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EXHIBIT 10.11
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SUBORDINATION AGREEMENT
GRANTED BY
LAKES GAMING, INC.
IN FAVOR OF HIBERNIA NATIONAL BANK
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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
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(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,
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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
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(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.
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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: Lakes Gaming, Inc.
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By: /s/ Timothy Cope
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Timothy Cope, Its Chief Financial
Officer
- ------------------------------ Date: March 5, 1999
ACCEPTED:
HIBERNIA NATIONAL BANK
By
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, its
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Date:
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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.
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NOTARY PUBLIC in and for
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