Document:

exv10w2

Exhibit 10.2

FIRST AMENDMENT DATED AS OF SEPTEMBER 29, 2008

TO CREDIT AGREEMENT DATED AS OF JULY 21, 2006

          This Amendment (this “Amendment”), dated as of September 29, 2008, is made by and among
LITTELFUSE, INC., a Delaware corporation (the “Borrower”), the banks party hereto (the “Banks”),
and Bank of America, N.A., as Agent (the “Agent”). Terms defined in the Credit Agreement shall
have the same respective meanings when used herein.

          W I T N E S S E T H:

          WHEREAS, the Borrower and the Banks, and the Agent are parties to that certain Credit
Agreement, dated as of July 21, 2006 (as amended, the “Credit Agreement”);

          WHEREAS, the Borrower and the Required Banks have agreed to amend the Credit Agreement on the
terms and conditions contained herein;

          NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained and
other good and valuable consideration (the receipt, adequacy and sufficiency of which is hereby
acknowledged), the parties hereto, intending legally to be bound, hereby agree as follows:

SECTION 1. AMENDMENT

          1.1 Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions
in proper alphabetical order:

     “JPM Loan Agreement” means the Loan Agreement dated as of September 29,
2008, among the Borrower, the banks party thereto, and JPMorgan Chase Bank, N.A. as
Administrative Agent, as it may be amended, restated, modified or supplemented from
time to time”.

     “Note Purchase Agreement” means that certain proposed Note Purchase
Agreement to be executed on or before December 31, 2008, among the Borrower and the
purchasers party thereto, as it may be amended, modified or supplemented from time
to time”.

          1.2 Section 7.09 of the Credit Agreement is hereby amended to read in its entirety as follows:

     7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than
this Agreement or any other Loan Document) that (a) limits the ability (i) of any
Subsidiary to make Restricted Payments to Borrower or any Guarantor or to otherwise
transfer property to Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee
the Indebtedness of Borrower or (iii) of Borrower or any Subsidiary to create,
incur, assume or suffer to exist Liens on property of such Person; provided,
however, that this clause (iii) shall not prohibit any negative pledge
incurred or provided in favor of any holder of Indebtedness permitted
under Section 7.03(e) so long as such negative pledge is on then-market
terms and otherwise customary for such Indebtedness; or (b) requires the grant of a
Lien to secure an obligation of such Person if a Lien is granted to secure another

 

 

obligation of such Person. Notwithstanding the foregoing, the provisions of this
Section 7.09 shall not apply to the JPM Loan Agreement, the Note Purchase Agreement
or the Guaranteed Notes issued thereunder or the transactions contemplated thereby.

SECTION 2. REPRESENTATION AND WARRANTIES

          The Borrower hereby represents and warrants to the Agent and the Banks that:

          2.1 This Amendment has been duly executed and delivered by the Borrower and is the legal,
valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy and other laws affecting the
rights of creditors generally and by general principles of equity;

          2.2 The representations and warranties of the Borrower set forth in Article V of the Credit
Agreement are true and correct as of the date hereof as though made on the date hereof and as
though applied to the Credit Agreement as amended by this Amendment;

          2.3 No Default or Event of Default has occurred and is continuing; and

          2.4 The Borrower has furnished to the Agent a true and correct copy of the JPM Credit
Agreement.

SECTION 3. GENERAL

          3.1 This Amendment shall become effective as of September 29, 2008, subject, however, to the
receipt by the Agent of counterparts of this Amendment, executed by the Borrower and the Required
Banks.

          3.2 Except as amended or modified by this Amendment, the Credit Agreement remains in full
force and effect. References to the Credit Agreement in any other document shall be deemed to
include a reference to the Credit Agreement as amended or modified hereby, whether or not reference
is made to this Amendment.

          3.3 The Borrower covenants to pay to or reimburse the Agent, upon demand, for all costs and
expenses (including legal expenses) in connection with the development, preparation, negotiation,
execution and delivery of this Amendment.

          3.4 This Amendment shall be a contract made under and governed by the internal laws of the
State of Illinois, without giving effect to principles of conflicts of laws.

          3.5 All obligations of the Borrower and rights of the Agent and the Banks, that are expressed
herein, shall be in addition to and not in limitation to those provided by applicable law.
Whenever possible, each provision of this Amendment shall be interpreted in such manner as to be
effective and valid under applicable law; but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.

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          3.6 This Amendment shall be binding upon and inure to the benefit of the parties and thereto
and their respective successors and assigns. No third party beneficiaries are intended in
connection with this Amendment.

