Document:

ex10-3.htm

Exhibit 10.3

 

This Instrument Prepared By:

Gill Ragon Owen, P.A.

425 West Capitol Avenue, Suite 3801

Little Rock, Arkansas 72201

Loan Number:  2757521066

MORTGAGE, SECURITY AGREEMENT

AND ASSIGNMENT OF RENTS

(Secures Obligatory Future Advances)

Notwithstanding anything to the contrary herein, enforcement of the Mortgage in Minnesota is limited to a default of $14,000,000.00 under Chapter 287 of Minnesota Statutes.

This MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS (the "Mortgage") is dated as of the 17th day of December, 2012, and is executed and entered into by LAKES ENTERTAINEMENT, INC., with an address of 130 Cheshire Lane, Minnetonka, Minnesota 55305 (the "Mortgagor"), in favor of CENTENNIAL BANK, with an address of 620 Chestnut Street, Conway, Arkansas 72032, or its successors or assigns ("Lender").

WHEREAS, Mortgagor is the owner of a 60,000 square foot office building, located on land in Hennepin County, Minnesota, which is more particularly described on EXHIBIT A attached hereto (the "Land"); and

WHEREAS, contemporaneously herewith, Lender extended funds to EVITTS RESORT, LLC, an affiliate of Mortgagor (the “Borrower”), for the purpose of renovating an existing hotel, convention center and golf course and constructing a casino facility all located in Rocky Gap State Park, Allegany County, Maryland (the “Project”); and

WHEREAS, the Lender would not otherwise have extended such credit without Mortgagor executing and delivering this Mortgage and an Unconditional Guaranty of the Borrower’s obligations, given for the purpose of securing the obligations of Borrower to Lender; and

WHEREAS, Borrower’s indebtedness to Lender is evidenced by that certain $17,500,000 Secured Promissory Note of even date herewith which is scheduled to mature on December 17, 2020, unless renewed, extended, modified or accelerated by demand or default in accordance with the Credit Agreement (said note, together with all extensions, renewals, modifications, consolidations, substitutions, replacements, restatements and increased additional advances evidenced by other written documents or otherwise thereof being collectively referred to herein as the "Note"); and

WHEREAS, Lender desires to secure repayment of the Note by means of Mortgagor's execution and delivery of this Mortgage to Lender; and

WHEREAS, all capitalized terms not specifically defined herein shall have the meanings given to them in the Secured Loan Agreement executed by Borrower of even date herewith.

 

  

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NOW, THEREFORE, in consideration of the mutual covenants and conditions referenced and exchanged herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

1.           That Mortgagor does hereby irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey unto Lender, and unto its successors and assigns, the following described property, rights, interests and estates now owned or hereafter acquired by Mortgagor (the “Property”), TO HAVE AND TO HOLD the same unto the said Lender, its successors and assigns forever:

	
  

	
(a)

	
Land.  The Land;

	
  

	
(b)

	
Additional Land.  All additional property interests related to the Land hereafter acquired by Mortgagor for use in the development of the Land, but only to the extent such interests are expressly made subject to the lien of this Mortgage by the written agreement of Mortgagor; and

	
  

	
(c)

	
Improvements.  The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements, and improvements now or hereafter erected or located on the Land and owned by Mortgagor (the "Improvements"); and

	
  

	
(d)

	
Easements.  All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, tides, interests, privileges, liberties, servitude, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in any street, road or avenue, opened or proposed, in front of or adjoining the Land, and all the estates, rights, titles, interests, property, possession, claim and demand whatsoever, both at law and in equity of Mortgagor of, in and to the Land, the Improvements and every part and parcel thereof, with the appurtenances thereto (collectively, the "Easements"); and

	
  

	
(e)

	
Fixtures.  All machinery and equipment affixed to or used in conjunction with the Land, the Easements and the Improvements in such a manner that the same are deemed to be fixtures or real property under Minnesota law (including, but not limited to all heating, air-conditioning, plumbing, lighting, communications and elevator fixtures) owned by Mortgagor, or in which Mortgagor has or shall have an interest, now and hereafter located upon the Land, the Easements, or the Improvements, or appurtenant thereto, used or created in connection with the present or future operation and occupancy of the Land, the Easements, and the Improvements owned by Mortgagor (collectively, the "Fixtures"); and

	
  

	
(f)

	
Leases and Rents.  All leases and other agreements affecting the use, enjoyment or occupancy of all or any part of the Land, the Improvements or the Easements, heretofore and hereafter entered into by Mortgagor, whether before or after the filing by or against Mortgagor of any petition for relief under 11 U.S.C. Section 101, et seq. (the "Bankruptcy Code"), as the same may be amended from time to time (collectively, the "Leases") and all right, title and interest of Mortgagor, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder, and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land, the Improvements and the Easements, whether paid or accruing before or after the filing by or against Mortgagor of any petition for relief under the Bankruptcy Code (collectively, the "Rents") and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt (as hereinafter defined); and

 

  

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(g)

	
Condemnation Awards.  All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Land, the Improvements and the Easements, whether from the exercise of the right of eminent domain (including, but not limited to any transfer made in lieu of or in anticipation of the exercise of the right) or for a change of grade, access, or for any other injury to or decrease in the value of the Land, the Improvements and the Easements; and

	
  

	
(h)

	
Insurance Proceeds.  All proceeds of and any unearned premiums on any insurance policies covering the Land, the Improvements and the Easements, including, without limitation, the right to receive and apply the proceeds of any insurance judgments, or settlements made in lieu thereof, for damage to the Land, the Improvements and the Easements; and

	
  

	
(i)

	
Conversion.  All proceeds of the voluntary or involuntary conversion of the Land, the Improvements and the Easements, including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims; and

	
  

	
(j)

	
Rights.  The right, in the name and on behalf of Mortgagor while an Event of Default (as defined in the Secured Loan Agreement) remains uncured, to commence any action or proceeding to protect the interest of Lender in the Land, the Improvements and the Easements, and to appear in and defend any action or proceedings brought with respect to the Land, the Improvements and the Easements; and

	
  

	
(k)

	
Agreements.  All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, including all management, maintenance and service contracts, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land, the Improvements and the Easements, and any part thereof, and all right, title and interest of Mortgagor therein and thereunder, including, without limitation, the right, while an Event of Default remains uncured, to receive and collect any sums payable to Mortgagor thereunder; and

	
  

	
(l)

	
Other Rights.  Any and all other rights of Mortgagor in and to the items set forth in Subsections (a) through (k) above.

