Exhibit 10.11


 


GUARANTY BY TRUST


 


This Guaranty, dated as
of October 20, 2005, is made by the                               
Trust (the “Guarantor”), for the benefit of Crown Bank, a Minnesota state
banking corporation (with its participants, successors and assigns, the “Lender”).


 


The Lender and Southwest
Casino and Hotel Corp., a Minnesota corporation (the “Borrower”), are parties
to a Revolving Credit and Term Loan Agreement of even date herewith pursuant to
which the Lender may make advances and extend other financial accommodations to
the Borrower.


 


As a condition to
extending such credit to the Borrower, the Lender has required the execution
and delivery of this Guaranty.


 


ACCORDINGLY, the
Guarantor, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
hereby agrees as follows:


 


1.             Definitions.  All terms defined in the Credit Agreement
that are not otherwise defined herein shall have the meanings given them in the
Credit Agreement.


 


2.             Indebtedness
Guaranteed.  The Guarantor hereby
absolutely and unconditionally guarantees to the Lender the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of principal, accrued interest and late charges, if any, on that
certain $2,500,000 Term Note of even date herewith executed by the Borrower and
payable to the order of the Lender (the “Term Note”) and any and all renewals
thereof including notes taken in substitution therefore, together with the full
and prompt payment of any and all costs and expenses of and incidental to the
collection of the Term Note and the enforcement of this Guaranty including,
without limitation, reasonable attorney’s fees (all of said sums being
hereinafter called the “Indebtedness”).


 


3.             Guarantor’s
Representations and Warranties.  The
Guarantor represents and warrants to the Lender that (i) the Guarantor is
a trust, duly organized and existing in good standing and has full power and
authority to make and deliver this Guaranty; (ii) the execution, delivery
and performance of this Guaranty by the Guarantor have been duly authorized by
all necessary action of its trust and do not and will not violate the
provisions of, or constitute a default under, any presently applicable law or
its trust agreement or any agreement presently binding on it; (iii) this
Guaranty has been duly executed and delivered by the trustee(s) of the
Guarantor and constitutes its lawful, binding and legally enforceable
obligation; and (iv) the authorization, execution, delivery and
performance of this Guaranty do not require notification to, registration with,
or consent or approval by, any federal, state or local regulatory body or
administrative agency.  The Guarantor
represents and warrants to the Lender that the Guarantor has a direct and
substantial economic interest in the Borrower and expects to derive substantial
benefits therefrom and from any loans, credit transactions, financial
accommodations, discounts, purchases of property and other transactions and
events resulting in the creation of the Indebtedness guarantied hereby, and
that this Guaranty is given for a proper trust purpose.  The Guarantor agrees (i) that the
Guarantor will indirectly benefit by and from the making of the loans by the
Lender to the


 





















 


Borrower evidenced by the
Notes; (ii) the Guarantor has received legal and adequate consideration
for the execution of this Guaranty and has executed and delivered this Guaranty
to the Lender in good faith in exchange for reasonably equivalent value
(including, without limitation, receiving warrants issued by the Borrower in
consideration and exchange for the execution of this Guaranty); (iii) the
Guarantor is not presently insolvent and will not be rendered insolvent by
virtue of the execution and delivery of this Guaranty; (iv) the Guarantor
has not executed or delivered this Guaranty with actual intent to hinder, delay
or defraud the Guarantor’s creditors; and (v) the Lender has agreed to
make such loans in reliance upon this Guaranty. 
The Guarantor agrees to rely exclusively on the right to revoke this
Guaranty prospectively as to future transactions, in accordance with paragraph
4, if at any time, in the opinion of the trustee(s), the benefits then being
received by the Guarantor in connection with this Guaranty are not sufficient
to warrant the continuance of this Guaranty as to the future Indebtedness of
the Borrower.  Accordingly, so long as
this Guaranty is not revoked prospectively in accordance with paragraph 4, the
Lender may rely conclusively on a continuing warranty, hereby made, that the
Guarantor continues to be benefited by this Guaranty and the Lender shall have
no duty to inquire into or confirm the receipt of any such benefits, and this
Guaranty shall be effective and enforceable by the Lender without regard to the
receipt, nature or value of any such benefits.


 


4.             Unconditional
Nature.  No act or thing need occur
to establish the Guarantor’s liability hereunder, and no act or thing, except
full payment and discharge of all of the Indebtedness, shall in any way
exonerate the Guarantor hereunder or modify, reduce, limit or release the
Guarantor’s liability hereunder.  This is
an absolute, unconditional and continuing guaranty of payment of the
Indebtedness and shall continue to be in force and be binding upon the
Guarantor, whether or not all of the Indebtedness is paid in full, until this
Guaranty is revoked prospectively as to future transactions, by written notice
actually received by the Lender, and such revocation shall not be effective as
to the amount of Indebtedness existing or committed for at the time of actual
receipt of such notice by the Lender, or as to any renewals, extensions,
refinancings or refundings thereof.


