument was signed in behalf of said limited liability company
by authority of its Manager and Members, and said Appearer acknowledged said
instrument to be the free act and deed of said limited liability company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------------
NOTARY PUBLIC in and for
.
-------------------
EQUIPMENT LOAN/ GRAND CASINOS - COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 6
<PAGE> 1
EXHIBIT 10.8
DOMINION ACCOUNT AGREEMENT
THIS DOMINION ACCOUNT AGREEMENT (the "Agreement"), dated effective as
of December 17, 1997 (the "Effective Date"), between the COUSHATTA TRIBE OF
LOUISIANA (the "Tribe"), a federally recognized Indian tribe, GRAND CASINOS OF
LOUISIANA, INC. -- COUSHATTA, a Minnesota corporation (the "Manager"), GRAND
CASINOS, INC., a Minnesota corporation ("Grand Casinos"), THE COTTONPORT BANK
("Cottonport Bank"), a bank chartered under the laws of the State of Louisiana,
and HIBERNIA NATIONAL BANK, a national banking association ("Hibernia");
WITNESSETH:
WHEREAS, the Tribe has the inherent power to conduct and regulate
gaming on its lands, subject only to the restrictions imposed by the Indian
Gaming Regulatory Act, Public Law 100-497 (the "IGRA"); and
WHEREAS, in accordance with the IGRA, the Tribe has adopted its Gaming
Ordinance No. 92-01 (the "Ordinance"), and has entered into a Tribal-State
Compact for the Conduct of Class III Gaming with the State of Louisiana; and
WHEREAS, under the Ordinance, the Tribe operates a gaming facility (the
"Casino") on its lands; and
WHEREAS, pursuant to that certain Amended and Restated Management &
Construction Agreement, dated as of February 25, 1992, (the "Management
Agreement"), the Tribe has engaged the Manager to manage the Casino and to
collect the receipts, pay the operating expenses and to distribute the income
thereof; and
WHEREAS, the Tribe has purchased, and intends to purchase additional,
gaming equipment to utilize in the gaming operations; and
WHEREAS, the Tribe, as borrower, and Hibernia, as lender, have entered
into that certain Commercial Loan Agreement dated as of the Effective Date (the
"Loan Agreement"), under the terms of which Hibernia agreed to loan to the Tribe
sums not to exceed $6,000,000 to purchase gaming equipment to use in conjunction
with gaming operations at the Casino; and
WHEREAS, the Tribe and the Manager desire to enter into this Agreement
in order to grant to Hibernia a security interest in the Gross Receipts (as
defined herein) and to provide for the receipt and deposit of the Gross Receipts
into the Casino Bank Accounts and the payment therefrom of certain sums to
Hibernia; and
WHEREAS, the parties hereto are willing to enter into this Agreement
and to undertake the duties set forth herein upon the terms and conditions set
forth herein;
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 1
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Unless the context otherwise requires, capitalized terms
which are not defined herein shall have the meaning ascribed to them in the Loan
Agreement.
Section 1.2 Defined Terms. The following terms when used herein shall
have the following meanings:
"Business Day" means a day other than (i) a Saturday or Sunday (ii) any
day on which banks located in the State of Louisiana are required or authorized
by law to remain closed.
"Casino Bank Accounts" means all of the bank accounts specified or
contemplated in Section 5.10 of the Management Contract, including without
limitation, the General Account, the Expense Account and the Contingency Reserve
Fund.
"Collateral" means the Gross Receipts and the Casino Bank Accounts and
the funds deposited or credited thereto from time to time.
"Contingency Reserve Fund" means that certain account which may be
established from time to time by the Tribe with the Cottonport Bank as the
Contingency Reserve Fund pursuant to Section 5.10.4 of the Management Contract.
"Entities" collectively means the Tribe and the Manager and "Entity"
means any one of the Entities.
"Enterprise" means the operation of the Casino by the Tribe and the
Manager pursuant to the Management Contract.
"Expense Account" means that certain Account No. [ Intentionally
Omitted ] owned and maintained by the Tribe with the Cottonport Bank as the
Expense Account pursuant to Section 5.10.2 of the Management Contract.
"General Account" means that certain Account No. [ Intentionally
Omitted ] owned and maintained by the Tribe with the Cottonport Bank as the
General Account pursuant to Section 5.10 of the Management Contract.
"Gross Receipts" has the meaning ascribed to it in Section 2.9 of the
Management Agreement; provided however, the term shall include all revenues
received by the Enterprise from the operations of the Hotel.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 2
<PAGE> 3
"Hotel Loan Dominion Account Agreement" means that certain Dominion
Account Agreement dated May 1, 1997, between the parties hereto and the
Coushatta Tribe of Louisiana Building Authority ("Authority") in connection with
that certain Commercial Loan Agreement dated as of May 1, 1997, between
Hibernia, as lender, and the Tribe and the Authority, as borrowers, regarding
loans not to exceed $25,000,000.
"Management Committee" has the meaning ascribed to it in Section 2.11
of the Management Contract.
"Net Profits" shall have the meaning ascribed to it in Section 2.14 of
the Management Contract.
"Note" means that certain promissory note dated as of the Effective
Date executed by Tribe in favor of Hibernia in the principal amount of up to Six
Million and No/100 Dollars ($6,000,000.00), together with all substitute or
replacement notes therefor, as well as all renewals, extensions, modifications,
refinancings, consolidations and substitutions of and for such a note.
"Obligations" the indebtedness evidenced by the Note, including
principal, interest, costs, expenses and attorneys' fees and all other fees and
charges, together with all other indebtedness and costs and expenses for which
the Tribe is responsible under this Agreement or for which the Tribe is
responsible under any of the Related Documents.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Related Documents" means and include individually, collectively,
interchangeably and without limitation the Note, the Loan Agreement, guaranties,
security agreements, financing statements and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection with
the Obligations.
ARTICLE 2
COVENANTS
Unless Hibernia's prior written consent to the contrary is obtained,
each of the Entities will at all times comply with the covenants contained in
this Article 2, from the date hereof and continuing thereafter for so long as
the Obligations, or any portion thereof, are outstanding.
Section 2.1 MAINTENANCE OF CASINO BANK ACCOUNTS. The Entities, acting
through the Management Committee, shall maintain the Casino Bank Accounts with
the Cottonport Bank in accordance with the terms of the Management Contract.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 3
<PAGE> 4
Section 2.2 DEPOSIT OF GROSS RECEIPTS. The Entities, acting through
the Management Committee, shall deposit all Gross Receipts into the General
Account maintained with the Cottonport Bank in accordance with the terms of the
Management Contract.
Section 2.3 CHARACTERIZATION OF PAYMENTS. All payments and transfers
to Hibernia which are referred to in Article 3 of this Agreement shall be
deemed to be, and treated and paid as, Operating Expenses under the terms of the
Management Agreement.
Section 2.4 LIMITATIONS OF MONTHLY DISTRIBUTIONS. No distributions,
transfers or payments shall be made from the Casino Bank Accounts to the
Entities or to Grand Casinos until the last Business Day of each calendar month.
Further, on the last Business Day of each calendar month, no distributions,
transfers or payments shall be made directly or indirectly from the Casino Bank
Accounts to the Entities or to Grand Casinos unless and until all Certificates
for Payment which have been previously submitted to the Cottonport Bank pursuant
to the Hotel Loan Dominion Account Agreement and to Section 3.1 hereof have been
fully paid. The foregoing prohibition applies to any and all distributions,
transfers or payments from the Casino Bank Accounts to the Entities or to Grand
Casinos, including, without limitation, any distribution of Net Profits,
repayments of principal or interest for loans made by the Manager or Grand
Casinos to the Tribe, the payment of any management fees, or the transfer of
funds from the Casino Bank Accounts to any other accounts maintained by the any
of the Entities.
Section 2.5 LIMITATIONS UPON DISTRIBUTIONS UPON DEFAULT. Upon the
occurrence of an Event of Default under the provisions of the Loan Agreement and
so long as the same remains unremedied in the opinion of Hibernia, no
distributions, transfers or payments shall be made directly or indirectly from
the Casino Bank Accounts to the Entities or to Grand Casinos, including without
limitation, any distribution of Net Profits, repayments of principal or interest
for loans made by the Manager or Grand Casinos to the Tribe, the payment of any
management fees, or the transfer of funds from the Casino Bank Accounts to any
other accounts maintained by any of the Entities with the Cottonport Bank.
Section 2.6 NO TERMINATION OF OR CHANGE IN THE MANAGEMENT CONTRACT.
The Entities will maintain the Management Contract until all of the Obligations
have been paid in full. The Entities shall not amend, modify, alter or change
the terms of the Management Contract without Hibernia's prior written consent
which consent will not be unreasonably withheld or delayed.
Section 2.7 FINANCIAL INFORMATION. The Entities shall comply with the
financial reporting requirements set forth in Section 9.01 of the Loan
Agreement.
ARTICLE 3
AUTHORIZED TRANSFERS FROM
THE CASINO BANK ACCOUNTS
Section 3.1 PAYMENTS DUE UNDER THE LOAN AGREEMENT AND THE NOTE. The
Tribe has agreed to make certain monthly payments to Hibernia as set forth in
the Loan Agreement and the Note. In order to receive any such payment, Hibernia
shall forward to the Entities and the Cottonport Bank by facsimile
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 4
<PAGE> 5
transmission or by any of the other means by which notice may be given as
specified in Section 8.1 hereof, a Certificate for Payment in the form set forth
in Exhibit No. 1 attached hereto. The Tribe and the Manager hereby authorize and
direct the Cottonport Bank upon its receipt of each such Certificate for Payment
to transfer funds from the Expense Account to Hibernia in the amounts specified
in each such certificate. The Tribe shall have the right to pay the Note in
accordance with its terms even though Hibernia fails to timely forward such a
Certificate for Payment.
Section 3.2 TRANSFERS FROM OTHER ACCOUNTS. In the event the funds in
the Expense Account are insufficient to meet the requirements of Section 3.1,
the Cottonport Bank is authorized and directed to withdraw and transfer from any
other Casino Bank Account maintained by the Entities with the Cottonport Bank,
including without limitation, the General Account or the Contingency Reserve
Fund, funds in an amount or amounts necessary to pay fully any such
requirements.
Section 3.3 METHOD OF TRANSFER. The Cottonport Bank shall make the
transfers authorized in Sections 3.1 to the extent funds are credited to the
Casino Bank Accounts. Unless otherwise requested by Hibernia, any transfer from
the Cottonport Bank to Hibernia pursuant to this Article 3 shall be made by wire
transfer to:
Hibernia National Bank
ABA Routing No. 065000090
333 Travis Street
Shreveport, Louisiana 71101
Attention: Christopher K. Haskew
If a Certificate for Payment is received by the Cottonport Bank at or prior to
10:00 a.m. Central Time on a Business Day, the Cottonport Bank shall make
payments as directed by Hibernia in the Certificate for Payment by or before
2:00 p.m. Central Time, on the same Business Day. If any such Certificate for
Payment is received by the Cottonport Bank after 2:00 p.m. Central Time on a
Business Day, the Cottonport Bank will make payment as directed by Hibernia in
the Certificate for Payment on or before 2:00 p.m. Central Time on the next
succeeding Business Day.
Section 3.4 BANK STATEMENTS. The Cottonport Bank is hereby authorized
and directed by the Entities to forward to Hibernia copies of the monthly
statements regarding the Casino Bank Accounts concurrently with the distribution
of such monthly statements of the Casino Bank Accounts to the Manager and/or the
Tribe.
Section 3.5 TERMINATION. (a) The authorizations and directions made in
this Article 3 to the Cottonport Bank are absolute and irrevocable and shall
terminate only upon the Cottonport Bank's receipt of a Termination Certificate
in a form similar to Exhibit No. 2 attached hereto which has been duly signed by
Hibernia and delivered to the Cottonport Bank and the Entities. Until such time
as the Cottonport Bank has received such a Termination Certificate, the
Cottonport Bank shall continue to transfer funds from the Casino Bank Accounts
in accordance with the terms hereof and to otherwise comply with the provisions
of this Agreement.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 5
<PAGE> 6
(b) In the Certificate for Payment submitted for the final
payments due under the Obligations, Hibernia will state that such a certificate
is the final Certificate for Payment to be submitted to the Cottonport Bank
under this Agreement. Upon payment and satisfaction of all of the Obligations,
Hibernia shall execute and deliver a Termination Certificate to the Cottonport
Bank and the Entities. If all of the Obligations have been paid in full and
Hibernia has not executed and delivered the Termination Certificate, the Tribe
will notify Hibernia in writing and within twenty (20) days of its receipt of
such notice, Hibernia shall execute and deliver the Termination Certificate to
the Cottonport Bank and the Entities.
ARTICLE 4
PLEDGE AND GRANT OF SECURITY INTERESTS
Section 4.1. GRANT OF SECURITY INTEREST. As security for the payment
and performance of all of the Obligations, each Entity hereby pledges to
Hibernia, and grants to Hibernia a continuing security interest in, all of the
right, title and interest of each Entity in and to the Collateral, whether now
or hereafter owned, existing, arising or acquired, including without limitation,
the Casino Bank Accounts and all funds currently or hereafter deposited therein
or credited thereto.
Section 4.2 DURATION. The security interests granted herein in the
Collateral in favor of Hibernia will continue until such time as all of the
Obligations have been fully paid and satisfied and this Agreement has been
canceled or terminated by Hibernia under a written cancellation instrument,
which instrument Hibernia will execute and deliver to the Entities concurrently
with the Termination Certificate; provided, however, the security interests
granted herein shall terminate as to specified funds previously on deposit in
the Casino Bank Accounts if and when such funds are distributed to the Entities
in accordance with the terms of the Management Agreement and this Agreement.
ARTICLE 5
COTTONPORT BANK'S
REPRESENTATIONS AND AGREEMENTS
Section 5.1 COTTONPORT BANK'S REPRESENTATIONS. Cottonport Bank hereby
warrants and represents to Hibernia that: (a) the Casino Bank Accounts exist and
the accounts numbers specified herein with respect to the Casino Bank Accounts
are correct; (b) the Tribe is the sole owner of the Casino Bank Accounts as
reflected in the records of the Cottonport Bank; and (c) Cottonport Bank has not
received notice from any third party, other than Hibernia, that any such third
party has taken or claims a security interest in the Casino Bank Accounts.
Section 5.2 RECEIPT OF NOTICE. The Cottonport Bank hereby acknowledges
that this Agreement constitutes sufficient notice under La. R. S. 10:9-305(4)
that the Tribe has pledged and granted to Hibernia a security interest to
Hibernia in and to Casino Bank Accounts.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 6
<PAGE> 7
Section 5.3 SUBORDINATION. The Cottonport Bank hereby subordinates to
the security interest granted herein to Hibernia any right of offset or any
other security interest that the Cottonport Bank has, or may hereafter obtain,
in and to the Casino Bank Accounts.
Section 5.4 NOTICES TO HIBERNIA. The Cottonport Bank will notify
Hibernia immediately in the event the account numbers for the Casino Bank
Accounts change. Further, the Cottonport Bank will notify Hibernia immediately
upon the Cottonport Bank's receipt of a notice of a claim of a security interest
asserted, or lien filed, by any Person in and to the Casino Bank Accounts.
Section 5.5 ACCEPTANCE. By execution of this Agreement, the Cottonport
Bank accepts its obligations hereunder, but only upon the express terms and
conditions set forth in this Agreement. Cottonport Bank undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement, including the instructions set forth in Article 3.
ARTICLE 6
AGREEMENTS REGARDING THE COTTONPORT BANK
The Entities and Hibernia agree that the following provisions shall
control with respect to the rights, duties, liabilities and privileges of the
Cottonport Bank:
Section 6.1 PERFORMANCE BY OTHERS. The Cottonport Bank shall have no
duty to see that any duties or obligations herein or elsewhere imposed on any
other parties are performed or honored.
Section 6.2 RECITALS. The Cottonport Bank shall not be responsible for
any recital herein or in any other instrument or certificate described in this
Agreement, or for the validity of execution by any party to any such
instruments, or for the validity of any representations set forth in any such
agreements.
Section 6.3 RELIANCE BY COTTONPORT BANK. As to the existence or
non-existence of any fact or as to the sufficiency or validity of any instrument
or certificate, or as to its authorization to perform any act described herein,
the Cottonport Bank shall be entitled to rely upon any written notice signed by
a representative of the parties to this Agreement. Further, Cottonport Bank acts
as depository and transfer agent only, and is not responsible, or liable in any
manner whatsoever, for the sufficiency, correctness, genuineness or validity of
the subject matter of a Certificate of Payment, or any part thereof; provided,
however, the Cottonport Bank shall have the obligation to confirm the validity
and authenticity of a Certificate of Payment if it has a reasonable basis for
concluding that such a certificate was not issued by Hibernia.
Section 6.4 FAILURE OF PERFORMANCE BY COTTONPORT BANK. In the event
that the Cottonport Bank fails to comply with its obligations hereunder, the
Entities, at the request of Hibernia, shall move custody of the Casino Bank
Accounts to another financial institution mutually acceptable to the Entities
and Hibernia.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 7
<PAGE> 8
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default under this Agreement:
(a) Any of the Entities shall breach any of their respective
covenants or agreements set forth herein; or
(b) Any of the Entities shall revoke, alter or modify, or attempt
to revoke, alter or modify, any direction or instruction given or required to be
given to Cottonport Bank pursuant to Article 3 hereof; or
(c) An Event of Default, as defined in the Loan Agreement, shall
occur.
Section 7.2 REMEDIES ON DEFAULT. Whenever an Event of Default shall
have occurred and be continuing, Hibernia shall be entitled to exercise all of
the rights and remedies available to a secured party under the Commercial Laws
- -- Secured Transactions as set forth in La. R.S. 10-9:901 et seq., all rights
and remedies under any Obligation, all rights and remedies available to it under
the Related Agreement and all rights and remedies available to it under this
Agreement, including, without limitation, the right, from time to time, without
demand or notice of any kind, to:
(a) direct the Cottonport Bank to freeze the balances of the
Casino Bank Accounts and not permit any further withdrawals or transfers
therefrom unless otherwise instructed by Hibernia to do so;
(b) take any action that Hibernia may deem necessary or desirable
in order to realize on the Collateral, including, the authority to endorse in
the name of the Tribe without recourse to the Tribe any checks, drafts, notes or
other instruments or documents received in payment of or on account of the Gross
Receipts; and
(c) exercise any and all other rights, remedies and privileges it
may have under this Agreement and under any Obligation.
Any proceeds received by Hibernia from the exercise of any remedy shall be
applied by Hibernia (i) first to the payment by Hibernia of all expenses of the
exercise of such remedies, including the reasonable attorneys' fees and legal
expenses incurred in connection therewith by Hibernia, (ii) second, to the
payment of the Obligations in such order and in such manner as Hibernia may, in
its discretion, determine, and (iii) third, any surplus after such application
shall be delivered to the Enterprise, except as otherwise required by law or as
a court of competent jurisdiction may direct. The Entities agree to pay all
reasonable expenses incurred by Hibernia in connection with the exercise of any
remedy hereunder, including the reasonable attorneys' fees incurred in
connection therewith by Hibernia.
Section 7.3 OFFSET. In addition to the remedies set forth in Section
7.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, the Tribe and the Manager hereby
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 8
<PAGE> 9
irrevocably authorize the Cottonport Bank, as agent for Hibernia until
Cottonport Bank receives a Termination Certificate, to set off all sums owing by
the Tribe to Hibernia against the Casino Bank Account and to forward transfer
such sums to Hibernia. Such right shall exist whether or not Hibernia shall have
made any demand hereunder or under any Obligation.
Section 7.4. WAIVERS; REMEDIES. Any waiver given by Hibernia hereunder
shall be effective only in the specific instance and for the specific purpose
given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to Hibernia. All rights and
remedies of Hibernia shall be cumulative and may be exercised singly in any
order or concurrently, at Hibernia's option, and the exercise or enforcement of
any such right or remedy shall neither be a condition to nor a bar to the
exercise or enforcement of any other.
ARTICLE 8
MISCELLANEOUS
Section 8.1. NOTICES. Except as otherwise provided herein, any notice
or demand which, by provision of this Agreement, is required or permitted to be
given or served by Hibernia to or on any of the Entities or the Cottonport Bank
shall be deemed to have been sufficiently given and served for all purposes: (a)
(if mailed) seven (7) calendar days after being deposited, postage prepaid, in
the United States Mail, registered or certified mail; or (b) (if delivered by
express courier) one Business Day after being delivered to such courier; or (c)
(if delivered in person) the same day as delivery or until another address or
addresses are given in writing by a party to Hibernia as follows:
To the Tribe Coushatta Tribe of Louisiana
Post Office Box 818
Elton, Louisiana 70532
Attention: Lovelin Poncho, Tribal Chairman
Fax: (318) 584-2998
With a simultaneous copy in each instance to:
Mr. F. Jefferson Millican
Millican, Cassidy & Riley
Post Office Drawer 1225
Jennings, Louisiana 70546
Fax: (318) 824-8728
To Manager Grand Casinos of Louisiana, Inc.- Coushatta
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: General Counsel
Fax: (612) 449-9353
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 9
<PAGE> 10
To Grand Grand Casinos, Inc.
Casinos 130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: General Counsel
Fax: (612) 449-9353
To Hibernia: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 7110
Attention: Legal Administration Department
Fax: (318) 674-3758
To Cottonport The Cottonport Bank
Bank: 144 South Main Street
Marksville, Louisiana 71351
Attention: Dwayne Harper
Fax No. (318) 253-4472
Section 8.2. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Louisiana.
Section 8.3. SEVERABILITY. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof; provided, however that where the provisions of any such applicable law
may be waived, they hereby are waived by the Entities to the fullest extent
permitted by law to the end that this Agreement shall be deemed to be a valid
and binding agreement in accordance with its terms.
Section 8.4. SURVIVAL. The warranties, representations, covenants and
agreements set forth herein shall survive the execution and delivery of this
Agreement and shall continue in full force and effect until all Obligations
shall have been paid and performed in full.
Section 8.5. COSTS AND EXPENSES; INDEMNITY. The Tribe will pay or
reimburse Hibernia on demand for all out-of-pocket expenses (including in each
case all filing and recording fees and taxes and all reasonable fees and
expenses of counsel) incurred by Hibernia in connection with the creation,
perfection, protection, satisfaction, foreclosure or enforcement of the liens
created hereby and the preparation, administration, continuance, amendment or
enforcement of this Agreement, and all such costs and expenses shall be part of
the Obligations secured by this Agreement. The Tribe shall indemnify and hold
Hibernia harmless from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement) or
Hibernia's actions pursuant hereto other than those claims, losses and
liabilities resulting from Hibernia's gross negligence or intentional
misconduct. Any liability of the Tribe to indemnify and hold Hibernia harmless
pursuant to the preceding sentence shall be part of the Obligations secured by
this
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 10
<PAGE> 11
Agreement. The obligations of the Tribe under this Section 8.5 shall survive any
termination of this Agreement.
