exv10w67



 






Exhibit 10.67



SETTLEMENT AGREEMENT




     This
Settlement Agreement is dated as of December 1 ___, 2004 [initial] and is entered into by and
between Lakes Entertainment, inc. (“Lakes”), on the one hand, and Grand Casinos, Inc. (“Grand”)
and Park Place Entertainment Corporation (now known as Caesars Entertainment, Inc.) (“Park
Place”), on the other hand. Lakes, Grand and Park Place are collectively referred to herein as the
“Parties.”



     WHEREAS, Lakes and Grand entered into a Tax Allocation And Indemnity Agreement, dated
December 31, 1998 (the “Tax Allocation Agreement”);



     WHEREAS, all capitalized terms not otherwise defined herein shall have the meaning specified
by the Tax Allocation Agreement;



     WHEREAS, on or about July 16, 2003, Lakes filed a complaint against Grand and Park Place in
the action styled Lakes Entertainment, Inc. v. Grand Casinos, Inc., Park Place Entertainment
Corporation, and John Doe Corporations 1-20, No. 03-13249, in the District Court, Fourth Judicial
District, County of Hennepin, State of Minnesota, seeking money allegedly owed to Lakes under the
Tax Allocation Agreement (the “Lawsuit”);



     WHEREAS, on or about March 22, 2004, the Parties entered into an Arbitration Agreement
wherein they agreed to dismiss the Lawsuit and submit to final, binding arbitration all claims
that had been asserted by Lakes against Grand and/or Park Place in the Lawsuit; all compulsory
counterclaims in the Lawsuit; and all other claims or defenses that relate to the sharing of the
Stratosphere Tax Benefits and/or to Lakes’ right to receive Income Tax Benefits resulting from the
unamortized costs associated with the original issuance of the Senior Notes or the Mortgage Notes
(the “Issuance Cost Benefits”) that have been or could have been asserted by Lakes, Grand and/or
Park Place in the Lawsuit (the “Arbitration Claims”);



     WHEREAS, to avoid the costs and uncertainties of further litigation, and without admission by
any Party as to any wrongdoing, liability or damage or as to any validity of any claims of any
other Party, the Parties have now agreed to resolve the Arbitration Claims in their entirety;



     NOW, THEREFORE, in consideration of the covenants and mutual promises set forth herein and
other good and valuable consideration, the sufficiency and receipt of which are hereby mutually
acknowledged by the Parties, and intending to be legally bound, the Parties agree as follows:



     1. Settlement payment. Within ten (10) business days of the date of this Agreement,
Park Place shall pay Lakes the sum of Eleven Million Two Hundred Fifty Thousand Dollars
($11,250,000) by wire transfer to the following account US Bank, Minneapolis, MN, ABA # 091000022,
For Credit to Lakes Entertainment, Inc., Account # 104755886546.



 









 





     2. Releases and Indemnity.



     a. Lakes Release of Grand and Park Place Releasees. Lakes hereby fully and
completely releases, discharges, covenants not to sue, and acquits Grand and Park Place and
each of their predecessors, successors, assigns, parents, subsidiaries, affiliates, principals,
owners, partners, shareholders, trustees, directors, officers, employees, agents and representatives
thereof (the “Grand and Park Place Releasees”) from the Arbitration Claims and any and all demands,
rights, obligations, liabilities, damages, losses, costs, expenses, attorneys’ fees and causes
of action, whether now known or unknown, suspected or unsuspected, fixed or contingent, that
Lakes ever had, now has, or hereafter can, shall or may have from the beginning of time to the
date hereof against the Grand and Park Place Releasees relating to the Arbitration Claims;
provided, however, nothing in this release shall be deemed to affect the enforceability of
this Settlement Agreement.



     b. Grand and Park Place Release of Lake Releasees. Grand and Park Place hereby
fully and completely release, discharge, covenant not to sue, and acquit Lakes and its
predecessors, successors, assigns, parents, subsidiaries, affiliates, principals, owners,
partners, shareholders, trustees, directors, officers, employees, agents and representatives thereof
(the “Lakes Releasees”) from the Arbitration Claims and any and all demands, rights, obligations,
liabilities, damages, losses, costs, expenses, attorneys’ fees and causes of action, whether
now known or unknown, suspected or unsuspected, fixed or contingent, that Grand and/or Park Place
ever had, now has, or hereafter can, shall or may have from the beginning of time to the date
hereof against the Lakes Releasees relating to the Arbitration
Claims; provided, however,
nothing in this release shall be deemed to affect the enforceability of this Settlement
Agreement, including without limitation Grand and/or Park Place’s right to seek reimbursement from Lakes
pursuant to Paragraph 3 below.



     3. Reimbursement By Lakes In The Event Of Bona Fide IRS Disallowance. In the
event that there is a bona fide disallowance by the Internal Revenue Service (“IRS”) of any
deduction relating to the Stratosphere Tax Benefits or the Issuance Cost Benefits, Lakes
agrees that within thirty (30) days of being provided written notice of such disallowance it will
reimburse Grand and/or Park Place its proportionate share of the disallowed Income Tax
Benefit. For purposes of this agreement, a “bona fide disallowance” is a disallowance based on a Final
Determination that the specific deduction is substantively inconsistent with law, and not
based on (i) any purported failure by Grand and/or Park Place to seek the deduction in a timely
fashion, or (ii) any agreement by Grand and/or Park Place to forego or compromise the deduction in
exchange for IRS allowance of a different deduction. For purposes of determining the amount of
any such reimbursement, the Parties agree that the $11.25 million settlement payment herein is
allocated between the Income Tax Benefits at issue as follows: (a) $8.825 million is allocated
to the Stratosphere Tax Benefits; and (b) $2.425 million is allocated to the Issuance Cost
Benefits. Accordingly, the Parties agree that: (a) for each dollar of Stratosphere Tax
Benefits-related deductions lost by Park Place/Grand due to a bona
fide disallowance, Lakes shall reimburse
Park Place 12.3 cents (up to a total of not more than $8,825,000.00); and (b) for each dollar of
Issuance Cost Benefits-related deductions lost by Park Place/Grand due to a bona fide
disallowance, Lakes shall reimburse Park Place 24.6 cents (up to a total of not more than
$2,425,000.00).



