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ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement is made the 16th day of October, 2000, by and among
Great Lakes of Michigan, LLC, a Minnesota limited liability company ("Great
Lakes"), Lakes Gaming, Inc., a Minnesota corporation ("Lakes"), and the Pokagon
Band of Potawatomi Indians (the "Band").
W I T N E S S E T H:
WHEREAS, the Band and Lakes have entered into a Development Agreement
dated as of July 8, 1999 (the "Development Agreement") and a Management
Agreement dated as of July 8, 1999 (the "Management Agreement"; collectively,
with the Development Agreement, the "Agreements"), pursuant to which the Band
has engaged the Lakes to, among other things, assist the Band in the design,
development, construction and management of a gambling casino and certain
related amenities (as defined in the Development Agreement, the "Facility"); and
WHEREAS, pursuant to the Development Agreement Lakes has agreed to make
certain payments and advances to the Band, including without limitation the
Transition Loan, the Lakes Development Loan and the Non-Gaming Land Acquisition
Line of Credit (collectively the "Lakes Loans"), and the Scholarship Program
Fee, and has agreed to perform development services with regard to the Facility,
all on the terms set out in that Agreement; and
WHEREAS, pursuant to the Management Agreement Lakes has agreed to
manage the Facility on the terms set out in that Agreement; and
WHEREAS, Lakes has informed the Band that it wishes to restructure its
corporate organization by forming a first tier subsidiary, Lakes Gaming and
Resorts, LLC, a Minnesota limited liability company ("LG&R"), to own the equity
in second-tier subsidiaries, including Great Lakes, that will be engaged in
gaming and gaming-related businesses, and to assign its rights and obligations
under the Agreements to Great Lakes as set out in this Agreement (the
"Restructuring"); and
WHEREAS, in connection with such Restructuring Lakes has requested that
the Band consent to (i) the assignment of Lakes' rights and obligations under
the Agreements, the Lakes Loans and all related documentation, including without
limitation the documents listed on the attached Schedule A (the "Related
Documents"; collectively, with the Agreements and the Lake Loans, the
"Obligations") to Great Lakes, and (ii) the release of Lakes as primary obligor
under the Obligations, in exchange for the execution by Lakes and LG&R of
unconditional guarantees of the
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obligations of Great Lakes under the Obligations; and
WHEREAS, it is the intent of the parties that the Restructuring not
affect or impair the Band's rights and remedies under the Obligations, other
than the conversion of Lakes from primary obligor to unlimited guarantor;
WHEREAS, under the Agreements Lakes cannot carry out such Restructuring
without the Band's consent; and
WHEREAS, the Band is willing to so consent, but only on the terms and
conditions set out in this Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Recitals True. The above recitals are true.
2. Defined Terms. Capitalized terms used but not otherwise defined herein
and defined in the Development Agreement or the Management Agreement
shall have the same meaning herein as therein.
3. Assignment of Lakes' Rights Under the Obligations. Lakes grants,
bargains, sells, conveys, assigns and transfers to Great Lakes, without
recourse, all of Lakes's right, title and interest, legal and
equitable, in, to and under the Obligations.
4. Transfer of Lakes Notes. Lakes agrees to endorse the Lakes Notes in
favor of Great Lakes. Great Lakes agrees that it is the assignee of the
Lakes Notes, but not a holder in due course.
5. Assignment of Account. Lakes hereby assigns and transfers to Great
Lakes all rights of Lakes in and to the Account and all cash, financial
assets and investment property in the Account, subject to the Band's
first perfected security interest, and agrees that the Account shall
secure all obligations of Great Lakes and Lakes to the Band in
accordance with the terms of the Pledge and Security Agreement and the
Control Agreement.