Section 8.6. CAPTIONS. Captions herein are for convenience only and
shall not be deemed part of this Agreement.
Section 8.7 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns.
Section 8.8 AMENDMENTS. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.
Section 8.9. SOVEREIGN IMMUNITY WAIVER; ARBITRATION; SUBMISSION TO
JURISDICTION, JURY TRIAL WAIVER. This Agreement constitutes a Loan Document as
defined in the Loan Agreement. As such and without limiting the scope of the
Loan Agreement, the provisions of Section 15.10 of the Loan Agreement apply to
this Agreement and are incorporated herein by reference.
Section 8.10 COMPLIANCE WITH 25 U.S.C. Section 81.
In compliance with 25 U.S.C. Section 81, the residence and
occupation of the parties is stated as follows:
Party in interest: COUSHATTA TRIBE OF LOUISIANA
Residence: P.O. Box 818
Elton, LA 70532
Occupation: A federally recognized Indian Tribe
Party in interest: THE COTTONPORT BANK
Residence: 144 South Main Street
Marksville, LA 71351
Occupation: Commercial bank
Party in interest: HIBERNIA NATIONAL BANK
Residence: 333 Travis Street
Shreveport, LA 71101
Occupation: Commercial bank
Party in interest: GRAND CASINOS OF LOUISIANA, INC.- COUSHATTA
Residence: 130 Chesire Lane
Minnetonka, Minnesota 55305
Occupation: A Minnesota corporation
Party in interest: GRAND CASINOS, INC.
Residence: 130 Chesire Lane
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 11
<PAGE> 12
Minnetonka, Minnesota 55305
Occupation: A Minnesota corporation
Scope of Authority:
The Tribe is authorized to execute the within document by a resolution
adopted by the Tribal Council of the Tribe at a meeting held at Jennings,
Louisiana, on May 1, 1997. The Tribal Council exercises its authority in this
instance because it believes the purchase of the Equipment related to Tribe's
Class II gaming facility in Kinder, Louisiana, in connection with the Casino,
and the financing thereof, to be in accordance with the long-range economic
objectives of the Tribe.
This document was executed on behalf of the Tribe on or about 11:30
a..m. on December 17, 1997, at Jennings, Louisiana, at Minnetonka, MN, on behalf
of Manager on or about 1:00 p.m. on February 4, 1998, at Minnetonka, MN, on
behalf of Grand Casinos on or about 1:00 p.m. on February 4, 1998, at
__________________, ___________on behalf of The Cottonport Bank on or about 3:00
p.m. on December 17, 1997, at Cheneyville, Louisiana, and on behalf of Hibernia
on or about 11:30 a.m. on December 17, 1997, at Jennings, Louisiana.
This instrument shall terminate upon payment in full of the
indebtedness secured hereby, provided that in any event this instrument shall
expire not later than 50 years from the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
COUSHATTA TRIBE OF LOUISIANA
By: /s/ Lovelin Poncho
-----------------------------------------
Lovelin Poncho, Tribal Chairman
HIBERNIA NATIONAL BANK
By: /s/ Christopher K. Haskew
-----------------------------------------
Christopher K. Haskew, Assistant
Vice President
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 12
<PAGE> 13
THE COTTONPORT BANK
By: /s/ Dwayne Harper
-----------------------------------------
Its: V. P.
GRAND CASINOS OF LOUISIANA, INC. --
COUSHATTA
By: /s/ Timothy Cope
-----------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
-----------------------------------------
Timothy Cope, its Chief Financial Officer
Attachments:
Exhibit No. 1 - Certificate for Payment
Exhibit No. 2 - Termination Certificate
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 13
<PAGE> 14
BIA APPROVAL
THE FOREGOING DOCUMENT IS
APPROVED PURSUANT TO 25 U.S.C. 81:
UNITED STATES DEPARTMENT OF THE INTERIOR,
BUREAU OF INDIAN AFFAIRS:
BY: /S/ FRANKLIN KEEL APRIL 21, 1998
----------------------------------------------------
AREA DIRECTOR OF THE EASTERN AREA OFFICE
OF THE BUREAU OF INDIAN AFFAIRS OF THE SECRETARY
OF THE INTERIOR AND THE COMMISSIONER OF INDIAN AFFAIRS,
ACTING UNDER DELEGATED AUTHORITY.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 14
<PAGE> 1
EXHIBIT 10.9
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (the "Agreement") dated as of
February 4, 1998, between Hibernia National Bank ("Bank") and Grand Casinos of
Louisiana, Inc. -- Coushatta ("GCI") and Grand Casinos, Inc. ("Grand "):
WITNESSETH:
WHEREAS, Bank, the Coushatta Tribe of Louisiana (the "Tribe")
and the Coushatta Tribe of Louisiana Building Authority (the "Authority")
entered into that certain Commercial Loan Agreement dated May 1, 1997 (the
"Hotel Loan Agreement") under the terms of which the Bank agreed to loan to the
Tribe and the Authority up to $25,000,000.00 (the "Hotel Loan") to be used to
construct and furnish a hotel facility, to purchase new gaming equipment, and to
make certain renovations, all as more fully set forth therein;
WHEREAS, in connection with the Hotel Loan Agreement, the
Tribe and the Authority executed in favor of the Bank the Hotel Loan Collateral
Documents (herein defined), including without limitation, the Hotel Loan
Dominion Account Agreement (herein defined) which, among other things, granted
to Bank as collateral for the Hotel Loan a first priority security interest in
accounts (the "Casino Bank Accounts") maintained by the Tribe at Cottonport Bank
(herein defined);
WHEREAS, certain of the Hotel Loan Collateral Documents create
a Lien (herein defined) on certain equipment which equipment is also encumbered
by a Lien created under certain of the Indemnity Collateral Documents (herein
defined);
WHEREAS, in connection with the Hotel Loan, Grand and GCI
executed in favor of the Bank that certain Commercial Guaranty Agreement dated
May 1, 1997 (the "Hotel Loan Guaranty") under the terms of which Grand and GCI
guaranteed up to the maximum sum of $25,000,000.00 of the Hotel Loan Obligations
(herein defined);
WHEREAS, in consideration of Grand and GCI executing the Hotel
Loan Guaranty, the Tribe and the Authority executed in favor of GCI and Grand
that certain Indemnity Agreement dated May 1, 1997 (the "Indemnity Agreement"),
under the terms of which the Tribe and the Authority each agreed to indemnify
GCI and Grand from any liability arising out of the Hotel Loan Guaranty;
WHEREAS, in connection with the Indemnity Agreement, the Tribe
and the Authority granted in favor of Grand and GCI the Indemnity Collateral
Documents (herein defined);
WHEREAS, in connection with the Hotel Loan Agreement, Grand
and GCI executed the Hotel Loan Subordination Agreements (herein defined);
WHEREAS, if the Bank makes demand for payment upon Grand
and/or GCI pursuant to the Hotel Loan Guaranty and if payment in full is made of
all amounts owing thereunder, GCI and Grand
INTERCREDITOR AGREEMENT -- PAGE 1
<PAGE> 2
will have certain subrogation rights under the Hotel Loan Guaranty, including,
the right to succeed to the Bank's rights as a secured party under the Hotel
Loan Collateral Documents (such subrogation rights herein referred to as the
"Hotel Loan Subrogation Rights");
WHEREAS, the Bank and the Tribe entered into that certain
Commercial Loan Agreement dated December 17, 1997 (the "Equipment Loan
Agreement"), under the terms of which the Bank agreed to loan to the Tribe up to
$6,000,000.00 (the "Equipment Loan") to purchase new gaming equipment and other
assets;
WHEREAS, in connection with the Equipment Loan Agreement, the
Tribe and the Authority executed in favor of the Bank the Equipment Loan
Collateral Documents (herein defined), including without limitation, the
Equipment Loan Dominion Account Agreement (herein defined) which, among other
things, granted to Bank as collateral for the Equipment Loan a security interest
in the Casino Bank Accounts;
WHEREAS, in connection with the Equipment Loan Agreement,
Grand and GCI executed the Equipment Loan Subordination Agreements (herein
defined);
WHEREAS, certain of the Equipment Loan Collateral Documents
creates a Lien (herein defined) on certain equipment which equipment is also
encumbered by a Lien created under certain of the Indemnity Collateral
Documents;
WHEREAS, the undersigned parties wish to set forth their
understanding with respect to the priority of those Liens;
WHEREAS, the Equipment Loan Dominion Account Agreement
encumbers the same collateral as the Hotel Loan Dominion Account Agreement;
WHEREAS, the parties wish to set forth herein their
understanding as to the application of the net proceeds from such collateral in
the event of foreclosure pursuant to such Dominion Account Agreements, the Hotel
Loan Collateral Documents and/or the Equipment Loan Collateral Documents;
NOW, THEREFORE, in consideration of the foregoing, the Bank,
GCI and Grand agree as follows:
SECTION 1. DEFINITIONS. The following terms shall have the
following meanings:
"Acceleration" means the earlier of (a) the acceleration of the Hotel
Loan Obligations under Section 11.02 of the Hotel Loan Agreement, (b) the
acceleration of the Equipment Loan Obligations under Section 11.02 of the
Equipment Loan Agreement, or (c) the date on which the Bank makes demand for
payment upon Grand and/or GCI under the Hotel Loan Guaranty and all obligations
of Grand and GCI under the Hotel Loan Guaranty have been fully satisfied.
"Bank's Equipment Liens" means collectively, (a) the Lien granted by
the Tribe and the Authority in favor of the Bank pursuant to that certain
Commercial Security Agreement dated May 1, 1997, and (b)
INTERCREDITOR AGREEMENT -- PAGE 2
<PAGE> 3
the Lien granted by the Tribe in favor of the Bank pursuant to that certain
Commercial Security Agreement dated December 17, 1997.
"Cottonport Bank" means The Cottonport Bank, a bank chartered under the
laws of Louisiana with its principal office in Marksville, Louisiana.
"Dominion Account Agreements" mean the Equipment Loan Dominion Account
Agreement and the Hotel Loan Dominion Account Agreement.
"Equipment Loan Collateral" means all property which is, or will
become, subject to the liens, pledges and security interests of every kind
granted by the Equipment Loan Collateral Documents.
"Equipment Loan Collateral Documents" means those documents designated
as such which are described in Schedule 1 attached hereto and made a part
hereof.
"Equipment Loan Dominion Account Agreement" means that certain Dominion
Account Agreement dated as of December 17, 1997, between the Tribe, GCI, Grand,
the Cottonport Bank and the Bank.
"Equipment Loan Obligations" shall have the meaning attributable to the
term "Obligations" as defined in the Equipment Loan Agreement.
"Equipment Loan Subordination Agreements" mean those certain
Subordinations Agreements entered into as of December 17, 1997, by Grand and GCI
in favor of the Bank regarding the Equipment Loan.
"Foreclosure" means (a) the seizure and sale of property of a debtor by
executory or ordinary proceedings or by any other judicial proceeding, (b) the
seizure and sale of the property of a debtor in a nonjudicial proceeding in lieu
of the institution of a judicial proceeding, and (c) the exercise by the
creditor of the right of setoff with respect to funds owed by the creditor to
the debtor.
"Grand Equipment Liens" mean any and all Liens granted by the Tribe
and/or the Authority in favor of Grand or GCI with respect to the Equipment Loan
Collateral and the Hotel Loan Collateral, including, but not limited to, those
Liens granted pursuant to that certain Mortgage, Assignment of Leases and Rents
and Securities Agreement dated as of May 1, 1997, by the Authority in favor of
GCI and Grand which was recorded on July 1, 1997, under File No. 387927, of the
Records of Allen Parish, Louisiana, together with the Non-Standard Financing
Statement executed by the Authority in favor of Grand and GCI which Financing
Statement was recorded under File No. 387924 on July 1, 1997, in the Records of
Allen Parish, Louisiana. The term "Grand Equipment Liens" does not include any
Liens under the Hotel Loan Collateral Documents to which Grand and/or GCI
succeed under their respective Hotel Loan Subrogation Rights.
"Hotel Loan Collateral" means all property which is, or will become,
subject to the liens, pledges and security interests of every kind granted by
the Hotel Loan Collateral Documents.
"Hotel Loan Collateral Documents" means those documents designated as
such which are described
INTERCREDITOR AGREEMENT -- PAGE 3
<PAGE> 4
in Schedule 2 attached hereto and made a part hereof.
"Hotel Loan Obligations" shall have the meaning attributable to the
term "Obligations" as defined in the Hotel Loan Agreement.
"Hotel Loan Dominion Account Agreement" means that certain Dominion
Account Agreement dated May 1, 1997, between the Tribe, the Authority, Grand,
GCI, the Cottonport Bank and the Bank with respect to the Hotel Loan.
"Hotel Loan Subordination Agreement" means those certain Subordination
Agreements dated as of May 1, 1997, executed by Grand and by GCI in favor of the
Bank regarding the Hotel Loan.
"Indemnity Obligations" means the obligations owed by the Tribe and/or
the Authority to GCI and Grand pursuant to the Indemnity Agreement.
"Indemnity Collateral Documents" means those documents designated as
such which are described in Schedule 3 attached hereto and made a part hereof.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a person other than the owner of the property, whether such
interest is based on jurisprudence, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, leasehold
mortgage, assignment of rents and leases, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes.
"Net Foreclosure Proceeds" means the amount by which (a) the gross
proceeds obtained by a creditor in a Foreclosure exceeds (b) all expenses
incurred by the creditor in connection with such Foreclosure, including without
limitation, all attorneys fees.
"Operative Agreements" means the Equipment Loan Agreement, the
Equipment Loan Collateral Documents, the Hotel Loan Agreement, the Hotel Loan
Collateral Documents, the Hotel Loan Guaranty, the Indemnity Agreement and the
Indemnity Collateral Documents.
"Post-Acceleration Payments" means any payments made after Acceleration
by the Tribe or the Authority for credit to the Hotel Loan Obligations or the
Equipment Loan Obligations other than payments from Net Foreclosure Proceeds
realized from Foreclosure upon the Casino Bank Accounts, upon the Hotel Loan
Collateral, or upon the Equipment Loan Collateral.
"Pro Rata Basis" means a fraction the numerator of which is the
outstanding principal balance and accrued unpaid interest due under either the
Hotel Loan or the Equipment Loan, as the case may be, and the denominator of
which is the sum of the outstanding principal balances and accrued unpaid
interest due under both the Hotel Loan and the Equipment Loan.
SECTION 2. RANK OF EQUIPMENT LIENS. The Bank's Equipment Liens
shall be senior and prior to the Grand Equipment Liens irrespective of the time,
order or method of attachment or perfection of any
INTERCREDITOR AGREEMENT -- PAGE 4
<PAGE> 5
such Liens.
SECTION 3. PRO RATA SHARING. Upon the earlier of Acceleration or
Foreclosure, the parties shall apply the following, whether received by the
Bank, Grand or GCI, on a Pro Rata Basis to the Hotel Loan Obligations and to the
Equipment Loan Obligations:
(a) Net Foreclosure Proceeds received from the
Foreclosure upon the Casino Bank Accounts, or any one
of them; and
(b) Post-Acceleration Payments.
SECTION 4. FORECLOSURE UPON THE OTHER HOTEL LOAN COLLATERAL. In
the event of Foreclosure upon the Hotel Loan Collateral (other than the Casino
Bank Accounts), the Net Foreclosure Proceeds realized therefrom shall be applied
to the following obligations in the following sequence and amounts:
(a) To the Hotel Loan Obligations until paid in full;
(b) To the Indemnity Obligations until paid in full; and
(c) To the Equipment Loan Obligations until paid in full.
SECTION 5. SUBROGATION RIGHTS. At such time, if any, that (a)
the Bank has made demand for payment upon Grand and/or GCI under the Hotel Loan
Guaranty and (b) after such demand, all obligations of Grand and GCI under the
Hotel Loan Guaranty have been fully satisfied, Grand and/or GCI will thereafter
be subrogated to the rights of the Bank under the Hotel Loan Obligations and the
Hotel Loan Collateral Documents in accordance with the terms of the Hotel Loan
Guaranty and shall succeed to, and be entitled to exercise and receive, the
rights and benefits under Sections 3 and 4 of this Agreement that the Bank would
otherwise be entitled to; provided however, neither Grand nor GCI shall have any
rights under the Equipment Loan Collateral Documents except in accordance with
the provisions of Section 6 of this Agreement.
SECTION 6. FORECLOSURE UPON THE OTHER EQUIPMENT LOAN COLLATERAL.
In the event of Foreclosure upon the Equipment Loan Collateral (other than the
Casino Bank Accounts), the Net Foreclosure Proceeds realized therefrom shall not
be applied toward the Hotel Loan Obligations or the Indemnity Obligations unless
and until: (a) the Equipment Loan Obligations have been paid in full; and (b)
the Bank, in its sole discretion which may be withheld for any reason or for no
reason, agrees to such an application.
SECTION 7. EFFECT OF THIS AGREEMENT.
7.1 The foregoing provisions shall supersede any
provisions to the contrary contained in the Operative Agreements. Except as
expressly set forth hereinabove, this Intercreditor Agreement shall not alter,
change or modify the terms of or the effects of the Operative Agreements.
7.2 This Agreement shall not be binding upon the parties
hereto until such time as (a) the Bank, Grand and GCI have signed this
Agreement, (b) the Tribe and the Authority have consented in writing to this
Agreement, and (c) the Bureau of Indian Affairs has approved of such consent of
the Tribe
INTERCREDITOR AGREEMENT -- PAGE 5
<PAGE> 6
and the Authority pursuant to 25 U.S.C 81.
SECTION 8. MISCELLANEOUS.
8.1 Notices. Except as otherwise provided herein, any
notice or demand which, by provision of this Agreement, is required or permitted
to be given or served by a party shall be deemed to have been sufficiently given
and served for all purposes: (a) (if mailed) seven (7) calendar days after being
deposited, postage prepaid, in the United States Mail, registered or certified
mail; or (b) (if delivered by express courier)one Business Day after being
delivered to such courier; or (c) (if delivered in person) the same day as
delivery or until another address or addresses are given in writing by a party
to the other parties as follows:
To GCI: Grand Casinos of Louisiana, Inc.- Coushatta
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-9353
To Grand: Grand Casinos, Inc.
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-9353
To Bank: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 7110
Attention: Legal Administration Department
Fax: (318) 674-3758
8.2 Governing Law. This Agreement shall be construed in
accordance with and governed the laws of the State of Louisiana.
8.3. Severability. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof.
8.4 Captions. Captions herein are for convenience
only and shall not be deemed part of this Agreement.
8.5 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their respective successors and
assigns.
8.6 Amendments. This Agreement may not be amended,
modified, waived, canceled
INTERCREDITOR AGREEMENT -- PAGE 6
<PAGE> 7
or terminated, except in writing executed by all of the parties hereto.
INTERCREDITOR AGREEMENT -- PAGE 7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
HIBERNIA NATIONAL BANK
By: /s/ Christopher K. Haskew
---------------------------------------------
Christopher K. Haskew
Assistant Vice President
GRAND CASINOS OF LOUISIANA, INC. -
COUSHATTA
By: /s/ Timothy Cope
---------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
---------------------------------------------
Timothy Cope, its Chief Financial Officer
INTERCREDITOR AGREEMENT -- PAGE 8
<PAGE> 9
CONSENT
Each of the undersigned hereby acknowledges and agrees: (a) to
the foregoing terms and provisions of the Intercreditor Agreement between the
Bank, Grand and GCI; (b) to be bound by the provisions hereof as they relate to
the relative rights of the Bank, Grand and GCI; and (c) that the terms of this
Agreement shall not give either of the undersigned any substantive rights
vis-a-vis the Bank, Grand and GCI, nor is either intended to be a third party
beneficiary hereunder.
If any of the Bank, Grand or GCI shall enforce its rights or
remedies in violation of the terms of this Agreement, each of the undersigned
further agrees that it shall not use such violation as a defense to enforcement
by the Bank, Grand or GCI, as applicable, of that party's respective rights
and/or remedies under any financing, development or other related agreements
with either of the undersigned nor assert such violation as a defense,
counterclaim or basis for set-off or recoupment against the Bank, Grand or GCI.
Dated: February 13, 1998. COUSHATTA TRIBE OF LOUISIANA
By /s/ Lovelin Poncho
Name: Lovelin Poncho
Title: CHAIRMAN
COUSHATTA TRIBE OF LOUISIANA
BUILDING AUTHORITY
By /s/ Lovelin Poncho
Name: Lovelin Poncho
Title: CHAIRMAN
BIA APPROVAL
THE FOREGOING DOCUMENT IS
APPROVED PURSUANT TO 25 U.S.C. 81:
UNITED STATES DEPARTMENT OF THE INTERIOR,
BUREAU OF INDIAN AFFAIRS:
BY: /S FRANKLIN KEEL APRIL 21, 1998
---------------------------------------------
AREA DIRECTOR OF THE EASTERN AREA OFFICE
OF THE BUREAU OF INDIAN AFFAIRS OF THE SECRETARY
OF THE INTERIOR AND THE COMMISSIONER OF INDIAN AFFAIRS,
ACTING UNDER DELEGATED AUTHORITY.
INTERCREDITOR AGREEMENT -- PAGE 9
<PAGE> 10
SCHEDULES ATTACHED
TO INTERCREDITOR AGREEMENT
SCHEDULE 1 -- EQUIPMENT LOAN COLLATERAL DOCUMENTS
1.1 That certain Dominion Account Agreement dated effective December 17,
1997, executed by the Tribe, GCI, Grand, Cottonport Bank and the Bank.
1.2 That certain Non-Standard Financing Statement dated December 17, 1997,
executed by the Tribe in favor of the Bank and consented to by
Cottonport Bank regarding the grant of the security interest in Cash
and the Casino Bank Accounts.
1.3 That certain Commercial Security Agreement dated December 17, 1997,
executed by the Tribe in favor of the Bank.
SCHEDULE 2 -- HOTEL LOAN COLLATERAL DOCUMENTS
2.1 That certain Dominion Account Agreement dated May 1, 1997, executed by
the Tribe, the Authority, Grand, GCI, Cottonport Bank and the Bank.
2.2 That certain Non-Standard Financing Statement (Casino Proceeds and
Casino Bank Accounts) dated May 1, 1997, executed by the Tribe and the
Authority in favor of the Bank and consented to by the Cottonport Bank
with respect to the grant of a security interest in all Cash and all
Casino Bank Accounts.