2.           Assignment of Leases and Rents.  Mortgagor hereby absolutely and unconditionally assigns to Lender Mortgagor's right, title and interest in and to all current and future Leases and Rents.  Mortgagor intends this assignment as a present, absolute assignment and not an assignment for additional security only.  Nevertheless, Lender grants to Mortgagor a revocable license to collect and receive the Rents.

 

3.           Security Agreement.  This Mortgage is both a real property mortgage and a "security agreement" within the meaning of the Uniform Commercial Code, as applicable.  The Property includes both real and personal property (to the extent described in Section 2), and all other rights and interests, whether tangible or intangible in nature, of Mortgagor in the Property.  By executing and delivering this Mortgage, Mortgagor hereby grants to Lender, as security for the Debt, a security interest in the Property to the full extent that the Property may be subject to the Maryland Uniform Commercial Code, as applicable, and, further, authorizes Lender to file and execute on behalf of Mortgagor, if necessary, all financing statements and continuation statements that might be required by law in order to perfect Lender's security interests in and to the Property and other collateral being granted to Lender hereunder.  A carbon, photostatic or other reproduction of this Mortgage shall be sufficient as a financing statement.  Lender shall have the right at any time to file a manually executed counterpart or a carbon, photostatic or other reproduction of this Mortgage as a financing statement in either the central or local UCC records of any jurisdiction wherein the Property is situated, but the failure of Lender to do so shall not impair (a) the effectiveness of this Mortgage as a fixture filing as permitted by Section 9.502(c) of the UCC, or (b) the validity and enforceability of this Mortgage in any respect whatsoever.

 

  

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4.           Pledge of Monies Held.  Mortgagor hereby pledges to Lender any and all monies now or hereafter held by Lender, as additional security for the Debt (as defined herein) until expended or applied as provided in this Mortgage.

And Mortgagor covenants with Lender, its successors and assigns, that Mortgagor will forever warrant and defend the title to the above-described Property against any and all lawful claims whatsoever.

TO HAVE AND TO HOLD the above granted and described Property unto and for the use and benefit of Lender, and the successors and assigns of Lender, forever;

PROVIDED, however, the foregoing conveyance is given as a mortgage for the purpose of securing the following (the “Debt”) at the time and in the manner provided in the Note and this Mortgage these presents and the estate hereby granted shall cease, terminate, and be void:

	
  

	
(a)

	
the payment of amounts due pursuant to the Note;

	
  

	
(b)

	
and the repayment to the Lender of all reimbursable expense at any time accruing to such Lender under the provisions hereof; and

	
  

	
(c)

	
the payment of all future and additional indebtedness for any amounts advanced under the Secured Loan Agreement, direct or indirect, created after the date of this Mortgage, which may be owing by the Borrower or the Mortgagor (or by any of the persons herein designated under the term "Mortgagor") to the Lender in connection with the Property at any time prior to the payment in full with interest of the indebtedness or the foreclosure of this Mortgage therefor (the event occurring first to be controlling); and it is agreed that this Mortgage shall stand as security for all such future and additional indebtedness.

All recitals set forth in the preamble of this instrument are incorporated herein by this reference.

 

IT IS EXPRESSLY AGREED AND UNDERSTOOD that the principal amount secured hereby is subject to multiple future advances pursuant to the terms and conditions of that Secured Loan Agreement of even date herewith.  Lender is obligated to fund such future advances in accordance with the terms and conditions of said Secured Loan Agreement.

 

  

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5.           Remedies.  Upon the occurrence of any Event of Default (as defined in the Secured Loan Agreement”), including the failure of Mortgagor to perform any obligation hereunder or under the Unconditional Guaranty, Mortgagor agrees that Lender may take such action, without notice or demand, unless specifically required, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Property, including, but not limited to the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender:

	
  

	
(a)

	
Declare the entire unpaid Debt to be immediately due and payable;

	
  

	
(b)

	
Institute proceedings, judicial or otherwise, for the complete foreclosure of this Mortgage under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;

	
  

	
(c)

	
With or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Mortgage for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Mortgage for the balance of the Debt not then due, unimpaired and without loss of priority;

	
  

	
(d)

	
Institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note or any agreement related thereto;

	
  

	
(e)

	
Recover judgment on the Note either before, during or after any proceedings for the enforcement of this Mortgage;

	
  

	
(f)

	
Apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Mortgagor, or of any person, firm or other entity liable for the payment of the Debt;

	
  

	
(g)

	
Subject to any applicable law, the license granted to Mortgagor under Section 2 shall automatically be revoked;

	
  

	
(h)

	
Exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code;

	
  

	
(i)

	
Pursue such other remedies as Lender may have under the Credit Agreement and applicable law.

In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the Property, this Mortgage shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority to secure any portion of the Debt then remaining unpaid.