          3.7 This Amendment may be executed in any number of counterparts, each of which shall be
deemed an original, but all such counterparts together shall constitute but one and the same
instrument. Each of the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed promptly by mailing
of a hard copy original, and that receipt by the Agent of a facsimile transmitted document
purportedly bearing the signature of such party shall bind such party with the same force and
effect as the delivery of a hard copy original. Any failure by the Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of receipt of the
facsimile transmitted executed original of such document of the party whose hard copy page was not
received by the Agent.

          3.8 This Amendment, together with the Credit Agreement, contains the entire and exclusive
agreement of the parties hereto with reference to the matters discussed herein and therein. This
Amendment supercedes all prior drafts and communications with respect thereto. This Amendment may
not be amended except in accordance with the provisions of Section 10.1 of the Credit Agreement.

[Signature Page Follows]

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          IN WITNESS WHEREOF, the parties hereto have caused the execution and delivery hereof by their
respective representatives thereunto duly authorized as of the date first herein appearing.

	 	 	 	 	 
	 	 	LITTELFUSE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Philip G. Franklin
	 

	 	 	 	 
	 	 	Name: 	 	Philip G. Franklin
	 	 	Title: 	 	Vice President, Operations Support and
	 

	 	 	 	Chief Financial Officer
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Agent
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael Brashler
	 

	 	 	 	 
	 	 	Name: 	 	Michael Brashler
	 	 	Title: 	 	Vice President
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Bank
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Carlos Morales
	 

	 	 	 	 
	 	 	Name: 	 	Carlos Morales
	 	 	Title: 	 	Vice President
	 
	 	 	 	 
	 	 	THE NORTHERN TRUST COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	/s/ William R. Kopp
	 

	 	 	 	 
	 	 	Name: 	 	William R. Kopp
	 	 	Title: 	 	Vice President
	 
	 	 	 	 
	 	 	NATIONAL CITY BANK OF MICHIGAN/ILLINOIS
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jonathan Twichell
	 

	 	 	 	 
	 	 	Name: 	 	Jonathan Twichell
	 	 	Title: 	 	Senior Vice President

 A-1exv10w1

Exhibit 10.1

Loan Number: 2757504497

SECURED LINE OF CREDIT LOAN AGREEMENT

     THIS SECURED LINE OF CREDIT LOAN AGREEMENT (“Agreement”) is dated this 28th day of October,
2008, and is entered into by and between LAKES ENTERTAINMENT, INC. (“Borrower”) and FIRST STATE
BANK (“Lender”).

     WHEREAS, Borrower desires to enter into a $8,000,000 non-revolving line of credit loan
agreement with Lender pursuant to the terms and conditions of that certain $8,000,000 Secured Line
of Credit Promissory Note, that certain Mortgage, Security Agreement and Absolute Assignment of
Lease and Rents (the “Mortgage”), that certain Absolute Assignment of Leases, Rents, Contracts and
Agreement (the “Assignment of Leases”), that certain Indemnification Agreement (the
“Indemnification Agreement”) and that certain Collateral Assignment of Life Insurance Policy
(“Insurance Collateral Assignment”), each executed as of an even date herewith, and all other
documents referenced therein or executed by Borrower in connection with this loan transaction
(collectively, the “Credit Agreement”);

     WHEREAS, Borrower and Lender desire to establish the conditions pursuant to which advances of
principal shall be funded and principal and interest hereunder shall be paid; and

     WHEREAS, the parties hereto desire to be legally bound by the terms and conditions of this
Agreement along with all exhibits attached hereto and related contractual agreements referenced
herein, the terms and conditions of which are incorporated herein by this reference;

     NOW, THEREFORE, for and in consideration of the foregoing recitals, and the covenants and
agreements hereinafter set forth and other good and valuable consideration, the legal adequacy and
sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby,
agree as follows:

     1. Definitions.

     In addition to the definitions set forth in the recitals, which are true and accurate and
which are incorporated herein by this reference, the following terms shall have the following
meanings unless otherwise agreed.

     “Advance” means each and every advance of principal by Lender to Borrower which shall
be evidenced by the Promissory Note and secured by the Credit Agreement.

     “Application for Advance” means any application for an advance of principal pursuant
to this loan agreement in a form and with content acceptable to Lender.

     “Borrowing Base” means Eight Million and No/100 Dollars ($8,000,000).

     “Business Day” means a day on which commercial banks are authorized to conduct
business or Lender is open for business in the State of Arkansas.

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Loan Number: 2757504497

     “Collateral” means the property of Borrower subject to security interests or other
liens pursuant to the Credit Agreements.

     “Event of Default” means the occurrence of those events as are more fully described in
Paragraph 7, hereof.

