Document:

EXHIBIT 10.3

 

PLEDGE
AGREEMENT

 

Southwest Casino Corporation (“Southwest”)  and each of the  parties listed as Co-Signers on Exhibit 1 (the “Co-Signers”) enter into this Pledge Agreement (the “Agreement”) effective March 7, 2008.  Each of the Co-Signers is referred to individually as a “Co-Signer” and collectively, the “Co-Signers”.

 

BACKGROUND

 

A.            Under the terms of Subscription Agreements
among Southwest and the Co-Signers dated the same date as this Agreement
(collectively, the “Subscription Agreements”),
each of the Co-Signers have agreed to co-sign with Southwest a promissory note
(each, a “Note” and collectively,
the “Notes”) or to execute and
deliver a guaranty (each, a “Guaranty”
and collectively, the “Guaranties”)
in favor of Crown Bank (the “Bank”).

 

B.            Southwest is the sole shareholder of
Southwest Casino & Hotel Corp., a Minnesota corporation  (“Casino &
Hotel”) and currently holds 1,000 shares of Casino & Hotel
common stock (the “Shares”).

 

C.            In consideration of co-signing the
Notes or entering into the Guaranties, Southwest has agreed to execute and
deliver this Agreement to the Co-Signers.

 

AGREEMENT

 

In consideration
of the accommodations made and to be made by the Co-Signers to Southwest, the
mutual promises, covenants and agreements contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which
each of the parties to this Agreement acknowledges, Southwest and the
Co-Signers agree as follows:

 

1.                                      THE PLEDGE

 

1.1           The Pledge. 
Southwest pledges and grants to the Co-Signers, as agents for and on
behalf of the Co-Signers, a first priority security interest (the “Pledge”) in the Shares (the “Collateral”), including:

 

a.                                       All securities, instruments, other investment
property and other rights or interests of any kind or description, at any time
issued or issuable as an addition to, in substitution or exchange for, or with
respect to, the Shares, including, without limitation, any shares or other
ownership interest issued as dividends or as the result of any reclassification,
split-up or other reorganization;

 

b.                                      All cash, proceeds, dividends, interest or other
property, paid, payable, received, receivable or otherwise distributed in
respect of, in exchange for, or upon the sale or other disposition of the Shares;
but before the occurrence of an Event of Default, not including any cash
dividends or distributions payable with respect to the Membership Interest,
which will remain the property of Southwest; and

 

c.                                       All records, books, ledgers, computer tapes or disks,
printouts and other information in whatsoever form regarding the Shares.

 

1.2           Secured Obligations.  The Pledge granted in this Agreement is given
to secure (i) all liabilities and obligations incurred by the Co-Signers
under the Notes, (ii) all liabilities and obligations incurred by the
Co-Signers under the Guarantees, and (iii) all amounts expended or
incurred by the Co-

 

 

 

Signers in negotiating with the Company or Southwest
in conjunction with Southwest’s obligations under this Agreement or in exercising
any rights or remedies consequent upon any default under this Agreement,
including, without limitation, UCC filing fees, court costs, and attorneys fees
and expenses of counsel for the Co-Signers incurred in connection with the
enforcement of this Agreement whether or not suit has been filed (all of which
are referred to in this Agreement collectively as the “Secured Obligations”).

 

1.3           Limitations
on Pledged Securities. 
Southwest represents and warrants to Co-Signers that Southwest holds
title to the shares of Southwest Casino and Hotel Corp. common stock free and
clear of any liens, pledges or encumbrances, except liens in favor of the
Co-Signers.  Provided, however, that
Southwest Casino and Hotel Corp. owns a 50% membership interest in North Metro
Harness Initiative, LLC (the “North Metro
Interest”) and Southwest Casino and Hotel Corp.’s ownership of the
North Metro Interest is subject to a prior pledge of the North Metro Interest
to Black Diamond Commercial Finance, LLC (the “Black Diamond Pledge”). 
Any attempt by Southwest Casino and Hotel Corp. or by Co-Signers to
transfer the North Metro Interest is subordinate to the prior Black Diamond
Pledge and cannot occur without the consent of Black Diamond Commercial
Finance, LLC, which Black Diamond may withhold in its sole discretion.  The North Metro Interest is also subject to
the terms of the North Metro Harness Initiative, LLC Member Control Agreement
dated June 4, 2004 that further limits the ability of Southwest Casino and
Hotel Corp. to dispose of the North Metro Interest.  In addition to the consent of Black Diamond
Commercial Finance, LLC, Southwest Casino and Hotel Corp. or Co-Signers must
obtain the consent of MTR-Harness, Inc., which also holds a 50% membership
interest in North Metro an may also withhold its consent in its sole
discretion, prior to any transfer of the North Metro Interest.