2.3 That certain Commercial Security Agreement dated May 1, 1997, executed
by the Tribe and the Authority in favor of the Bank granting a security
interest in all equipment to be used in the operation of the Hotel and
all gaming equipment purchased with the proceeds of the Hotel Loan.
SCHEDULE 3 - INDEMNITY COLLATERAL DOCUMENTS
3.1 That certain Mortgage, Assignment of Leases and Rents and Security
Agreement dated May 1, 1997, executed by the Authority in favor of
Grand and GCI, which instrument was recorded on July 1, 1997, under
File No. 387929 of the Records of Allen Parish, Louisiana.
3.2 That certain Non-Standard Financing Statement dated May 1, 1997,
executed by the Authority in favor of GCI, individually and as agent
for Grand, which was recorded on July 1, 1997, under File No. 387924 of
the Records of Allen Parish, Louisiana.
3.3 Assignment of Construction Contract by Borrower dated May 1, 1997,
executed by the Authority in favor of GCI and Grand assigning an
interest in the Construction Contract between the Tribe and Arkel
Construction Co.
INTERCREDITOR AGREEMENT -- PAGE 10
<PAGE> 11
3.4 That certain Assignment of Architect's Contract by Borrower dated
effective May 1, 1997, executed by the Authority and the Tribe and in
favor of GCI and Grand.
INTERCREDITOR AGREEMENT -- PAGE 11
<PAGE> 1
EXHIBIT 10.10
COUNTERPART SIGNATURE PAGE
TO
INTERCREDITOR AGREEMENT
(FIRST INTERCREDITOR AGREEMENT)
THIS COUNTERPART SIGNATURE PAGE relates to that certain Intercreditor
Agreement dated as of February 4, 1998 (the "First Intercreditor Agreement"), by
and among Hibernia National Bank ("Bank"), Grand Casinos, Inc. ("Grand") and
Grand Casinos of Louisiana, Inc. -- Coushatta ("GCI"); and is entered into
pursuant to Section 2 of that certain Release and Assumption Agreement dated as
of December 31, 1998 (the "Release Agreement"), by and among the Bank, Grand,
GCI, The Coushatta Tribe of Louisiana, The Coushatta Tribe of Louisiana Building
Authority, Lakes Gaming, Inc. ("Lakes") and Grand Casinos of Louisiana,
LLC-Coushatta ("GCI LLC").
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed thereto in the Release Agreement.
By executing this counterpart signature page, each of the parties
hereto acknowledge and agree that (i) GCI has been released from all debts,
liabilities and obligations whatsoever now or hereafter owing to the Bank under
any of the Loan Documents, including, without limitation, the Hotel Loan
Guaranty; (ii) all obligations of GCI under each of the Existing Subordination
Agreements are hereby terminated; (iii) Grand has assigned to Lakes and Lakes
has assumed all of the respective rights, duties and obligations of Grand under
each of the Operative Agreements to which it is a party provided, however, Grand
remains liable under the Hotel Loan Guaranty; (iv) GCI has assigned to GCI LLC
and GCI LLC has assumed from GCI all of the rights, duties and obligations of
GCI under each of the Operative Agreements to which it is a party; (v) all
rights under the First Intercreditor Agreement that were previously exercisable
by Grand and/or GCI shall hereinafter be deemed to be exercisable by Grand,
Lakes and/or GCI LLC; (vi) all references to the term "Hotel Loan Guaranty" in
the First Intercreditor Agreement shall hereinafter be deemed to include an
additional reference to that certain Commercial Guaranty Agreement dated
February 15, 1999, executed by Lakes and GCI LLC in favor of the Bank with
respect to the Hotel Loan; (vii) all references to Grand and/or GCI under each
of the Operative Agreements (excluding the Hotel Loan Guaranty of Grand) and in
the definitions of the terms "Acceleration," "Grand Equipment Liens," "Hotel
Loan Subrogation Rights," and "Indemnity Obligations," shall each hereinafter be
deemed to refer to each of Lakes and GCI LLC, respectively; (viii) the term
"Equipment Loan Subordination Agreements" shall hereinafter be deemed to include
additional references to those certain Subordination Agreements dated February
15, 1999, respectively executed by each of Lakes and GCI LLC in favor of
Hibernia Bank with respect to the First Equipment Loan; and (ix) the term "Hotel
Loan Subordination Agreements" shall hereinafter be deemed to include additional
references to those certain Subordination Agreements dated February 15, 1999,
respectively executed by each of Lakes and GCI LLC in favor of Hibernia Bank
with respect to the Hotel Loan.
[The remainder of this page has been intentionally left blank.]
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Counterpart
Signature Page as of the 15th day of February, 1999.
HIBERNIA NATIONAL BANK
BY: /s/ Christopher K. Haskew
-----------------------------
Christopher K. Haskew
Assistant Vice President
LAKES GAMING, INC.
BY: /s/ Timothy Cope
-----------------------------
Timothy J. Cope, its Chief Financial Officer
GRAND CASINOS OF LOUISIANA, LLC -
COUSHATTA
BY: /s/ Timothy Cope
-----------------------------
Timothy J. Cope, its Chief Financial Officer
<PAGE> 1
EXHIBIT 10.11
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY
LAKES GAMING, INC.
IN FAVOR OF HIBERNIA NATIONAL BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999 (the "Effective Date"), by:
LAKES GAMING, INC. (hereinafter referred to as "Lakes
Gaming"), a Minnesota corporation, whose permanent
mailing address is 130 Chesire Lane, Minnetonka,
Minnesota, 55305, represented herein by Timothy Cope,
its duly authorized Chief Financial Officer.
Lakes Gaming hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Coushatta Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, to Lakes Gaming, whether such debts, liabilities and obligations
now exist or are hereafter incurred or arise, or whether the obligation
of the Tribe thereon be direct, contingent, primary, secondary, joint
and several, or otherwise, and irrespective of whether such debts,
liabilities or obligations are evidenced by note, contract, open
account or otherwise, and irrespective of the person or entity in whose
favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Lakes Gaming; provided, however, that the term
"Subordinated Claims" shall not include any such debts, liabilities and
obligations of the Tribe hereafter owing to Lakes Gaming pursuant to
the Hotel Loan Subrogation Rights. The term "Hotel Loan Subrogation
Rights" shall mean those certain subrogation rights that may now or
hereafter be obtained by Lakes Gaming pursuant to that certain
Commercial Guaranty Agreement dated February 15, 1999, executed by
Lakes Gaming in favor of Hibernia National Bank in connection with the
Hotel Loan Agreement (as such term is defined in the Loan Agreement
[herein defined]).
2. For and in consideration of the Hibernia Indebtedness (herein defined)
under the Hibernia Documents (herein defined), and in order to induce
the Hibernia National Bank ("Hibernia"), acting in its discretion in
each instance, to make loans or otherwise to give, grant or extend
credit at any time or times to the Tribe under the Hibernia Documents,
Lakes Gaming hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by
the Tribe of the Subordinated Claims, together with any and
all interest accrued or to accrue thereon, to the payment to
Hibernia of any and all debts, liabilities and obligations for
which the Tribe may now or hereafter be under obligation to
Hibernia (the "Hibernia Indebtedness"), under:
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
(i) that certain Equipment Loan Agreement dated as of
December 18, 1998, between Hibernia, as lender, and
the Tribe (herein referred to as the "Loan
Agreement");
(ii) that certain Equipment Loan Promissory Note dated as
of December 18, 1998, executed by the Tribe in favor
of Hibernia in the original principal sum of
$15,000,000.00 (herein referred to as the "Note");
(iii) that certain Dominion Account Agreement for the
Equipment Loan dated as of December 18, 1998,
executed by the Tribe, Hibernia, and Grand Casinos,
Inc., a Minnesota corporation, Grand Casinos of
Louisiana, Inc. - Coushatta, a Minnessota
corporation, and The Cottonport Bank in favor of
Hibernia, which agreement encumbers the proceeds from
the gaming operations at the Tribe's casino
operations as well as the Casino Bank Accounts which
are more fully described therein (the "Dominion
Account Agreement")
(iv) that certain Commercial Security Agreement dated as
of December 18, 1998, executed by the Tribe, as
debtor, in favor of Hibernia, as secured party, which
agreement covers certain equipment referred to
therein (the "Security Agreement"); and
(v) that certain Non-Standard Financing Statement
executed by the Tribe, as the debtor, in favor of
Hibernia, as the secured party, on or about December
18, 1998, regarding the Collateral (as defined in the
aforesaid Dominion Account) which instrument has or
soon will be recorded in the public records of Allen
Parish, Louisiana, together with any subsequent
financing statements executed by the Tribe in
connection with the security interests granted in the
Security Agreement and/or the Dominion Account
Agreement (the "Financing Statements")
(the Loan Agreement, Note, Dominion Account
Agreement, Security Agreement and the Financing
Statements are sometimes collectively referred to as
the "Hibernia Documents")
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Tribe
thereon be direct, contingent,
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
primary, secondary, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced
by note, contract, open account or otherwise).
(b) Not to ask, demand, sue for, take or receive all or any part
of the Subordinated Claims, or any interest thereon, unless or
until that portion of the Hibernia Indebtedness then due shall
have been fully paid and discharged; provided however, unless
and until Hibernia notifies Lakes Gaming at the address noted
above that an Event of Default has occurred under the terms of
the Loan Agreement, Lakes Gaming may continue to receive
scheduled payments from the Tribe under the Subordinated
Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement,
each and every amount so paid shall be held in trust by Lakes
Gaming on behalf of Hibernia, and Lakes Gaming will promptly
pay such amounts to Hibernia to be credited and applied to any
Hibernia Indebtedness (principal and/or interest) then owing
to Hibernia by the Tribe whether matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the assets of the Tribe securing
payment of the Subordinated Claims shall be and remain
inferior and subordinate to any liens, security interests,
judgment liens, charges or other encumbrances upon the assets
of the Tribe securing payment of the Hibernia Indebtedness;
(e) If Lakes Gaming forecloses upon any of the Subordinated Claims
or obtains possession of the property of the Tribe in lieu of
foreclosure, all assets of such Tribe or proceeds thereof
obtained thereby shall be held in trust by Lakes Gaming on
behalf of Hibernia, and Lakes Gaming will promptly pay such
amounts to Hibernia to be credited and applied to any Hibernia
Indebtedness (principal and/or interest) then owing to
Hibernia by the Tribe, whether matured or unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of the Tribe whether by reason of reorganization,
liquidation, dissolution, bankruptcy, receivership, assignment
for the benefit of creditors, or any other action or
proceeding involving the readjustment of all or any of the
Subordinated Claims, or the application of assets of the Tribe
to the payment or liquidation thereof, either in whole or in
part, Hibernia shall be entitled to receive payment in full of
any and all of the Hibernia Indebtedness then owing to
Hibernia by such Tribe prior to the payment of all or any
portion of the Subordinated Claims; and
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
(g) Not to transfer, assign, encumber or subordinate at any time
while this Agreement remains in effect, any right, claim or
interest of any kind in or to any of the Subordinated Claims,
either principal or interest, unless such is done expressly
subject to the terms and provisions of this Agreement.
4. This Agreement is complete and effective upon execution by Lakes Gaming
and delivery of this Agreement to Hibernia.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Lakes Gaming and its legal representatives,
successors or assigns, until all of the Hibernia Indebtedness has been
paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Hibernia and Lakes Gaming.
8. Hibernia will not alter, modify or amend any of the Hibernia Documents
without the prior written consent of Lakes Gaming, which consent will
not be unreasonably withheld.
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned has executed this Agreement before
the undersigned witnesses on the date shown below, but effective as of the
Effective Date.
WITNESSES: Lakes Gaming, Inc.
- ------------------------------
By: /s/ Timothy Cope
------------------------------------
Timothy Cope, Its Chief Financial
Officer
- ------------------------------ Date: March 5, 1999
ACCEPTED:
HIBERNIA NATIONAL BANK
By
----------------------------------------
, its
------------- ---------------
Date:
--------------------------------------
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 5
<PAGE> 6
STATE OF MINNESOTA,
COUNTY OF .
On this day of , 1999, before me appeared TIMOTHY COPE, to me
known, who, being by me duly sworn, did say: Lakes Gaming, Inc., a Minnesota
corporation, and that the foregoing instrument was signed in behalf of said
corporation by authority of its Board of Directors, and said Appearer
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------------
NOTARY PUBLIC in and for
.
-------------------
EQUIPMENT LOAN/ LAKES GAMING SUBORDINATION AGREEMENT -- PAGE 6
<PAGE> 1
EXHIBIT 10.12
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY
GRAND CASINOS OF LOUISIANA, LLC -- COUSHATTA
IN FAVOR OF HIBERNIA NATIONAL BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999, (the "Effective Date"), by:
GRAND CASINOS OF LOUISIANA, LLC -- COUSHATTA (hereinafter
referred to as "Grand Casinos"), a Minnesota limited
liability company, whose permanent mailing address is
130 Chesire Lane, Minnetonka, Minnesota, 55305,
represented herein by Timothy Cope, its duly
authorized Chief Financial Officer.
Grand Casinos hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Coushatta Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, to Grand Casinos, whether such debts, liabilities and obligations
now exist or are hereafter incurred or arise, or whether the obligation of
the Tribe thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of whether such debts, liabilities
or obligations are evidenced by note, contract, open account or otherwise,
and irrespective of the person or entity in whose favor such debts or
liabilities may, at their inception, have been, or may hereafter be
created, or the manner in which they have been or may hereafter be acquired
by Grand Casinos; provided, however, that the term "Subordinated Claims"
shall not include any such debts, liabilities and obligations of the Tribe
hereafter owing to Grand Casinos pursuant to the Hotel Loan Subrogation
Rights. The term "Hotel Loan Subrogation Rights" shall mean those certain
subrogation rights that may now or hereafter be obtained by Grand Casinos
pursuant to that certain Commercial Guaranty Agreement dated February 15,
1999, executed by Grand Casinos in favor of Hibernia National Bank in
connection with the Hotel Loan Agreement (as such term is defined in the
Loan Agreement[herein defined]).
2. For and in consideration of the Hibernia Indebtedness (herein defined)
under the Hibernia Documents (herein defined), and in order to induce the
Hibernia National Bank ("Hibernia"), acting in its discretion in each
instance, to make loans or otherwise to give, grant or extend credit at any
time or times to the Tribe under the Hibernia Documents, Grand Casinos
hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by the Tribe
of the Subordinated Claims, together with any and all interest accrued
or to accrue thereon, to the payment to Hibernia of any and all debts,
liabilities
EQUIPMENT LOAN/ GRAND CASINOS COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
and obligations for which the Tribe may now or hereafter be under
obligation to Hibernia (the "Hibernia Indebtedness"), under:
(i) that certain Commercial Loan Agreement dated as of December 17, 1997,
between Hibernia, as lender, and the Tribe (herein referred to as the
"Loan Agreement");
(ii) that certain Equipment Loan Promissory Note dated as of December 17,
1997, executed by the Tribe in favor of Hibernia in the original
principal sum of $6,000,000.00 (herein referred to as the "Note");
(iii) that certain Dominion Account Agreement for the Equipment Loan dated
as of December 17, 1997, executed by the Tribe, Hibernia, and Grand
Casinos, Inc., a Minnesota corporation, Grand Casinos of Louisiana,
Inc. -- Coushatta, a Minnesota corporation, and The Cottonport Bank
in favor of Hibernia, which agreement encumbers the proceeds from the
gaming operations at the Tribe's casino operations as well as the
Casino Bank Accounts which are more fully described therein (the
"Dominion Account Agreement")
(iv) that certain Commercial Security Agreement dated as of December 17,
1997, executed by the Tribe, as debtor, in favor of Hibernia, as
secured party, which agreement covers certain equipment referred to
therein (the "Security Agreement"); and
(v) that certain Non-Standard Financing Statement executed by the Tribe,
as the debtor, in favor of Hibernia, as the secured party, on or
about December 17, 1997, regarding the Collateral (as defined in the
aforesaid Dominion Account) which instrument has or soon will be
recorded in the public records of Allen Parish, Louisiana, together
with any subsequent financing statements executed by the Tribe in
connection with the security interests granted in the Security
Agreement and/or the Dominion Account Agreement (the "Financing
Statements")
(the Loan Agreement, Note, Dominion Account Agreement, Security
Agreement and the Financing Statements are sometimes collectively
referred to as the "Hibernia Documents")
(whether such debts and liabilities now exist or are hereafter incurred or
arise, or whether the obligation of the Tribe thereon be direct,
contingent,
EQUIPMENT LOAN/ GRAND CASINOS COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
primary, secondary, joint and several, or otherwise, and irrespective
of whether such debts or liabilities be evidenced by note, contract,
open account or otherwise).
(b) Not to ask, demand, sue for, take or receive all or any part of the
Subordinated Claims, or any interest thereon, unless or until that
portion of the Hibernia Indebtedness then due shall have been fully
paid and discharged; provided however, unless and until Hibernia
notifies Grand Casinos at the address noted above that an Event of
Default has occurred under the terms of the Loan Agreement, Grand
Casinos may continue to receive scheduled payments from the Tribe
under the Subordinated Claims;
(c) That, if any payment(s) is (are) made on account of the Subordinated
Claims contrary to the terms of this Agreement, each and every amount
so paid shall be held in trust by Grand Casinos on behalf of Hibernia,
and Grand Casinos will promptly pay such amounts to Hibernia to be
credited and applied to any Hibernia Indebtedness (principal and/or
interest) then owing to Hibernia by the Tribe whether matured or
unmatured;
(d) That any liens, security interests, judgments liens, charges or other
encumbrances upon the assets of the Tribe securing payment of the
Subordinated Claims shall be and remain inferior and subordinate to
any liens, security interests, judgment liens, charges or other
encumbrances upon the assets of the Tribe securing payment of the
Hibernia Indebtedness;
(e) If Grand Casinos forecloses upon any of the Subordinated Claims or
obtains possession of the property of the Tribe in lieu of
foreclosure, all assets of such Tribe or proceeds thereof obtained
thereby shall be held in trust by Grand Casinos on behalf of Hibernia,
and Grand Casinos will promptly pay such amounts to Hibernia to be
credited and applied to any Hibernia Indebtedness (principal and/or
interest) then owing to Hibernia by the Tribe, whether matured or
unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of the Tribe whether by reason of reorganization,
liquidation, dissolution, bankruptcy, receivership, assignment for the
benefit of creditors, or any other action or proceeding involving the
readjustment of all or any of the Subordinated Claims, or the
application of assets of the Tribe to the payment or liquidation
thereof, either in whole or in part, Hibernia shall be entitled to
receive payment in full of any and all of the Hibernia Indebtedness
then owing to Hibernia by such Tribe prior to the payment of all or
any portion of the Subordinated Claims; and
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<PAGE> 4
(g) Not to transfer, assign, encumber or subordinate at any time while
this Agreement remains in effect, any right, claim or interest of any
kind in or to any of the Subordinated Claims, either principal or
interest, unless such is done expressly subject to the terms and
provisions of this Agreement.
4. This Agreement is complete and effective upon execution by Grand
Casinos and delivery of this Agreement to Hibernia.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Grand Casinos and its legal representatives,
successors or assigns, until all of the Hibernia Indebtedness has been
paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Hibernia and Grand Casinos.
8. Hibernia will not alter, modify or amend any of the Hibernia Documents
without the prior written consent of Grand Casinos, which consent will
not be unreasonably withheld.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement before
the undersigned witnesses on the date shown below, but effective as of the
Effective Date.
WITNESSES: GRAND CASINOS OF LOUISIANA, LLC -- COUSHATTA
- -----------------------
By: /s/ Timothy Cope
-------------------------------------
Timothy Cope, Its Chief Financial Officer
Date: March 5, 1999
- ----------------------- ---------------
ACCEPTED:
HIBERNIA NATIONAL BANK
By ___________________________________
_____________, its _______________
Date: _______________________________
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<PAGE> 6
STATE OF MINNESOTA,
COUNTY OF __________.
On this day of , 1999, before me appeared TIMOTHY COPE, to me
----- ----------
known, who, being by me duly sworn, did say:
That he is the Chief Financial Officer of GRAND CASINOS OF LOUISIANA, LLC
- -- COUSHATTA., a Minnesota limited liability company, and that the foregoing
instrument was signed in behalf of said limited liability company by authority
of its Manager and Members, and said Appearer acknowledged said instrument to be
the free act and deed of said limited liability company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------------------------
NOTARY PUBLIC in and for
-------------------.
EQUIPMENT LOAN/ GRAND CASINOS COUSHATTA LLC SUBORDINATION AGREEMENT -- PAGE 6
<PAGE> 1
EXHIBIT 10.13
DOMINION ACCOUNT AGREEMENT
THIS DOMINION ACCOUNT AGREEMENT (the "Agreement"), dated effective as
of December 18, 1998 (the "Effective Date"), between the COUSHATTA TRIBE OF
LOUISIANA (the "Tribe"), a federally recognized Indian tribe, GRAND CASINOS OF
LOUISIANA, L.L.C. - COUSHATTA, a Minnesota limited liability company (the
"Manager"), LAKES GAMING, INC., a Minnesota corporation ("Lakes Gaming"), THE
COTTONPORT BANK ("Cottonport Bank"), a bank chartered under the laws of the
State of Louisiana, and HIBERNIA NATIONAL BANK, a national banking association
("Hibernia");
WITNESSETH:
WHEREAS, the Tribe has the inherent power to conduct and regulate
gaming on its lands, subject only to the restrictions imposed by the Indian
Gaming Regulatory Act, Public Law 100-497 (the "IGRA"); and
WHEREAS, in accordance with the IGRA, the Tribe has adopted its Gaming
Ordinance No. 92-01 (the "Ordinance"), and has entered into a Tribal-State
Compact for the Conduct of Class III Gaming with the State of Louisiana; and
WHEREAS, under the Ordinance, the Tribe operates a gaming facility (the
"Casino") on its lands; and
WHEREAS, pursuant to that certain Amended and Restated Management &
Construction Agreement, dated as of February 25, 1992, (the "Management
Contract"), the Tribe engaged Grand Casinos of Louisiana, Inc.-Coushatta ("GCI")
to manage the Casino and to collect the receipts, pay the operating expenses and
to distribute the income thereof; and
WHEREAS, pursuant to that certain Assignment dated December 31, 1998,
GCI assigned to the Manager all of GCI's rights, title and interest in and to
the Management Contract; and
WHEREAS, the Tribe has consented such an Assignment; and
WHEREAS, the Tribe has purchased, and intends to purchase additional,
gaming equipment to utilize in the gaming operations; and
WHEREAS, the Tribe, as borrower, and Hibernia, as lender, have entered
into that certain Equipment Loan Agreement dated as of the Effective Date (the
"Loan Agreement"), under the terms of which Hibernia agreed to loan to the Tribe
sums not to exceed $15,000,000 to purchase gaming equipment and other equipment
to use in conjunction with gaming operations at the Casino; and
WHEREAS, the Tribe and the Manager desire to enter into this Agreement
in order to grant to Hibernia a security interest in the Gross Receipts (as
defined herein) and to provide for the receipt and deposit of the Gross Receipts
into the Casino Bank Accounts and the payment therefrom of certain sums to
Hibernia; and
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 1
<PAGE> 2
WHEREAS, the parties hereto are willing to enter into this Agreement
and to undertake the duties set forth herein upon the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Unless the context otherwise requires, capitalized
terms which are not defined herein shall have the meaning ascribed to them in
the Loan Agreement.
