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EXHIBIT 10.4
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (the "Agreement") dated as of May
28, 1999, between The Cottonport Bank ("Cottonport Bank"), Hibernia National
Bank ("Hibernia") and Grand Casinos of Louisiana, LLC -- Tunica-Biloxi ("Grand
Casinos/Tunica Biloxi") and Lakes Gaming, Inc. ("Lakes Gaming"):
WITNESSETH:
WHEREAS, the Cottonport Bank, and the Tunica-Biloxi Tribe of
Louisiana (the "Tribe") entered into that certain Commercial Loan Agreement
dated March 14, 1997 (the "Hotel Loan Agreement") under the terms of which the
Cottonport Bank agreed to loan to the Tribe up to $16,500,000.00 (the "Hotel
Loan") to be used to purchase and renovate a hotel facility, to purchase new
gaming equipment, and to refinance certain gaming equipment, all as more fully
set forth therein;
WHEREAS, in connection with the Hotel Loan Agreement, the
Tribe executed in favor of the Cottonport Bank the Hotel Loan Collateral
Documents (herein defined), including without limitation, the Hotel Loan
Security Agreement (herein defined) which, among other things, granted to the
Cottonport Bank as collateral for the Hotel Loan a first priority security
interest in accounts (the "Casino Bank Accounts") maintained by the Tribe at the
Cottonport Bank;
WHEREAS, certain of the Hotel Loan Collateral Documents create
a Lien (herein defined) on certain equipment which equipment is also encumbered
by the Grand Equipment Liens (herein defined);
WHEREAS, in connection with the Hotel Loan, Grand Casinos,
Inc. ("Grand"), a Minnesota corporation and Grand Casinos of Louisiana, Inc. --
Tunica Biloxi ("GCI"), a Minnesota corporation, executed in favor of the
Cottonport Bank that certain Commercial Guaranty Agreement dated April 7, 1997
(the "Grand 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, Lakes Gaming and
Grand Casino/ Tunica Biloxi executed in favor of the Cottonport Bank that
certain Commercial Guaranty Agreement dated February 15, 1999 (the "Lakes Hotel
Loan Guaranty") under the terms of which Lakes Gaming and Grand Casino/ Tunica
Biloxi guaranteed up to the maximum sum of $16,500,000.00 of the Hotel Loan
Obligations;
WHEREAS, in connection with the Management Agreement (herein
defined), the Tribe executed in favor of Grand and GCI the Grand Collateral
Documents (herein defined);
WHEREAS, in connection with the Hotel Loan Agreement, Lakes
Gaming and Grand Casinos/Tunica Biloxi executed the Lakes Hotel Loan
Subordination Agreements (herein defined);
WHEREAS, Grand Casinos/Tunica Biloxi has succeeded to the
interests of GCI in the Operative Agreements (herein defined);
WHEREAS, Lakes Gaming has succeeded to the interests of Grand
in the Operative
INTERCREDITOR AGREEMENT -- PAGE 1
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Agreements, except for Grand's obligation under the Hotel Loan Guaranty;
WHEREAS, if the Cottonport Bank makes demand for payment upon
Lakes Gaming and Grand Casinos/Tunica Biloxi pursuant to the Lakes Hotel Loan
Guaranty and if payment in full is made of all amounts owing thereunder, Lakes
Gaming and Grand Casinos/Tunica Biloxi will have certain subrogation rights
under the Lakes Hotel Loan Guaranty, including, the right to succeed to the
Cottonport Bank's rights as a secured party under the Hotel Loan Collateral
Documents (such subrogation rights herein referred to as the "Lakes Hotel Loan
Subrogation Rights");
WHEREAS, the Cottonport Bank has participated to Hibernia one
hundred percent (100%) of the Hotel Loan;
WHEREAS, Hibernia and the Tribe entered into that certain
Commercial Loan Agreement dated May 28, 1999 (the "Equipment Loan Agreement"),
under the terms of which Hibernia agreed to loan to the Tribe up to
$6,000,000.00 (the "Equipment Loan") to purchase new gaming equipment and other
general equipment;
WHEREAS, in connection with the Equipment Loan Agreement, the
Tribe executed in favor of Hibernia the Equipment Loan Collateral Documents
(herein defined), including without limitation, the Equipment Loan Dominion
Account Agreement (herein defined) which, among other things, granted to
Hibernia as collateral for the Equipment Loan a security interest in the Casino
Bank Accounts;
WHEREAS, in connection with the Equipment Loan Agreement,
Grand Casinos/Tunica Biloxi and Lakes Gaming executed the Equipment Loan
Subordination Agreements (herein defined);