 

1.4           Proxies, Stock Powers,
Other Endorsements. 
After the occurrence of an Event of Default and upon demand of
Co-Signers representing a majority of the total principal amount of the Notes
and the Guarantees, Southwest will execute, assign and endorse to the
Co-Signers all proxies, endorsements, applications, acceptances, powers,
documents, instruments or other evidences of payment or writing constituting or
relating to any of the Collateral.  All
assignments and endorsements will be in form and substance reasonably
satisfactory to the Co-Signers.

 

1.5           Duty of the Co-Signers.  The Co-Signers are not be obligated to take
any action to exercise any rights, warrants or options with respect to the
Collateral, to present any coupon(s) for payment, to effect redemption of,
or to make any presentment, protest, notice of protest or to otherwise protect
any optional right(s) on the Collateral.

 

1.6           Security Interest is
Continuing. 
Southwest agrees and acknowledges that the Pledge granted in this
Agreement is a continuing security interest and must continue in full force and
effect until all of the Secured Obligations are paid in full.  Except as expressly provided in this
Agreement, the Co-Signers must release their interest in the Collateral only
upon payment in full of all of the Secured Obligations and the indefeasible
termination, release and discharge of the Guaranties; provided, however, that
the Co-Signers will execute and deliver to Southwest the proper instruments
(including UCC termination statements) acknowledging the termination of this
Agreement, and will duly assign, transfer and deliver to Southwest any
Collateral that may be in the possession of the Co-Signers and has not been
disposed of, applied or released.

 

1.7           Actions Not Affecting the
Pledge.  The
Co-Signers may (and each of the Co-Signers is authorized to make from time to
time, without notice to anyone) without impairing or affecting the Pledge
granted in this Agreement:

 

 

 

a.                                       Sell, pledge, surrender, compromise,
settle, release, renew, extend, grant an indulgence, alter, substitute, change,
modify, or otherwise dispose of any of the Secured Obligations or any contract
evidencing the same or any part of the Secured Obligations or any security
interest for the Secured Obligations;

 

b.                                      Accept additional security for or
additional parties or other Co-Signers upon any of the Secured Obligations or
release any portion of the Collateral or any maker, endorser, security or
Co-Signer or other party liable on any portion of the Secured Obligations;

 

c.                                       Apply any and all payments a Co-Signer
receives on account of the Secured Obligations and the proceeds of the
Collateral or any other security for the Collateral against any item or items
of the Secured Obligations as the Co-Signers, each in its sole discretion, may
determine, whether the same is then due or not; and

 

d.                                      Settle or compromise any liability
secured by this Agreement, any security for that liability or any liability
(including any of those under this Agreement) incurred directly or indirectly
in respect of the liability secured by this Agreement, and may subordinate the
payment of all or part of that liability to the payment of any liability of
Southwest to creditors of Southwest, other than the Co-Signers.

 

2.                                      WARRANTIES AND REPRESENTATIONS OF SOUTHWEST

 

2.1           Power and Authority.  Southwest has full power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement.

 

2.2           Enforceability.  This Agreement is the legal, valid and
binding obligation of Southwest, enforceable against Southwest according to its
terms, subject only to bankruptcy, insolvency, moratorium, reorganization or
similar laws, rulings or decisions at the time in effect affecting the
enforceability of rights of creditors generally and to applicable equitable
principles.

 

2.3           Title to the Collateral.  Southwest warrants and represents to the
Co-Signers that it holds title to the Collateral free and clear of any liens,
pledges or encumbrances, except liens or encumbrances in favor of the
Co-Signers, and no financing statement or registration of pledge covering all
or any part of the Collateral is on file in any public office or private office,
except those in favor of the Co-Signers.