Section 1.2 Defined Terms. The following terms when used herein
shall have the following meanings:
"Business Day" means a day other than (i) a Saturday or Sunday (ii) any
day on which banks located in the State of Louisiana are required or authorized
by law to remain closed.
"Casino Bank Accounts" means all of the bank accounts specified or
contemplated in Section 5.10 of the Management Contract, including without
limitation, the General Account, the Expense Account and the Contingency Reserve
Fund.
"Collateral" means the Gross Receipts and the Casino Bank Accounts and
the funds deposited or credited thereto from time to time.
"Contingency Reserve Fund" means that certain account which may be
established from time to time by the Tribe with the Cottonport Bank as the
Contingency Reserve Fund pursuant to Section 5.10.4 of the Management Contract.
"Entities" collectively means the Tribe and the Manager and "Entity"
means any one of the Entities.
"Enterprise" means the operation of the Casino by the Tribe and the
Manager pursuant to the Management Contract.
"Expense Account" means that certain Account No. [ Intentionally
Omitted ] owned and maintained by the Tribe with the Cottonport Bank as the
Expense Account pursuant to Section 5.10.2 of the Management Contract.
"Existing Equipment Loan Dominion Account Agreement" means that certain
Dominion Account Agreement dated as of December 17, 1997, by the Tribe, GCI,
Grand Casinos, Inc. ("Grand"), a Minnesota corporation, Hibernia and Cottonport
Bank in connection with the Existing Equipment Loan.
"General Account" means that certain Account No. [ Intentionally
Omitted ] owned and maintained by the Tribe with the Cottonport Bank as the
General Account pursuant to Section 5.10 of the Management Contract.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 2
<PAGE> 3
"Gross Receipts" has the meaning ascribed to it in Section 2.9 of the
Management Agreement; provided however, the term shall include all revenues
received by the Enterprise from the operations of the Hotel.
"Hotel Loan Dominion Account Agreement" means that certain Dominion
Account Agreement dated May 1, 1997, between Hibernia, Cottonport Bank, GCI,
Grand, the Tribe and the Coushatta Tribe of Louisiana Building Authority
("Authority") in connection with that certain Commercial Loan Agreement dated as
of May 1, 1997, between Hibernia, as lender, and the Tribe and the Authority, as
borrowers, regarding loans not to exceed $25,000,000.
"Management Committee" has the meaning ascribed to it in Section 2.11
of the Management Contract.
"Net Profits" shall have the meaning ascribed to it in Section 2.14 of
the Management Contract.
"Note" means that certain promissory note dated as of the Effective
Date executed by Tribe in favor of Hibernia in the principal amount of up to
Fifteen Million and No/100 Dollars ($15,000,000.00), together with all
substitute or replacement notes therefor, as well as all renewals, extensions,
modifications, refinancings, consolidations and substitutions of and for such a
note.
"Obligations" the indebtedness evidenced by the Note, including
principal, interest, costs, expenses and attorneys' fees and all other fees and
charges, together with all other indebtedness and costs and expenses for which
the Tribe is responsible under this Agreement or for which the Tribe is
responsible under any of the Related Documents.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Related Documents" means and include individually, collectively,
interchangeably and without limitation the Note, the Loan Agreement, guaranties,
security agreements, financing statements and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection with
the Obligations.
ARTICLE 2
COVENANTS
Unless Hibernia's prior written consent to the contrary is obtained,
each of the Entities will at all times comply with the covenants contained in
this Article 2, from the date hereof and continuing thereafter for so long as
the Obligations, or any portion thereof, are outstanding.
Section 2.1 MAINTENANCE OF CASINO BANK ACCOUNTS. The Entities,
acting through the Management Committee, shall maintain the Casino Bank Accounts
with the Cottonport Bank in accordance with the terms of the Management
Contract.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 3
<PAGE> 4
Section 2.2 DEPOSIT OF GROSS RECEIPTS. The Entities, acting through
the Management Committee, shall deposit all Gross Receipts into the General
Account maintained with the Cottonport Bank in accordance with the terms of the
Management Contract.
Section 2.3 CHARACTERIZATION OF PAYMENTS. All payments and
transfers to Hibernia which are referred to in Article 3 of this Agreement shall
be deemed to be, and treated and paid as, Operating Expenses under the terms of
the Management Agreement.
Section 2.4 LIMITATIONS OF MONTHLY DISTRIBUTIONS. No distributions,
transfers or payments shall be made from the Casino Bank Accounts to the
Entities or to Lakes Gaming until the last Business Day of each calendar month.
Further, on the last Business Day of each calendar month, no distributions,
transfers or payments shall be made directly or indirectly from the Casino Bank
Accounts to the Entities or to Lakes Gaming unless and until all Certificates
for Payment which have been previously submitted to the Cottonport Bank pursuant
to the Hotel Loan Dominion Account Agreement, to the Existing Equipment Loan
Dominion Account Agreement and to Section 3.1 hereof have been fully paid. The
foregoing prohibition applies to any and all distributions, transfers or
payments from the Casino Bank Accounts to the Entities or to Lakes Gaming,
including, without limitation, any distribution of Net Profits, repayments of
principal or interest for loans made by the Manager or Lakes Gaming to the
Tribe, the payment of any management fees, or the transfer of funds from the
Casino Bank Accounts to any other accounts maintained by the any of the
Entities.
Section 2.5 LIMITATIONS UPON DISTRIBUTIONS UPON DEFAULT. Upon the
occurrence of an Event of Default under the provisions of the Loan Agreement and
so long as the same remains unremedied in the opinion of Hibernia, no
distributions, transfers or payments shall be made directly or indirectly from
the Casino Bank Accounts to the Entities or to Lakes Gaming, including without
limitation, any distribution of Net Profits, repayments of principal or interest
for loans made by the Manager or Lakes Gaming to the Tribe, the payment of any
management fees, or the transfer of funds from the Casino Bank Accounts to any
other accounts maintained by any of the Entities with the Cottonport Bank.
Section 2.6 NO CHANGE IN THE MANAGEMENT CONTRACT. The Entities will
maintain the Management Contract pursuant to the provisions of Section 9.16 of
the Loan Agreement. The Entities shall not amend, modify, alter or change the
terms of the Management Contract without Hibernia's prior written consent which
consent will not be unreasonably withheld or delayed.
Section 2.7 FINANCIAL INFORMATION. The Entities shall comply with
the financial reporting requirements set forth in Section 9.01 of the Loan
Agreement.
ARTICLE 3
AUTHORIZED TRANSFERS FROM
THE CASINO BANK ACCOUNTS
Section 3.1 PAYMENTS DUE UNDER THE LOAN AGREEMENT AND THE NOTE. The
Tribe has agreed to make certain monthly payments to Hibernia as set forth in
the Loan Agreement and the Note. In order to receive any such payment, Hibernia
shall forward to the Entities and the Cottonport Bank by facsimile transmission
or by any of the other means by which notice may be given as specified in
Section 8.1 hereof, a Certificate for Payment in the form set forth in Exhibit
No. 1 attached hereto. The Tribe and the Manager
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 4
<PAGE> 5
hereby authorize and direct the Cottonport Bank upon its receipt of each such
Certificate for Payment to transfer funds from the Expense Account to Hibernia
in the amounts specified in each such certificate. The Tribe shall have the
right to pay the Note in accordance with its terms even though Hibernia fails to
timely forward such a Certificate for Payment.
Section 3.2 TRANSFERS FROM OTHER ACCOUNTS. In the event the funds
in the Expense Account are insufficient to meet the requirements of Section 3.1,
the Cottonport Bank is authorized and directed to withdraw and transfer from any
other Casino Bank Account maintained by the Entities with the Cottonport Bank,
including without limitation, the General Account or the Contingency Reserve
Fund, funds in an amount or amounts necessary to pay fully any such
requirements.
Section 3.3 METHOD OF TRANSFER. The Cottonport Bank shall make the
transfers authorized in Sections 3.1 to the extent funds are credited to the
Casino Bank Accounts. Unless otherwise requested by Hibernia, any transfer from
the Cottonport Bank to Hibernia pursuant to this Article 3 shall be made by wire
transfer to:
Hibernia National Bank
ABA Routing No. 065000090
333 Travis Street
Shreveport, Louisiana 71101
Attention: Christopher K. Haskew
If a Certificate for Payment is received by the Cottonport Bank at or prior to
10:00 a.m. Central Time on a Business Day, the Cottonport Bank shall make
payments as directed by Hibernia in the Certificate for Payment by or before
2:00 p.m. Central Time, on the same Business Day. If any such Certificate for
Payment is received by the Cottonport Bank after 10:00 a.m. Central Time on a
Business Day, the Cottonport Bank will make payment as directed by Hibernia in
the Certificate for Payment on or before 2:00 p.m. Central Time on the next
succeeding Business Day.
Section 3.4 BANK STATEMENTS. The Cottonport Bank is hereby
authorized and directed by the Entities to forward to Hibernia copies of the
monthly statements regarding the Casino Bank Accounts concurrently with the
distribution of such monthly statements of the Casino Bank Accounts to the
Manager and/or the Tribe.
Section 3.5 TERMINATION. (a) The authorizations and directions made
in this Article 3 to the Cottonport Bank are absolute and irrevocable and shall
terminate only upon the Cottonport Bank's receipt of a Termination Certificate
in a form similar to Exhibit No. 2 attached hereto which has been duly signed by
Hibernia and delivered to the Cottonport Bank and the Entities. Until such time
as the Cottonport Bank has received such a Termination Certificate, the
Cottonport Bank shall continue to transfer funds from the Casino Bank Accounts
in accordance with the terms hereof and to otherwise comply with the provisions
of this Agreement.
(b) In the Certificate for Payment submitted for the final
payments due under the Obligations, Hibernia will state that such a certificate
is the final Certificate for Payment to be submitted to the Cottonport Bank
under this Agreement. Upon payment and satisfaction of all of the Obligations,
Hibernia shall execute and deliver a Termination Certificate to the Cottonport
Bank and the Entities. If all of the Obligations have been paid in full and
Hibernia has not executed and delivered the Termination
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 5
<PAGE> 6
Certificate, the Tribe will notify Hibernia in writing and within twenty (20)
days of its receipt of such notice, Hibernia shall execute and deliver the
Termination Certificate to the Cottonport Bank and the Entities.
ARTICLE 4
PLEDGE AND GRANT OF SECURITY INTERESTS
Section 4.1. GRANT OF SECURITY INTEREST. As security for the payment
and performance of all of the Obligations, each Entity hereby pledges to
Hibernia, and grants to Hibernia a continuing security interest in, all of the
right, title and interest of each Entity in and to the Collateral, whether now
or hereafter owned, existing, arising or acquired, including without limitation,
the Casino Bank Accounts and all funds currently or hereafter deposited therein
or credited thereto.
Section 4.2 DURATION. The security interests granted herein in the
Collateral in favor of Hibernia will continue until such time as all of the
Obligations have been fully paid and satisfied and this Agreement has been
canceled or terminated by Hibernia under a written cancellation instrument,
which instrument Hibernia will execute and deliver to the Entities concurrently
with the Termination Certificate; provided, however, the security interests
granted herein shall terminate as to specified funds previously on deposit in
the Casino Bank Accounts if and when such funds are distributed to the Entities
in accordance with the terms of the Management Agreement and this Agreement.
ARTICLE 5
COTTONPORT BANK'S
REPRESENTATIONS AND AGREEMENTS
Section 5.1 COTTONPORT BANK'S REPRESENTATIONS. Cottonport Bank
hereby warrants and represents to Hibernia that: (a) the Casino Bank Accounts
exist and the accounts numbers specified herein with respect to the Casino Bank
Accounts are correct; (b) the Tribe is the sole owner of the Casino Bank
Accounts as reflected in the records of the Cottonport Bank; and (c) Cottonport
Bank has not received notice from any third party, other than Hibernia, that any
such third party has taken or claims a security interest in the Casino Bank
Accounts.
Section 5.2 RECEIPT OF NOTICE. The Cottonport Bank hereby
acknowledges that this Agreement constitutes sufficient notice under La. R. S.
10:9-305(4) that the Tribe has pledged and granted to Hibernia a security
interest to Hibernia in and to Casino Bank Accounts .
Section 5.3 SUBORDINATION. The Cottonport Bank hereby subordinates
to the security interest granted herein to Hibernia any right of offset or any
other security interest that the Cottonport Bank has, or may hereafter obtain,
in and to the Casino Bank Accounts.
Section 5.4 NOTICES TO HIBERNIA. The Cottonport Bank will notify
Hibernia immediately in the event the account numbers for the Casino Bank
Accounts change. Further, the Cottonport Bank will notify Hibernia immediately
upon the Cottonport Bank's receipt of a notice of a claim of a security interest
asserted, or lien filed, by any Person in and to the Casino Bank Accounts.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 6
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Section 5.5 ACCEPTANCE. By execution of this Agreement, the
Cottonport Bank accepts its obligations hereunder, but only upon the express
terms and conditions set forth in this Agreement. Cottonport Bank undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement, including the instructions set forth in Article 3.
ARTICLE 6
AGREEMENTS REGARDING THE COTTONPORT BANK
The Entities and Hibernia agree that the following provisions shall
control with respect to the rights, duties, liabilities and privileges of the
Cottonport Bank:
Section 6.1 PERFORMANCE BY OTHERS. The Cottonport Bank shall have
no duty to see that any duties or obligations herein or elsewhere imposed on any
other parties are performed or honored.
Section 6.2 RECITALS. The Cottonport Bank shall not be responsible
for any recital herein or in any other instrument or certificate described in
this Agreement, or for the validity of execution by any party to any such
instruments, or for the validity of any representations set forth in any such
agreements.
Section 6.3 RELIANCE BY COTTONPORT BANK. As to the existence or
non-existence of any fact or as to the sufficiency or validity of any instrument
or certificate, or as to its authorization to perform any act described herein,
the Cottonport Bank shall be entitled to rely upon any written notice signed by
a representative of the parties to this Agreement. Further, Cottonport Bank acts
as depository and transfer agent only, and is not responsible, or liable in any
manner whatsoever, for the sufficiency, correctness, genuineness or validity of
the subject matter of a Certificate of Payment, or any part thereof; provided,
however, the Cottonport Bank shall have the obligation to confirm the validity
and authenticity of a Certificate of Payment if it has a reasonable basis for
concluding that such a certificate was not issued by Hibernia.
Section 6.4 FAILURE OF PERFORMANCE BY COTTONPORT BANK. In the event
that the Cottonport Bank fails to comply with its obligations hereunder, the
Entities, at the request of Hibernia, shall move custody of the Casino Bank
Accounts to another financial institution mutually acceptable to the Entities
and Hibernia.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
(a) Any of the Entities shall breach any of their
respective covenants or agreements set forth herein; or
(b) Any of the Entities shall revoke, alter or modify, or
attempt to revoke, alter or modify, any direction or instruction given or
required to be given to Cottonport Bank pursuant to Article 3 hereof; or
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 7
<PAGE> 8
(c) An Event of Default, as defined in the Loan Agreement,
shall occur.
Section 7.2 REMEDIES ON DEFAULT. Whenever an Event of Default shall
have occurred and be continuing, Hibernia shall be entitled to exercise all of
the rights and remedies available to a secured party under the Commercial Laws
- -- Secured Transactions as set forth in La. R.S. 10-9:901 et seq., all rights
and remedies under any Obligation, all rights and remedies available to it under
the Related Agreement and all rights and remedies available to it under this
Agreement, including, without limitation, the right, from time to time, without
demand or notice of any kind, to:
(a) direct the Cottonport Bank to freeze the balances of
the Casino Bank Accounts and not permit any further withdrawals or transfers
therefrom unless otherwise instructed by Hibernia to do so;
(b) take any action that Hibernia may deem necessary or
desirable in order to realize on the Collateral, including, the authority to
endorse in the name of the Tribe without recourse to the Tribe any checks,
drafts, notes or other instruments or documents received in payment of or on
account of the Gross Receipts; and
(c) exercise any and all other rights, remedies and
privileges it may have under this Agreement and under any Obligation.
Any proceeds received by Hibernia from the exercise of any remedy shall be
applied by Hibernia (i) first to the payment by Hibernia of all expenses of the
exercise of such remedies, including the reasonable attorneys' fees and legal
expenses incurred in connection therewith by Hibernia, (ii) second, to the
payment of the Obligations in such order and in such manner as Hibernia may, in
its discretion, determine, and (iii) third, any surplus after such application
shall be delivered to the Enterprise, except as otherwise required by law or as
a court of competent jurisdiction may direct. The Entities agree to pay all
reasonable expenses incurred by Hibernia in connection with the exercise of any
remedy hereunder, including the reasonable attorneys' fees incurred in
connection therewith by Hibernia.
Section 7.3 OFFSET. In addition to the remedies set forth in
Section 7.2, upon the occurrence of any Event of Default and thereafter while
the same be continuing, the Tribe and the Manager hereby irrevocably authorize
the Cottonport Bank, as agent for Hibernia until Cottonport Bank receives a
Termination Certificate, to set off all sums owing by the Tribe to Hibernia
against the Casino Bank Account and to forward transfer such sums to Hibernia.
Such right shall exist whether or not Hibernia shall have made any demand
hereunder or under any Obligation.
Section 7.4. WAIVERS; REMEDIES. Any waiver given by Hibernia
hereunder shall be effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to Hibernia. All rights and
remedies of Hibernia shall be cumulative and may be exercised singly in any
order or concurrently, at Hibernia's option, and the exercise or enforcement of
any such right or remedy shall neither be a condition to nor a bar to the
exercise or enforcement of any other.
ARTICLE 8
MISCELLANEOUS
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 8
<PAGE> 9
Section 8.1. NOTICES. Except as otherwise provided herein, any
notice or demand which, by provision of this Agreement, is required or permitted
to be given or served by Hibernia to or on any of the Entities or the Cottonport
Bank shall be deemed to have been sufficiently given and served for all
purposes: (a) (if mailed) seven (7) calendar days after being deposited, postage
prepaid, in the United States Mail, registered or certified mail; or (b) (if
delivered by express courier) one Business Day after being delivered to such
courier; or (c) (if delivered in person) the same day as delivery or until
another address or addresses are given in writing by a party to Hibernia as
follows:
To the Tribe Coushatta Tribe of Louisiana
Post Office Box 818
Elton, Louisiana 70532
Attention: Lovelin Poncho, Tribal Chairman
Fax: (318) 584-2998
Troy Woodward
Coushatta Legal Center
214 East Nezpique Street
Jennings, Louisiana 70546
Fax: 318-824-8728
To Manager Grand Casinos of Louisiana, L.L.C.- Coushatta
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: Chief Financial Officer
Fax: (612) 449-9353
To Lakes Lakes Gaming, Inc.
Gaming 130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: Chief Financial Officer
Fax: (612) 449-9353
To Hibernia: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 71101
Attention: Loan Administration Department
Fax: (318) 674-3758
To Cottonport The Cottonport Bank
Bank: 144 South Main Street
Marksville, Louisiana 71351
Attention: Dwayne Harper
Fax No. (318) 253-4472
Section 8.2. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Louisiana.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 9
<PAGE> 10
Section 8.3. SEVERABILITY. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof; provided, however that where the provisions of any such applicable law
may be waived, they hereby are waived by the Entities to the fullest extent
permitted by law to the end that this Agreement shall be deemed to be a valid
and binding agreement in accordance with its terms.
Section 8.4. SURVIVAL. The warranties, representations, covenants
and agreements set forth herein shall survive the execution and delivery of this
Agreement and shall continue in full force and effect until all Obligations
shall have been paid and performed in full.
Section 8.5. COSTS AND EXPENSES; INDEMNITY. The Tribe will pay or
reimburse Hibernia on demand for all out-of-pocket expenses (including in each
case all filing and recording fees and taxes and all reasonable fees and
expenses of counsel) incurred by Hibernia in connection with the creation,
perfection, protection, satisfaction, foreclosure or enforcement of the liens
created hereby and the preparation, administration, continuance, amendment or
enforcement of this Agreement, and all such costs and expenses shall be part of
the Obligations secured by this Agreement. The Tribe shall indemnify and hold
Hibernia harmless from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement) or
Hibernia's actions pursuant hereto other than those claims, losses and
liabilities resulting from Hibernia's gross negligence or intentional
misconduct. Any liability of the Tribe to indemnify and hold Hibernia harmless
pursuant to the preceding sentence shall be part of the Obligations secured by
this Agreement. The obligations of the Tribe under this Section 8.5 shall
survive any termination of this Agreement.
Section 8.6. CAPTIONS. Captions herein are for convenience only and
shall not be deemed part of this Agreement.
Section 8.7 BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their respective successors and
assigns.
Section 8.8 AMENDMENTS. This Agreement may not be amended,
modified, waived, canceled or terminated, except in writing executed by all of
the parties hereto.
Section 8.9. SOVEREIGN IMMUNITY WAIVER; ARBITRATION; SUBMISSION TO
JURISDICTION, JURY TRIAL Waiver. This Agreement constitutes a Loan Document as
defined in the Loan Agreement. As such and without limiting the scope of the
Loan Agreement, the provisions of Section 15.10 of the Loan Agreement apply to
this Agreement and are incorporated herein by reference.
Section 8.10 OMPLIANCE WITH 25 U.S.C. SS.81.
