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EXHIBIT 10.18
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SUBORDINATION AGREEMENT
GRANTED BY LAKES GAMING, INC.,
IN FAVOR OF THE COTTONPORT BANK
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This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999, 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 Tunica-Biloxi 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.
2. For and in consideration of the Cottonport Indebtedness (herein
defined) under the Cottonport Documents (herein defined), and in order
to induce the Cottonport Bank ("Cottonport Bank"), 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 Cottonport
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
Bank of any and all debts, liabilities and obligations for
which the Tribe may now or hereafter be under obligation to
Cottonport Bank (the "Cottonport Indebtedness"), under:
(i) that certain Commercial Loan Agreement dated March
14, 1997, between Cottonport Bank, as lender, and the
Tribe, as borrower (herein referred to as the "Loan
Agreement");
(ii) that certain Promissory Note dated March 14, 1997,
executed by the Tribe in favor of Cottonport Bank in
the original principal sum of $16,500,000.00 (herein
referred to as the "Note");
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(iii) that certain Commercial Security Agreement dated
March 14, 1997, executed by the Tribe, as debtor, in
favor of Cottonport Bank, as secured party, which
agreement covers certain bank accounts and gaming
equipment more fully described therein (the
"Cottonport Security Agreement"); and
(iv) that certain Non Standard Financing Statement
executed by the Tribe, as the debtor, in favor of the
Cottonport Bank, as the secured party, on or about
March 14, 1997, regarding the Collateral (as defined
in the Cottonport Security Agreement) which
instrument has or soon will be recorded in the public
records of Avoyelles Parish, Louisiana, (the Loan
Agreement, Note, Cottonport Security Agreement and
Cottonport Financing Statement are sometimes
collectively referred to as the "Cottonport
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, 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 Cottonport Indebtedness then due
shall have been fully paid and discharged; provided however,
unless and until Cottonport Bank 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 Cottonport Bank and Lakes Gaming will
promptly pay such amounts to Cottonport Bank to be credited
and applied to any Cottonport Indebtedness (principal and/or
interest) then owing to Cottonport Bank by the Tribe, whether
matured or unmatured;
(d) That any liens, security interests, judgments liens, charges
or other encumbrances upon the Tribe's assets 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 Tribe's assets securing
payment of the Cottonport Indebtedness;
(e) If Lakes Gaming forecloses upon any of the Subordinated Claims
or obtains possession of the Tribe's property in lieu of
foreclosure, all assets
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of the Tribe or proceeds thereof obtained thereby shall be
held in trust by Lakes Gaming on behalf of Cottonport Bank and
Lakes Gaming will promptly pay such amounts to Cottonport Bank
to be credited and applied to any Cottonport Indebtedness
(principal and/or interest) then owing to Cottonport Bank 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, Cottonport Bank shall be entitled
to receive payment in full of any and all of the Cottonport
Indebtedness then owing to Cottonport Bank by the Tribe prior
to the payment of all or any portion of the Subordinated
Claims; and
(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 Cottonport Bank.
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 Cottonport 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 Cottonport Bank and Lakes Gaming.
8. Cottonport Bank will not alter, modify or amend any of the Cottonport
Documents with the prior written consent of Lakes Gaming, which consent
will not be unreasonably withheld.
LAKES GAMING, INC.--TUNICA-BILOXI
By: /s/ Timothy Cope
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Timothy Cope, Its Chief Financial Officer
ACCEPTED:
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THE COTTONPORT BANK
By ___________________________________
_____________, its _______________
Date: _______________________________
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