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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
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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
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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
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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.
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"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
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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
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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
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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
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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
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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
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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
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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