In compliance with 25 U.S.C.ss.81, the residence and occupation
of the parties is stated as follows:
Party in interest: COUSHATTA TRIBE OF LOUISIANA
Residence: P.O. Box 818
Elton, LA 70532
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 10
<PAGE> 11
<TABLE>
<S> <C>
Occupation: A federally recognized Indian Tribe
Party in interest: THE COTTONPORT BANK
Residence: 144 South Main Street
Marksville, LA 71351
Occupation: Commercial bank
Party in interest: HIBERNIA NATIONAL BANK
Residence: 333 Travis Street
Shreveport, LA 71101
Occupation: Commercial bank
Party in interest: GRAND CASINOS OF LOUISIANA, L.L.C.- COUSHATTA
Residence: 130 Chesire Lane
Minnetonka, Minnesota 55305
Occupation: A Minnesota limited liability company
Party in interest: LAKES GAMING, INC.
Residence: 130 Chesire Lane
Minnetonka, Minnesota 55305
Occupation: A Minnesota corporation
Scope of Authority:
</TABLE>
The Tribe is authorized to execute the within document by a resolution
adopted by the Tribal Council of the Tribe at a meeting held at Elton,
Louisiana, on 12/17/98. The Tribal Council exercises its authority in this
instance because it believes the purchase of the Equipment related to Tribe's
Class II gaming facility in Kinder, Louisiana, in connection with the Casino,
and the financing thereof, to be in accordance with the long-range economic
objectives of the Tribe.
This document was executed on behalf of the Tribe on or about 2:39 p.m.
on 1/13/99, at Jennings, Louisiana, at ________________, __________, on behalf
of Manager on or about 11:00 a.m. on 12/31/98, at Los Angeles, CA, on behalf of
Lakes Gaming on or about 11:00 a.m. on 12/31/98, at Los Angeles, CA, on behalf
of The Cottonport Bank on or about 2:05 p.m. on 1/13/99, at Jennings, Louisiana,
and on behalf of Hibernia on or about 2:39 p.m. on 1/13/99, at Jennings,
Louisiana.
This instrument shall terminate upon payment in full of the
indebtedness secured hereby, provided that in any event this instrument shall
expire not later than 50 years from the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
counterparts, as of the Effective Date.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 11
<PAGE> 12
COUSHATTA TRIBE OF LOUISIANA
By: /s/ Lovelin Poncho
---------------------------------------
Lovelin Poncho, Tribal Chairman
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 12
<PAGE> 13
HIBERNIA NATIONAL BANK
By: /s/ Christopher K. Haskew
------------------------------------------------
Christopher K. Haskew, Assistant Vice President
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 13
<PAGE> 14
THE COTTONPORT BANK
By: /s/ Dwayne Harper
--------------------------------
Its V.P.
--------------------------------
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 14
<PAGE> 15
THIS PAGE INTENTIONALLY LEFT BLANK
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 15
<PAGE> 16
GRAND CASINOS OF LOUISIANA, L.L.C. -
COUSHATTA
By: /s/ Timothy Cope
------------------------------------------
Timothy Cope, its Chief Financial Officer
LAKES GAMING, INC.
By: /s/ Timothy Cope
-----------------------------------------
Timothy Cope, its Chief Financial Officer
Attachments:
Exhibit No. 1 - Certificate for Payment
Exhibit No. 2 - Termination Certificate
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 16
<PAGE> 17
BIA APPROVAL
THE FOREGOING DOCUMENT IS
APPROVED PURSUANT TO 25 U.S.C. 81:
UNITED STATES DEPARTMENT OF THE INTERIOR,
BUREAU OF INDIAN AFFAIRS:
BY_______________________________________
AREA DIRECTOR OF THE EASTERN AREA OFFICE
OF THE BUREAU OF INDIAN AFFAIRS OF THE SECRETARY
OF THE INTERIOR AND THE COMMISSIONER OF INDIAN AFFAIRS,
ACTING UNDER DELEGATED AUTHORITY.
EQUIPMENT LOAN DOMINION ACCOUNT AGREEMENT -- PAGE 17
<PAGE> 1
EXHIBIT 10.14
SECOND INTERCREDITOR AGREEMENT
This SECOND INTERCREDITOR AGREEMENT (the "Agreement") dated as
of December 18, 1998, between Hibernia National Bank ("Bank") and Grand Casinos
of Louisiana, Inc. -- Coushatta ("GCI") and Grand Casinos, Inc. ("Grand "):
WITNESSETH:
WHEREAS, Bank, the Coushatta Tribe of Louisiana (the "Tribe")
and the Coushatta Tribe of Louisiana Building Authority (the "Authority")
entered into that certain Commercial Loan Agreement dated May 1, 1997 (the
"Hotel Loan Agreement") under the terms of which the Bank agreed to loan to the
Tribe and the Authority up to $25,000,000.00 (the "Hotel Loan") to be used to
construct and furnish a hotel facility, to purchase new gaming equipment, and to
make certain renovations, all as more fully set forth therein;
WHEREAS, in connection with the Hotel Loan Agreement, the
Tribe and the Authority executed in favor of the Bank the Hotel Loan Collateral
Documents (herein defined), including without limitation, the Hotel Loan
Dominion Account Agreement (herein defined) which, among other things, granted
to Bank as collateral for the Hotel Loan a first priority security interest in
accounts (the "Casino Bank Accounts") maintained by the Tribe at Cottonport Bank
(herein defined);
WHEREAS, certain of the Hotel Loan Collateral Documents create
a Lien (herein defined) on certain equipment which equipment is also encumbered
by a Lien created under certain of the Indemnity Collateral Documents (herein
defined);
WHEREAS, in connection with the Hotel Loan, Grand and GCI
executed in favor of the Bank that certain Commercial Guaranty Agreement dated
May 1, 1997 (the "Hotel Loan Guaranty") under the terms of which Grand and GCI
guaranteed up to the maximum sum of $25,000,000.00 of the Hotel Loan Obligations
(herein defined);
WHEREAS, in consideration of Grand and GCI executing the Hotel
Loan Guaranty, the Tribe and the Authority executed in favor of GCI and Grand
that certain Indemnity Agreement dated May 1, 1997 (the "Indemnity Agreement"),
under the terms of which the Tribe and the Authority each agreed to indemnify
GCI and Grand from any liability arising out of the Hotel Loan Guaranty;
WHEREAS, in connection with the Indemnity Agreement, the Tribe
and the Authority granted in favor of Grand and GCI the Indemnity Collateral
Documents (herein defined);
WHEREAS, in connection with the Hotel Loan Agreement, Grand
and GCI executed the Hotel Loan Subordination Agreements (herein defined);
WHEREAS, if the Bank makes demand for payment upon Grand
and/or GCI pursuant
INTERCREDITOR AGREEMENT -- PAGE 1
<PAGE> 2
to the Hotel Loan Guaranty and if payment in full is made of all amounts owing
thereunder, GCI and Grand will have certain subrogation rights under the Hotel
Loan Guaranty, including, the right to succeed to the Bank's rights as a secured
party under the Hotel Loan Collateral Documents (such subrogation rights herein
referred to as the "Hotel Loan Subrogation Rights");
WHEREAS, the Bank and the Tribe entered into that certain
Commercial Loan Agreement dated December 17, 1997 (the "First Equipment Loan
Agreement"), under the terms of which the Bank agreed to loan to the Tribe up to
$6,000,000.00 (the "First Equipment Loan") to purchase new gaming equipment and
other assets;
WHEREAS, in connection with the First Equipment Loan
Agreement, the Tribe and the Authority executed in favor of the Bank the First
Equipment Loan Collateral Documents (herein defined), including without
limitation, the First Equipment Loan Dominion Account Agreement (herein defined)
which, among other things, granted to Bank as collateral for the First Equipment
Loan a security interest in the Casino Bank Accounts;
WHEREAS, in connection with the First Equipment Loan
Agreement, Grand and GCI executed the First Equipment Loan Subordination
Agreements (herein defined);
WHEREAS, in connection with the First Equipment Loan
Agreement, Bank, Grand and GCI executed the First Intercreditor Agreement
(herein defined);
WHEREAS, the Bank and the Tribe entered into that certain
Commercial Loan Agreement dated December 18, 1998 (the "Second Equipment Loan
Agreement"), under the terms of which the Bank agreed to loan to the Tribe up to
$15,000,000.00 (the "Second Equipment Loan") to purchase new gaming equipment
and other assets and to sometime before September 20, 1999, refinance the First
Equipment Loan;
WHEREAS, in connection with the Second Equipment Loan
Agreement, the Tribe and the Authority executed in favor of the Bank the Second
Equipment Loan Collateral Documents (herein defined), including without
limitation, the Second Equipment Loan Dominion Account Agreement (herein
defined) which, among other things, granted to Bank as collateral for the Second
Equipment Loan a security interest in the Casino Bank Accounts;
WHEREAS, in connection with the Second Equipment Loan
Agreement, Grand and GCI executed the Second Equipment Loan Subordination
Agreements (herein defined);
WHEREAS, certain of the First Equipment Loan Collateral
Documents and of the Second Equipment Loan Collateral Documents create a Lien
(herein defined) on certain equipment which equipment is also encumbered by a
Lien created under certain of the Indemnity Collateral Documents;
WHEREAS, the undersigned parties wish to set forth their
understanding with respect to the priority of those Liens;
INTERCREDITOR AGREEMENT -- PAGE 2
<PAGE> 3
WHEREAS, the First Equipment Loan Dominion Account Agreement
and the Second Equipment Loan Dominion Account Agreement encumber the same
collateral as the Hotel Loan Dominion Account Agreement;
WHEREAS, the parties wish to set forth herein their
understanding as to the application of the net proceeds from such collateral in
the event of foreclosure pursuant to such Dominion Account Agreements, the Hotel
Loan Collateral Documents, the First Equipment Loan Collateral Documents and/or
the Second Equipment Loan Collateral Documents;
NOW, THEREFORE, in consideration of the foregoing, the Bank,
GCI and Grand agree as follows:
SECTION 1. DEFINITIONS. The following terms shall have the
following meanings:
"Acceleration" means the earlier of (a) the acceleration of the Hotel
Loan Obligations under Section 11.02 of the Hotel Loan Agreement, (b) the
acceleration of the First Equipment Loan Obligations under Section 11.02 of the
First Equipment Loan Agreement, (c) the acceleration of the Second Equipment
Loan Obligations under Section 11.02 of the Second Equipment Loan Agreement, or
(d) the date on which the Bank makes demand for payment upon Grand and/or GCI
under the Hotel Loan Guaranty and all obligations of Grand and GCI under the
Hotel Loan Guaranty have been fully satisfied.
"Bank's Equipment Liens" means collectively, (a) the Lien granted by
the Tribe and the Authority in favor of the Bank pursuant to that certain
Commercial Security Agreement dated May 1, 1997, (b) the Lien granted by the
Tribe in favor of the Bank pursuant to that certain Commercial Security
Agreement dated December 17, 1997, and (c) the Lien granted by the Tribe in
favor of the Bank pursuant to that certain Commercial Security Agreement dated
December 18, 1998.
"Cottonport Bank" means The Cottonport Bank, a bank chartered under the
laws of Louisiana with its principal office in Marksville, Louisiana.
"Dominion Account Agreements" mean the First Equipment Loan Dominion
Account Agreement, the Second Equipment Loan Dominion Account Agreement and the
Hotel Loan Dominion Account Agreement.
"Equipment Loans" means collectively the First Equipment Loan and the
Second Equipment Loan.
"Equipment Loans Collateral" means collectively the First Equipment
Loan Collateral Documents and the Second Equipment Loan Collateral Documents.
"Equipment Loans Obligations" means collectively the First Equipment
Loan Obligations and the Second Equipment Loan Obligations.
"First Equipment Loan Collateral" means all property which is, or will
become, subject to the liens,
INTERCREDITOR AGREEMENT -- PAGE 3
<PAGE> 4
pledges and security interests of every kind granted by the First Equipment Loan
Collateral Documents.
"First Equipment Loan Collateral Documents" means those documents
designated as such which are described in Schedule 1 attached hereto and made a
part hereof.
"First Equipment Loan Dominion Account Agreement" means that certain
Dominion Account Agreement dated as of December 17, 1997, between the Tribe,
GCI, Grand, the Cottonport Bank and the Bank.
"First Equipment Loan Obligations" shall have the meaning attributable
to the term "Obligations" as defined in the First Equipment Loan Agreement.
"First Equipment Loan Subordination Agreements" mean those certain
Subordinations Agreements entered into as of December 17, 1997, by Grand and GCI
in favor of the Bank regarding the First Equipment Loan.
"First Intercreditor Agreement" means that certain Intercreditor
Agreement dated February 4, 1998, executed by the Bank, Grand and GCI.
"Foreclosure" means (a) the seizure and sale of property of a debtor by
executory or ordinary proceedings or by any other judicial proceeding, (b) the
seizure and sale of the property of a debtor in a nonjudicial proceeding in lieu
of the institution of a judicial proceeding, and (c) the exercise by the
creditor of the right of setoff with respect to funds owed by the creditor to
the debtor.
"Grand Equipment Liens" mean any and all Liens granted by the Tribe
and/or the Authority in favor of Grand or GCI with respect to the First
Equipment Loan Collateral, the Second Equipment Loan Collateral and the Hotel
Loan Collateral, including, but not limited to, those Liens granted pursuant to
(a) that certain Mortgage, Assignment of Leases and Rents and Securities
Agreement dated as of May 1, 1997, by the Authority in favor of GCI and Grand
which was recorded on July 1, 1997, under File No. 387927, of the Records of
Allen Parish, Louisiana, together with the Non-Standard Financing Statement
executed by the Authority in favor of Grand and GCI which Financing Statement
was recorded under File No. 387924 on July 1, 1997, in the Records of Allen
Parish, Louisiana; and (b) that certain Financing Statement executed by the
Tribe in favor of GCI which Financing Statement was recorded under File No.
02-362267 on March 27, 1992, in the Records of Allen Parish, Louisiana The term
"Grand Equipment Liens" does not include any Liens under the Hotel Loan
Collateral Documents to which Grand and/or GCI succeed under their respective
Hotel Loan Subrogation Rights.
"Hotel Loan Collateral" means all property which is, or will become,
subject to the liens, pledges and security interests of every kind granted by
the Hotel Loan Collateral Documents.
"Hotel Loan Collateral Documents" means those documents designated as
such which are described in Schedule 2 attached hereto and made a part hereof.
INTERCREDITOR AGREEMENT -- PAGE 4
<PAGE> 5
"Hotel Loan Obligations" shall have the meaning attributable to the
term "Obligations" as defined in the Hotel Loan Agreement.
"Hotel Loan Dominion Account Agreement" means that certain Dominion
Account Agreement dated May 1, 1997, between the Tribe, the Authority, Grand,
GCI, the Cottonport Bank and the Bank with respect to the Hotel Loan.
"Hotel Loan Subordination Agreement" means those certain Subordination
Agreements dated as of May 1, 1997, executed by Grand and by GCI in favor of the
Bank regarding the Hotel Loan.
"Indemnity Obligations" means the obligations owed by the Tribe and/or
the Authority to GCI and Grand pursuant to the Indemnity Agreement.
"Indemnity Collateral Documents" means those documents designated as
such which are described in Schedule 3 attached hereto and made a part hereof.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a person other than the owner of the property, whether such
interest is based on jurisprudence, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, leasehold
mortgage, assignment of rents and leases, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes.
"Net Foreclosure Proceeds" means the amount by which (a) the gross
proceeds obtained by a creditor in a Foreclosure exceeds (b) all expenses
incurred by the creditor in connection with such Foreclosure, including without
limitation, all attorneys fees.
"Operative Agreements" means the First Equipment Loan Agreement, the
First Equipment Loan Collateral Documents, the Second Equipment Loan Agreement,
the Second Equipment Loan Collateral Documents, the First Intercreditor
Agreement, the Hotel Loan Agreement, the Hotel Loan Collateral Documents, the
Hotel Loan Guaranty, the Indemnity Agreement and the Indemnity Collateral
Documents.
"Post-Acceleration Payments" means any payments made after Acceleration
by the Tribe or the Authority for credit to the Hotel Loan Obligations or the
First Equipment Loan Obligations or the Second Equipment Loan Obligations other
than payments from Net Foreclosure Proceeds realized from Foreclosure upon the
Casino Bank Accounts, upon the Hotel Loan Collateral, upon the First Equipment
Loan Collateral, or upon the Second Equipment Loan Collateral.
"Pro Rata Basis" means a fraction the numerator of which is the
outstanding principal balance and accrued unpaid interest due under either the
Hotel Loan or the Equipment Loans, as the case may be, and the denominator of
which is the sum of the outstanding principal balances and accrued unpaid
interest due under both the Hotel Loan and the Equipment Loans.
"Second Equipment Loan Collateral" means all property which is, or will
become, subject to the
INTERCREDITOR AGREEMENT -- PAGE 5
<PAGE> 6
liens, pledges and security interests of every kind granted by the Second
Equipment Loan Collateral Documents.
"Second Equipment Loan Collateral Documents" means those documents
designated as such which are described in Schedule 4 attached hereto and made a
part hereof.
"Second Equipment Loan Dominion Account Agreement" means that certain
Dominion Account Agreement dated as of December 18, 1998, between the Tribe,
GCI, Grand, the Cottonport Bank and the Bank.
"Second Equipment Loan Obligations" shall have the meaning attributable
to the term "Obligations" as defined in the Second Equipment Loan Agreement.
"Second Equipment Loan Subordination Agreements" mean those certain
Subordinations Agreements entered into as of December 18, 1998, by Grand and GCI
in favor of the Bank regarding the Second Equipment Loan.
SECTION 2. RANK OF EQUIPMENT LIENS. The Bank's Equipment Liens shall be
senior and prior to the Grand Equipment Liens irrespective of the time, order or
method of attachment or perfection of any such Liens.
SECTION 3. PRO RATA SHARING. Upon the earlier of Acceleration or
Foreclosure, the parties shall apply the following, whether received by the
Bank, Grand or GCI, on a Pro Rata Basis to the Hotel Loan Obligations and to the
Equipment Loans Obligations:
(a) Net Foreclosure Proceeds received from the
Foreclosure upon the Casino Bank Accounts, or any one
of them; and
(b) Post-Acceleration Payments.
SECTION 4. FORECLOSURE UPON THE OTHER HOTEL LOAN COLLATERAL. In the
event of Foreclosure upon the Hotel Loan Collateral (other than the Casino Bank
Accounts), the Net Foreclosure Proceeds realized therefrom shall be applied to
the following obligations in the following sequence and amounts:
(a) To the Hotel Loan Obligations until paid in full;
(b) To the Indemnity Obligations until paid in full; and
(c) To the Equipment Loans Obligations until paid in
full.
SECTION 5. SUBROGATION RIGHTS. At such time, if any, that (a) the Bank
has made demand for payment upon Grand and/or GCI under the Hotel Loan Guaranty
and (b) after such demand, all obligations of Grand and GCI under the Hotel Loan
Guaranty have been fully satisfied, Grand and/or GCI will thereafter be
subrogated to the rights of the Bank under the Hotel Loan Obligations and the
Hotel Loan Collateral
INTERCREDITOR AGREEMENT -- PAGE 6
<PAGE> 7
Documents in accordance with the terms of the Hotel Loan Guaranty and shall
succeed to, and be entitled to exercise and receive, the rights and benefits
under Sections 3 and 4 of this Agreement that the Bank would otherwise be
entitled to; provided however, neither Grand nor GCI shall have any rights under
the Equipment Loans Collateral Documents except in accordance with the
provisions of Section 6 of this Agreement.
SECTION 6. FORECLOSURE UPON THE OTHER EQUIPMENT LOAN COLLATERAL. In the
event of Foreclosure upon the Equipment Loans Collateral (other than the Casino
Bank Accounts), the Net Foreclosure Proceeds realized therefrom shall not be
applied toward the Hotel Loan Obligations or the Indemnity Obligations unless
and until: (a) the Equipment Loans Obligations have been paid in full; and (b)
the Bank, in its sole discretion, which may be withheld for any reason or for no
reason, agrees to such an application.
SECTION 7. EFFECT OF THIS AGREEMENT.
7.1 The foregoing provisions shall supersede any provisions
to the contrary contained in the Operative Agreements. Except as expressly set
forth hereinabove, this Intercreditor Agreement shall not alter, change or
modify the terms of or the effects of the Operative Agreements.
7.2 This Agreement shall not be binding upon the parties
hereto until such time as (a) the Bank, Grand and GCI have signed this
Agreement, (b) the Tribe and the Authority have consented in writing to this
Agreement, and (c) the Bureau of Indian Affairs has approved of such consent of
the Tribe and the Authority pursuant to 25 U.S.C 81.
SECTION 8. MISCELLANEOUS.
8.1 Notices. Except as otherwise provided herein, any notice
or demand which, by provision of this Agreement, is required or permitted to be
given or served by a party shall be deemed to have been sufficiently given and
served for all purposes: (a) (if mailed) seven (7) calendar days after being
deposited, postage prepaid, in the United States Mail, registered or certified
mail; or (b) (if delivered by express courier) one Business Day after being
delivered to such courier; or (c) (if delivered in person) the same day as
delivery or until another address or addresses are given in writing by a party
to the other parties as follows:
To GCI: Grand Casinos of Louisiana, Inc.- Coushatta
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-9353
To Grand: Grand Casinos, Inc.
130 Chesire Lane
Minnetonka, Minnesota 55305
INTERCREDITOR AGREEMENT -- PAGE 7
<PAGE> 8
Attention: President
Fax: (612) 449-9353
To Bank: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 7110
Attention: Legal Administration Department
Fax: (318) 674-3758
8.2 Governing Law. This Agreement shall be construed in
accordance with and governed the laws of the State of Louisiana.
8.3. Severability. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof.
8.4 Captions. Captions herein are for convenience only and
shall not be deemed part of this Agreement.
8.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns, including, but not limited to any subsequent assignment or conveyance
made by Grand and/or GCI to Lakes Gaming, Inc. ("Lakes"), a Minnesota
corporation, or to Grand Casinos of Louisiana, L.L.C. - Coushatta ("GCI LLC"), a
Minnesota limited liability company. This Agreement shall be binding upon Lakes
and GCI LLC at such time as such entities sign counterparts of this Agreement
which counterparts shall refer to and incorporate into the terms hereof any
guaranties and subordination agreements which either Lakes or GCI LLC have
executed in favor of the Bank relative to any of the Operative Agreements.
8.6 Amendments. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
HIBERNIA NATIONAL BANK
By: /s/ Christopher K. Haskew
--------------------------------
Christopher K. Haskew
Assistant Vice President
(SIGNATURES CONTINUED ON NEXT PAGE)
INTERCREDITOR AGREEMENT -- PAGE 8
<PAGE> 9
GRAND CASINOS OF LOUISIANA, INC. -
COUSHATTA
By: /s/ Timothy Cope
------------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
------------------------------------------------
Timothy Cope, its Chief Financial Officer
INTERCREDITOR AGREEMENT -- PAGE 9
<PAGE> 10
CONSENT
Each of the undersigned hereby acknowledges and agrees: (a) to
the foregoing terms and provisions of the Second Intercreditor Agreement between
the Bank, Grand and GCI; (b) to be bound by the provisions hereof as they relate
to the relative rights of the Bank, Grand and GCI; and (c) that the terms of
this Agreement shall not give either of the undersigned any substantive rights
vis-a-vis the Bank, Grand and GCI, nor is either intended to be a third party
beneficiary hereunder.