     “Financing Statements” means and includes all Uniform Commercial Code financing
statements and continuation statements as Lender shall require to give notice of and perfect or to
continue perfection of Lender’s security interest in all personal property and fixtures
constituting Collateral or otherwise constituting security for the Obligations.

     “Guarantor” means Lyle Berman, an equity owner of Borrower.

     “Guaranty” means the Unconditional Guaranty of Guarantor of even date herewith.

     “Information” means all information received from Borrower relating to Borrower and
its businesses, other than any such information that is available to the Lender on a
nonconfidential basis prior to disclosure by Borrower.

     “Lender Expenses” means all reasonable legal fees, court costs, and administrative
charges which Lender may incur in connection with the administration of this credit relationship
after the occurrence and during the continuation of an Event of Default.

     “Maturity Date” means that date which is twenty-four (24) months from and after the
date of the Promissory Note.

     “Obligations” means all advances of principal and all interest, Lender Expenses, fees,
costs, charges, and other liabilities of every possible nature, whether now existing or accruing
hereafter, and whether vested or contingent in nature, and whether monetary or non-monetary in
nature, the payment or performance of which are owed by the Borrower to the Lender pursuant to the
Credit Agreements, or any other document executed by Borrower in favor of Lender.

     “Promissory Note” means that Secured Line of Credit Promissory Note in the original
face amount of Eight Million and No/100 Dollars ($8,000,000.00) of even date herewith.

     2. The Loan and Terms of Payment.

     (a) Promissory Note. Upon Borrower’s compliance with all conditions precedent and
terms and conditions as are set forth herein and in the Credit Agreement, Lender hereby agrees to
extend credit to Borrower in a collective sum not to exceed the Borrowing Base. Concurrently
herewith, Borrower shall execute and deliver to Lender the Promissory Note in the face amount of
Eight Million and No/100 Dollars ($8,000,000.00).

     (b) Term of Credit Facility. All Obligations outstanding hereunder shall be due and
payable at the Maturity Date, subject to acceleration as provided in the Credit Agreement. The

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Loan Number: 2757504497

Obligations shall bear interest at the rate and pursuant to the terms and conditions of the
Promissory Note.

     3. Conditions to Advances; Providing for In-Balance Nature of Facility; Non-Revolving
Nature of Facility.

     (a) Conditions to Advances. Assuming the absence of a continuing Event of Default,
Borrower shall have the right to request advances of principal from Lender, and, upon such
requests, Lender shall make such advances of principal to Borrower; PROVIDED, HOWEVER, that Lender
shall never advance principal hereunder in an amount in excess of the Borrowing Base and provided
that Borrower shall have executed and/or delivered, as applicable, the following items to Lender:

	 	(i)	 	a completed Application for Advance;
	 
	 	(ii)	 	Financing Statements, in a form deemed reasonably acceptable by Lender;
	 
	 	(iii)	 	the Promissory Note;
	 
	 	(iv)	 	the Mortgage;
	 
	 	(v)	 	the Assignment of Leases;
	 
	 	(vi)	 	the Guaranty;
	 
	 	(vii)	 	the Indemnification Agreement;
	 
	 	(viii)	 	the Insurance Collateral Assignment; and
	 
	 	(ix)	 	any and all other documents that Lender may reasonably require.

     (b) Maintenance of In-Balance Nature of Facility. On each Business Day throughout the
term of the Credit Agreement, Lender shall determine whether the total amount of Advances to Lender
hereunder equals or is less than the Borrowing Base, and shall provide for the following
occurrences in the following situations:

     (i) To the extent that the collective sum total of all Advances is less than the
Borrowing Base, then Borrower may request and Lender shall advance, assuming the absence of
a continuing Event of Default, additional principal up to, but not exceeding, the Borrowing
Base; and

     (ii) Should the collective sum total of all Advances hereunder ever exceed the
Borrowing Base, then the Lender shall provide Borrower with written notice of such status
and within three (3) Business Days after the delivery by Lender to Borrower of such written
notice Borrower shall take any and all action necessary to ensure that the collective sum
total of all Advances equals or is less than the Borrowing Base, including, without
limitation, reducing the collective sum total of all Advances hereunder through prepayment
of principal, pledging additional collateral or a combination of the forgoing.

     (c) Non-Revolving Nature of Credit Facility. This credit facility is intended to be
non-revolving in nature.

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Loan Number: 2757504497

     4. Security.

     As security to collateralize the Borrower’s duty to pay and perform all Obligations hereunder,
Borrower shall and does hereby give and grant to Lender all collateral and security which is
pledged pursuant to the Credit Agreement. Such Obligations will be guaranteed by the Guaranty.

