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EXHIBIT 10.7
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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 Equipment Loan Agreement dated as of
December 18, 1998, 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 18, 1998, executed by the Tribe in favor
of Hibernia in the original principal sum of
$15,000,000.00 (herein referred to as the "Note");
(iii) that certain Dominion Account Agreement for the
Equipment Loan dated as of December 18, 1998,
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 18, 1998, 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
18, 1998, 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, primary, secondary, joint and
several, or otherwise, and irrespective of
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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
ACCEPTED:
HIBERNIA NATIONAL BANK
By
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, its
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Date:
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STATE OF MINNESOTA,
COUNTY OF .
On this day of , 1999, before
me appeared TIMOTHY COPE, to me 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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