6. Assumption of Obligations. Great Lakes accepts assignment of Lakes'
rights and obligations under the Obligations. Great Lakes assumes and
agrees to perform and discharge all of the obligations and liabilities
of Lakes arising under or relating to the Obligations in accordance
with the terms thereof, as if
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Great Lakes had originally been a party thereto. The liabilities so
assumed by Great Lakes include any obligations or liabilities of Lakes
which have accrued under the Obligations as of the date hereof, as well
as those subsequently accruing. All references to Lakes in the
Obligations shall, except as set out in ss. 10 or in a certain
Amendment of Account Control Agreement or Amendment to Pledge and
Security Agreement of near or even date, be deemed to refer to Great
Lakes.
7. Band Consent. The Band consents to this Assignment, recognizes Great
Lakes as a substituted party under the Obligations, and agrees that
Great Lakes shall be a party to such Obligations to the same extent as
if Great Lakes had originally been a party thereto; without prejudice,
however, to Lakes' continued obligations to the Band under the
Obligations as provided in ss. 10, under its Guaranty, the Account
Control Agreement, as amended, the Amendment to Pledge and Security
Agreement, as amended, and under this Agreement.
8. Release of Lakes. The Band releases and forever discharges Lakes of any
and all liabilities or obligations under the Obligations except as
specifically set out in ss. 10 below, and except as provided in ss. 10
agrees to look solely to Great Lakes for performance of all obligations
of Lakes under the Obligations; conditioned on, however, the execution
by Lakes and LG&R of the unlimited guarantee attached hereto as Exhibit
B (the "Guarantee"), and without prejudice to the Band's rights under
such Guarantee, under the provisions of the Obligations specified
in ss. 10, or under this Agreement.
9. Release of the Band. Lakes agrees that, given the assignment of its
rights under the Obligations to Great Lakes, Lakes has and shall have
no claims against the Band under or relating to such Obligations;
reserving, however, any rights or remedies, if any, which (a) Lakes may
now have or may in the future acquire under the Indemnity Agreement
referred to in ss. 10(b) below, (b) Lakes may in the future acquire
under the specific provisions of the Obligations described in ss.
10(c), or (c) Lakes or LG&R may have under this Agreement or the
Guarantee.
10. Lakes Continuing Obligations. Notwithstanding any other provision of
this Agreement:
a. Lakes shall continue to be bound by, and shall remain subject
to and (where applicable) liable for breach of, the following
provisions of the
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Obligations, and any reference to Lakes in such provisions
(whether in its own name or as Manager) shall be deemed to be
references to each of Lakes and Great Lakes. The reference to
captions is for convenience only, and does not substitute for
or affect the terms of the indicated sections.
AGREEMENT SECTION CAPTION
Development Agreement 1.1 Definition of Insider
1.1 Definition of Lakes Internal Expenses
1.1 Definition of Limited Recourse
1.1 Definition of Material Adverse Change
1.1 Definition of NIGC Approval
2.1.1 Option
2.3 Confidentiality
2.4 Assignment of Other Options
10.4 Non-Competition
10.5(c) Change of Control; provided that in the second paragraph of that
subsection the term "Lakes" shall not include Great Lakes as to
clauses II, III and IV.
10.6 Restrictions on Collateral Development
11.3 Representations and Warranties of Lakes
11.4 Lakes Covenants
12.2 Events of Defaults by Lakes
13.5 Band Right to Terminate for Material Adverse
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Change
14.2 Arbitration
14.3 Limitation of Actions
14.5(i)(C),
(D) and (E) Liquidated Damages Payable by Lakes
14.6 Lakes Continuing Obligations
14.9 Fees not Damages
15.13 Confidentiality
Management Agreement 2 Definition of Affiliate
2 Definition of Gross Revenues
2 Definition of Insider
2 Definition of Limited Recourse
2 Definition of Manager's Internal Expenses
2 Definition of NIGC Approval
3.5 Manager Compliance with Law; Licenses
4.2.2 Compliance with Band Ordinances
4.6 No Manager Internal Expenses; Limitation on
Manager Payments
4.8 Employee Background Checks
9.3 Non-Competition
9.4.3 Change of Control; provided that in the second paragraph of that subsection
the term "Lakes" shall only include Great Lakes as to
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clause I of the definition of Change of Control, and shall not include Great
Lakes as to clauses II, III and IV.