     5. Representations and Warranties.

     Borrower does additionally warrant and represent to Lender the following:

     (a) Borrower’s execution, delivery and performance of this Agreement and the Credit Agreement
(i) will not violate any indenture, agreement or any other instrument to which Borrower is a party
or by which Borrower or any of its property is bound; and (ii) will not be in conflict with, result
in a breach of or constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or other instrument, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of its property or assets, except as
contemplated by the provisions of this Agreement. Each of the documents which collectively
constitute the Credit Agreement, when executed and delivered to Lender, will constitute the legal,
valid and binding obligations of respective signatories thereto enforceable in accordance with
their terms.

     (b) All financial data and other written information that has been provided by Borrower to
Lender with respect to Borrower (i) is complete and correct in all material respects and does not
omit to state any material fact necessary in order to make the statements herein or therein not
misleading; and (ii) accurately presents the financial condition of Borrower as of the date on
which the same have been furnished. Borrower’s year-end balance sheet dated as of December 30,
2007 and quarterly balance sheet dated as of June 29, 2008 disclose all known material liabilities,
direct and contingent, as of their respective dates. Other than as disclosed by Borrower in its
public reports filed pursuant to the Securities Exchange Act of 1934, there has been no material
adverse change in the financial condition of Borrower since December 30, 2007 other than changes in
the ordinary course of business or changes attributable to market conditions generally, none of
which changes has been both material and adverse.

     (c) To its knowledge, Borrower is not in material default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions set forth in any agreement or
instrument to which it is a party.

     (d) All other written reports, papers, data and information given by Borrower to Lender with
respect to Borrower are accurate and correct in all material respects and complete insofar as
completeness may be necessary to give Lender a true and accurate knowledge of the subject matters
thereof.

     (e) Borrower has filed all required federal and state income tax returns and has paid all
taxes which have become due pursuant to such returns or pursuant to any assessments received by it
except those which are being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been provided in accordance with generally

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Loan Number: 2757504497

accepted
accounting principles. Borrower knows of no basis for an additional assessment in respect of
any such taxes.

     (f) There is not now pending against or affecting the Collateral or Borrower nor is there to
our knowledge threatened any action, suit or proceeding at law or in equity or by or before any
administrative agency which, if adversely determined, would impair or affect the financial
condition or operation of Borrower in any material respect.

     (g) Borrower is not insolvent; has not made an assignment for the benefit of creditors; has
not suspended business or commenced proceedings for dissolution or become insolvent; has not filed
or become the subject of any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings for relief under bankruptcy, insolvency or receivership laws for
the relief of debtors; has not had any judgment, writ or warrant of attachment, or similar process,
entered or filed against it or any of its property or assets, which renders it insolvent or impairs
its ability to continue doing business and which has remained unvacated, unbonded or unstayed for a
period of 30 days; has not failed to pay its debts as they became due except for taxes which are
being contested in good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with generally accepted accounting principles;
has not taken any action, nor has any intentions to take any action, which would constitute an “act
of bankruptcy” under the Federal Bankruptcy Code and is not in contemplation thereof.

     6. Covenants.

     So long as any of the Obligations remain unpaid, Borrower shall at all times be in full and
timely compliance with all of the following covenants and perform all duties and obligations set
forth below in a timely manner:

     (a) The Borrower shall keep adequate records and books of account reflecting all financial
transactions in conformity with appropriate income tax accounting procedures and all applicable
requirements of any governmental agency having jurisdiction over Borrower or any of its businesses;
and (b) Borrower acknowledges that the placement of any additional liens upon the Collateral
described in the Credit Agreement may impair the ability of Lender to obtain assurance that its
security interest remains in a prior position and that the Obligations will be repaid in accordance
with the Credit Agreement. Accordingly and to facilitate the purposes of this Agreement and to
avoid causing damage to Lender, Borrower agrees that it shall not create or suffer to be created
any additional lien upon any of the Collateral without Lender’s prior written consent, such consent
not to be unreasonably withheld or delayed.

     (b) Upon the request of Lender, the Borrower shall execute or cause the execution,
acknowledgment and delivery of such further instruments (including, without limitation,
declarations of no set-off) and do such further acts as may be necessary, desirable or proper to
carry out more effectively the purposes of this Agreement or the other Credit Agreements.

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Loan Number: 2757504497

     (c) The Borrower shall not take any action with respect to any of the Collateral which is
inconsistent with the provisions and the purpose of this Agreement or which would materially
adversely affect the rights of Lender under the Credit Agreement.