If any of the Bank, Grand or GCI shall enforce its rights or
remedies in violation of the terms of this Agreement, each of the undersigned
further agrees that it shall not use such violation as a defense to enforcement
by the Bank, Grand or GCI, as applicable, of that party's respective rights
and/or remedies under any financing, development or other related agreements
with either of the undersigned nor assert such violation as a defense,
counterclaim or basis for set-off or recoupment against the Bank, Grand or GCI.
Dated: December 18, 1998. COUSHATTA TRIBE OF LOUISIANA
By: /s/ Lovelin Poncho
Name: Lovelin Poncho
Title: CHAIRMAN
COUSHATTA TRIBE OF LOUISIANA
BUILDING AUTHORITY
By: /s/ Lovelin Poncho
Name: Lovelin Poncho
Title: CHAIRMAN
INTERCREDITOR AGREEMENT -- PAGE 10
<PAGE> 11
SCHEDULES ATTACHED
TO THE SECOND INTERCREDITOR AGREEMENT
SCHEDULE 1 -- FIRST EQUIPMENT LOAN COLLATERAL DOCUMENTS
1.1 That certain Dominion Account Agreement dated effective December 17,
1997, executed by the Tribe, GCI, Grand, Cottonport Bank and the Bank.
1.2 That certain Non-Standard Financing Statement dated December 17, 1997,
executed by the Tribe in favor of the Bank and consented to by
Cottonport Bank regarding the grant of the security interest in Cash
and the Casino Bank Accounts.
1.3 That certain Commercial Security Agreement dated December 17, 1997,
executed by the Tribe in favor of the Bank as well as any Financing
Statements executed in connection therewith
SCHEDULE 2 -- HOTEL LOAN COLLATERAL DOCUMENTS
2.1 That certain Dominion Account Agreement dated May 1, 1997, executed by
the Tribe, the Authority, Grand, GCI, Cottonport Bank and the Bank.
2.2 That certain Non-Standard Financing Statement (Casino Proceeds and
Casino Bank Accounts) dated May 1, 1997, executed by the Tribe and the
Authority in favor of the Bank and consented to by the Cottonport Bank
with respect to the grant of a security interest in all Cash and all
Casino Bank Accounts.
2.3 That certain Commercial Security Agreement dated May 1, 1997, executed
by the Tribe and the Authority in favor of the Bank granting a security
interest in all equipment to be used in the operation of the Hotel and
all gaming equipment purchased with the proceeds of the Hotel Loan, as
well as any Financing Statements executed in connection therewith
SCHEDULE 3 - INDEMNITY COLLATERAL DOCUMENTS
3.1 That certain Mortgage, Assignment of Leases and Rents and Security
Agreement dated May 1, 1997, executed by the Authority in favor of
Grand and GCI, which instrument was recorded on July 1, 1997, under
File No. 387929 of the Records of Allen Parish, Louisiana.
3.2 That certain Non-Standard Financing Statement dated May 1, 1997,
executed by the Authority in favor of GCI, individually and as agent
for Grand, which was recorded on July 1, 1997, under File No. 387924 of
the Records of Allen Parish, Louisiana.
INTERCREDITOR AGREEMENT -- PAGE 11
<PAGE> 12
3.3 Assignment of Construction Contract by Borrower dated May 1, 1997,
executed by the Authority in favor of GCI and Grand assigning an
interest in the Construction Contract between
the Tribe and Arkel Construction Co.
3.4 That certain Assignment of Architect's Contract by Borrower dated
effective May 1, 1997, executed by the Authority and the Tribe and in
favor of GCI and Grand.
SCHEDULE 4 -- SECOND EQUIPMENT LOAN COLLATERAL DOCUMENTS
4.1 That certain Dominion Account Agreement dated effective December 18,
1998, executed by the Tribe, GCI, Grand, Cottonport Bank and the Bank.
4.2 That certain Non-Standard Financing Statement dated December 18, 1998,
executed by the Tribe in favor of the Bank and consented to by
Cottonport Bank regarding the grant of the security interest in Cash
and the Casino Bank Accounts.
4.3 That certain Commercial Security Agreement dated December 18, 1998,
executed by the Tribe in favor of the Bank, as well as any Financing
Statements executed in connection therewith
INTERCREDITOR AGREEMENT -- PAGE 12
<PAGE> 1
EXHIBIT 10.15
COUNTERPART SIGNATURE PAGE
TO
INTERCREDITOR AGREEMENT
(SECOND INTERCREDITOR AGREEMENT)
THIS COUNTERPART SIGNATURE PAGE relates to that certain Second
Intercreditor Agreement dated as of December 18, 1998 (the "Second Intercreditor
Agreement"), by and among Hibernia National Bank ("Bank"), Grand Casinos, Inc.
("Grand") and Grand Casinos of Louisiana, Inc. -- Coushatta ("GCI"); and is
entered into pursuant to Section 2 of that certain Release and Assumption
Agreement dated as of December 31, 1998 (the "Release Agreement"), by and among
the Bank, Grand, GCI, The Coushatta Tribe of Louisiana, The Coushatta Tribe of
Louisiana Building Authority, Lakes Gaming, Inc. ("Lakes") and Grand Casinos of
Louisiana, LLC-Coushatta ("GCI LLC").
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed thereto in the Release Agreement.
By executing this counterpart signature page, each of the parties
hereto acknowledge and agree that (i) GCI has been released from all debts,
liabilities and obligations whatsoever now or hereafter owing to the Bank under
any of the Loan Documents, including, without limitation, the Hotel Loan
Guaranty; (ii) all obligations of GCI under each of the Existing Subordination
Agreements are hereby terminated; (iii) Grand has assigned to Lakes and Lakes
has assumed all of the respective rights, duties and obligations of Grand under
each of the Operative Agreements to which it is a party provided, however, Grand
remains liable under the Hotel Loan Guaranty; (iv) GCI has assigned to GCI LLC
and GCI LLC has assumed from GCI all of the rights, duties and obligations of
GCI under each of the Operative Agreements to which it is a party; (v) all
rights under the Second Intercreditor Agreement that were previously exercisable
by Grand and/or GCI shall hereinafter be deemed to be exercisable by Grand,
Lakes and/or GCI LLC; (vi) all references to the term "Hotel Loan Guaranty" in
the Second Intercreditor Agreement shall hereinafter be deemed to include an
additional reference to that certain Commercial Guaranty Agreement dated
February 15, 1999, executed by Lakes and GCI LLC in favor of the Bank with
respect to the Hotel Loan; (vii) all references to Grand and/or GCI under each
of the Operative Agreements (excluding the Hotel Loan Guaranty of Grand) and in
the definitions of the terms "Acceleration," "Grand Equipment Liens," "Hotel
Loan Subrogation Rights," and "Indemnity Obligations," shall each hereinafter be
deemed to refer to each of Lakes and GCI LLC, respectively; (viii) the term
"First Equipment Loan Subordination Agreements" shall hereinafter be deemed to
include additional references to those certain Subordination Agreements dated
February 15, 1999, respectively executed by each of Lakes and GCI LLC in favor
of Hibernia Bank with respect to the First Equipment Loan; (ix) the term "Second
Equipment Loan Subordination Agreements" shall hereinafter be deemed to include
additional references to those certain Subordination Agreements dated February
15, 1999, respectively executed by each of Lakes and GCI LLC in favor of
Hibernia Bank with respect to the Second Equipment Loan; and (x) the term "Hotel
Loan Subordination Agreements" shall hereinafter be deemed to include additional
references to those certain Subordination Agreements dated February 15, 1999,
respectively executed by each of Lakes and GCI LLC in favor of Hibernia Bank
with respect to the Hotel Loan.
[The remainder of this page has been intentionally left blank.]
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Counterpart
Signature Page as of the 15th day of February, 1999.
HIBERNIA NATIONAL BANK
BY: /s/ Christopher K. Haskew
------------------------------
Christopher K. Haskew
Assistant Vice President
LAKES GAMING, INC.
BY: /s/ Timothy Cope
------------------------------
Timothy J. Cope, its Chief Financial Officer
GRAND CASINOS OF LOUISIANA, LLC -
COUSHATTA
BY: /s/ Timothy Cope
------------------------------
Timothy J. Cope, its Chief Financial Officer
<PAGE> 1
EXHIBIT 10.16
RELEASE AND ASSUMPTION AGREEMENT
This RELEASE AND ASSUMPTION AGREEMENT (the "Agreement") dated
as of December 31, 1998, among Cottonport Bank ("Bank"), the Tunica-Biloxi Tribe
of Louisiana (the "Tribe"), Grand Casinos of Louisiana, Inc.--Tunica-Biloxi
("GCI"), Grand Casinos, Inc. ("Grand"), Lakes Gaming, Inc., a Minnesota
corporation and a subsidiary of Grand ("Lakes") and Grand Casinos of Louisiana,
LLC-Tunica-Biloxi, a Minnesota limited liability company and a subsidiary of
Lakes ("GCI LLC").
WITNESSETH:
WHEREAS, Bank entered into that certain Commercial Loan
Agreement dated March 17, 1997 (the "Hotel Loan Agreement") under the terms of
which the Bank agreed to loan to the Tribe up to $16,500,000.00 (the "Hotel
Loan") to be used to construct and furnish a hotel facility, to purchase new
gaming equipment, and to make certain renovations, all as more fully set forth
therein;
WHEREAS, in connection with the Hotel Loan, Grand and GCI
executed in favor of the Bank that certain Commercial Guaranty Agreement dated
April 7, 1997 (the "Hotel Loan Guaranty") under the terms of which Grand and GCI
guaranteed up to the maximum sum of $16,500,000.00 of the Hotel Loan Obligations
(herein defined);
WHEREAS, in connection with the Hotel Loan Agreement, Grand
executed that certain Subordination Agreement dated April 7, 1997 in favor of
the Bank (the "Grand Subordination Agreement");
WHEREAS, in connection with the Hotel Loan Agreement, GCI executed the certain
Subordination Agreement dated April 7, 1997 in favor of the Bank (the "GCI
Subordination Agreement");
WHEREAS, capitalized terms used herein shall have the meanings
ascribed thereto in the Hotel Loan Agreement unless otherwise defined herein;
WHEREAS, pursuant to that certain Merger Agreement dated June
30, 1998 (the "Merger Agreement") among Grand, Lakes, Hilton Hotels Corporation,
a Delaware corporation ('Hilton"), Park Place Entertainment Corporation , a
Delaware corporation and a subsidiary of Hilton ("Park Place"), Gaming
Acquisition Corporation, a Minnesota corporation and a subsidiary of Park Place
(the "Merger Subsidiary"), such parties intend to cause the following
transactions to occur effective as of closing on December 31,1998 (collectively,
the "Grand Transactions"):
(a) all right, title, interest, duties and obligations of Grand and
GCI in, to and under: (i) the Management Agreement, and (ii) any other security
agreements, mortgages, deeds of trust, contracts, agreements, instruments and
documents between or among the Tribe and either or both of Grand and/or GCI of
whatever nature, including, without limitation, any debts, liabilities or other
obligations owing by the Tribe to either or both of Grand and/or GCI, shall be
forever and
<PAGE> 2
absolutely assigned to and assumed by Lakes or GCI LLC, as applicable (the
"Assignment Transaction");
(b) GCI shall merge with and into Lakes, with Lakes remaining as the
surviving entity (the "GCI-Lakes Merger");
(c) Hilton will spin-off 100% of the capital stock of Park Place to
its public shareholders;
(d) Grand will spin-off 100% of the capital stock of Lakes to its
public shareholders; and
(e) the Merger Subsidiary shall merge with and into Grand, with Grand
remaining as the surviving entity (the "Park Place-Grand Merger");
WHEREAS, the Tribe has consented to the Grand Transactions and
Grand, GCI, Lakes and GCI LLC are also requesting the consent of the Bank to the
Grand Transactions and to amend the Loan Documents (herein defined) as set forth
herein, including without limitation, the release of GCI from and assumption by
GCI LLC of all obligations of GCI to the Bank under the applicable Loan
Documents to which it is a party; and
WHEREAS, the Bank is willing to grant such consent pursuant to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the Bank,
GCI and Grand agree as follows:
SECTION 1. CONSENT AND WAIVER. The Bank hereby consents to the Grand
Transactions as described above and waives any and all provisions (including,
without limitation, any change in control provisions) contained in the Loan
Documents that would restrict or otherwise give rise to an event of default
under the Loan Documents on account of the Grand Transactions. As used herein
the term "Loan Documents" shall individually or collectively, as the context my
require, mean the Hotel Loan Agreement, the Collateral Documents, the Hotel Loan
Guaranty, the Grand Subordination Agreement, the GCI Subordination Agreement,
and all other instruments, documents and agreements related thereto .
SECTION 2. RELEASE OF GCI AND REAFFIRMATION BY GRAND. Upon the
occurrence of the Release Effective Date (as hereinafter defined), the Bank
shall be deemed to have forever released GCI from all debts, liabilities and
obligations whatsoever now or hereafter owing to the Bank under the Hotel Loan
Guaranty. Grand hereby confirms that each and all of the obligations of Grand
under the Loan Documents, including, without limitation, the Hotel Loan
Guaranty, remain, and will remain, in full force and effect in accordance with
their original terms, without waiver or modification, notwithstanding the
completion of the Grand Transactions.
2
<PAGE> 3
The "Release Effective Date" shall be defined as and be deemed to have occurred
on the date that each of the following agreements and documents shall have been
executed and delivered to the Bank, each in form and substance acceptable to the
Bank (collectively, the "Release Documents"):
(aa) An acknowledgment and certification of Park Place that (i) the
release of Grand from Grand's obligations under the Loan Documents is not a
condition to the completion of the Park Place-Grand Merger, (ii) the Park
Place-Grand Merger has been legally effectuated and Grand has become the
wholly-owned subsidiary of Park Place, and (iii) no material adverse change has
occurred with respect to the post-merger pro forma financial statements of Grand
set forth in that certain Form S-4 Registration Statement of Park Place and
Grand and filed with the Securities and Exchange Commission on October 23, 1998;
(bb) An opinion of counsel of Grand, GCI, Lakes and GCI LLC (which
counsel shall be acceptable to the Bank) that (i) each of such entities (1) is
duly organized and existing under the laws of the state of its incorporation or
organization, and (2) has duly executed and deliver, and has taken all corporate
action necessary to authorize the execution, delivery and performance of, such
documents to the extent it is a party thereto; and (ii) the completion of the
Park Place-Grand Merger in accordance with applicable Minnesota law and the
Merger Agreement will not in and of itself create a defense to enforcement of
the Hotel Loan Guaranty with respect to Grand under Minnesota law;
(cc) Evidence that the Assignment Transaction has been completed;
(dd) Evidence that all Louisiana gaming approvals required in
connection with the Assignment Transaction have been obtained by Lakes and/or
GCI LLC, as applicable;.
(ee) An opinion rendered by Ropes & Gray that the approval of the
Bureau of Indian Affairs to the transactions contemplated herein is not required
or advised;
(ff) Delivery of the Lakes Guaranty and Lakes Subordination Agreement;
(gg) Delivery of the GCI LLC Guaranty and GCI LLC Subordination
Agreement; and
(hh) Payment of Bank's costs and attorneys fees.
SECTION 3. ASSUMPTION OF GCI OBLIGATIONS. GCI LLC hereby
unconditionally assumes each and every debt, liability and obligation of
whatever nature owing by GCI to the Bank under the Loan Documents, including,
without limitation, the Hotel Loan Guaranty, to the same extent as though GCI
LLC was originally a party thereto. In furtherance thereof, GCI LLC shall
execute and deliver to the Bank prior to the Release Effective Date such
additional documents as may be necessary to evidence or effectuate such
assumption, including, without limitation, the following:
(a) a Commercial Loan Guaranty pursuant to which GCI LLC shall
guaranty the payment of the Hotel Loan on terms and conditions substantially
similar to the Hotel Loan Guaranty (the "GCI LLC Guaranty"); and
3
<PAGE> 4
(b) a Subordination Agreement pursuant to which GCI LLC shall grant a
debt subordination to the Bank on terms substantially similar to the GCI
Subordination Agreement (the "GCI LLC Subordination").
SECTION 4. GUARANTY AND SUBORDINATION OF LAKES. To induce the Bank to
enter into this Agreement, Lakes hereby agrees to execute and deliver to the
Bank prior to the Release Effective Date the following:
(a) the Commercial Loan Guaranty pursuant to which Lakes shall
guaranty the payment of the Hotel Loan on terms and conditions substantially
similar to the Hotel Loan Guaranty (the "Lakes Guaranty"); and
(b) the Subordination Agreement pursuant to which Lakes shall grant a
debt subordination to the Bank on terms substantially similar to the Grand
Subordination Agreement (the "Lakes Subordination Agreement").
SECTION 5. FURTHER ASSURANCES. Each of the parties hereto agrees that
upon the request of any other party it shall execute and deliver such additional
agreements and documents as may be reasonably necessary to effectuate the
intents and purposes of this Agreement.
SECTION 6. EFFECT OF THIS AGREEMENT.
6.1 The foregoing provisions shall supersede any provisions to
the contrary contained in the Loan Documents. Except as expressly set forth
hereinabove, this Agreement shall not alter, change or modify the terms of or
the effects of the Loan Documents.
6.2 This Agreement shall not be binding upon the parties hereto
and shall not become effective (the "Effective Date") until such time as (a) the
Bank, the Tribe, Grand, GCI, Lakes and GCI LLC have signed this Agreement, and
(b) Grand shall have delivered to the Bank by facsimile or otherwise a written
notice confirming that the proposed Park Place-Grand Merger has been commenced
and is in a position to concurrently close with the transactions contemplated by
this Agreement.
SECTION 7. MISCELLANEOUS.
7.1 Notices. Except as otherwise provided herein, any notice or
demand which, by provision of this Agreement, is required or permitted to be
given or served by a party shall be deemed to have been sufficiently given and
served for all purposes: (a) (if mailed) seven (7) calendar days after being
deposited, postage prepaid, in the United States Mail, registered or certified
mail; or (b) (if delivered by express courier) one Business Day after being
delivered to such courier; or (c) (if delivered in person) the same day as
delivery or until another address or addresses are given in writing by a party
to the other parties as follows:
To GCI LLC: Grand Casinos of Louisiana, LLC.- Coushatta
130 Cheshire Lane
4
<PAGE> 5
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-7064
To Lakes: Lakes Gaming, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-7064
To Grand: Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attention: President
Fax: (612) 449-7064
To Bank: Cottonport Bank
144 South Main Street
Marksville, Louisiana 71351
Attention: Dwayn Harper
Fax: (318) 674-3758
To Tribe: The Tunica-Biloxi Tribe of Louisiana
P.O. Box 331
Marksville, Louisiana 71351
Attention: Tribal Chairman
Fax: (318) 253-9791
7.2 Governing Law. This Agreement shall be construed in
accordance with and governed the laws of the State of Louisiana.
7.3. Severability. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof.
7.4 Captions. Captions herein are for convenience only and shall
not be deemed part of this Agreement.
7.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns.
7.6 Amendments. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.
7.6 Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which when executed and delivered shall
be deemed to be an original and all of which shall constitute together but one
and the same agreement.
<PAGE> 6
7.7 Expenses. All attorneys fees, costs and expenses of the Bank
associated with the preparation, execution and delivery of this Agreement and
the Release Documents shall be jointly and severally paid by Grand, GCI, Lakes
and GCI LLC prior to the Release Effective Date.
[The remainder of this page has been intentionally left blank--
signature pages follow.]
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
COTTONPORT BANK
By: /s Dwayne Harper
------------------------------------
Its: Vice President
--------------------------------
<PAGE> 8
TUNICA-BILOXI TRIBE OF LOUISIANNA
By: /s/ Earl Barbry
------------------------------------
Earl Barbry
Chairman
<PAGE> 9
GRAND CASINOS OF LOUISIANA, LLC
- TUNICA-BILOXI
By: /s/ Timothy Cope
-----------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. -
TUNICA-BILOXI
By: /s/ Timothy Cope
-----------------------------------------------
Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
-----------------------------------------------
Timothy Cope, its Chief Financial Officer
LAKES GAMING, INC.
By: /s/ Timothy Cope
-----------------------------------------------
Timothy Cope, its Chief Financial Officer
<PAGE> 1
EXHIBIT 10.17
COMMERCIAL GUARANTY AGREEMENT
This Commercial Guaranty Agreement (this "Agreement") is made
and entered into effective as of February 15, 1999, by LAKES GAMING, INC., a
Minnesota corporation (herein sometimes referred to as "Grand Casinos"), GRAND
CASINOS OF LOUISIANA, LLC - TUNICA-BILOXI, a Minnesota limited liability company
(herein sometimes referred to as "Grand Casinos/TB") [Lakes Gaming and Grand
Casinos/TB are herein referred to individually as a "Guarantor" and collectively
as the "Guarantors"]) in favor of THE COTTONPORT BANK (the "Lender"),
guaranteeing the Indebtedness (as hereinafter defined) of the TUNICA-BILOXI
TRIBE OF LOUISIANA (the "Borrower").
W I T N E S S E T H:
FOR VALUE RECEIVED, and in consideration of and for credit and
financial accommodations extended, to be extended, or continued to or for the
account of the above named Borrower, each of the undersigned Guarantors, whether
one or more, hereby jointly, severally and solidarily, agrees as follows:
SECTION 1. Guaranty of Borrower's Indebtedness. Each Guarantor does
hereby absolutely and unconditionally guarantee the prompt and punctual payment
of all of the indebtedness, including principal, interest, attorneys' fees and
other amounts, of the Borrower to Lender incurred by the Borrower pursuant to
that certain Commercial Loan Agreement dated effective March 14, 1997, between
Borrower, as borrower, Lender, as lender, under the terms of which Lender agreed
to loan to Borrower the principal sum of Sixteen Million Five Hundred Thousand
and No/100 Dollars ($16,500,000.00), (the "Loan Agreement"), and pursuant to
that certain Promissory Note (the "Note") also dated effective March 14, 1997,
executed by the Borrower in favor of the Lender in the original principal amount
of Sixteen Million Five Hundred Thousand and No/100 Dollars ($16,500,000.00) in
connection with the Loan Agreement (all such indebtedness referred to herein as
the "Indebtedness"). Notwithstanding anything to the contrary contained herein,
the maximum amount of Indebtedness secured hereby is Sixteen Million Five
Hundred Thousand and No/100 Dollars ($16,500,000.00) (the "Maximum Amount").