9.5 Restrictions on Collateral Development
10.3 Representations and Warranties of Manager
10.4 Manager Covenants
10.5 No Liens
10.7 Authority to Execute and Perform Agreement
10.8 Brokerage
11.2 Events of Default by Manager
12.5 Band Right to Terminate for Material Adverse Change
12.6 Termination if Manager License Withdrawn or on Conviction
13.2 Arbitration
13.3 Limitation of Actions
13.6 Manager Continuing Obligations
13.10 No Setoff
13.11 Indemnification on Termination
13.12 Fees not Damages
15.2 Warranties
15.3 Disclosure Amendments
15.4 Breach of Manager's Warranties and Agreements
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18.4 Further Actions
18.15 Confidential and Proprietary Information
18.19 Government Savings Clause
b. Lakes shall continue to be a Hazardous Waste Indemnitee under
ss. 4 of the Indemnity Agreement between the Band and Lakes
dated March 10, 2000 and shall have the benefit of, and be
bound by, ss.ss. 4, 6, 7, 8, 9 and 10 of that Indemnity
Agreement.
c. Lakes shall continue to have the benefit of its right and
remedies, if any, under the following provisions of the
Agreements:
AGREEMENT SECTION CAPTION
Development Agreement 10.3 Indiana Casino
11.1 Representations and Warranties of the Band
12.3 Right to Cure
13.5 Band Right to Terminate for Material Adverse Change
14.8 Remedies; provided that the remedies of Lakes shall be
limited to claims for breach of its retained rights under
this ss. 10(c).
15.4 Notice
15.7 Waiver
15.10 Survival of Covenants
15.12 Periods of Time; Time of the Essence
15.13 Confidential and Proprietary
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Information
15.18(a) Consent - Band; provided that the rights of Lakes under
this subsection shall be limited to claims relating to
consent of the Band with regard to sections specified in
this ss. 10(c).
Management Agreement
9.2 Indiana Casino
10.1 Representations and Warranties of the Band
11.3 Right to Cure
12.5 Band Right to Terminate for Material Adverse Change
13.8 Remedies; provided that the remedies of Lakes shall be
limited to claims for breach of its retained rights under
this ss. 10(c).
13.11(ii) Indemnity of Manager by Band, provided that such indemnity
shall be limited to claims relating to the period prior to
the date of this Agreement.
14.1 Consents and Approvals - Band; provided that the rights of
Lakes under this subsection shall be limited to claims
relating to consent of the Band with regard to sections
specified in this ss. 10(c).
18.2 Notice
18.5 Waiver
18.10 Survival of Covenants
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18.12 Periods of Time; Time of the Essence
18.15 Confidential and Proprietary Information
d. Lakes and Great Lakes shall both be parties to, and bound by,
the Account Control Agreement, as amended, and the Amendment
to Pledge and Security Agreement, as amended,
11. Sovereign Immunity. Lakes agrees that all claims and causes of action
it may in the future have against the Band, whether at law, in tort or
otherwise, shall be subject to the Band's sovereign immunity, unless
specifically waived by the Band in writing after the date of this
Agreement or, as to disputes under this Agreement or as to sections
specified in ss.10, as provided in ss.19 of this Agreement. Lakes
shall, upon the execution of this Agreement, no longer have the
benefit of any limited waiver of sovereign immunity provided in the
Obligations. Nothing in this Agreement waives or prejudices any rights
Lakes or LG&R may have under the terms of their Guaranty, or affects
any limited waiver of sovereign immunity in such Guaranty.