6.           Protection of the Property. If Lender shall expend any sum or sums for the protection of any of the Property or the lien of this Mortgage (Lender to have uncontrolled discretion as to the necessity of making any such expenditures), the repayment of such sum or sums on demand (with interest thereon at the highest rate permitted under applicable law from the date of each expenditure) shall be the obligation of the Mortgagor; and such obligation to repay will constitute a part of the indebtedness secured hereby.  The expenditures thus made reimbursable will include (without limiting the foregoing) taxes, special improvement assessments, and sums paid to discharge prior liens.  The cost of any abstract or supplemental abstract procured by the Lender of the secured indebtedness to facilitate foreclosure will also constitute a part of the reimbursable expense secured hereby.

 

  

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7.           Multiple Remedies.  In the event of a default hereunder, the Lender hereby shall be entitled to enforce the lien of this Mortgage in respect to all Property encumbered hereby by foreclosure or otherwise in proceedings that are prosecuted simultaneously or are prosecuted separately in such order as the Lender may select.

8.           Waivers. To the extent permitted by law, Mortgagor hereby waives any and all rights of dower, curtesy, appraisement, sale, redemption and homestead under the laws of Minnesota.

9.           Representations and Warranties.  Mortgagor represents and warrants:

	
  

	
(a)

	
that Mortgagor is the owner or has control of the Property;

	
  

	
(b)

	
that Mortgagor has the right to pledge or grant a security interest in the Property;

	
  

	
(c)

	
that, to Mortgagor’s knowledge, the Property is free from liens, adverse claims, set-offs, default, repayment, defenses and conditions precedent of any kind or character except in favor of Lender;

	
  

	
(d)

	
that the security interest in the Property granted to Lender hereby is a second priority security interest and that Mortgagor has not, and, except as otherwise provided herein will not, grant or suffer another security interest in or encumbrance against the Property except in favor of Lender;

	
  

	
(e)

	
that Mortgagor's execution, delivery and performance of this Mortgage (i) will not violate any indenture, agreement or any other instrument to which Mortgagor is a party or by which Mortgagor 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 Mortgage;

	
  

	
(f)

	
that this Mortgage when executed and delivered to Lender, will constitute the legal, valid and binding obligations of Mortgagor, enforceable in accordance with its terms; and

	
  

	
(g)

	
any residential Improvements located on the Land are not used by the Mortgagor as a primary residence and are not subject to any homestead exemptions or other homestead rights.  To the extent any homestead rights or exemptions may be applicable to the Property, the Mortgagor hereby specifically waives them in their entirety.

	
  

	
10.

	
Covenants of Mortgagor.

 

  

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(a)

	
Mortgagor shall (i) perform all obligations secured hereby when performance is due; (ii) permit Lender to exercise its powers granted herein; (iii) execute and deliver such documents as Lender reasonably deems necessary to create, perfect and continue the security interests contemplated hereby; (iv) not permit any lien on the Property, except in favor to Lender and except such purchase money financing liens granted in the ordinary course of Mortgagor’s business and such liens otherwise permitted by Lender; and (v) not change its chief place of business or the place where Mortgagor keeps its records concerning the Property without first giving Lender written notice of the address to which Mortgagor is moving same.

	
  

	
(b)

	
Without Lender's consent, Mortgagor shall (i) not commingle proceeds; (ii) not sell, transfer, encumber, hypothecate or otherwise dispose of any Property or proceeds (except as may otherwise be permitted herein) at any time, except to Lender, or except in the ordinary course of business; (iii) not materially modify, alter, amend, or subordinate, or consent to or suffer any material modification, alteration, amendment or subordination of, any of the Property, nor, through action or failure to act, waive any of its rights thereunder, except to the extent such waiver does not materially impair Mortgagor’s ability to perform its obligations hereunder; and (iv) provide any service and do all other acts and things reasonably necessary to keep the Property free and clear of all defenses, rights of off-set and counterclaims.

	
  

	
(c)

	
Upon the request of Lender, Mortgagor 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 Mortgage or the Credit Agreement (as defined in the Secured Loan Agreement).

	
  

	
(d)

	
Mortgagor shall not take any action with respect to any of the Property held by Lender from time to time which is inconsistent with the provisions and the purpose of this Mortgage or which would adversely affect the rights of Lender under the Credit Agreement.

	
  

	
(e)

	
Mortgagor agrees to pay, prior to delinquency, all taxes, special improvement assessments and other governmental charges against the Property, both real and personal, at any time levied or becoming due.

	
  

	
(f)

	
Except as otherwise provided above, Mortgagor agrees to prevent the Property from becoming encumbered by any lien or charge having priority over, or on a parity with, the lien of this Mortgage except prior liens in favor of the Lender; and to comply with all statutes, ordinances and regulations relating to such Property.

11.           Due on Sale/Encumbrance. Mortgagor agrees that Mortgagor shall not sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof or permit the Property or any part thereof (other than the interest of a tenant) to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred in any transaction which does not result in full payment of the Debt at the time of the closing of such transaction, except as otherwise permitted in Section 10 hereof.

 

  

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12.           CHOICE OF LAW.  THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARKANSAS (WITHOUT REGARD TO CHOICE OF LAW OR CONFLICT OF LAWS RULES) AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN THE STATE OF ARKANSAS,  EXCEPT TO THE EXTENT THAT REAL AND PERSONAL PROPERTY LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, INCLUDING LAWS RELATING TO PERFECTION AND THE EFFECT OF PERFECTION AND NON-PERFECTION OF LIENS ON REAL AND PERSONAL PROPERTY, OR THE TRANSFER OF, AND EFFECT OF TRANSFER OF, SECURITY TITLE TO REAL PROPERTY LOCATED IN SUCH STATE, SHALL NECESSARILY APPLY TO THE EXERCISE OF ANY REMEDIES RELATING TO THE ENFORCEMENT OF THE SECURITY COVERED BY THIS MORTGAGE AND PROVIDED FURTHER, THE PARTIES EXPRESSLY CHOOSE THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED TO GOVERN THE EFFECTIVENESS OF THE GRANT AND CONVEYANCE OF THE LIEN AGAINST AND SECURITY TITLE TO THE PROPERTY.