SECTION 2. Joint, Several and Solidary Liability. Each Guarantor
further agrees that its obligations and liabilities for the prompt and punctual
payment, performance and satisfaction or purchase of all of Borrower's
Indebtedness shall be on a "joint and several" and "solidary" basis with
Borrower to the same degree and extent as if Guarantor had been and/or will be a
co-borrower, co-principal obligor and/or co-maker of all of Borrower's
Indebtedness, up to the Maximum Amount. In the event that there is more than one
guarantor under this Agreement, or in the event that there are other guarantors,
endorsers, or sureties of all or any portion of Borrower's Indebtedness,
Guarantor's obligations and liabilities hereunder shall be on a "joint and
several" and "solidary" basis along with such other guarantor or guarantors,
endorsers and/or sureties.
GUARANTY -- PAGE 1 OF 7
<PAGE> 2
SECTION 3. Duration. This Agreement and each Guarantor's obligations
and liabilities hereunder shall remain in full force and effect until such time
as all of Borrower's Indebtedness shall be paid, performed and/or satisfied in
full, in principal, interests costs and attorney's fees, and the Loan Agreement
terminated.
SECTION 4. Default by Borrower.
A. Should an Event of Default as defined in the Loan Agreement
occur, Lender shall notify each of the Guarantors of such an
event. Guarantors shall have the right (but not the obligation)
to attempt to remedy an Event of Default within the time periods
specified in the Loan Agreement. Such notice shall be given to
Guarantors concurrently with notice thereof being given to the
Borrower under the Loan Agreement. Guarantors may attempt to
remedy such an Event of Default and, if Guarantors cure such an
Event of Default, Lender will accept such a cure thereof by
Guarantors.
B. Should an Event of Default as defined in the Loan Agreement occur
and not be timely cured, each Guarantor unconditionally and
absolutely agrees to pay within one-hundred and twenty days after
Lender notifies the Guarantors of such an Event of Default the
full unpaid amount of all of Borrower's Indebtedness guaranteed
hereunder. Such payment or payments shall be made at Lender's
offices as specified in the Loan Agreement immediately following
demand by Lender. Each Guarantor hereby waives notice of
acceptance of this Agreement and of any Indebtedness to which it
applies or may apply. Each Guarantor further waives presentment
and demand for payment of Borrower's Indebtedness, notice of
dishonor, notice of intention to accelerate, protest and notice
of protest, collection or institution of any suit or other action
by Lender in collection. Each Guarantor additionally waives any
and all rights and pleas of division and discussion as provided
under Louisiana law, as well as, to the degree applicable, any
similar rights as may be provided under the laws of any other
state.
SECTION 5. Guarantor's Subordination of Rights. In the event that a
Guarantor should for any reason (A) advance or lend monies to Borrower, whether
or not such funds are used by Borrower to make payment(s) under Borrower's
Indebtedness, and/or (B) make any payment(s) to Lender or others for and on
behalf of Borrower under Borrower's Indebtedness, and/or (C) make any payment to
Lender in total or partial satisfaction of Guarantor's obligations and
liabilities under this Agreement, each such Guarantor hereby agrees that any and
all rights that Guarantor may have or acquire to collect from or to be
reimbursed by Borrower (or from or by any other guarantor, endorser or surety of
Borrower's Indebtedness), whether Guarantor's rights of collection or
reimbursement arise by way of subrogation to the rights of Lender or otherwise,
shall in all respects, whether or not Borrower is presently or subsequently
becomes insolvent, be subordinate, inferior and junior to the rights of Lender
to collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness is fully paid
and satisfied. So long as no Event of Default as defined in the Loan Agreement
exists, Guarantor may be repaid by Borrower as to any subordinated debt
permitted by the Loan Agreement. In the event of Borrower's insolvency or
consequent liquidation of Borrower's assets, through bankruptcy, by an
assignment
GUARANTY -- PAGE 2 OF 7
<PAGE> 3
for the benefit of creditors, by voluntary liquidation, or otherwise,
the assets of Borrower applicable to the payment of claims of both Lender and
Guarantor shall be paid to Lender and shall be first applied by Lender to
Borrower's then remaining Indebtedness. Notwithstanding the foregoing, unless
and until Lender notifies Guarantors of an Event of default pursuant to Section
4(A), each Guarantor may continue to receive from the Borrower any scheduled
payments due under existing indebtedness owed by the Borrower to the Guarantors.
SECTION 6. Covenants Relating to the Indebtedness. No course of dealing
between Lender and Borrower (or any other Guarantor, surety or endorser of
Borrower's Indebtedness), nor any failure or delay on the part of Lender to
exercise any of Lender's rights and remedies, or any other agreement or
agreements by and between Lender and Borrower (or any other Guarantor, surety or
endorser) shall have the affect of impairing or releasing any Guarantor's
obligations and liabilities to Lender or of waiving any of Lender's rights and
remedies. Any partial exercise of any rights and remedies granted to Lender
shall furthermore not constitute a waiver of any of Lender's other rights and
remedies, it being each Guarantor's intent and agreement that Lender's rights
and remedies shall be cumulative in nature. Each Guarantor further agrees that,
should Borrower default under any of Borrower's Indebtedness, any waiver or
forbearance on the part of Lender to pursue the rights and remedies available to
Lender shall be binding upon Lender only to the extent that Lender specifically
agrees to such waiver or forbearance in writing. A waiver or forbearance on the
part of Lender as to one event of default shall not constitute a waiver or
forbearance as to any other default.
SECTION 7. No Release of Guarantor. Each Guarantor's obligations and
liabilities under this Agreement shall not be released, impaired, reduced or
otherwise affected by, and shall continue in full force and effect,
notwithstanding the occurrence of any event, including without limitation any
one or more of the following events:
A. Insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution or
lack of authority (whether corporate, partnership or
trust) of Borrower (or any person acting on Borrower's
behalf), or any other guarantor, surety or endorser of
any of Borrower's Indebtedness;
B. Partial payment or payments of any amount due and/or
outstanding under any of Borrower's Indebtedness;
C. Any payment by Borrower or any other party to Lender is
held to constitute a preferential transfer or a
fraudulent conveyance under any applicable law, or for
any reason, Lender is required to refund such payment
or pay such amount to Borrower or to any other person;
D. Any dissolution of Borrower or any sale, lease or
transfer of all or any part of Borrower's assets;
and/or
GUARANTY -- PAGE 3 OF 7
<PAGE> 4
E. Any failure of Lender to notify Guarantor of the
acceptance of this Agreement or of the making of
loans or other extensions of credit in reliance on
this Agreement.
This Agreement and each Guarantor's obligations and liabilities hereunder shall
continue to be effective, and/or shall automatically and retroactively be
reinstated if a release or discharge has occurred, as the case may be, if at any
time any payment or part thereof to Lender with respect to any of Borrower's
Indebtedness is rescinded or must otherwise be restored by Lender pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Borrower or to any other party. In the event that Lender must
rescind or restore any payment received by Lender in satisfaction of Borrower's
Indebtedness, any prior release or discharge from the terms of this Agreement
given to Guarantor shall be without effect, and this Agreement and each
Guarantor's obligations and liabilities hereunder shall automatically be renewed
or reinstated and shall remain in full force and effect to the same degree and
extent as if such a release or discharge was never granted. It is the intention
of Lender and each Guarantor that Guarantor's obligations and liabilities
hereunder shall not be discharged except by Guarantor's full and complete
performance of such obligations and liabilities and then only to the extent of
such performance.
SECTION 8. Representations and Warranties. Each Guarantor
represents and warrants to the Lender that:
A. To the best of its knowledge, the execution and
delivery of this Agreement will not result in any
violation of, or be in conflict with, or constitute a
default under any mortgage, indenture, deed of trust,
security agreement, lease, contract, agreement,
instrument, obligation, judgment, decree, order,
statute, regulation, or rule applicable to such
Guarantor;
B. this Agreement is valid, enforceable, and binding upon
the Guarantor in accordance with its terms, conditions,
and provisions; and
C. each Guarantor has received and reviewed an executed
copy of the Loan Agreement.
SECTION 9. Enforcement of Guarantor's Obligations and Liabilities.
Subject to the provision of Section 4 hereof, each Guarantor agrees that
following the occurrence of an Event of Default as defined in the Loan
Agreement, should Lender deem it necessary to file an appropriate collection
action to enforce Guarantor's obligations and liabilities under this Agreement,
Lender may commence such a civil action against Guarantor without the necessity
of first (i) attempting to collect Borrower's Indebtedness from Borrower or from
any other guarantor, surety or endorser, whether through filing of suit or
otherwise, (ii) attempting to exercise against any collateral directly or
indirectly securing repayment of any of Borrower's Indebtedness, whether through
the filing of an appropriate foreclosure action or otherwise, or (iii) including
Borrower or any other guarantor, surety or endorser of any of Borrower's
Indebtedness as an additional party defendant in such a collection action
against Guarantor. If there is more than one guarantor under this Agreement,
each Guarantor additionally agrees that Lender may file an appropriate
collection and/or enforcement action against any one or more of them, without
impairing the rights of Lender against any other
GUARANTY -- PAGE 4 OF 7
<PAGE> 5
Guarantor under this Agreement. In the event that Lender should ever deem it
necessary to refer this Agreement to an attorney-at-law for the purpose of
enforcing Guarantor's obligations and liabilities hereunder, or of protecting or
preserving Lender's rights hereunder, each Guarantor agrees to reimburse Lender
for the reasonable fees of such an attorney. Each Guarantor additionally agrees
that Lender shall not be liable for failure to use diligence in the collection
of any of Borrower's Indebtedness or any collateral security therefor, or in
creating or preserving the liability of any person liable on any such
Indebtedness, or in creating, perfecting or preserving any security for any such
Indebtedness.
SECTION 10. Environmental Condition. Neither Guarantor is obligated
pursuant to this Agreement to remediate any environmental or other condition
located in the Hotel (as defined in the Loan Agreement) or the land on which the
Hotel is located.
SECTION 11. No Changes. Lender shall not alter, change or amend the
Loan Agreement, the Note or the other documents executed by the Borrower and/ or
Lender in connection therewith, without the prior written consent of the
Guarantors.
SECTION 12. Additional Documents. Upon the reasonable request of
Lender, each Guarantor will, at any time, and from time to time, duly execute
and deliver to Lender any and all such further instruments and documents, and
supply such additional information, as may be necessary or advisable in the
opinion of Lender, to further evidence or perfect this Agreement, provided that
the foregoing does not expand the scope of the Guarantors' obligation or limit
Guarantors' rights hereunder.
SECTION 13. Transfer of Indebtedness.
A. This Agreement is for the benefit of Lender and for
such other person or persons as may from time to time
become or be the holders of any of Borrower's
Indebtedness hereby guaranteed and this Agreement shall
be transferrable and negotiable, with the same force
and effect and to the same extent as Borrower's
Indebtedness may be transferrable, it being understood
that, upon the transfer or assignment by Lender of any
of Borrower's Indebtedness hereby guaranteed, the legal
holder of such Indebtedness shall have all of the
rights granted to Lender under this Agreement.
B. Each Guarantor hereby recognizes and agrees that Lender
may, from time to time, one or more times, transfer any
portion (but not all) of Borrower's Indebtedness to one
or more third parties provided that the Lender retains
a portion of the Indebtedness. Such transfers may
include, but are not limited to, sales of a
participation interest in such Indebtedness in favor of
one or more third party lenders, provided that the
Lender remains the lead or agent bank. Each Guarantor
specifically agrees and consents to all such transfers
and assignments and each Guarantor further waives any
subsequent notice of and right to consent to any such
transfers and assignments as may be provided under
applicable Louisiana law. Each Guarantor additionally
agrees that the purchaser of a participation interest
GUARANTY -- PAGE 5 OF 7
<PAGE> 6
in Borrower's Indebtedness will be considered as the
absolute owner of a percentage interest of such
Indebtedness and that such a purchaser will have all of
the rights granted to the purchaser under any
participation agreement governing the sale of such a
participation interest.
SECTION 14. Notice. Lender agrees to deliver to each Guarantor a copy
of each and every written notice Lender is required to deliver to Borrower under
the Loan Agreement and the Loan Documents (as that term is defined in the Loan
Agreement). Lender shall deliver such notices to the Guarantors in the manner
required by the Loan Agreement, to the following address:
Lakes Gaming, Inc.
130 Cheshire Lane
Minnetonka, MN 55305
Grand Casinos of Louisiana, LLC. - Tunica-Biloxi
130 Cheshire Lane
Minnetonka, MN 55305.
SECTION 15. Subordination. In the event Guarantors, or any of them,
pays to Lender all sums due under Borrower's Indebtedness up to the Maximum
Amount, then immediately upon such payment, the paying Guarantor or Guarantors,
as the case may be, shall automatically subrogate to any and all rights and
remedies available to Lender against Borrower under the Loan Agreement and the
Loan Documents.
SECTION 16. Miscellaneous.
A. Construction. The provisions of this Agreement shall be in
addition to and cumulative of, and not in substitution, novation or discharge
of, any and all prior or contemporaneous guaranty or other agreements by
Guarantor (or any one or more of them), in favor of Lender or assigned to Lender
by others, all of which shall be construed as complementing each other. Nothing
herein contained shall prevent Lender from enforcing any and all such other
guaranties or agreements in accordance with their respective terms.
B. Amendment. No amendment, modification, consent or waiver of
any provision of this Agreement, and no consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing signed by a
duly authorized officer of Lender, and then shall be effective only to the
specific instance and for the specific purpose for which given.
C. Successors and Assigns Bound. Each Guarantor's obligations
and liabilities under this Agreement shall be binding upon Guarantor's
successors, heirs, legatees, devisees, administrators, executors and assigns.
The rights and remedies granted to Lender under this Agreement shall also inure
to the benefit of Lender's successors and assigns, as well as to any and all
subsequent holder or holders of any of Borrower's Indebtedness subject to this
Agreement.
GUARANTY -- PAGE 6 OF 7
<PAGE> 7
D. Caption Headings. Caption headings of the sections of this
Agreement are for convenience purposes only and are not to be used to interpret
or to define their provisions. In this Agreement, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.
E. Governing Law. This Agreement shall be governed and
construed in accordance with the substantive laws of the State of Louisiana.
F. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Agreement
shall be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
G. Consent to Jurisdiction. GUARANTOR HEREBY IRREVOCABLY
CONSENTS TO THE JURISDICTION OF THE STATE COURTS OF LOUISIANA AND THE FEDERAL
COURTS IN LOUISIANA, AND AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR
BROUGHT TO ENFORCE THE PROVISIONS OF THIS AGREEMENT MAY BE BROUGHT IN ANY COURT
HAVING SUBJECT MATTER JURISDICTION.
IN WITNESS WHEREOF, each Guarantor has executed this Agreement
in favor of Lender on the day, month and year first written above.
LAKES GAMING, INC. GRAND CASINOS OF LOUISIANA, LLC. -
TUNICA-BILOXI
By: /s/ Timothy Cope By: /s/ Timothy Cope
---------------------------------- ----------------------------------
Timothy Cope, Chief Financial Officer Timothy Cope, Chief Financial Officer
Date: March 5, 1999 Date: March 5, 1999
ACCEPTED:
THE COTTONPORT NATIONAL BANK
By:
------------------------------
--------------,---------------
Date:
----------------------------
GUARANTY -- PAGE 7 OF 7
<PAGE> 1
EXHIBIT 10.18
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY LAKES GAMING, INC.,
IN FAVOR OF THE COTTONPORT BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999, by:
LAKES GAMING, INC. (hereinafter referred to as "Lakes
Gaming"), a Minnesota corporation, whose permanent
mailing address is 130 Chesire Lane, Minnetonka,
Minnesota, 55305, represented herein by Timothy Cope,
its duly authorized Chief Financial Officer.
Lakes Gaming hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Tunica-Biloxi Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, to Lakes Gaming, whether such debts, liabilities and obligations
now exist or are hereafter incurred or arise, or whether the obligation
of the Tribe thereon be direct, contingent, primary, secondary, joint
and several, or otherwise, and irrespective of whether such debts,
liabilities or obligations are evidenced by note, contract, open
account or otherwise, and irrespective of the person or entity in whose
favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Lakes Gaming.
2. For and in consideration of the Cottonport Indebtedness (herein
defined) under the Cottonport Documents (herein defined), and in order
to induce the Cottonport Bank ("Cottonport Bank"), acting in its
discretion in each instance, to make loans or otherwise to give, grant
or extend credit at any time or times to the Tribe under the Cottonport
Documents, Lakes Gaming hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by
the Tribe of the Subordinated Claims, together with any and
all interest accrued or to accrue thereon, to the payment to
Bank of any and all debts, liabilities and obligations for
which the Tribe may now or hereafter be under obligation to
Cottonport Bank (the "Cottonport Indebtedness"), under:
(i) that certain Commercial Loan Agreement dated March
14, 1997, between Cottonport Bank, as lender, and the
Tribe, as borrower (herein referred to as the "Loan
Agreement");
(ii) that certain Promissory Note dated March 14, 1997,
executed by the Tribe in favor of Cottonport Bank in
the original principal sum of $16,500,000.00 (herein
referred to as the "Note");
SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
(iii) that certain Commercial Security Agreement dated
March 14, 1997, executed by the Tribe, as debtor, in
favor of Cottonport Bank, as secured party, which
agreement covers certain bank accounts and gaming
equipment more fully described therein (the
"Cottonport Security Agreement"); and
(iv) that certain Non Standard Financing Statement
executed by the Tribe, as the debtor, in favor of the
Cottonport Bank, as the secured party, on or about
March 14, 1997, regarding the Collateral (as defined
in the Cottonport Security Agreement) which
instrument has or soon will be recorded in the public
records of Avoyelles Parish, Louisiana, (the Loan
Agreement, Note, Cottonport Security Agreement and
Cottonport Financing Statement are sometimes
collectively referred to as the "Cottonport
Documents").
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Tribe
thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of whether such debts
or liabilities be evidenced by note, contract, open account or
otherwise).
(b) Not to ask, demand, sue for, take or receive all or any part
of the Subordinated Claims, or any interest thereon, unless or
until that portion of the Cottonport Indebtedness then due
shall have been fully paid and discharged; provided however,
unless and until Cottonport Bank notifies Lakes Gaming at the
address noted above that an Event of Default has occurred
under the terms of the Loan Agreement, Lakes Gaming may
continue to receive scheduled payments from the Tribe under
the Subordinated Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement,
each and every amount so paid shall be held in trust by Lakes
Gaming on behalf of Cottonport Bank and Lakes Gaming will
promptly pay such amounts to Cottonport Bank to be credited
and applied to any Cottonport Indebtedness (principal and/or
interest) then owing to Cottonport Bank by the Tribe, whether
matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the Tribe's assets securing payment
of the Subordinated Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon the Tribe's assets securing
payment of the Cottonport Indebtedness;
(e) If Lakes Gaming forecloses upon any of the Subordinated Claims
or obtains possession of the Tribe's property in lieu of
foreclosure, all assets
SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
of the Tribe or proceeds thereof obtained thereby shall be
held in trust by Lakes Gaming on behalf of Cottonport Bank and
Lakes Gaming will promptly pay such amounts to Cottonport Bank
to be credited and applied to any Cottonport Indebtedness
(principal and/or interest) then owing to Cottonport Bank by
the Tribe, whether matured or unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of the Tribe, whether by reason of
reorganization, liquidation, dissolution, bankruptcy,
receivership, assignment for the benefit of creditors, or any
other action or proceeding involving the readjustment of all
or any of the Subordinated Claims, or the application of
assets of the Tribe to the payment or liquidation thereof,
either in whole or in part, Cottonport Bank shall be entitled
to receive payment in full of any and all of the Cottonport
Indebtedness then owing to Cottonport Bank by the Tribe prior
to the payment of all or any portion of the Subordinated
Claims; and
(g) Not to transfer, assign, encumber or subordinate at any time
while this Agreement remains in effect, any right, claim or
interest of any kind in or to any of the Subordinated Claims,
either principal or interest, unless such is done expressly
subject to the terms and provisions of this Agreement.
4. This Agreement is complete and effective upon execution by Lakes Gaming
and delivery of this Agreement to Cottonport Bank.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Lakes Gaming and its legal representatives,
successors or assigns, until all of the Cottonport Indebtedness has
been paid in full and the aforesaid Loan Agreement has been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Cottonport Bank and Lakes Gaming.
8. Cottonport Bank will not alter, modify or amend any of the Cottonport
Documents with the prior written consent of Lakes Gaming, which consent
will not be unreasonably withheld.
LAKES GAMING, INC.--TUNICA-BILOXI
By: /s/ Timothy Cope
-----------------------------------------
Timothy Cope, Its Chief Financial Officer
ACCEPTED:
SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
THE COTTONPORT BANK
By ___________________________________
_____________, its _______________
Date: _______________________________
SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 1
EXHIBIT 10.19
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY GRAND CASINOS OF
LOUISIANA, LLC - TUNICA-BILOXI
IN FAVOR OF THE COTTONPORT BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999, by:
GRAND CASINOS OF LOUISIANA LLC -TUNICA-BILOXI (hereinafter
referred to as "Grand Casinos-TB"), a Minnesota
limited liability company, whose permanent mailing
address is 130 Chesire Lane, Minnetonka, Minnesota,
55305, represented herein by Timothy Cope, its duly
authorized Chief Financial Officer.