     (d) Borrower shall deliver to Lender: (a) quarterly financial statements within forty-five
(45) days after the end of each fiscal quarter (b) annual financial statements within ninety (90)
days after the end of each fiscal year, (c) such other information as Lender might reasonably
request from time to time. With regard to internally generated reports, all shall be certified by
Borrower’s Chief Executive Officer and Chief Financial Officer as being true and correct.

     (e) Without the prior written consent of Lender, Borrower shall not: amend its organizational
or governing documents in a manner that materially adversely affects Lender’s rights hereunder;
dissolve; or fail to remain in good standing and authorized to do business in all jurisdictions
where such standing or authorization is required with respect to Borrower and where the failure to
do so would have a material adverse impact on Borrower or its assets or operations.

     (f) Borrower will maintain throughout the term of the Loan insurance policies, with premiums
prepaid, with reputable insurance companies not affiliated with Borrower, in such amounts and
against such risks as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower operates, including, without limitation, such
insurance as is required pursuant to the Mortgage.

     (g) On the date hereof, Borrower agrees to pay Lender an origination fee equal to $20,000.

     7. Default.

     The occurrence of any one or more of the following events and/or occurrences shall constitute
an “Event of Default” hereunder:

     (a) Default in the payment of any Obligation by Borrower under the Credit Agreement for a
period in excess of any applicable cure period provided therein;

     (b) Borrower’s failure to comply with the provision of any financial covenant or any other
covenant, condition or obligation contained in the Credit Agreement provided that such failure
continues for at least 10 days after Borrower’s receipt of written notice thereof;

     (c) Should any warranty or representation contained herein or elsewhere in the Credit
Agreement at any time prove to have been false or misleading in any material respect when made;

     (d) The levy of an attachment, execution or other such process against Borrower’s property or
any of their assets with respect to a claim or claims aggregating $50,000 or more and the failure
by Borrower to obtain the discharge thereof or provide adequate bond acceptable to Lender as
security therefor within 30 days after attachment;

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Loan Number: 2757504497

     (e) Default in the performance of any other obligation of Borrower to Lender under any other
agreement between Borrower and Lender for a period in excess of any applicable cure period provided
therein;

     (f) Borrower’s entry into or granting of a general assignment for the benefit of its
creditors, the voluntary or involuntary appointment of a receiver for all or substantially all of
its assets, Borrower’s bankruptcy or Borrower’s admission in writing of its inability to make
payments on its debts as they mature;

     (g) The occurrence of any material adverse change in the financial conditions or operations of
Borrower other than changes attributable to market conditions generally.

     8. Remedies.

     (a) Upon the occurrence and during the continuance of any Event of Default Lender may:

     (i) Declare all of the Obligations immediately due and payable;

     (ii) Take all steps in accordance with applicable law that Lender may deem necessary
and appropriate in Lender’s discretion to sell and liquidate the Collateral in that manner
which Lender deems appropriate;

     (iii) Terminate Lender’s agreement to make further Advances under this Agreement;

     (iv) Offset against the Obligations any amounts due Borrower under any other agreement
between Borrower and Lender, including, without limitation, bank accounts otherwise held by
Lender;

     (v) Exercise any and all other rights and/or remedies which may be available to Lender
either at law or in equity.

     (b) Disposition of Proceeds. Subject to the provisions of all applicable law, and
after the occurrence and during the continuation of an Event of Default, the net cash proceeds
resulting from the sale or other disposition of all or any part of the Collateral held by Lender
shall be applied in the following order: (i) first, to Lender Expenses; (ii) second, to the
satisfaction of the Obligations, with application to principal, interest, charges and expenses to
be in such order and manner as determined by Lender in its sole discretion; and (iii) third to
satisfaction of any remaining obligations of Borrower hereunder. Any surplus after such
application shall be delivered to Borrower, and Borrower shall be liable for, and shall pay to
Lender on demand, any deficiency remaining after such application.

     (c) Remedies Cumulative. The remedies provided for herein are cumulative and shall be
in addition to any and all other rights or remedies provided for herein or at law or in equity
including any banker’s lien and right of offset. The exercise of any right or remedy by Lender
hereunder shall
not constitute a cure or waiver of any default in connection with the Obligations nor
invalidate any

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Loan Number: 2757504497

notice of default or act done pursuant to any such notice, nor prejudice Lender in
the exercise of any of its other rights.

     9. Miscellaneous.

     (a) Waiver. No waiver by Lender of any default or breach by Borrower hereunder shall
be implied from any omission by Lender to take, or any delay in taking, action on account of such
default other than the default expressly made the subject of the waiver and any such express waiver
shall be operative only for the time and to the extent therein stated. Any waiver of any covenant,
term or condition contained herein shall not be construed as a waiver of any subsequent breach of
the same covenant, term or condition. The consent or approval by Lender to or of any act by
Borrower requiring further consent or approval shall not be deemed to waive or render unnecessary
the consent or approval to or of any subsequent similar act.