 

3.                                      EVENTS OF DEFAULT AND REMEDIES

 

3.1           Events
of Default.  An “Event of Default” will occur if the Bank
requires and any co-signer makes any payment on a Note or the Bank calls all or
any portion of any Guaranty given by any of the Co-Signers and Southwest is
unable to reimburse the amount paid by the Co-Signer or Co-Signers within 30
days.  After occurrence of an Event of
Default and upon written demand from Co-Signers representing a majority in
interest of the total amount co-signed or guaranteed, Southwest will assign to
the Co-Signers, that portion of the Collateral reasonably determined by
Co-Signer to be of value necessary to repay to Co-Signer any amounts paid by
Co-Signer in connection with the Event of Default.  Southwest and Co-Signer agree that the intent
of this provision is to reimburse Co-Signer only for amounts actually paid in
connection with an Event of Default.  For
that reason, strict foreclosure in accordance with Section 9-620 of the
Uniform Commercial Code (“UCC”) is
not available to Co-Signers.  If
Co-Signer disposes of the assigned Collateral in accordance with Section 3.2
of this Agreement within 90 days of its assignment to Co-Signer and does not
receive sufficient value to repay to Co-Signer any 

 

 

 

amounts paid by Co-Signer in connection with the Event
of Default, Co-Signer shall have the right to assignment of additional
Collateral in accordance with the terms of this Agreement.

 

3.2           Co-Signer’s Right to Sell
the Collateral. 
Subject to the terms and conditions of the Black Diamond Pledge and the
Member Control Agreement, upon the occurrence of an Event of Default and
assignment of the Collateral, each Co-Signer:

 

a.                                       will be entitled to sell that portion of
the Collateral reasonably necessary to repay to Co-Signer any amounts paid by
Co-Signer in connection with the Event of Default.  The disposition of the Collateral after an
Event of Default shall be by public proceedings under UCC 9-610, and not by
private proceeding, unless consented to by Southwest in writing subsequent to
an Event of Default; or

 

b.                                      may cause that portion of the Collateral
assigned to that Co-Signer to be registered in the Co-Signer’s name and to
receive all dividends, interest and other distributions on that portion of the
Collateral and apply the same to the Secured Obligations as the Co-Signer deems
appropriate.

 

3.3           Waiver of Redemption; No
Liability for Value Decline.  Any and all sales of the Collateral held by
the Co-Signers under Section 3.2 above will be free from any right of
redemption, which Southwest expressly waives. 
In addition, the Co-Signers will have no liability for any increase or
decrease in the value of any of the Collateral at any time.

 

3.4           Application of Sales
Proceeds.  The
proceeds of the sale(s) of the Collateral under Section 3.2 above
will be applied as follows:

 

a.                                       First, to the payment of all costs and
expenses incurred by the Co-Signers under this Agreement, including all costs
and expenses of collection, whether or not a suit has been filed, including,
but not limited to, all sales commissions, brokers’ fees and attorneys’ fees;

 

b.                                      Second, to the satisfaction of the
Secured Obligations;

 

c.                                       Third, to the payment of any other
amounts required by applicable law; and

 

d.                                      Fourth, any balance then remaining will
be paid to Southwest, unless it is the subject of tax lien or levy, attachment,
restraining order, injunction or other such distraint.

 

3.5           Rights Cumulative.  All remedies of the Co-Signers under this
Agreement are in addition to remedies afforded to the Co-Signers under any
other document evidencing or securing any of the Secured Obligations or any
other document or under law.  All
remedies are cumulative and may be exercised by the Co-Signers concurrently or
consecutively.  No failure or omission of
the Co-Signers to exercise any right or remedy will constitute a waiver.

 

4.                                      MISCELLANEOUS

 

4.1           Agreement Binding.  This Agreement binds the successors and
assigns of Southwest and the insolvency, bankruptcy, or release of any such
party will not release or discharge any other borrower, pledgor, endorser, or
Co-Signer from liability under this Agreement; provided, however, that the
rights of Southwest under this Agreement may not be assigned without the prior
written consent of the Co-Signers.