13.           Provisions Subject to Applicable Law.  All rights, powers and remedies provided in this Mortgage may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Mortgage invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law.  If any term of this Mortgage or any application thereof shall be invalid or unenforceable, the remainder of this Mortgage and any other application of the term shall not be affected thereby.

14.           No Oral Change.  This Mortgage, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Mortgagor or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

15.           Duplicate Originals; Counterparts.  This Mortgage may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original.  This Mortgage may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Mortgage.  The failure of any party hereto to execute this Mortgage, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

16.           Number and Gender.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

17.           Subrogation.  If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, the performance and discharge of Mortgagor's obligations hereunder, and under the Note and the Credit Agreement.

 

  

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18.           Entire Agreement.  The Credit Agreement constitutes the entire understanding and agreement between Mortgagor and Lender with respect to the transactions arising in connection with the Debt and supersede all prior written or oral understandings and agreements between Mortgagor and Lender with respect thereto.  Mortgagor hereby acknowledges that, except as incorporated in writing in the Credit Agreement, there are not, and were not, and no persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Credit Agreement.

19.           No Waiver.  No waiver by Lender of any default or breach by Mortgagor 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 Mortgagor 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.  The intent of this paragraph is to avoid unintentional waivers by Lender of any of its rights hereunder.

20.           No Duty of Lender.  Nothing in this Mortgage 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 Mortgagor with respect to any of the security held by Lender for the obligations.  Mortgagor waives any and all impairment of recourse and/or impairment of collateral defenses that it may possess against the Lender.

21.           Binding Effect; Assignment.  This Mortgage may be assigned by Lender.  Mortgagor may not assign its interest in, or obligation under, this Mortgage 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 Mortgagor.  Mortgagor hereby consents to the collateral assignment of Lender's interests in and to this Agreement to third party creditors of Lender without the need for any further consent of whatever nature by Mortgagor.  Should Lender's assignee assume rights under this agreement, Mortgagor covenants and agrees that it will continue to perform this agreement in accordance with its terms and conditions and shall recognize said assignee as the lawful and enforceable successor in interest to Lender.

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

23.           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 Mortgage and that each party understands the terms and conditions contained herein and that each has entered into this Mortgage voluntarily.

24.           Severability.  In the event that any one or more of the provisions contained in this Mortgage or in any other loan document executed in connection herewith shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage or any other loan document executed in connection herewith, and in lieu of such invalid, illegal or unenforceable provision there shall be added automatically as part of this Agreement or any other loan document executed in connection herewith a provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable thereafter.

 

  

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25.           Minnesota State-Specified Provisions.

(a)           Inconsistencies.  In the event of any inconsistencies between the terms and conditions of this Section 25 and the other provisions of this Mortgage, the terms and conditions of this Section 25 shall control and be binding.

(b)           Application of Rents.  All Rents collected by Lender, or by a receiver, shall be held and applied in the following order:

	 	 	

(1)         to payment of all reasonable fees of the receiver, if any, approved by the court;

	 	 	
(2)         to the repayment when due of all tenant security deposits, with interest thereon, pursuant to the provisions of Minn. Statutes, § 504B.178;

	 	 	
(3)         to payment of all delinquent or current real estate taxes and special assessments payable with respect to the Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof;

	 	 	
(4)         to payment of all premiums then due for the insurance required by the provisions of this Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof;

	 	 	
(5)         to payment of expenses incurred for normal maintenance of the Property;

	 	 	
(6)         if received prior to any foreclosure sale of the Property, to Lender for payment of the indebtedness secured by this Mortgage, but no such payment made after acceleration of the indebtedness shall affect such acceleration; and

	 	 	
(7)         if received during or with respect to a period after a foreclosure sale of the Property:

(i)           if the purchaser at the foreclosure sale is not Lender, first to Lender to the extent of any deficiency of the sale proceeds to repay the Debt secured by this Mortgage, second to the purchaser as a credit to the redemption price, but if the Property is not redeemed, then to the purchaser of the Property;

(ii)           if the purchaser at the foreclosure sale is Lender, first to Lender to the extent of any deficiency of the sale proceeds to repay the Debt secured by this Mortgage and the balance to the retained by Lender as a credit to the redemption price, but if the Property is not redeemed, then to Lender, whether or not such deficiency exists.

The rights and powers of Lender under this Mortgage and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or procedure to foreclose this Mortgage, after any foreclosure sale of the Property in connection with the foreclosure of this Mortgage, and until expiration of the period of redemption from any such foreclosure sale, whether or not any deficiency from the unpaid balance of the Debt exists after such foreclosure sale.

 

  

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(c)           Receiver.  Lender shall be entitled as a matter of right without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Property or adequacy of the security of the Property, to apply for the appointment of a receiver, in accordance with the statutes and law made and provided.  The receiver shall collect the rents, and all other income of any kind; manage the Property so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Property and perform the terms of this Mortgage and apply the rents, issues and profits in the following order to (i) payment of the reasonable fees of said receiver, (ii) application of tenant security deposits as required by Minn. Stats. § 504B.178, (iii) payment when due of prior or current real estate taxes or special assessments with respect to the Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (iv) the payment when due of premiums for insurance of the type required by this Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof; and (v) as further provided in any assignment of rents executed by Mortgagor as further security for the Debt (whether included in this Mortgage or a separate instrument), including but not limited to applying the same to the costs and expenses of the receivership, including reasonable attorney’s fees, to the repayment of the Debt and to the operation, maintenance, upkeep and repair of the Property, including payment of taxes and payments of premiums of insurance.  Mortgagor does hereby irrevocably consent to such appointment.