     (b) No Duty of Lender. Nothing in this Agreement shall impose or imply any duty or
obligation whatsoever upon Lender, and Lender shall be under no duty to take any action to preserve
rights of Borrower with respect to any of the security held by Lender for the Obligations.
Borrower waives any and all impairment of recourse and/or impairment of collateral defenses which
it may possess against the Lender.

     (c) Amendment. This Agreement and the other agreements comprising the Credit
Agreement constitute the entire agreement between the parties and may not be changed, waived,
discharged or terminated orally, but only by an instrument or instruments in writing signed by the
party against whom enforcement is sought.

     (d) Indemnification. To the fullest extent permitted by law, Borrower agrees to
indemnify and hold harmless Lender, and Lender’s officers, directors, shareholders, agents,
attorneys and employees (collectively “Indemnitee”), from and against any and all out of pocket
costs resulting from liability, loss, damage, costs or expense, including court costs and
reasonable attorney’s fees, that Indemnitee may hereafter suffer, incur, reasonably pay or in any
manner be held liable for to third parties, by reason of any breach, default, misstatement or
misrepresentation of any of the statements, warranties or representations of Borrower contained in
the Credit Agreement, or by reason of any material breach or default by Borrower, or any of
Borrower’s employees, officers, affiliates or agents, in the performance of any duties, covenants
or obligations arising under this or any related agreement, other than any such breach or default
occasioned by Lender’s gross negligence, willful misconduct or breach of contract. In this
connection, but without limitation, Borrower agrees to reimburse any Indemnitee promptly upon
demand for any payments made by such person to a third party with respect to any liability, damage,
loss or claim to which the foregoing indemnity relates.

     (e) Notices. All notices or other written communications hereunder shall be deemed to
have been properly given (a) upon delivery, if delivered in person or by facsimile transmission
with receipt acknowledged by the recipient thereof, (b) one (1) Business Day (defined below) after
having been deposited for overnight delivery with any reputable overnight courier service, or (c)
three (3)
Business Days after having been deposited in any post office or mail depository regularly

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Loan Number: 2757504497

maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:

	 	 	 
	If to Borrower:

	 	LAKES ENTERTAINMENT, INC.
	 

	 	130 Cheshire Lane
	 

	 	Suite 101
	 

	 	Minnetonka, Minnesota 55305
	 

	 	Attn: Damon Schramm, Vice President and General Counsel
	 
	 	 
	With a copy to:

	 	GRAY PLANT MOOTY
	 

	 	80 South Eighth Street
	 

	 	500 IDS Center
	 

	 	Minneapolis, Minnesota 55402
	 

	 	Attn: Daniel Tenenbaum
	 
	 	 
	If to Lender:

	 	FIRST STATE BANK
	 

	 	620 Chestnut Street
	 

	 	Conway, Arkansas 72032
	 

	 	Attn: Randy Sims
	 
	 	 
	With a copy to:

	 	GILL ELROD RAGON
	 

	 	    OWEN & SHERMAN, P.A.
	 

	 	425 West Capitol Avenue, Suite 3801
	 

	 	Little Rock, Arkansas 72201
	 

	 	Attn: Daniel Goodwin

or addressed as such party may from time to time designate by written notice to the other parties.

     Either party by notice to the other may designate additional or different addresses for
subsequent notices or communications.

     (f) Attorneys’ Fees. Borrower does hereby covenant and agree that it shall reimburse
Lender for any and all reasonable litigation, collection and enforcement fees and costs of whatever
nature, including attorneys’ fees and court costs, which Lender may incur as a result of its
enforcement of Borrower’s obligations hereunder including, without limitation, all “workout” or
similar discussions and negotiations and all fees and costs incurred in connection with Lender’s
involvement in any bankruptcies arising therefrom. Borrower shall additionally be responsible for
the payment at the initial funding of principal hereunder all legal fees incurred by Lender in
connection with the documentation and closing of this credit facility.