WHEREAS, certain of the Equipment Loan Collateral Documents
creates a Lien (herein defined) on certain equipment which equipment is also
encumbered by a Lien created under certain of the Grand Collateral Documents;
WHEREAS, the undersigned parties wish to set forth their
understanding with respect to the priority of those Liens;
WHEREAS, the Equipment Loan Dominion Account Agreement and the
Hotel Loan Security Agreement encumber the Casino Bank Accounts;
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 Equipment Loan Dominion Account
Agreement, Hotel Loan Security Agreement, the other Hotel Loan Collateral
Documents and/or the other Equipment Loan Collateral Documents;
NOW, THEREFORE, in consideration of the foregoing, the
Cottonport Bank, Hibernia, Lakes Gaming and Grand Casinos/Tunica Biloxi 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
INTERCREDITOR AGREEMENT -- PAGE 2
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Section 11.02 of the Hotel Loan Agreement, (b) the acceleration of the Equipment
Loan Obligations under Section 11.02 of the Equipment Loan Agreement, or (c) the
date on which the Cottonport Bank makes demand for payment upon Lakes Gaming
and/or Grand Casinos/Tunica Biloxi under the Lakes Hotel Loan Guaranty and all
obligations of Lakes Gaming and/or Grand Casinos/Tunica Biloxi under the Lakes
Hotel Loan Guaranty have been fully satisfied.
"Cottonport Bank Equipment Lien" means the Lien granted by the Tribe in
favor of the Cottonport Bank pursuant to that certain Commercial Security
Agreement dated March 14, 1997.
"Equipment Loan Collateral" means all property which is, or will
become, subject to the liens, pledges and security interests of every kind
granted by the Equipment Loan Collateral Documents.
"Equipment Loan Collateral Documents" means those documents designated
as such which are described in Schedule 1 attached hereto and made a part
hereof.
"Equipment Loan Dominion Account Agreement" means that certain Dominion
Account Agreement dated as of May 28, 1999, between the Tribe, Lakes Gaming,
Grand Casinos/Tunica Biloxi, the Cottonport Bank and Hibernia.
"Equipment Loan Obligations" shall have the meaning attributable to the
term "Obligations" as defined in the Equipment Loan Agreement.
"Equipment Loan Subordination Agreements" mean those certain
Subordinations Agreements dated as of May 28, 1999, by Lakes Gaming and Grand
Casinos/Tunica Biloxi in favor of the Bank regarding the Equipment Loan.
"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 Collateral Documents" means those documents designated as such
which are described in Schedule 3 attached hereto and made a part hereof.
"Grand Equipment Liens" mean any and all Liens granted by the Tribe in
favor of Grand, GCI, Lakes Gaming and/or Grand Casinos/Tunica Biloxi with
respect to the Equipment Loan Collateral and the Hotel Loan Collateral,
including, but not limited to, those Liens granted pursuant to that certain
Security Agreement dated as of November 1, 1991, by the Tribe in favor of GCI
and assigned by GCI to Grand Casinos/Tunica Biloxi, together with the Financing
Statements executed by the Tribe in favor of GCI which Financing Statement was
recorded under File No. 05-920792 on April 7, 1992, and under File No.
05-941890, on September 26, 1994, in the Records of Avoyelles Parish, Louisiana.
The term "Grand Equipment Liens" does not include any Liens under the Hotel Loan
Collateral Documents to which Lakes Gaming or Grand Casinos/Tunica Biloxi
succeed under their respective Hotel Loan Subrogation Rights.
"Grand Obligations" means the indemnification obligations owed by the
Tribe to Lakes Gaming and Grand Casinos/Tunica Biloxi pursuant to the Management
Agreement, any of the Grand Collateral
INTERCREDITOR AGREEMENT -- PAGE 3
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Documents or applicable law with respect to the Lakes Hotel Loan Guaranty.
"Hibernia Equipment Lien" means the Lien granted by the Tribe in favor
of the Bank pursuant to that certain Commercial Security Agreement dated May 28,
1999.
"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.
"Hotel Loan Obligations" shall have the meaning attributable to the
term "Obligations" as defined in the Hotel Loan Agreement.
"Hotel Loan Security Agreement" means that certain Commercial Security
Agreement dated March 14, 1997, by the Tribe in favor of the Cottonport Bank
with respect to the Hotel Loan.