 

 

 

4.2           Severability.  If one or more provisions of this Agreement
should be declared to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, the validity, legality and enforceability of
the remaining provisions in this Agreement will not in any way be affected or
impaired.

 

4.3           Regarding
the Secured Parties.  All actions taken by the Co-Signers
under this Agreement will be taken only upon the mutual agreement of Co-Signers
representing a majority of the total amount Guaranteed under the Subscription
Agreements.

 

4.4           Attorney in Fact.  Effective upon the occurrence of an Event of
Default, Southwest appoints the Co-Signers as Southwest’s attorney-in-fact for
the purpose of carrying out the terms of this Agreement and taking any action
and executing any instrument which it may deem advisable or necessary to
accomplish the purposes of this Agreement, which appointment is irrevocable and
coupled with an interest.  Without
limiting the generality of the foregoing, upon the occurrence of an Event of
Default, the Co-Signers have the right, power and authority to endorse and
collect all checks and other orders for the payment of money made payable to
Southwest representing any dividend, interest payment or other distribution in
respect of the Collateral or any part of the Collateral.

 

4.5           Notices.  Any notice required under this Agreement will
be deemed given on the third banking day after deposit in the U.S. Mail, proper
postage prepaid addressed to Southwest and to the Co-Signers at the following
addresses:

 

Southwest Casino
Corporation

2001 Killebrew Drive, Suite 350

Minneapolis, MN 55425

Attn: Thomas E. Fox,
President

 

The Co-Signers:

At the address listed on Exhibit 1
to this Agreement.

 

Any changes in a party’s
address may be made by giving written notice to the other parties in accordance
with this Section.

 

4.6           Governing Law;
Jurisdiction. 
This Agreement must be construed, interpreted and governed according to
the laws of the State of Minnesota.  Southwest and each of the Co-Signers consent
to the personal jurisdiction of the state and federal courts located in the
State of Minnesota in connection
with any controversy related to this Agreement, waive any argument that venue
in such forums is not convenient and agree that any litigation instigated in
connection with this Agreement must be venued in either the District Courts of Hennepin County, Minnesota, or the
United States District Court for the District
of Minnesota, Fourth Division.

 

4.7           Further Assurances.  Southwest agrees to do any further act and
things, and to execute and deliver any additional conveyances, assignments,
agreements and instruments, as the Co-Signers may at any time request in
connection with the administration or enforcement of this Agreement or related
to the Collateral or any part of the Collateral or in order better to assure
and confirm unto the Co-Signers its rights, powers and remedies under this
Agreement.  Southwest consents and agrees
that the issuers of or obligors in respect of the Collateral or any registrar
or transfer agent or trustees for any of the Collateral are entitled to accept
the provisions of this Agreement as conclusive evidence of the right of the
Co-Signers to effect any transfer, notwithstanding any other notice or direction
to the contrary given by Southwest or any other person to any issuers or
obligors or to any registrar or transfer agent or trustees.

 

 

 

Signature Page for

Pledge Agreement

 

 

IN WITNESS WHEREOF, the parties to this Agreement have executed this
instrument as of the day and year first above written.

 

	
  SOUTHWEST
  CASINO CORPORATON

  	
   

  	
  CO-SIGNER
  or GUARANTOR

  

 

	
  By:

  	
   

  	
   

  	
   

  	
   

  

 

	
  Its:

  	
   

  	
   

  	
  Print Name:Exhibit 10.4

 

 

 

 

AMENDED
AND RESTATED

PERSONAL
GUARANTY

 

BY

 

 

TO

 

CROWN BANK

 

 

Dated:  March 7, 2008

 

 

 

PERSONAL
GUARANTY

 

In consideration of and in
order to induce Crown Bank, a Minnesota state banking corporation, with its
banking house located in Minneapolis, Minnesota (the “Lender”), to extend
financial accommodations to Southwest Casino and Hotel Corp., a Minnesota
corporation, (the “Borrower”), pursuant to a series of promissory notes dated
the same date as this Amended and Restated Guaranty and identified on Exhibit 1
to this Guaranty (the “Notes”) and that certain Line of Credit dated April 19,
2007 (the “Line of Credit”) all by and between the Lender and the Borrower, the
undersigned (the “Guarantor”) hereby amends and restates the Amended and Restated
Personal Guaranty between Lender and Borrow dated April 16, 2007 and
hereby:

