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EXHIBIT 10.12
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SUBORDINATION AGREEMENT
GRANTED BY
GRAND CASINOS OF LOUISIANA, LLC -- COUSHATTA
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:
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
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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,
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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 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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(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
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By: /s/ Timothy Cope
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Timothy Cope, Its Chief Financial Officer
Date: March 5, 1999
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ACCEPTED:
HIBERNIA NATIONAL BANK
By ___________________________________
_____________, its _______________
Date: _______________________________
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STATE OF MINNESOTA,
COUNTY OF __________.
On this day of , 1999, before me appeared TIMOTHY COPE, to me
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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.
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NOTARY PUBLIC in and for
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