 


5.             Dissolution
or Insolvency of Guarantor.  The
dissolution or adjudication of bankruptcy of the Guarantor shall not revoke
this Guaranty, except upon actual receipt of written notice thereof by the
Lender and only prospectively, as to future transactions, as herein set
forth.  If the Guarantor shall be
dissolved or shall be or become insolvent (however defined), then the Lender
shall have the right to declare immediately due and payable, and the Guarantor
will forthwith pay to the Lender, the full amount of all of the Indebtedness
whether due and payable or unmatured.  If
the Guarantor voluntarily commences or there is commenced involuntarily against
the Guarantor a case under the United States Bankruptcy Code, the full amount
of all Indebtedness, whether due and payable or unmatured, shall be immediately
due and payable without demand or notice thereof.


 


6.             Subrogation,
etc.  The Guarantor will not exercise
or enforce any rights that the Guarantor may now have or hereafter acquire,
whether by subrogation, contribution, reimbursement, recourse, exoneration,
contract or otherwise, to recover from the Borrower or from any property of the
Borrower any sums paid under this Guaranty until all of the Indebtedness shall
have been fully paid and discharged.  The
Guarantor will not exercise or 


 


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enforce any right of
contribution to recover any such sums from any person who is a co-obligor with
the Borrower or a guarantor or surety of the Indebtedness or from any property
of any such person until all of the Indebtedness shall have been fully paid and
discharged.


 


7.             Enforcement
Expenses.  The Guarantor will pay or
reimburse the Lender for all costs, expenses and attorneys’ fees paid or
incurred by the Lender in endeavoring to collect and enforce the Indebtedness
and in enforcing this Guaranty.


 


8.             Lender’s
Rights.  The Lender shall not be
obligated by reason of its acceptance of this Guaranty to engage in any
transactions with or for the Borrower. 
Whether or not any existing relationship between the Guarantor and the
Borrower has been changed or ended and whether or not this Guaranty has been
revoked, the Lender may enter into transactions resulting in the creation or
continuance of the Indebtedness and may otherwise agree, consent to or suffer
the creation or continuance of any of the Indebtedness, without any consent or
approval by the Guarantor and without any prior or subsequent notice to the
Guarantor.  The Guarantor’s liability
shall not be affected or impaired by any of the following acts or things (which
the Lender is expressly authorized to do, omit or suffer from time to time,
both before and after revocation of this Guaranty, without consent or approval
by or notice to the Guarantor): (i) any acceptance of collateral security,
guarantors, accommodation parties or sureties for any or all of the
Indebtedness; (ii) one or more extensions or renewals of the Indebtedness
(whether or not for longer than the original period) or any modification of the
interest rates, maturities, if any, or other contractual terms applicable to
any of the Indebtedness or any amendment or modification of any of the terms or
provisions of any loan agreement or other agreement under which the
Indebtedness or any part thereof arose; (iii) any waiver or indulgence
granted to the Borrower, any delay or lack of diligence in the enforcement of
the Indebtedness or any failure to institute proceedings, file a claim, give
any required notices or otherwise protect any of the Indebtedness; (iv) any
full or partial release of, compromise or settlement with, or agreement not to
sue, the Borrower or any guarantor or other person liable in respect of any of
the Indebtedness; (v) any release, surrender, cancellation or other
discharge of any evidence of the Indebtedness or the acceptance of any
instrument in renewal or substitution therefor; (vi) any failure to obtain
collateral security (including rights of setoff) for the Indebtedness, or to
see to the proper or sufficient creation and perfection thereof, or to
establish the priority thereof, or to preserve, protect, insure, care for,
exercise or enforce any collateral security; or any modification, alteration,
substitution, exchange, surrender, cancellation, termination, release or other
change, impairment, limitation, loss or discharge of any collateral security; (vii) any
collection, sale, lease or disposition of, or any other foreclosure or
enforcement of or realization on, any collateral security; (viii) any
assignment, pledge or other transfer of any of the Indebtedness or any evidence
thereof; (ix) any manner, order or method of application of any payments
or credits upon the Indebtedness; and (x) any election by the Lender under
Section 1111(b) of the United States Bankruptcy Code.  The Guarantor waives any and all defenses and
discharges available to a surety, guarantor or accommodation co-obligor.