 

1.             Unconditionally and absolutely
guarantees to the Lender the full and prompt payment, when due, whether at the
maturity dates specified therein or theretofore upon acceleration of maturity
pursuant to the provisions thereof, of principal, accrued interest and late
charges, if any, on the Notes and the Line of Credit, and any and all renewals
thereof including notes taken in substitution therefore (collectively referred to
as the “Obligations”); together with the full and prompt payment of any and all
costs and expenses of and incidental to the collection of the Obligations for
the enforcement of this Guaranty, including, without limitation, reasonable
attorneys’ fees.  All capitalized terms
not otherwise defined herein shall have the meaning assigned thereto in the
Notes or the Line of Credit.

 

2.             Agrees that the Lender may demand
payment from the Guarantor of any installment (or portion thereof) of principal
or interest on either the Notes or the Line of Credit, when due and unpaid, and
the Guarantor shall immediately pay the same to the Lender, and the Lender may
demand payment or performance of any or all of the other Obligations, when such
payment or performance is due or required (subject to any applicable grace
period), and the Guarantor shall immediately pay or perform the same, whether
or not the Lender has (i) declared an Event of Default, or (ii) accelerated
payment of the Notes or the Line of Credit, or (iii) commenced
repossession of, or foreclosure of any security interest, mortgage or other
lien in, any or all of the collateral securing the Notes or the Line of Credit,
or (iv) otherwise exercised its rights and remedies under this Guaranty or
under the Notes, the Line of Credit, the documents related thereto or
applicable law.

 

3.             Waives (i) presentment,
demand, notice of nonpayment, protest and notice of protest and dishonor on the
Obligations; (ii) notice of acceptance of this Guaranty by the Lender; and
(iii) notice of the creation or incurrence of the Obligations by the
Borrower.

 

4.             Agrees that the Lender may from
time to time, without notice to the Guarantor, which notice is hereby waived by
the Guarantor, extend, modify, renew or compromise the Obligations, in whole or
in part, without releasing, extinguishing or affecting in any manner whatsoever
the liability of the Guarantor hereunder, the foregoing acts being hereby
consented to by the Guarantor.

 

5.             Agrees that the Lender shall not be
required to first resort for payment to the Borrower or any other person,
corporation or entity, or their properties or estates, or any other right or
remedy whatsoever, prior to enforcing this Guaranty.

 

 

6.             Agrees that this Guaranty shall be
construed as a continuing, absolute, and unconditional guaranty without regard
to (i) the validity, regularity or enforceability of the Obligations or
the disaffirmance thereof in any insolvency or bankruptcy proceeding relating
to the Borrower, or (ii) any event or any conduct or action of the
Borrower or the Lender or any other party which might otherwise constitute a
legal or equitable discharge of a surety or guarantor but for this provision.

 

7.             Agrees that this Guaranty shall
remain in full force and effect and be binding upon the Guarantor until the
Obligations are paid in full.

 

8.             Agrees that the Lender is expressly
authorized to forward or deliver any or all collateral and security which may
at any time be placed with it by the Borrower, the Guarantor or any other
person, directly to the Borrower for collection and remittance or for credit,
or to collect the same in any other manner and to renew, extend, compromise,
exchange, release, surrender or modify the installments of, any or all of such
collateral and security with or without consideration and without notice to the
Guarantor and without in any manner affecting the absolute liability of the
Guarantor hereunder; and that the liability of the Guarantor hereunder shall
not be affected or impaired by any failure, neglect or omission on the part of
the Lender to realize upon the Obligations, or upon any collateral or security
therefor, nor by the taking by the Lender of any other guaranty or guaranties
to secure the Obligations or any other indebtedness of the Borrower to the Lender,
nor by the taking by the Lender of collateral or security of any kind nor by
any act or failure to act whatsoever which, but for this provision, might or
could in law or in equity act to release or reduce the Guarantor’s liability
hereunder.