     (g) Binding Effect; Assignment. This Agreement may be assigned by Lender, including,
without limitation the assignment or sale of a participation interest in the loan transaction
governed by this Agreement. Subject to compliance with the confidentiality requirements of
paragraph 9(q) below, Borrower authorizes Lender to disseminate any information it has pertaining
to the loan
transaction, including, without limitation, credit information on Borrower, any of its
principals, any guarantor, or any other party liable, directly or indirectly for the Obligations,
to such assignee or

9

 

Loan Number: 2757504497

participant or prospective assignee or participant. Borrower shall execute,
acknowledge and deliver any and all instruments requested by Lender in connection with such
assignment or participation. Borrower may not assign its interest in, or obligation under, this
Agreement except with the written consent of Lender. Subject to the forgoing, all of the terms,
covenants, conditions, representations and warranties hereof shall inure to the benefit of, and be
binding upon, the successors and assigns of Lender and Borrower. Borrower hereby consents to the
collateral assignment of Lender’s interests in and to the Credit Agreement to third party creditors
of Lender without the need for any further consent of whatever nature by Borrower. Should Lender’s
assignee assume rights under the Credit Agreement, Borrower covenants and agrees that it will
continue to perform the Credit Agreement in accordance with its terms and conditions and shall
recognize said assignee as the lawful and enforceable successor in interest to Lender.

     (h) Interpretation. This Agreement shall be governed and interpreted under Arkansas
law. Whenever the context requires, all words used in the singular will be construed to have been
used in the plural, and vice versa, and each gender will include any other gender. The headings of
the paragraph of this Agreement are for convenience only and do not define or limit any terms or
provisions. Time is of the essence in the performance of this Agreement by Borrower. The
invalidity or unenforceability of any one or more provisions of this Agreement will in no way
affect any other provision.

     (i) Preparation of Agreement. The parties hereto acknowledge that this Agreement has
been negotiated and prepared in an arms-length transaction and that both Lender and Borrower have
negotiated all the terms contained herein. Accordingly, the parties agree that neither party shall
be deemed to have drafted the Agreement and the Agreement shall not be interpreted against either
party as the draftsman.

     (j) Other Acts and Documents. The parties agree to undertake such other acts and
execute such other documents as may be reasonably necessary to effect the purpose and intent of
this Agreement.

     (k) Merger. This Agreement, the Promissory Note, and the other agreements or
instruments identified or referenced in the Credit Agreement represent the culmination of all prior
negotiations, representations, and agreements between the parties with respect to the transaction
contemplated hereby. All such prior negotiations, representations, and agreements are merged
herein.

     (l) Advice of Counsel. Each party acknowledges to the other that such party has been
advised by legal counsel in connection with the negotiation and execution of this Agreement and
that each party understands the terms and conditions contained herein and that each has entered
into this Agreement voluntarily.

     (m) JURY WAIVER. BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHT TO A JURY
TRIAL IN THE EVENT OF ANY DISPUTE OR LITIGATION
ARISING HEREUNDER OR UNDER ANY RELATED DOCUMENT EXECUTED IN CONNECTION HEREWITH. BORROWER
COVENANTS AND AGREES THAT THE SOLE AND EXCLUSIVE JURISDICTION AND VENUE FOR ALL LITIGATION ARISING
IN

10

 

Loan Number: 2757504497

CONNECTION WITH THE ENFORCEMENT, COLLECTION OR ADMINISTRATION OF THIS SECURED LINE OF CREDIT
LENDING AGREEMENT SHALL REST EXCLUSIVELY IN FAULKNER COUNTY, ARKANSAS AND MAKER WAIVES ALL RIGHTS
TO ASSERT OTHERWISE.

     (n) Construction. Unless the context of any provision of this document clearly
requires otherwise, references to the plural include the singular, references to the singular
include the plural, the term “including” is not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or”. The words “hereof,”
“herein,” “hereby,” “hereunder, “ and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section, paragraph, exhibit and
similar references are to this Agreement unless otherwise specified. Any reference in this
Agreement to the Credit Agreement or any other Agreement to which Lender and Borrower are a party
shall include all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions and supplements thereto.

     (o) Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by this reference.

     (p) USA Patriot Act Compliance. Borrower warrants and represents that neither
Borrower nor any principal, manager or majority member of Borrower appear on the list of Specially
Designated Nationals and Blocked Persons that is maintained by the United States Treasury
Department’s Office of Foreign Assets Control (“OFAC”) or any similar list maintained by any
governmental entity or agency (collectively, the “SDN List”). If Lender knows, has reason to know
or suspects or has reason to suspect that Borrower has, is, or will violate the warranty and
representation contained in the preceding sentence, Lender shall have the right to terminate this
Agreement and to take any and all action or to make any report or notification required by OFAC or
any other applicable governmental entity or agency or by the laws relating to the applicable SDN
List.

     (q) Participation. Lender shall have the exclusive option and privilege of selling
the Loan in its entirety or participating interests in the Loan to such persons or entities and on
such terms and conditions as Lender may determine and may disclose any and all information relating
to the Loan to such participants or any other purchaser of the Loan, provided that such
participants or other purchasers are bound by written obligations of confidence substantially
similar to those contained herein or are otherwise subject to bank secrecy laws prohibiting the
disclosure of Borrower’s confidential information.