(d)           Foreclosure; Action or Advertisement.  Lender may (and is hereby authorized and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Property at public auction and convey the same to the purchaser in fee simple and, out of the proceeds arising from such sale, to pay all Debt secured hereby with interest, and all legal costs and charges of such foreclosure and the maximum attorneys’ fees permitted by law, which costs, charges and fees Mortgagor agrees to pay.  Any real estate or interest or estate sold hereunder may be sold in one parcel, as an entirety, or in such parcels and in such manner or order as Lender, in its sole discretion, may elect.  In case of any sale of the Property pursuant to any judgment or decree of any court or at public auction or otherwise in connection with the enforcement of any of the terms of this Mortgage, Lender, its successors and assigns, may become the purchaser, and for the purpose of making settlement for or payment of the purchase price, shall be entitled to deliver over and use the Loan Agreement and any claims for interest accrued and unpaid thereon, together with all other sums, with interest, advanced and unpaid hereunder, and all statutory charges for such foreclosure including maximum attorney’s fees allowed by law in order that there may be credited as paid on the purchase price the sum then due under the Loan Agreement including principal and interest thereon and all other sums, with interest, advanced and unpaid hereunder, and all charges and expenses of such foreclosure including maximum attorney’s fees allowed by law.

(e)           Fixture Filing.  From the date of its recording, this Mortgage shall be effective as a financing statement filed as a fixture financing with respect to all goods constituting part of the Property (as defined in Section 1 hereof) which are or are to become fixtures related to the Land described herein.  For this purpose, the following information is set forth:

- the name and mailing address of Debtor is the Mortgagor as set forth on page 1 of this Mortgage.

- the name and mailing address of Secured Party is the Lender as set forth on page 1 of this Mortgage.

 

  

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- This document covers goods which are or are to become fixtures.

- The name of the record owner of the Land is the Debtor described above.

- Debtor is organized as a Minnesota corporation.

- Debtor’s jurisdiction of organization is Minnesota

- Debtor’s organizational identification number is MN10E-882.

[This Space Intentionally Left Blank; Signatures to Follow]

 

  

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[Signatures to Mortgage, Security Agreement and Assignment of Rents]

IN WITNESS WHEREOF, the undersigned has executed this Mortgage, Security Agreement and Assignment of Rents, as of the date set forth in the preface.

MORTGAGOR:

LAKES ENTERTAINMENT, INC.

By: __/s/ Damon Schramm______________

Title: ___VP-General Counsel___________

ACKNOWLEDGMENT

STATE OF Minnesota

COUNTY OF Hennepin

I, the undersigned authority in and for the said county and state, on this 17th day of December, 2012, within my jurisdiction, hereby certify that the within-named Damon E. Schramm personally appeared before me, the undersigned authority in and for the said county and state, who acknowledged that he is the VP-General Counsel of LAKES ENTERTAINMENT, INC., a Minnesota corporation, and that, for and on behalf of the said corporation and as its act and deed, he executed the above and foregoing instrument after first having been duly authorized by said corporation to do so.

__/s/ Jessica Islas__________________

Notary Public

 

My commission expires:

_______1-31-2015___________

  

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EXHIBIT A

LAND

Lot 1, Block 1, Carlson Center East, Hennepin County, Minnesota.

Together with benefits and easements created in Declaration of Easements and Covenants, dated December 18, 1996, recorded December 20, 1996 as Document No. 2771390; and as amended by that certain First Amendment to Declaration of Easements and Covenants, dated March 25, 1998 recorded April 14, 1998 as Document No. 3009312.

 

 

 

14ex10-4.htm

Exhibit 10.4

 Loan Number: 2757521066

UNCONDITIONAL GUARANTY

THIS UNCONDITIONAL GUARANTY (this “Guaranty”) is executed by the undersigned as of the 17th day of December, 2012.

LAKES ENTERTAINMENT, INC. (the “Guarantor”), hereby requests and authorizes CENTENNIAL BANK (“Lender”) to extend credit to EVITTS RESORT, LLC (“Borrower”), an affiliate of the Guarantor, pursuant to the terms and conditions of that certain Secured Construction Loan Agreement between Borrower and Lender dated as of even date herewith (as the same may hereafter be amended or otherwise modified from time to time, the “Secured Construction Loan Agreement”).

It is recognized and agreed that Guarantor owns, either directly or indirectly, an equity position in the Borrower and will receive substantial financial consideration, benefit and gain as a result of Guarantor’s execution of this document.

In consideration of the granting of said financial and credit accommodations by Lender to Borrower and for other good and valuable consideration, and recognizing that Lender would not otherwise advance a loan to Borrower pursuant to the Secured Construction Loan Agreement absent the execution of this Unconditional Guaranty by Guarantor, Guarantor hereby covenants and agrees with Lender as follows:

1.           Performance.  Guarantor hereby guarantees the prompt performance and the punctual payment when the same shall become due and payable (whether at stated maturity or upon acceleration) of all of Borrower’s obligations, financial and otherwise, as are set forth and specified in the documents constituting the Credit Agreement (as defined in the Secured Construction Loan Agreement), including without limitation all present and future obligations and indebtedness of Borrower created pursuant to the documents constituting the Credit Agreement (all such obligations being referred to collectively herein as the “Obligations”).