 

9.             Waives any right that the Guarantor
may have to collect or seek to collect from the Borrower the claim, if any, by
subrogation or otherwise, acquired by the Guarantor through payment of any part
or all of the Obligations until the Obligations have been paid in full.

 

10.           Agrees that the liability of the
Guarantor hereunder shall not be affected or impaired by the existence or
creation from time to time, with or without notice to the Guarantor, which
notice is hereby waived, of indebtedness from the Borrower to the Lender in
addition to the indebtedness evidenced by the Notes and the Line of Credit; the
creation or existence of such additional indebtedness being hereby consented to
by the Guarantor.

 

11.           Agrees that the possession of this
instrument of guaranty by the Lender shall be conclusive evidence of due
execution and delivery hereof by the Guarantor.

 

12.           Agrees that this Guaranty shall be
binding upon the legal representatives, successors and assigns of the
Guarantor, and shall inure to the benefit of the Lender and its successors,
assigns and legal representatives; that notwithstanding the foregoing, the
Guarantor shall not have the right to assign or otherwise transfer his rights
and obligations under this Guaranty to any third party without the prior written
consent of the Lender; and that any such assignment or transfer shall not
release or affect the liability of the Guarantor hereunder in any manner
whatsoever.

 

13.           Agrees that the Guarantor may be
joined in any action or proceeding commenced against the Borrower in connection
with or based upon the Obligations and recovery may be had against the
Guarantor in any such action or proceeding or in any independent action or
proceeding 

 

2

 

against
the Guarantor should the Borrower fail to duly and punctually pay any of the
principal of or interest on the Obligations without any requirement that the
Lender first assert, prosecute or exhaust any remedy or claim against the
Borrower.

 

14.           Agrees that upon the occurrence at
any time of an Event of Default, the Lender shall have the right to set off any
and all amounts due hereunder by the Guarantor to the Lender against any
indebtedness or obligation of the Lender to the Guarantor.

 

15.           Agrees that the Guarantor shall be
liable to the Lender for any deficiency remaining after foreclosure of any
mortgage in real estate or any security interest in personal property granted
by the Borrower, the Guarantor or any third party to the Lender to secure
repayment of the Obligations and the subsequent sale by the Lender of the
property subject thereto to a third party (whether at a foreclosure sale or at
a sale thereafter by the Lender in the event the Lender purchases said property
at the foreclosure sale) notwithstanding any provision of applicable law which
may prevent the Lender from obtaining a deficiency judgment against, or
otherwise collecting a deficiency from, the Borrower including, without
limitation, Minnesota Statutes Section 582.30.

 

16.           Agrees that this Guaranty shall be
deemed a contract made under and pursuant to the laws of the State of Minnesota
and shall be governed by and construed under the laws of such state without
giving effect to the choice of law provisions thereof; and that, wherever
possible, each provision of this Guaranty shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of the Guaranty.

 

17.           Agrees that no failure on the part of
the Lender to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as or constitute a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy granted hereby or
by any related document or by law.

 

18.           Waives any and all claims against the
Lender and defenses to performance and payment hereunder relating in any way,
directly or indirectly, to the performance of the Lender’s obligations or
exercise of any of its rights under the Notes and the documents related
thereto.

 

19.           Warrants
and represents to the Lender as follows:

 

a.             Enforceability.  This
Guaranty constitutes the legal, valid and binding obligation of the Guarantor
enforceable in accordance with its terms (subject, as to enforceability, to
limitations resulting from bankruptcy, insolvency or other similar laws
affecting creditors’ rights generally).

 

b.             Litigation.  There
is no action, suit or proceeding pending or, to the knowledge of the Guarantor,
threatened against or affecting the Guarantor which, if adversely determined,
would have a Material Adverse Effect (as defined in the Credit Agreement) on
the Guarantor, or which would question the validity of this Guaranty or any 

 

3

 

instrument,
document or other agreement related hereto or required hereby, or impair the
ability of the Guarantor to perform his obligations hereunder or thereunder.