"Lakes Hotel Loan Subordination Agreements" means those certain
Subordination Agreements dated as of February 15, 1999, executed by Lakes Gaming
and Grand Casinos/Tunica Biloxi in favor of the Bank regarding the Hotel Loan.
"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.
"Management Agreement" means that certain Amended and Restated
Management & Construction Agreement between the Tribe and GCI dated November 1,
1991.
"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 Equipment Loan Agreement, the
Equipment Loan Collateral Documents, the Hotel Loan Agreement, the Hotel Loan
Collateral Documents, the Lakes Hotel Loan Guaranty, the Management Agreement
and the Grand Collateral Documents.
"Post-Acceleration Payments" means any payments made by the Tribe after
Acceleration for credit to the Hotel Loan Obligations or the Equipment Loan
Obligations other than payments from Net Foreclosure Proceeds realized from
Foreclosure upon the Casino Bank Accounts, upon the Hotel Loan Collateral, or
upon the 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 Loan, 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 Loan.
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SECTION 2. RANK OF EQUIPMENT LIENS. The Hibernia Equipment Lien and the
Cottonport Bank Equipment Lien 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
Hibernia, the Cottonport Bank, Lakes Gaming or Grand Casinos/Tunica Biloxi on a
Pro Rata Basis to the Hotel Loan Obligations and to the Equipment Loan
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 Grand Obligations until paid in full; and
(c) To the Equipment Loan Obligations until paid in full.
SECTION 5. SUBROGATION RIGHTS. At such time, if any, that (a) the
Cottonport Bank has made demand for payment upon Lakes Gaming and/or Grand
Casinos/Tunica Biloxi under the Lakes Hotel Loan Guaranty and (b) after such
demand, all obligations of Lakes Gaming and/or Grand Casinos/Tunica Biloxi under
the Lakes Hotel Loan Guaranty have been fully satisfied, Lakes Gaming and/or
Grand Casinos/Tunica Biloxi will thereafter be subrogated to the rights of the
Cottonport Bank under the Lakes Hotel Loan Obligations and the Hotel Loan
Collateral Documents in accordance with the terms of the Lakes 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 Cottonport
Bank would otherwise be entitled to; provided however, neither Lakes Gaming
and/or Grand Casinos/Tunica Biloxi shall have any rights under the Equipment
Loan 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 Loan Collateral (other than the Casino
Bank Accounts), the Net Foreclosure Proceeds realized therefrom shall not be
applied toward the Hotel Loan Obligations or the Grand Obligations unless and
until: (a) the Equipment Loan Obligations have been paid in full; (b)
Acceleration by Hibernia of the Hotel Loan Obligations; and (c) Hibernia, 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.
INTERCREDITOR AGREEMENT -- PAGE 5
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7.2 This Agreement shall not be binding upon the parties hereto
until such time as (a) the Bank, Lakes Gaming and/or Grand Casinos/Tunica Biloxi
have signed this Agreement, (b) the Tribe has consented in writing to this
Agreement, and (c) the Bureau of Indian Affairs has approved of such consent of
the Tribe 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 Grand Casinos/Tunica Biloxi: Grand Casinos of Louisiana, LLC-Tunica-Biloxi
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: Chief Financial Officer
Fax: (612) 449-9353
To Lakes Gaming: Lakes Gaming, Inc.
130 Chesire Lane
Minnetonka, Minnesota 55305
Attention: Chief Financial Officer
Fax: (612) 449-9353
To Hibernia: Hibernia National Bank
333 Travis Street
Shreveport, Louisiana 7110
Attention: Legal Administration Department
Fax: (318) 674-3758
To Cottonport Bank: The Cottonport Bank
144 South Main Street
Marksville, Louisiana 71351
Attention: President
Fax: (318) 253-0276
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.
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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.
8.6 Amendments. This Agreement may not be amended, modified,
waived, canceled or terminated, except in writing executed by all of the parties
hereto.
[The remainder of this page has been intentionally left blank]
INTERCREDITOR AGREEMENT -- PAGE 7
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
HIBERNIA NATIONAL BANK
By: s/ Christopher K. Haskew
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Christopher K. Haskew,
Vice President
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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
LAKES GAMING, INC.
