1
EXHIBIT 10.19
================================================================================
SUBORDINATION AGREEMENT
GRANTED BY GRAND CASINOS OF
LOUISIANA, LLC - TUNICA-BILOXI
IN FAVOR OF THE COTTONPORT BANK
================================================================================
This Subordination Agreement (the "Agreement") is entered into
as of February 15, 1999, by:
GRAND CASINOS OF LOUISIANA LLC -TUNICA-BILOXI (hereinafter
referred to as "Grand Casinos-TB"), 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-TB 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 Grand Casinos-TB, 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-TB. Without limiting
the foregoing, the term Subordinated Claims includes the following
existing debts, liabilities and obligations owed by the Tribe to Grand
Casinos-TB under:
(a) That certain Amended and Restated Management and Construction
Agreement between the Tribe and Grand Casinos-TB, as successor
to Grand Casinos of Louisiana, Inc. - Tunica-Biloxi
(hereinafter referred to as "GCL, Inc.."), a Minnesota
corporation, dated November 1, 1991 (herein referred to as the
"Management Agreement"); and
(b) That certain Amended and Restated Tunica-Biloxi Tribe of
Louisiana Security Agreement dated November 1, 1991, between
the Tribe, as the debtor, and Grand-Casinos-TB (as successors
to GCL, Inc.), as the secured party (herein referred to as the
"Grand Casinos-TB Security Agreement"); and
(c) That certain UCC-1 Financing Statement executed by the Tribe,
as the debtor, in favor of Grand Casinos-TB (as successors to
GCL, Inc.), as the secured party, filed on April 7, 1992, in
the public records of Avoyelles Parish, Louisiana, under
Original File No. 05-920792, as continued by
SUBORDINATION AGREEMENT -- PAGE 1
2
Continuation Statement filed in the public records of Avoyelles Parish,
Louisiana, under File No. 05-970190 (herein referred to as the "Grand
Casino-TB Financing Statement"); (herein collectively referred to as
the "Existing Subordinated Claims").
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, Grand Casinos-TB 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");
(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).
SUBORDINATION AGREEMENT -- PAGE 2
3
(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 Grand Casinos-TB at
the address noted above that an Event of Default has occurred
under the terms of the Loan Agreement, Grand Casinos-TB may
continue to receive scheduled payments from the Tribe under
the Existing 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-TB on behalf of Cottonport Bank and Grand Casinos-TB
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 Grand Casinos-TB forecloses upon any of the Subordinated
Claims or obtains possession of the Tribe's property in lieu
of foreclosure, all assets of the Tribe or proceeds thereof
obtained thereby shall be held in trust by Grand Casinos-TB on
behalf of Cottonport Bank and Grand Casinos-TB 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.
SUBORDINATION AGREEMENT -- PAGE 3
4
4. This Agreement is complete and effective upon execution by Grand
Casinos-TB 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 Grand Casinos-TB 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 Grand Casinos-TB.
8. Cottonport Bank will not alter, modify or amend any of the Cottonport
Documents with the prior written consent of Grand Casinos-TB, which
consent will not be unreasonably withheld.
GRAND CASINOS OF LOUISIANA , LLC --TUNICA-BILOXI
By: /s/ Timothy Cope
------------------------------------------
Timothy Cope, Its Chief Financial Officer
ACCEPTED:
THE COTTONPORT BANK
By
----------------------------------------
, its
------------- ---------------
Date:
-------------------------------------
SUBORDINATION AGREEMENT -- PAGE 4