Time is of the essence in connection with the performance of Guarantor’s obligations hereunder.  Payment shall be made in any certified and readily-available funds which at the time of payment are legal tender in the United States of America for public and private debts. Guarantor’s obligations hereunder are unconditional and irrevocable.

2.           Change of Terms.  In such manner, upon such terms and at such times as Lender deems best and without notice to the undersigned, by agreement between them, Lender and Borrower may alter, compromise, accelerate, extend or change the time or manner for the payment or  performance of any Obligations, release Borrower, by acceptance of a deed in lieu of foreclosure or otherwise, as to all or any portion of the Obligations, release, substitute or add any one or more guarantors or endorsers, accept additional or substituted security therefor, or exchange, release, surrender, realize upon, or subordinate any security therefor or deal with it in any manner that Lender may determine.  No exercise or non-exercise by Lender of any right hereby given Lender, no dealing by Lender with Borrower or any guarantor, endorser or any other person, and no change, impairment or suspension of any right or remedy of Lender shall in any way affect any of the obligations of Guarantor hereunder or any security furnished by Guarantor or give Guarantor any recourse against Lender.

 

  

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Loan Number: 2757521066

3.           Continuing Guaranty.  This is a continuing guaranty relating to the Obligations.

4.           All Liability Included.  The Obligations include without limit all liability of the Borrower to the Lender whether now or hereafter incurred under the Credit Agreement and any other document executed by Borrower in connection therewith.  Termination of this guaranty shall be effective only as to that portion of the Obligations incurred after written notice of termination has been received by an officer of Lender, and this guaranty shall remain in full force and effect as to all Obligations incurred before that time including loan commitments.  Regardless of when a renewal, extension or pretermination of any Obligations hereby occurs (with or without adjustment of interest rate or other terms), such Obligations are deemed to have been incurred prior to termination to the extent of the renewal or extension and to be fully covered by this guaranty.

5.           Security Interest.  In addition to all liens and rights of setoff given to Lender by law against any property of Borrower or of Guarantor, Lender shall have a general lien on and security interest in and a right of setoff against all property of Guarantor now or hereafter in the physical possession of or on deposit with Lender whether held in a general or special account, on deposit or for safekeeping or otherwise.  Each such lien, security interest and right of setoff may be enforced or exercised without demand upon or notice to Guarantor (unless such notice or demand is required by statute), shall continue in full force unless specifically waived or released by Lender in writing and shall not be deemed waived by any conduct of Lender, by any failure of Lender to exercise any such right of setoff or to enforce any such lien or security interest or by any neglect or delay in so doing.

6.           Consent of Lender.  By accepting this Guaranty, Lender, as a party to that certain Secured Line of Credit Loan Agreement dated as of October 28, 2008 between Lender (f/k/a First State Bank) and Guarantor (as amended, the “Existing Loan Agreement”), hereby consents to the execution, delivery and performance by Borrower and Guarantor of the documents constituting the Credit Agreement  (including without limitation, with respect to Guarantor, this Guaranty and the Mortgage, as defined in the Secured Construction Loan Agreement) and hereby agrees that, notwithstanding anything to the contrary in the Existing Loan Agreement or in any instrument, agreement or other document securing the obligations or indebtedness of Guarantor under the Existing Loan Agreement or otherwise executed in connection with the Existing Loan Agreement, arising out of the transaction contemplated thereby or otherwise relating thereto (collectively, “Existing Loan Documents”), the execution, delivery and performance by Borrower and Guarantor of the Credit Agreement shall not be deemed to be a breach of or otherwise a default under the terms of any of the Existing Loan Documents, any such breach or default hereby being waived by Lender.

7.           Waiver.  Guarantor hereby waives and agrees not to assert or take advantage of:

	
  

	
(a)

	
Any right to require Lender to proceed against Borrower or any other person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power before proceeding against Guarantor;

 

  

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Loan Number: 2757521066

 

	
  

	
(b)

	
The defense of the statute of limitations in any action hereunder or in any action for the collection of the Credit Agreement or the performance of any other obligation hereby guaranteed;

	
  

	
(c)

	
Any defense that may arise by reason of the incapacity, illegality, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons;

	
  

	
(d)

	
Demand, protest and notice of any kind including without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of Borrower, Lender, and endorser or creditor of Borrower or Guarantor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Lender as collateral or in connection with the Credit Agreement or any other obligation hereby guaranteed;

	
  

	
(e)

	
Any defense based upon an election of remedies by Lender, including without limitation an election to proceed by non-judicial rather than judicial foreclosure, which destroys or otherwise impairs the subrogation rights of Guarantor or the rights of Guarantor to proceed against Borrower for reimbursement, or both; and

	
  

	
(f)

	
Any duty on the part of Lender to disclose to Guarantor any facts Lender may now or hereafter know about Borrower, regardless of whether Lender has reasons to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsible and has the means available for being and keeping informed of the financial condition of Borrower and of all circumstances bearing on the risk of non-payment of the Credit Agreement or nonperformance of any other obligation hereby guaranteed.

The foregoing is not to be construed as a waiver of any notice requirement explicitly set forth in the Credit Agreement or related documents.

8.           Guarantor Information.  Guarantor warrants to Lender that it has adequate means to obtain from Borrower on a continuing basis, information concerning the financial condition of Borrower and that it is not relying on Lender to provide such information either now or in the future. Guarantor shall supply to Lender such information as it makes publicly available to its shareholders on each anniversary date of this Credit Agreement and otherwise as reasonably requested by Lender. Guarantor covenants and agrees that it will always be fully informed regarding the status of the Credit Agreement, all advances of principal under the Credit Agreement, the in-balance or out-of-balance nature of the Credit Agreement, and all other financial and other aspects of every nature pertaining to the Credit Agreement.  Lender will possess no obligation of any nature to provide Guarantor with any information regarding the status of the Credit Agreement.