12. Covenants and Representations of Lakes and Great Lakes
a. Great Lakes is, and at all times during the Term of the
Development Agreement and the Term of the Management Agreement
shall be, the wholly owned subsidiary of LG&R, which in turn
is and shall remain during such Terms the wholly owned
subsidiary of Lakes.
b. The Chief Manager and Chief Financial Manager of Great Lakes
are, and at all times during the Term of the Development
Agreement and the Term of the Management Agreement shall be,
the Chief Executive Officer and Treasurer, respectively, of
Lakes.
c. Lyle Berman is and at all times during the Term of the
Development Agreement and the Term of the Management Agreement
shall be the Chief Manager of Great Lakes, unless (i) Mr.
Berman dies or becomes disabled, or (ii) Mr. Berman is
replaced as Chief Executive Officer of Lakes with the consent
of the Band as provided in ss. 10.5(c) of the Development
Agreement. In the event of such replacement, Mr.
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Berman's replacement as approved by the Band shall be the
Chief Manager of Great Lakes.
d. Great Lakes is a duly organized Minnesota limited liability
company.
e. This Agreement constitutes the legal, valid and binding
obligation of Great Lakes and Lakes, and is fully enforceable
in accordance with its terms.
f. The Obligations constitute the legal, valid and binding
obligation of Great Lakes, and are fully enforceable in
accordance with their terms.
g. Neither the execution or delivery of this Agreement nor
fulfillment of or compliance with the terms and provisions
hereof, will conflict with, or result in a breach of the
terms, conditions or provisions of, constitute a default under
or result in the creation of any lien, charge or encumbrance
upon any property or assets of Lakes or Great Lakes under any
agreement or instrument to which either of them is now a party
or by which either of them is or may in the future be bound.
h. The fulfillment of and compliance with the terms and
provisions of the Obligations will not conflict with, result
in a breach of the terms, conditions or provisions of,
constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of
Great Lakes under any agreement or instrument to which it is
now a party or by which it is or may in the future be bound.
i. The Band has, and shall have until the termination of the
Pledge Agreement in accordance with ss. 12 thereof, a first
perfected security interest in the Account.
13. Amendment of Related Documents. The following Related Documents shall
be amended as provided in the indicated exhibits:
a. Account Control Agreement (Exhibit C)
b. Pledge and Security Agreement (Exhibit D)
i. UCC-1 Financing Statements
(1) Minnesota Secretary of State (Exhibit E-1)
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(2) Michigan Secretary of State (Exhibit E-2)
ii. UCC-3 Financing Statements
(1) Minnesota Secretary of State (Exhibit E-3)
(2) Michigan Secretary of State (Exhibit E-4)
c. Assignment of Mortgage (Exhibit F)
14. Further Assurances. From time to time hereafter, Lakes, Great Lakes
and/or the Band will execute and deliver, or will cause to be executed
and delivered, such additional instruments, certificates or documents,
and will take all such actions, as may reasonably be requested by the
other party or parties, for the purpose of implementing or effectuating
the provisions of this Agreement.
15. Governing Law; Severability. This Agreement shall be interpreted in
accordance with the law of Michigan. Wherever possible each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provisions of this
Agreement shall be prohibited by, unenforceable or invalid under
applicable law, such provision shall be ineffective to the extent of
such prohibition, unenforceability or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this
Agreement.
16. Amendments, Assignments, Etc. Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is signed by
each of the parties hereto. No modification shall be implied from
course of conduct. Great Lakes may not further assign its rights and
obligations hereunder and under the Obligations without the written
consent of the Band.
17. Gender and Number; Counterparts. Whenever the context so requires the
masculine gender shall include the feminine and/or neuter and the
singular number shall include the plural, and conversely in each case.
This Agreement may be executed in separate counterparts and said
counterparts shall be deemed to constitute one binding document.