     (r) Multiple Counterpart Execution. It is expressly agreed and understood that this
document may be executed in multiple counterparts and with multiple signature pages and that all
signature pages, when attached to and assembled with this document, shall constitute and comprise a
single document that is enforceable against all parties on all signature pages in accordance
with this document’s terms.

     (s) Regulatory Matters. As a business involved in the gaming industry, Borrower
conducts business in a highly regulated industry under privileged licenses issued by federal,
state,

11

 

Loan Number: 2757504497

local and tribal gaming regulatory authorities. Borrower maintains compliance programs that
have been established to protect and preserve its name, reputation, integrity, and goodwill and to
monitor compliance with the requirements established by gaming regulatory authorities. Performance
of the Credit Agreement is contingent upon both parties’ compliance with the laws, regulations, and
policies in jurisdictions where business activity is conducted. Failure to comply with laws,
regulations, and policies in jurisdictions where business is conducted could result in termination
of the Credit Agreement. Lender agrees to (a) undergo all reasonable and necessary background due
diligence investigations, including completing Borrower’s standard background questionnaire,
performed by Borrower from time to time, and (b) cooperate with requests, inquiries, or
investigations of gaming regulatory agencies in connection with the performance of the Credit
Agreement.

     (t) Treatment of Certain Information; Confidentiality. Lender agrees to maintain the
confidentiality of all information received by Borrower relating to Borrower and its businesses
(such information, other than any such information that is available to the Lender on a
non-confidential basis prior to disclosure by Borrower, being herein referred to as the
“Information”), except that Information may be disclosed to (a) affiliates, partners, directors,
officers, employees, agents, advisors, and representatives (it being understood that the persons to
whom such disclosure is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential, (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) in connection with the exercise of,
but only to the extent necessary with respect thereto, any remedies hereunder or under any other of
the Credit Agreements, subject to an agreement containing provisions substantially the same as
those of this Section, (e) with the consent of the Borrower, or (f) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Lender on a nonconfidential basis from a source other than the Borrower. Lender
shall be considered to have complied with its obligations under this Section if Lender has
exercised the same degree of care to maintain the confidentiality of such Information, but in no
event less than a reasonable degree of care, as it would accord its own confidential information of
a similar nature.

     Lender acknowledges that (a) the Information may include material non-public information
concerning the Borrower, (b) it has developed compliance procedures regarding the use of material
non-public information, and (c) it will handle such material non-public information in accordance
with applicable law, including federal and state securities laws.

[This space intentionally left blank; signatures to follow]

12

 

Loan Number: 2757504497

[Signatures to the Secured Line of Credit Loan Agreement]

     IN WITNESS WHEREOF, the parties hereto have executed this Secured Line of Credit Loan
Agreement on the day and year set forth in the preface.

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST STATE BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Randall Sims	 	 
	 

	 	Title:
	 	 

President & CEO
	 	 
	 
	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	LAKES ENTERTAINMENT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Timothy Cope	 	 
	 

	 	Title:
	 	 

President and Chief Financial Officer
	 	 

ACKNOWLEDGMENT

STATE OF Minnesota                        )

                                          )ss.

COUNTY OF Hennepin                      )

     Personally appeared before me, the undersigned authority in and for the said county and state,
on this 28th day of October, 2008, within my jurisdiction, the
within-named Timothy Cope, who acknowledged that he/she was the
President and Chief Financial Officer, of LAKES ENTERTAINMENT, INC. a Minnesota business
corporation, and that, for and on behalf of the said Corporation and as its act and deed, he/she
executed the above and foregoing instrument after first having been duly authorized by said
Corporation to do so.

	 	 	 	 	 
	 	 	 
	 	/s/ Tamora R. Hartman
 	 
	 	Notary Public 	 
	 	 	 
	 

My commission expires:

January 31, 2012

13

 

Loan Number: 2757504497

ACKNOWLEDGMENT

STATE OF Minnesota              )

                                          )ss.

COUNTY OF Hennepin            )

     Personally appeared before me, the undersigned authority in and for the said county and state,
on this 28th day of October     , 2008, within my jurisdiction, the
within-named Randall Sims     , who acknowledged that he/she was the
President & CEO, of FIRST STATE BANK an Arkansas state bank, and that, for and on behalf
of the said Bank and as its act and deed, he/she executed the above and foregoing instrument after
first having been duly authorized by said Bank to do so.

	 	 	 	 	 
	 	 	 
	 	/s/ Tamora R. Hartman
 	 
	 	Notary Public 	 
	 	 	 
	 

My Commission expires:

January 31, 2012

14

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