 


9.             Waivers
by Guarantor.  The Guarantor waives
as against the Lender any and all defenses, claims, setoffs and discharges of
the Borrower, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. 
Without limiting the generality of the foregoing, the Guarantor will not
assert, plead or enforce against the Lender any defense of waiver, release,
discharge or disallowance in bankruptcy, statute of limitations, res


 


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judicata, statute of
frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality
or unenforceability which may be available to the Borrower or any other person
liable in respect of any of the Indebtedness, or any setoff available against
the Lender to the Borrower or any other such person, whether or not on account
of a related transaction.  The Guarantor
expressly agrees that the Guarantor shall be and remain liable for any
deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.  The liability of the Guarantor
shall not be affected or impaired by any voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar event or proceeding affecting,
the Borrower or any of its assets.  The
Guarantor will not assert, plead or enforce against the Lender any claim,
defense or setoff available to the Guarantor against the Borrower.  The Guarantor waives presentment, demand for
payment, notice of dishonor or nonpayment and protest of any instrument
evidencing the Indebtedness.  The Lender
shall not be required first to resort for payment of the Indebtedness to the
Borrower or other persons, or their properties, or first to enforce, realize
upon or exhaust any collateral security for the Indebtedness, before enforcing
this Guaranty.


 


10.           If
Payments Set Aside, etc.  If any
payment applied by the Lender to the Indebtedness is thereafter set aside,
recovered, rescinded or required to be returned for any reason (including,
without limitation, the bankruptcy, insolvency or reorganization of the
Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purpose of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.


 


11.           Additional
Obligation of Guarantor.  The
Guarantor’s liability under this Guaranty is in addition to and shall be
cumulative with all other liabilities of the Guarantor to the Lender as
guarantor, surety, endorser, accommodation co-obligor or otherwise of any of
the Indebtedness or obligation of the Borrower, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.


 


12.           No
Duties Owed by Lender.  The Guarantor
acknowledges and agrees that the Lender (i) has not made any
representations or warranties with respect to, (ii) does not assume any
responsibility to the Guarantor for, and (iii) has no duty to provide information
to the Guarantor regarding, the enforceability of any of the Indebtedness or
the financial condition of the Borrower or any guarantor.  The Guarantor has independently determined
the creditworthiness of the Borrower and the enforceability of the Indebtedness
and until the Indebtedness is paid in full will independently and without
reliance on the Lender continue to make such determinations.


 


13.           Miscellaneous.  This Guaranty shall be effective upon
delivery to the Lender, without further act, condition or acceptance by the
Lender, shall be binding upon the Guarantor and the successors and assigns of
the Guarantor and shall inure to the benefit of the Lender and its
participants, successors and assigns. 
Any invalidity or unenforceability of any provision or application of
this Guaranty shall not affect other lawful provisions and application thereof,
and to this end the provisions of this Guaranty are declared to be
severable.  This Guaranty may not


 


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be waived, modified,
amended, terminated, released or otherwise changed except by a writing signed
by the Guarantor and the Lender.  This
Guaranty shall be governed by and construed in accordance with the substantive
laws (other than conflict laws) of the State of Minnesota.  The Guarantor hereby (i) consents to the
personal jurisdiction of the state and federal courts located in the State of
Minnesota in connection with any controversy related to this Guaranty; (ii) waives
any argument that venue in any such forum is not convenient, (iii) agrees
that any litigation initiated by the Lender or the Guarantor in connection with
this Guaranty shall be venued in either the District Court of Hennepin County,
Minnesota, or the United States District Court, District of Minnesota, Fourth
Division; and (iv) agrees that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.


 


14.           Waiver
of Jury Trial.  THE GUARANTOR HEREBY
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF, BASED ON OR PERTAINING TO THIS GUARANTY.


 


15.           Notwithstanding the aggregate amount of the
Indebtedness which may from time to time be outstanding, the Guarantor’s
liability hereunder shall be limited to $400,000 plus all attorney’s fees,
collection costs and enforcement expenses incurred in connection with the
enforcement of this Guaranty.  The
Indebtedness may be created and continued in any amount, whether or not in
excess of such amount, without affecting or impairing the Guarantor’s liability
hereunder, and the Lender may pay (or allow for the payment of) the excess out
of any sums received by or available to the Lender on account of the
Indebtedness from the Borrower or any other person (except the Guarantor) from
their properties, out of any collateral security, or from any other source, and
such payment (or allowance) shall not reduce, affect, or impair the Guarantor’s
liability hereunder.  Any payment made by
the Guarantor under this Guaranty shall be effective to reduce or discharge
such liability only if accompanied by a written transmittal document, received
by the Lender, advising the Lender that such payment is made under this
Guaranty for such purpose.


 


IN WITNESS WHEREOF, this
Guaranty has been duly executed by the Guarantor the date first written above.


 


 


	
   

  	
   

  
	
   

  	
                                  ,
  Trustee of the

  
	
   

  	
                                                     
  Trust

  
	
   

  	
   

  
	
  STATE OF
  MINNESOTA

  	
  )

  
	
   

  	
  ) ss

  
	
  COUNTY OF

  	
  )

  
			



 


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The foregoing instrument
was acknowledged before me this       day of            ,
2005, by                     ,
the trustee of the                             
Trust, on behalf of the trust.


 


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


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