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     4. Lakes’ Obligation To Cooperate. Lakes agrees to provide documents and
continue to otherwise cooperate with Grand and Park Place, as needed, in connection with Grand
and Park Place’s efforts to obtain allowance of the deductions relating to the Stratosphere
Tax Benefits or the Issuance Cost Benefits.



     5. Lakes’ Entitlement To Participate. Grand and Park Place agree that Lakes shall
have all rights provided by Section 9(e) of the Tax Allocation Agreement to participate in any
Tax Authority examinations or reviews that may affect in any way the Stratosphere Tax Benefits
and/or the Issuance Cost Benefits.



     6. Treatment of settlement payment. The settlement payment made to Lakes
pursuant to Paragraph 1 herein shall be treated by all Parties for tax purposes as a
non-taxable capital contribution. Accordingly, neither Grand, Park Place nor any members of their
Affiliated Group shall take a tax deduction for any part of the settlement payment on their tax returns.



     7. Refund of Income Tax Benefits from Settlement Payments. If Grand, Park Place
or their Affiliated Group receives any Income Tax Benefits as a result of the settlement
payment hereunder, all such Income Tax Benefits shall be paid to Lakes. Payment of such Income Tax
Benefits shall be made in accordance with the provisions of Section 8 of the Tax Allocation
Agreement.



     8. Arbitration. The Parties agree that any and all disputes with respect to this
Settlement Agreement shall be resolved in binding arbitration conducted and administered by
Richard B. Solum of Dorsey & Whitney. Mr. Solum’s arbitration decision and award shall be
final and binding and shall be subject to judicial review only in accordance with the
standards of the Minnesota Arbitration Act. A judgment may be entered on Mr. Solum’s arbitration decision
and award by a court in Minnesota. Mr. Solum’s arbitration fees and expenses, along with the
reasonable legal fees and expenses of the prevailing party (including all expert witness fees
and expenses), the fees and expenses of a court reporter and any expenses for a hearing room shall
be paid by the losing party.



     9. Understanding
of Agreement. The Parties expressly acknowledge and represent
to each other that they are competent to execute this Settlement Agreement and have done so
voluntarily. The Parties further represent that they have read this Settlement Agreement
carefully and understand its terms and conditions without reservation. The Parties
acknowledge that they have had ample opportunity to consult with legal advisors and/or counsel of their
choice regarding this Settlement Agreement, that they have not relied on any representations
or statements of any other party or its respective counsel or advisors in connection with
entering into this Settlement Agreement and that they have been represented and advised by counsel
concerning the terms and conditions of this Settlement Agreement as well as their execution
thereof.



     10. Entire Agreement. This Settlement Agreement sets forth the entire understanding
and agreement between the Parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, arrangements and understandings related thereto.



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     11. Written Amendments. This Settlement Agreement may be amended, superseded
or canceled only by a written instrument which specifically states that it amends, supersedes
or cancels this Settlement Agreement, executed and delivered by the party to be bound.



     12. Interpretation of this Agreement. The Parties agree that the rule of
construction that questions of interpretation of a contract will be resolved against the drafter of the
contract will have no application to questions arising with respect to terms of this Settlement
Agreement.



     13. Authority to Bind. The Parties warrant and represent that the signatories on their
behalf have the authority and power to bind them to all terms, conditions and provisions of
this Settlement Agreement. The Parties each further represent and warrant that no claims of any
kind that any of them have, may have had, or may have against the other have been assigned to any
other person or entity.



     14. Binding Effect. All of the provisions hereof shall be binding upon and shall inure
to the benefit of the Parties and their respective representatives, successors and permitted
assigns.



     15. Choice of Law. This Settlement Agreement shall be governed and construed
under the laws of the State of Minnesota without giving effect to the choice of law rules
thereof.



     16. Counterparts. This Settlement Agreement may be executed in counterparts, each
of which when so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same Settlement Agreement.



     IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement as of the date first
above written with the intent to be legally bound hereby.



	 	 	 	 	 	 	 
	LAKES ENTERTAINMENT, INC.	 	GRAND CASINOS, INC.
	 
	 	 	 	 	 	 
	By:

	 	Timothy Cope
	 	By:
	 	Bernard Delury
	Name:

	 	Timothy Cope
	 	Name:
	 	Bernard Delury
	Title:

	 	President / CEO
	 	Title:
	 	Sr. Vice President
	 
	 	 	 	 	 	 
	 	 	 	 	CAESARS ENTERTAINMENT, INC.
(formerly known as PARK PLACE ENTERTAINMENT CORPORATION)
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Bernard Delury
	 

	 	 	 	Name:
	 	Bernard Delury
	 

	 	 	 	Title:
	 	Executive Vice President







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