18. Notices. Great Lakes agrees that any notice or demand upon it shall be
deemed to be sufficiently given or served if it is in writing and is
personally served or in lieu of personal service is mailed by first
class certified mail, postage
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prepaid, or be overnight mail or courier service, addressed to Great
Lakes at the address of Lakes and with copies as set forth in Section
15.4 of the Development Agreement. Notice to the Band shall be given as
provided in Section 15.4 of the Development Agreement. Any notice or
demand so mailed shall be deemed received on the date of actual
receipt, on the third business day following mailing as herein set
forth or one day following delivery to a courier service, whichever
first occurs.
19. Arbitration; Limited Waiver of Sovereign Immunity. Any disputes under
this Agreement or under the sections of the Agreements specified in
ss.10 shall be subject to arbitration as provided in ss.14.2 of the
Development Agreement; provided that any demand for arbitration shall
be made within 30 days after a notice of default, denominated as such,
is given under this Agreement. The Band's limited waiver of sovereign
immunity in ss.ss.14.1 and 14.3 of the Development Agreement shall
apply to this Agreement; provided that the liability of the Band under
any judgment shall always be Limited Recourse, and in no instance shall
any enforcement of any kind whatsoever be allowed against any assets of
the Band other than the limited assets of the Band specified in Section
14.3(i) of the Development Agreement.
20. Ratification. Great Lakes and the Band, and Lakes (to the extent
provided in ss.10) each ratify and confirm the Obligations.
21. Interpretation. This Agreement, the related amendments to a Pledge and
Security Agreement and Account Control Agreement (the "Amendments") and
the Obligations shall be interpreted in favor of the Band so as to
ensure for the Band the full benefit of its rights, powers and remedies
under the Obligations notwithstanding the Restructuring, this Agreement
and the Amendments; and to fully implement the intent of the parties
that the Restructuring, this Agreement and the Amendments not affect or
impair the Band's rights, powers and remedies under the Obligations,
other than the conversion of Lakes from primary obligor to unlimited
guarantor.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed as of the day first above written.
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WITNESS:
GREAT LAKES OF MICHIGAN, LLC
BY:
NAME: Timothy J. Cope
ITS: Chief Financial Officer
LAKES GAMING, INC.
BY:
NAME: Timothy J. Cope
ITS: Chief Financial Officer
THE POKAGON BAND OF POTAWATOMI
INDIANS
By:
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Its: Council Chairman
By:
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Its: Secretary
Seen and agreed:
LAKES GAMING AND RESORTS, LLC
BY:
NAME: Timothy J. Cope
ITS: Chief Financial Officer
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SCHEDULE A
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Development Agreement between the Pokagon Band of Potawatami Indians
(the "Band") and Lakes Gaming, Inc. ("Lakes") dated July 8, 1999.
2. Management Agreement between the Band and Lakes dated July 8, 1999.
3. Account Control Agreement by and among the Band, Lakes and Firstar Bank
of Minnesota, N.A. dated July 8, 1999.
4. Pledge and Security Agreement by and between Lakes and the Band dated
July 8, 1999.
5. Transition Loan Note dated July 8, 1999 made payable by the Band to the
order of Lakes in the original principal amount of $7,500,000.
6. Lakes Note dated July 8, 1999 made payable by the Band to the order of
Lakes in the original principal amount of $43,000,000.
7. Non-Gaming Land Acquisition Line of Credit Agreement dated July 8, 1999
by and between the Band and Lakes.
8. Guaranty by Pokagon Properties, LLC ("Pokagon Properties") in favor of
Lakes dated March 9, 2000.
9. Mortgage covering properties in Berrien County, Michigan dated March 9,
2000 executed by Pokagon Properties in favor of Lakes, as amended.
10. Mortgage covering properties in VanBuren County, Michigan dated March
9, 2000 executed by Pokagon Properties in favor of Lakes, as amended.
11. Mortgage covering properties in Cass County, Michigan dated September
25, 2000 executed by Pokagon Properties in favor of Lakes.
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