By: s/ Timothy Cope
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Timothy Cope, its Chief Financial Officer
THE COTTONPORT BANK
By: s/ DeWayne Harper
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Schedules
Schedule 1 - Equipment Loan Collateral Documents
Schedule 2 - Hotel Loan Collateral Documents
Schedule 3 - Grand Collateral Documents
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CONSENT
The undersigned hereby acknowledges and agrees: (a) to the
foregoing terms and provisions of the Intercreditor Agreement between the
Cottonport Bank, Hibernia, Lakes Gaming and Grand Casinos/Tunica Biloxi; (b) to
be bound by the provisions hereof as they relate to the relative rights of the
Cottonport Bank, Hibernia, Lakes Gaming and Grand Casinos/Tunica Biloxi; and (c)
that the terms of this Agreement shall not give either of the undersigned any
substantive rights vis-a-vis the Cottonport Bank, Hibernia, Lakes Gaming and
Grand Casinos/Tunica Biloxi, nor is either intended to be a third party
beneficiary hereunder.
If any of the Cottonport Bank, Hibernia, Lakes Gaming or Grand
Casinos/Tunica Biloxi 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 Cottonport Bank,
Hibernia, Lakes Gaming or Grand Casinos/Tunica Biloxi, 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 Cottonport Bank, Hibernia, Lakes Gaming or Grand Casinos/Tunica Biloxi.
Dated: May 28, 1999 TUNICA-BILOXI TRIBE OF LOUISIANA
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By s/ Earl J. Barbry, Sr.
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Name: Earl J. Barbry, Sr.
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Title: Chairman
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BIA APPROVAL
THE FOREGOING DOCUMENT IS
APPROVED PURSUANT TO 25 U.S.C. 81:
UNITED STATES DEPARTMENT OF THE INTERIOR,
BUREAU OF INDIAN AFFAIRS:
BY_______________________________________
AREA DIRECTOR OF THE EASTERN AREA OFFICE
OF THE BUREAU OF INDIAN AFFAIRS OF THE SECRETARY
OF THE INTERIOR AND THE COMMISSIONER OF INDIAN AFFAIRS,
ACTING UNDER DELEGATED AUTHORITY.
SCHEDULES ATTACHED
TO INTERCREDITOR AGREEMENT
SCHEDULE 1 -- EQUIPMENT LOAN COLLATERAL DOCUMENTS
1.1 That certain Dominion Account Agreement dated effective May 28, 1999,
executed by the Tribe, Lakes Gaming, Grand Casinos/Tunica Biloxi, Cottonport
Bank and the Bank.
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1.2 That certain Commercial Security Agreement dated May 28, 1999, executed by
the Tribe in favor of the Bank.
1.2 Financing Statement(s) executed by the Tribe in favor of the Bank regarding
the grant of security interests in the Collateral referred to in the aforesaid
Dominion Account Agreement and Commercial Security Agreement, including, without
limitation, security interest in Cash, the Casino Bank Accounts and Equipment
purchased with Advances made pursuant to the Equipment Loan.
SCHEDULE 2 -- HOTEL LOAN COLLATERAL DOCUMENTS
2.1 That certain Commercial Security Agreement dated March 14, 1997, executed by
the Tribe and the Cottonport Bank granting in favor of the Cottonport Bank a
security interest in the Casino Bank Accounts, all funds deposited by the Tribe
with the Cottonport Bank and in certain equipment consisting of approximately
360 slot machines.
2.2 That certain Non-Standard Financing Statement dated March 19, 1997, executed
by the Tribe in favor of the Cottonport Bank with respect to the grant of a
security interest in the Casino Bank Accounts, all funds deposited by the Tribe
with the Cottonport Bank and in certain equipment consisting of approximately
360 slot machines which financing statement was filed on April 22, 1997, under
Original File No. 97-0978 of the Records of Avoyelles Parish.
2.3 That certain instrument entitled "An Agreement Pertaining to the Transfer or
Encumbrance of Property" executed by the Tribe in favor of the Cottonport Bank
which instrument was filed on April 22, 1999, in Conveyance Book 437 and
Mortgage Book 431 of the Records of Avoyelles Parish.
SCHEDULE 3 - GRAND COLLATERAL DOCUMENTS
3.1 That certain Amended and Restated Management & Construction Agreement
between the Tribe and GCI dated November 1, 1991.
3.2 That certain Security Agreement dated as of November 1, 1991, by the Tribe
in favor of GCI and later assigned by GCI to Grand Casinos/Tunica Biloxi,
together with the Financing Statements executed by the Tribe in favor of GCI
which Financing Statement was recorded under File No. 05-920792 on April 7,
1992, and under File No. 05-941890, on September 26, 1994, in the Records of
Avoyelles Parish, Louisiana.
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