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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
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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.
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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
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(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
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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.
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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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
COTTONPORT BANK
By: /s Dwayne Harper
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Its: Vice President
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TUNICA-BILOXI TRIBE OF LOUISIANNA
By: /s/ Earl Barbry
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Earl Barbry
Chairman
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GRAND CASINOS OF LOUISIANA, LLC
- TUNICA-BILOXI
By: /s/ Timothy Cope
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Timothy Cope, its Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. -
TUNICA-BILOXI
By: /s/ Timothy Cope
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Timothy Cope, its Chief Financial Officer
GRAND CASINOS, INC.
By: /s/ Timothy Cope
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Timothy Cope, its Chief Financial Officer
LAKES GAMING, INC.
By: /s/ Timothy Cope
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Timothy Cope, its Chief Financial Officer