 

c.             Default.  The
Guarantor is not in default of a material provision under any material
agreement, instrument, decree or order to which he is a party or by which he or
his property is bound or affected.

 

d.             Consents.  To
the Guarantor’s knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any governmental
authority or any third party is required in connection with the execution and
delivery of this Guaranty or any of the agreements or instruments herein
mentioned to which the Guarantor is a party or the carrying out or performance
of any of the transactions required or contemplated hereby or thereby or, if
required, such consent, approval, order or authorization has been obtained or
such registration, declaration or filing has been accomplished or such notice
has been given prior to the date hereof.

 

e.             Taxes.  The
Guarantor has filed all tax returns required to be filed and has paid all taxes
shown thereon to be due, including interest and penalties, which are not being
contested in good faith and by appropriate proceedings and has no information
or knowledge of any objections to or claims for additional taxes in respect of
federal income or excess profits tax returns for prior years.

 

20.           Agrees that the liability of the
Guarantor and any other guarantor of the Obligations shall be joint and
several.

 

21.           Agrees to deliver to the Lender
financial information and related documents as set forth in Section 5.1 of
the Credit Agreement with respect to the Guarantor.

 

22.           Agrees that (i) the Guarantor
will indirectly benefit by and from the making of the loans by the Lender to
the Borrower evidenced by the Notes and the Line of Credit; (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.

 

23.           Agrees that if, at any time, all or
any part of any payment previously applied by the Lender to any of the
Obligations must be returned by the Lender for any reason, whether by court
order, administrative order or settlement, the Guarantor shall remain liable
for the full amount returned as if said amount had never been received by the
Lender, notwithstanding any term of this Guaranty or the cancellation or return
of any note or other agreement evidencing the Obligations.

 

24.           Irrevocably submits to the
jurisdiction of any Minnesota state court or federal court over any action or
proceeding arising out of or relating to this Guaranty, the Notes and any 

 

4

 

instrument,
agreement or document related thereto; agrees that all claims in respect of
such action or proceeding may be heard and determined in such Minnesota state
or federal court; irrevocably waives, to the fullest extent he may effectively
do so, the defense of an inconvenient forum to the maintenance of such action
or proceeding; irrevocably consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by the mailing by United States certified mail, return receipt
requested, of copies of such process to the Guarantor’s last known address; and
agrees that judgment final by appeal, or expiration of time to appeal without
an appeal being taken, in any such action or proceeding shall be conclusive and
may be enforced in any other jurisdictions by suit on the judgment or in any
other manner provided by law; provided that nothing in this paragraph shall
affect the right of the Lender to serve legal process in any other manner permitted
by law or affect the right of Lender to bring any action or proceeding against
the Guarantor or his property in the courts of any other jurisdiction to the
extent permitted by law.

 

25.           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.

 

26.           Notwithstanding the aggregate amount
of the Obligations which may from time to time be outstanding, the Guarantor’s
liability hereunder with respect to the Promissory Notes and the Line of Credit
shall be limited to an aggregate of $250,000.00 plus all attorney’s fees,
collection costs and enforcement expenses incurred in connection with the
enforcement of this Guaranty.  The
Obligations may be created and continued in any amount without affecting or
impairing the Guarantor’s liability hereunder, and the Lender may apply any
sums received by or available to the Lender on account of the Obligations from
the Borrower or any other person (except the Guarantor) from their properties,
out of any collateral security, or from any other source, to the Obligations in
any manner as the Lender may determine in its sole discretion, and such
payment, allowance or application shall not reduce, affect, or impair the
Guarantor’s liability hereunder.  Any
payment made by the Guarantor under this Guaranty shall be applied by the
Lender to the Obligations in the Lender’s sole discretion.

 

Remainder of Page Intentionally Blank

Signatures
on Next Page

 

5

 

Signature Page for

Personal
Guarantee

 

Dated
as of this 7th day of March 2008.

 

	
   

  	
   

  

 

 

	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  ) ss

  
	
  COUNTY OF

  	
   

  	
  )

  
			

 

The
foregoing instrument was acknowledged before me this
           day of January 2008,
by                           ,
a                          
individual.

 

	
   

  	
   

  
	
   

  	
  Notary Public

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]