 

  

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Loan Number: 2757521066

 

9.           Subrogation.  Unless and until the Obligations have been paid in full, (a) Guarantor shall have no right of subrogation and waives any right to enforce any remedy that Lender now has or may hereafter have against Borrower and any benefit of, and any right to participate in, any security now or hereafter held by Lender, (b)  Guarantor shall not be a creditor with respect to this Guaranty in any bankruptcy proceeding by or against Borrower, but instead Guarantor shall be an “entity” under the bankruptcy code in any such proceeding, and (c) Guarantor shall have neither a contingent nor a non-contingent claim against Borrower under this Guaranty.

10.           Subordination.  Except as otherwise provided in this Paragraph, all existing and future indebtedness of Borrower to Guarantor or to any person owned in whole or in part by Guarantor and, if Borrower is a partnership, the right of Guarantor to cause or permit any person owned in whole or in part by Guarantor to withdraw any capital invested by such person in Borrower, is hereby subordinated to the Obligations and, following the occurrence and during the continuance of an Event of Default (as defined in the Secured Construction Loan Agreement), without the prior written consent of Lender, such subordinated indebtedness shall not be paid or withdrawn in whole or in part nor will Guarantor cause or permit any person owned in whole or in part by Guarantor to accept any payment of or on account of any such indebtedness or as a withdrawal of capital while this Guaranty is in effect.  At Lender’s request, Guarantor shall cause Borrower to pay to Lender all or any part of such subordinated indebtedness and any capital which any such person owned by any Guarantor is entitled to withdraw.  Each such payment by Borrower in violation of this Guaranty following the occurrence and during the continuance of an Event of Default shall be received by the person to whom paid in trust for Lender, and Guarantor shall cause the same to be paid to Lender immediately on account of the indebtedness.

11.           Bankruptcy.  Except as provided in Paragraph 8 above, Guarantor shall file in any bankruptcy or other proceeding in which the filing of claims is required by law, all claims which such Guarantor may have against Borrower relating to any indebtedness of Borrower to such Guarantor and will assign to Lender all rights of such Guarantor thereunder.  If a Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender’s discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender’s nominee.  In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Lender the full amount hereof and, to the full extent necessary for that purpose, each Guarantor hereby assigns to Lender all of such Guarantor’s rights to any such payment or distributions to which such Guarantor would otherwise be entitled.

12.           Application of Payment.  With or without notice to Guarantor, Lender, in Lender’s sole discretion and at any time and from time to time and in such manner and upon such terms as Lender deems fit, may apply any or all payments or recoveries from Borrower or from any other guarantor or endorser under any other instrument or realized from any security, in such manner and order of priority as Lender may determine, to any of the Obligations.

 

  

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Loan Number: 2757521066

13.           Cumulative Rights.  The amount of Guarantor’s liability and all rights, powers and remedies of Lender hereunder shall be cumulative and not alternative and such rights, powers and remedies shall be in addition to all rights, powers and remedies given to Lender by law.  This Guaranty is in addition to and exclusive of the guarantee of any other guarantor of any of the Obligations.

14.           Independent Obligations.  The obligations of Guarantor hereunder are independent of the Obligations and, in the event of any default hereunder, a separate action or actions may be brought and prosecuted against Guarantor whether or not Borrower is joined therein or a separate action or actions are brought against Borrower.  In this regard, Guarantor waives any right to require Lender to (a) proceed against Borrower, (b) proceed against or exhaust any security held by Lender for payment of the Obligations, or (c) pursue any other remedy that Lender has or to which it may be entitled.  Without limiting the foregoing, Guarantor waives any necessity or requirement, substantive or procedural, that an action previously be commenced or a judgment previously be rendered against Borrower or any other person or entity or that any other person or entity be joined in such cause or that a separate action be brought against Borrower or any other person or entity.  Lender may maintain successive actions for other defaults.  Lender’s rights hereunder shall not be exhausted by its exercise of any of its rights or remedies or by any such action or by any number of successive actions until and unless all Obligations have been paid in full and fully performed.

15.           Costs and Fees.  Guarantor shall pay to Lender, promptly upon demand, reasonable attorneys’ fees and all costs and other expenses that Lender expends or incurs in enforcing this Guaranty against such Guarantor whether or not suit is filed, expressly including without limitation all costs, attorneys’ fees and expenses incurred by Lender in connection with any insolvency, bankruptcy, reorganization, arrangement or similar proceedings involving such Guarantor that in any way affect the exercise by Lender of its rights and remedies hereunder.

16.           Severability.  Should any one or more provisions of this Guaranty be determined to be illegal or unenforceable, all other provisions shall nevertheless be effective.

17.           Binding Effect.  This Guaranty shall inure to the benefit of Lender, its successors and assigns, including the assignees of any indebtedness hereby guaranteed, and shall bind the heirs, executors, administrators, successors and assigns of a Guarantor.  This Guaranty may be assigned by Lender with respect to all or any portion of the Obligations, and when so assigned Guarantor shall be liable under this Guaranty to the assignee(s) of the portion(s) of the Obligations so assigned without in any manner affecting the liability of Guarantor hereunder to Lender with respect to any portion of the Obligations retained by Lender.

18.           Expiration.  Upon the full performance and payment in full to Lender of the Obligations, this Guaranty shall be of no further force or effect.

19.           Reasonableness.  Guarantor warrants and agrees that each of the waivers set forth in this Guaranty are made with Guarantor’s full knowledge of its significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law.  No provisions of this Guaranty or right of Lender hereunder can be waived nor can Guarantor be released from its obligations hereunder except by a writing duly executed by an authorized officer of Lender.