Grand Casinos-TB hereby represents, covenants and agrees as follows:
1. As used herein, the term "Subordinated Claims" shall mean all debts,
liabilities and obligations of the Tunica-Biloxi Tribe of Louisiana
(hereinafter referred to as the "Tribe"), a federally recognized Indian
tribe, to Grand Casinos-TB, whether such debts, liabilities and
obligations now exist or are hereafter incurred or arise, or whether
the obligation of the Tribe thereon be direct, contingent, primary,
secondary, joint and several, or otherwise, and irrespective of whether
such debts, liabilities or obligations are evidenced by note, contract,
open account or otherwise, and irrespective of the person or entity in
whose favor such debts or liabilities may, at their inception, have
been, or may hereafter be created, or the manner in which they have
been or may hereafter be acquired by Grand Casinos-TB. Without limiting
the foregoing, the term Subordinated Claims includes the following
existing debts, liabilities and obligations owed by the Tribe to Grand
Casinos-TB under:
(a) That certain Amended and Restated Management and Construction
Agreement between the Tribe and Grand Casinos-TB, as successor
to Grand Casinos of Louisiana, Inc. - Tunica-Biloxi
(hereinafter referred to as "GCL, Inc.."), a Minnesota
corporation, dated November 1, 1991 (herein referred to as the
"Management Agreement"); and
(b) That certain Amended and Restated Tunica-Biloxi Tribe of
Louisiana Security Agreement dated November 1, 1991, between
the Tribe, as the debtor, and Grand-Casinos-TB (as successors
to GCL, Inc.), as the secured party (herein referred to as the
"Grand Casinos-TB Security Agreement"); and
(c) That certain UCC-1 Financing Statement executed by the Tribe,
as the debtor, in favor of Grand Casinos-TB (as successors to
GCL, Inc.), as the secured party, filed on April 7, 1992, in
the public records of Avoyelles Parish, Louisiana, under
Original File No. 05-920792, as continued by
SUBORDINATION AGREEMENT -- PAGE 1
<PAGE> 2
Continuation Statement filed in the public records of Avoyelles Parish,
Louisiana, under File No. 05-970190 (herein referred to as the "Grand
Casino-TB Financing Statement"); (herein collectively referred to as
the "Existing Subordinated Claims").
2. For and in consideration of the Cottonport Indebtedness (herein
defined) under the Cottonport Documents (herein defined), and in order
to induce the Cottonport Bank ("Cottonport Bank"), acting in its
discretion in each instance, to make loans or otherwise to give, grant
or extend credit at any time or times to the Tribe under the Cottonport
Documents, Grand Casinos-TB hereby agrees:
(a) To subordinate, and does hereby subordinate, the payment by
the Tribe of the Subordinated Claims, together with any and
all interest accrued or to accrue thereon, to the payment to
Bank of any and all debts, liabilities and obligations for
which the Tribe may now or hereafter be under obligation to
Cottonport Bank (the "Cottonport Indebtedness"), under:
(i) that certain Commercial Loan Agreement dated March
14, 1997, between Cottonport Bank, as lender, and the
Tribe, as borrower (herein referred to as the "Loan
Agreement");
(ii) that certain Promissory Note dated March 14, 1997,
executed by the Tribe in favor of Cottonport Bank in
the original principal sum of $16,500,000.00 (herein
referred to as the "Note");
(iii) that certain Commercial Security Agreement dated
March 14, 1997, executed by the Tribe, as debtor, in
favor of Cottonport Bank, as secured party, which
agreement covers certain bank accounts and gaming
equipment more fully described therein (the
"Cottonport Security Agreement"); and
(iv) that certain Non Standard Financing Statement
executed by the Tribe, as the debtor, in favor of the
Cottonport Bank, as the secured party, on or about
March 14, 1997, regarding the Collateral (as defined
in the Cottonport Security Agreement) which
instrument has or soon will be recorded in the public
records of Avoyelles Parish, Louisiana, (the Loan
Agreement, Note, Cottonport Security Agreement and
Cottonport Financing Statement are sometimes
collectively referred to as the "Cottonport
Documents").
(whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of the Tribe
thereon be direct, contingent, primary, secondary, joint and
several, or otherwise, and irrespective of whether such debts
or liabilities be evidenced by note, contract, open account or
otherwise).
SUBORDINATION AGREEMENT -- PAGE 2
<PAGE> 3
(b) Not to ask, demand, sue for, take or receive all or any part
of the Subordinated Claims, or any interest thereon, unless or
until that portion of the Cottonport Indebtedness then due
shall have been fully paid and discharged; provided however,
unless and until Cottonport Bank notifies Grand Casinos-TB at
the address noted above that an Event of Default has occurred
under the terms of the Loan Agreement, Grand Casinos-TB may
continue to receive scheduled payments from the Tribe under
the Existing Subordinated Claims;
(c) That, if any payment(s) is (are) made on account of the
Subordinated Claims contrary to the terms of this Agreement,
each and every amount so paid shall be held in trust by Grand
Casinos-TB on behalf of Cottonport Bank and Grand Casinos-TB
will promptly pay such amounts to Cottonport Bank to be
credited and applied to any Cottonport Indebtedness (principal
and/or interest) then owing to Cottonport Bank by the Tribe,
whether matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the Tribe's assets securing payment
of the Subordinated Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon the Tribe's assets securing
payment of the Cottonport Indebtedness;
(e) If Grand Casinos-TB forecloses upon any of the Subordinated
Claims or obtains possession of the Tribe's property in lieu
of foreclosure, all assets of the Tribe or proceeds thereof
obtained thereby shall be held in trust by Grand Casinos-TB on
behalf of Cottonport Bank and Grand Casinos-TB will promptly
pay such amounts to Cottonport Bank to be credited and applied
to any Cottonport Indebtedness (principal and/or interest)
then owing to Cottonport Bank by the Tribe, whether matured or
unmatured;
(f) That, upon any distribution of the assets or readjustment of
indebtedness of the Tribe, whether by reason of
reorganization, liquidation, dissolution, bankruptcy,
receivership, assignment for the benefit of creditors, or any
other action or proceeding involving the readjustment of all
or any of the Subordinated Claims, or the application of
assets of the Tribe to the payment or liquidation thereof,
either in whole or in part, Cottonport Bank shall be entitled
to receive payment in full of any and all of the Cottonport
Indebtedness then owing to Cottonport Bank by the Tribe prior
to the payment of all or any portion of the Subordinated
Claims; and
(g) Not to transfer, assign, encumber or subordinate at any time
while this Agreement remains in effect, any right, claim or
interest of any kind in or to any of the Subordinated Claims,
either principal or interest, unless such is done expressly
subject to the terms and provisions of this Agreement.
SUBORDINATION AGREEMENT -- PAGE 3
<PAGE> 4
4. This Agreement is complete and effective upon execution by Grand
Casinos-TB and delivery of this Agreement to Cottonport Bank.
5. This is a continuing Agreement and shall remain in full force and
effect and be binding upon Grand Casinos-TB and its legal
representatives, successors or assigns, until all of the Cottonport
Indebtedness has been paid in full and the aforesaid Loan Agreement has
been terminated.
6. This Agreement shall be deemed to be made under and shall be governed
by the laws of the State of Louisiana in all respects, including
matters of construction, validity and performance.
7. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on
behalf of Cottonport Bank and Grand Casinos-TB.
8. Cottonport Bank will not alter, modify or amend any of the Cottonport
Documents with the prior written consent of Grand Casinos-TB, which
consent will not be unreasonably withheld.
GRAND CASINOS OF LOUISIANA , LLC --TUNICA-BILOXI
By: /s/ Timothy Cope
------------------------------------------
Timothy Cope, Its Chief Financial Officer
ACCEPTED:
THE COTTONPORT BANK
By
----------------------------------------
, its
------------- ---------------
Date:
-------------------------------------
SUBORDINATION AGREEMENT -- PAGE 4
<PAGE> 1
EXHIBIT 10.20
EXECUTION COPY
--------------
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is made and
entered into as of December 31, 1998, by and between Thomas J. Brosig (the
"Executive") and Park Place Entertainment Corporation (f/n/a Gaming Co., Inc.),
a Delaware corporation ("Park Place").
RECITALS
WHEREAS, Gaming Co., Inc. (n/k/a Park Place Entertainment
Corporation), a Delaware corporation, Hilton Hotels Corporation, a Delaware
corporation ("Hilton"), Grand Casinos, Inc., a Minnesota corporation
("Company"), Gaming Acquisition Corporation, a Minnesota corporation and a
wholly-owned subsidiary of Park Place ("Merger Sub") and GCI Lakes, Inc. (n/k/a
Lakes Gaming, Inc.), a Minnesota corporation and a wholly-owned subsidiary of
Company ("Lakes") entered into an Agreement and Plan of Merger, dated as of June
30, 1998 (as the same may be amended or modified from time to time in accordance
with the terms thereof, the "Merger Agreement"), pursuant to which, upon the
terms and subject to the conditions thereof, Merger Sub will merge with and into
Company, with Company as the surviving corporation (the "Merger");
WHEREAS, the parties hereto recognize that the Executive may
have certain expertise in the business conducted by Park Place, the skills to
compete in the gaming industry, and the economic resources to compete in such
industry. Therefore, the parties hereto agree a non-competition agreement is
necessary, prudent, and has been bargained for in respect to the Merger.
WHEREAS, as a condition and inducement to each of Hilton's and
Park Place's willingness to consummate the transactions contemplated by the
Merger Agreement, Hilton and Park Place have requested that the Executive enter
into a non-compete agreement, upon the terms and subject to the conditions
hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual
covenants, undertakings and obligations set forth herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Covenant. Except for matters expressly provided for in or
contemplated by this Agreement, the Executive hereby agrees that he will not,
without the prior written consent of Park Place, directly or indirectly engage
in any of the following actions on or before the date that is two years after
the Closing Date (as defined in the Merger Agreement):
(a) own any interest in, manage, operate, join, control, lend
money or render other financial assistance to, participate
or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, any entity whose
products or services are offered in the State of Mississippi
and could be considered part of the gaming industry;
provided, however, that
<PAGE> 2
nothing in this Section 1 shall preclude the Executive from
holding less than five percent (5%) of the outstanding
capital stock of any corporation whose products or services
are offered in such states and could be considered part of
such industry and which is required to file periodic reports
with the U.S. Securities and Exchange Commission under
Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, the securities of which corporation are listed
on any securities exchange, quoted on the National
Association of Securities Dealers Automated Quotation System
or traded in the over-the-counter market; or
(b) solicit for employment, endeavor to entice away from Park
Place or any of its subsidiaries or affiliates or otherwise
interfere with the relationship of Park Place or any of its
subsidiaries or affiliates with any person who is employed
by, or otherwise engaged to, perform services for Park Place
or any of its subsidiaries or affiliates, whether for the
Executive's own account or for the account of any other
individual, partnership, firm, corporation or other business
entity.
Section 2. Enforcement. If the scope of the Executive's agreement
under Section 1 hereof is determined by any court of competent jurisdiction
to be too broad to permit the enforcement of all of the provisions of such
section to their fullest extent, then the provisions of Section 1 hereof
shall be construed (and each of the parties hereto hereby confirm that its
intent is that such provisions be so construed) to be enforceable to the
fullest extent permitted by applicable law. To the maximum extent permitted
by applicable law, the Executive hereby consents to the judicial
modification of the provisions of Section 1 hereof in any proceeding
brought to enforce such provisions in such a manner that renders such
provisions enforceable to the maximum extent permitted by applicable law.
Section 3. Relationship of Parties. Nothing in this Agreement shall be
deemed or construed by the parties hereto or any third party as creating
the relationship of principal and agent, partnership or joint venture
between the parties hereto, it being understood and agreed that no
provision contained herein, and no act of the parties hereto, shall be
deemed to create any relationship between such parties other than the
relationship set forth herein.
Section 4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party hereto and any purported transfer without such
consent shall be void.
Section 5. Headings. The section and paragraph headings and table of
contents contained herein are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
Section 6. Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the validity of the
other provisions hereof, which shall continue in full force and effect.
-2-
<PAGE> 3
Section 7. Parties in Interest; No Third Party Beneficiary Rights.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
Except as specifically provided herein, this Agreement is for the sole and
exclusive benefit of the parties hereto and nothing herein is intended to
give or shall be construed to give to any person or entity other than the
parties hereto any rights or remedies hereunder.
Section 8. Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party
(or other person referred to herein) shall be in writing and shall be
deemed to be given and effective (a) upon delivery if delivered in person
or by courier, (b) when sent by electronic transmission (telegraph, telex,
telecopy or facsimile transmission), receipt confirmed, (c) five days after
being sent by airmail, postage prepaid or (d) when receipt is acknowledged
if mailed by certified mail, postage prepaid, return receipt requested. The
notice shall be delivered to the addresses of each party hereto as follows,
or to such other persons or addresses as may be designated in writing by
the party to receive such notice:
(i) if to Park Place:
Park Place Entertainment Corporation
3930 Howard Hughes Parkway, 4th Floor
Las Vegas, Nevada 89109
Attn: General Counsel
Fax: (702) 699-5179
with a copy to:
Sills Cummis Zuckerman
Radin Tischman Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Michael Tischman, Esq.
Fax: (973) 643-6500
(ii) if to the Executive:
Grand Casinos, Inc.
11975 Seaway Road
Gulfport, Mississippi 39503
Attn: Thomas J. Brosig
Fax: (228) 604-5050
-3-
<PAGE> 4
with a copy to:
Maslon Edelman Borman & Brand, LLP
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attn: Neil I. Sell, Esq.
Fax: (612) 672-8397
Section 9. Further Assurances. Each of the parties hereto promptly
shall execute such documents and other instruments and take such further
actions as may be reasonably required or desirable to carry out the
provisions hereof and to consummate the transactions contemplated hereby.
Section 10. Waiver of Conditions. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
Section 11. Governing Law. This Agreement shall be deemed to be made
in and in all respects shall be interpreted, construed and governed by and
in accordance with the laws of the State of New York, without giving effect
to principles of conflicts of laws thereof.
Section 12. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto, and supersede all prior written
or oral communications, relating to the subject matter covered by said
agreements. No amendment, modification, extension or failure to enforce any
condition of this Agreement by either party shall be deemed a waiver of any
of its rights herein.
Section 13. Survival. Obligations described in this Agreement shall
remain in full force and effect and shall survive the Closing Date.
Section 14. Dispute Resolution. Any dispute arising under this
Agreement shall be resolved by binding arbitration in the manner
contemplated by Section 9.14 of the Hilton Distribution Agreement (as
defined in the Merger Agreement), including Section 9.14(c) thereof
regarding the parties' ability to seek specific performance or injunctive
relief thereof, and including the attorneys' fees provisions referred to
therein.
Section 15. Specific Performance. The parties hereto agree that the
remedy at law for any breach of this Agreement will be inadequate and that
any party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy.
Such party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable
laws, each party waives any objection to the imposition of such relief.
-4-
<PAGE> 5
Section 16. Default. In the event of a material default by either
party hereunder, the non-defaulting party shall be entitled to all remedies
provided by law or equity (including reasonable attorneys' fees and costs
of suit incurred).
Section 17. Counterparts. This Agreement and any amendments hereto may
be executed in two or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.
[SIGNATURE PAGE TO FOLLOW]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THOMAS J. BROSIG,
an Individual
By: THOMAS J. BROSIG
------------------------------------
Name:
PARK PLACE ENTERTAINMENT CORPORATION,
a Delaware corporation
By: Scott A. LaPorta
------------------------------------
Name: Scott A. LaPorta
Title: Executive Vice President and
Chief Financial Officer
S-1
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THOMAS J. BROSIG,
an Individual
By:
------------------------------------
Name:
PARK PLACE ENTERTAINMENT CORPORATION,
a Delaware corporation
By: Scott A. LaPorta
------------------------------------
Name: Scott A. LaPorta
Title: Executive Vice President and
Chief Financial Officer
S-1
<PAGE> 1
EXHIBIT 10.21
EXECUTION COPY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is made and
entered into as of December 31, 1998, by and between Lyle Berman (the
"Executive") and Park Place Entertainment Corporation (f/n/a Gaming Co., Inc.),
a Delaware corporation ("Park Place").
RECITALS
WHEREAS, Gaming Co., Inc. (n/k/a Park Place Entertainment
Corporation), a Delaware corporation, Hilton Hotels Corporation, a Delaware
corporation ("Hilton"), Grand Casinos, Inc., a Minnesota corporation
("Company"), Gaming Acquisition Corporation, a Minnesota corporation and a
wholly-owned subsidiary of Park Place ("Merger Sub") and GCI Lakes, Inc. (n/k/a
Lakes Gaming, Inc.), a Minnesota corporation and a wholly-owned subsidiary of
Company ("Lakes") entered into an Agreement and Plan of Merger, dated as of June
30, 1998 (as the same may be amended or modified from time to time in accordance
with the terms thereof, the "Merger Agreement"), pursuant to which, upon the
terms and subject to the conditions thereof, Merger Sub will merge with and into
Company, with Company as the surviving corporation (the "Merger");
WHEREAS, the parties hereto recognize that the Executive may
have certain expertise in the business conducted by Park Place, the skills to
compete in the gaming industry, and the economic resources to compete in such
industry. Therefore, the parties hereto agree a non-competition agreement is
necessary, prudent, and has been bargained for in respect to the Merger.
WHEREAS, as a condition and inducement to each of Hilton's and
Park Place's willingness to consummate the transactions contemplated by the
Merger Agreement, Hilton and Park Place have requested that the Executive enter
into a non-compete agreement, upon the terms and subject to the conditions
hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual
covenants, undertakings and obligations set forth herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Covenant. Except for matters expressly provided for in or
contemplated by this Agreement, the Executive hereby agrees that he will not,
without the prior written consent of Park Place, directly or indirectly engage
in any of the following actions on or before the date that is two years after
the Closing Date (as defined in the Merger Agreement):
(a) own any interest in, manage, operate, join, control,
lend money or render other financial assistance to,
participate or be connected with, as an officer,
employee, partner, stockholder, consultant or
otherwise, any entity
<PAGE> 2
whose products or services are offered in the State
of Mississippi and could be considered part of the
gaming industry; provided, however, that nothing in
this Section 1 shall preclude the Executive from
holding less than five percent (5%) of the
outstanding capital stock of any corporation whose
products or services are offered in such states and
could be considered part of such industry and which
is required to file periodic reports with the U.S.
Securities and Exchange Commission under Section 13
or 15(d) of the Securities Exchange Act of 1934, as
amended, the securities of which corporation are
listed on any securities exchange, quoted on the
National Association of Securities Dealers Automated
Quotation System or traded in the over-the-counter
market; or
(b) solicit for employment, endeavor to entice away from
Park Place or any of its subsidiaries or affiliates
or otherwise interfere with the relationship of Park
Place or any of its subsidiaries or affiliates with
any person who is employed by, or otherwise engaged
to, perform services for Park Place or any of its
subsidiaries or affiliates, whether for the
Executive's own account or for the account of any
other individual, partnership, firm, corporation or
other business entity.
Section 2. Enforcement. If the scope of the Executive's agreement under
Section 1 hereof is determined by any court of competent jurisdiction to be too
broad to permit the enforcement of all of the provisions of such section to
their fullest extent, then the provisions of Section 1 hereof shall be construed
(and each of the parties hereto hereby confirm that its intent is that such
provisions be so construed) to be enforceable to the fullest extent permitted by
applicable law. To the maximum extent permitted by applicable law, the Executive
hereby consents to the judicial modification of the provisions of Section 1
hereof in any proceeding brought to enforce such provisions in such a manner
that renders such provisions enforceable to the maximum extent permitted by
applicable law.
Section 3. Relationship of Parties. Nothing in this Agreement shall be
deemed or construed by the parties hereto or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties hereto, it being understood and agreed that no provision contained
herein, and no act of the parties hereto, shall be deemed to create any
relationship between such parties other than the relationship set forth herein.
Section 4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party hereto and any purported transfer without such
consent shall be void.
Section 5. Headings. The section and paragraph headings and table of
contents contained herein are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
-2-
<PAGE> 3
Section 6. Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the validity of the
other provisions hereof, which shall continue in full force and effect.
Section 7. Parties in Interest; No Third Party Beneficiary Rights. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Except as specifically
provided herein, this Agreement is for the sole and exclusive benefit of the
parties hereto and nothing herein is intended to give or shall be construed to
give to any person or entity other than the parties hereto any rights or
remedies hereunder.
Section 8. Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party (or
other person referred to herein) shall be in writing and shall be deemed to be
given and effective (a) upon delivery if delivered in person or by courier, (b)
when sent by electronic transmission (telegraph, telex, telecopy or facsimile
transmission), receipt confirmed, (c) five days after being sent by airmail,
postage prepaid or (d) when receipt is acknowledged if mailed by certified mail,
postage prepaid, return receipt requested. The notice shall be delivered to the
addresses of each party hereto as follows, or to such other persons or addresses
as may be designated in writing by the party to receive such notice:
(i) if to Park Place:
Park Place Entertainment Corporation
3930 Howard Hughes Parkway, 4th Floor
Las Vegas, Nevada 89109
Attn: General Counsel
Fax: (702) 699-5179
with a copy to:
Sills Cummis Zuckerman
Radin Tischman Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Michael Tischman, Esq.
Fax: (973) 643-6500
(ii) if to the Executive:
Lakes Gaming Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attn: Lyle Berman
Fax: (612) 449-7003
-3-
<PAGE> 4
with a copy to:
Maslon Edelman Borman & Brand, LLP
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attn: Neil I. Sell, Esq.
Fax: (612) 672-8397
Section 9. Further Assurances. Each of the parties hereto promptly
shall execute such documents and other instruments and take such further actions
as may be reasonably required or desirable to carry out the provisions hereof
and to consummate the transactions contemplated hereby.
Section 10. Waiver of Conditions. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
Section 11. Governing Law. This Agreement shall be deemed to be made in
and in all respects shall be interpreted, construed and governed by and in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of laws thereof.
Section 12. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto, and supersede all prior written or
oral communications, relating to the subject matter covered by said agreements.
No amendment, modification, extension or failure to enforce any condition of
this Agreement by either party shall be deemed a waiver of any of its rights
herein.
Section 13. Survival. Obligations described in this Agreement shall
remain in full force and effect and shall survive the Closing Date.
Section 14. Dispute Resolution. Any dispute arising under this
Agreement shall be resolved by binding arbitration in the manner contemplated by
Section 9.14 of the Hilton Distribution Agreement (as defined in the Merger
Agreement), including Section 9.14(c) thereof regarding the parties' ability to
seek specific performance or injunctive relief thereof, and including the
attorneys' fees provisions referred to therein.
Section 15. Specific Performance. The parties hereto agree that the
remedy at law for any breach of this Agreement will be inadequate and that any
party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable laws, each party waives any
objection to the imposition of such relief.
-4-
<PAGE> 5
Section 16. Default. In the event of a material default by either party
hereunder, the non-defaulting party shall be entitled to all remedies provided
by law or equity (including reasonable attorneys' fees and costs of suit
incurred).
Section 17. Counterparts. This Agreement and any amendments hereto may
be executed in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other party, it
being understood that all parties need not sign the same counterpart.
[SIGNATURE PAGE TO FOLLOW]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
LYLE BERMAN,
an Individual
By: Lyle Berman
--------------------------------------
Name: Lyle Berman
PARK PLACE ENTERTAINMENT
CORPORATION,
a Delaware corporation
By: Scott A. LaPorta
--------------------------------------
Name: Scott A. LaPorta
Title: Executive Vice President and Chief
Financial Officer
S-1
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<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-END> APR-04-1999
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<CURRENT-ASSETS> 96,680
<PP&E> 2,512
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0
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