 

  

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Loan Number: 2757521066

20.           Terminology.  When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa.  The word “person” as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.

21.           Exclusive Statement.  This writing is intended by the parties as a final expression of this Unconditional Guaranty and is also intended as a complete and exclusive statement of the terms hereof.  No course of dealing, course of performance or trade usage, and no parol evidence of any nature shall be used to supplement or modify any terms.  Nor are there any conditions to the full effectiveness of this agreement.

22.           Joint and Several Liability.  If two or more persons are signing this Guaranty as Guarantor, then all such persons shall be jointly and severally liable for the obligations of Guarantor hereunder.

23.           Waiver of Change.  The Guarantor hereby expressly waives notice of (a) any renewals or extensions of time for payment of the Obligations, (b) any changes in the terms of the Obligations including increase or decrease in installment payments or any interest rate adjustments, or (c) any other change with respect to the Obligations including a change in the business structure of the Borrower.

24.           Dealing with Security Interest.  The undersigned Guarantor hereby expressly waives (a) surrender, release, exchange, substitution, dealing with or taking any additional collateral, (b) abstaining from taking advantage of or realizing upon any security interest, or other guarantee, (c) any impairment of collateral by Lender including but not limited to, failure to perfect a security interest in the collateral, and (d) any impairment by Lender of Guarantor’s rights of recourse against other parties.

25.           Unconditional Liability.  Each of the persons who have signed this Unconditional Guaranty has unconditionally delivered it to Lender, and failure to sign this or any other guaranty by any other person shall not discharge the liability of any signer.  The unconditional liability of the signer applies whether signer is jointly and severally liable for the entire amount of the debt, or for only a pro rata portion.  The release of one or more guarantors shall not release to any extent, any other guarantors.

26.           Errors and Omissions.  The Guarantor hereby waives all errors and omissions in connection with Lender’s administration of the Obligations, except behavior which amounts to bad faith or gross negligence.

 

  

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Loan Number: 2757521066

27.           Acts and Omissions.  Without in any way limiting the foregoing, the Guarantor hereby waives any other act or omission of Lender (except acts or omissions due to the gross negligence of Lender or bad faith) which changes the scope of the Guarantor’s risk.

28.           Remedies.  As a condition of the payment or performance by Guarantor, Lender is not required to enforce any remedies against Borrower or Guarantor or any other party liable to Lender on account of the Obligations.  Nor is Lender required to seek to enforce or resort to any remedies with respect to any security interest, lien or encumbrance to Lender by the Borrower or any other party.

29.           Enforceability.  This Unconditional Guaranty remains fully enforceable irrespective of any defenses which Borrower may assert on the underlying debt, including but not limited to failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction, and usury.

30.           Liability for Full Amount.  The Guarantor agrees that, if at any time all or any part of any payment previously applied by Lender to any of the guaranteed debt must be returned by Lender for any reason, whether by court order, or settlement, the Guarantor remains liable for the full amount returned as if such amount had never been received by Lender notwithstanding any termination of this Guaranty or cancellation of any note or other agreement evidencing the Obligations.

31.           Governing Law.  This Guaranty shall be governed by and construed in accordance with the laws of the State of Arkansas.  Except as provided in any other written agreement now or at any time hereafter in force between Lender and Guarantor, this Guaranty shall constitute the entire agreement of Guarantor with Lender with respect to the subject matter hereof, and no representation, understanding, promise or condition concerning the subject matter hereof shall be binding upon Lender unless expressed herein.  Guarantor does hereby irrevocably consent to the exclusive jurisdiction of the court of the State of Arkansas with respect to any action or proceedings arising between the parties and expressly covenant and agree that the exclusive jurisdiction for all disputes and enforcement actions arising hereunder shall occur in Faulkner County, Arkansas.

32.           JURY WAIVER.  GUARANTOR AND LENDER EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN THE EVENT OF ANY DISPUTE OR LITIGATION ARISING HEREUNDER OR UNDER ANY RELATED DOCUMENTS EXECUTED IN CONNECTION HEREWITH.

33.           Multiple Counterpart Execution.  It is expressly agreed and understood that this document is being 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.

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

 

  

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Loan Number: 2757521066

 

If to Guarantors:

Lakes Entertainment, Inc.

Attn:  Timothy J. Cope, President

130 Cheshire Lane, Suite 101

Minnetonka, MN 55305

With a copy to:

Lakes Entertainment, Inc.

Attn:  Damon Schramm, Esq., General Counsel

130 Cheshire Lane, Suite 101

Minnetonka, MN 55305

And to:

Gray Plant Mooty

Attn: David M. Morehouse

500 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

If to Lender:

CENTENNIAL BANK

Attn:  Randy Crowell

P.O. Box 966

Conway Arkansas 72033

Facsimile: 501-328-4650

With a copy to:

GILL RAGON OWEN, P.A.

Attn:  Daniel Goodwin

425 West Capitol Avenue, Suite 3801

Little Rock, Arkansas  72201

Fax: (501) 372-3359

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

 

  

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Loan Number: 2757521066

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

For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are authorized to conduct business or Lender is open for business in the State of Arkansas.

35.           Changes to Guarantor. Without the prior written consent of Lender, Guarantor 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 Guarantor and where the failure to do so would have a material adverse impact on Guarantor or its assets or operations.

[The remainder of this page intentionally left blank;

signatures appear on next page.]

 

  

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Loan Number: 2757521066

[Signature Page To Unconditional Guaranty]

THIS UNCONDITIONAL GUARANTY is executed on the date set forth in the preface.

GUARANTOR:

LAKES ENTERTAINMENT, INC.

By: __/s/ Damon Schramm____________

Title: __VP-General Counsel__________

10

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