Sample Business Contracts

Loan Agreement - The Chateaux LLC and Grand Casinos Nevada I Inc.

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                                 LOAN AGREEMENT

         THIS AGREEMENT is made as of this 25th day of September 2002, by and
between THE CHATEAUX, LLC, a Nevada limited liability company ("Borrower"),
whose address is 3745 Las Vegas Blvd. South, Las Vegas, NV 89109; and GRAND
CASINOS NEVADA I, INC., a Minnesota corporation ("Lender"), with offices at 130
Cheshire Lane, Minnetonka, MN 55305.

         In consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto hereby agree as follows:

                                   ARTICLE 1.


         For purposes of this Agreement, the following terms shall have the
following meanings:

         1.1 "Collateral Documents" shall mean the following documents, each of
which shall be in form and substance acceptable to Lender, in its sole and
absolute discretion:

                  1.1.1 A Promissory Note in the amount of One Million and
         No/100 Dollars ($1,00,000.00), dated of even date herewith, from
         Borrower to Lender (the "Note").

                  1.1.2 A Guaranty (the "Guaranty") executed by Diamond Resorts,
         LLC (the "Guarantor").

                  1.1.3 A Collateral Pledge Agreement (the "Pledge Agreement")
         executed by the Guarantor, granting a security interest in the
         Guarantor's membership interests in the Borrower to secure the

                  1.1.4 UCC-1 Financing Statement covering the collateral
         described in the Pledge Agreement.

         1.2 "Improvements" shall mean the proposed timeshare sales center to be
installed and constructed by Guarantor on the Property, including without
limitation leasehold improvements, trade fixtures, furniture and equipment, all
of which are intended to be owned and used primarily for the benefit of

         1.3 "Loan" shall mean the loan referred to in Article 2 hereof as
evidenced by the Note, but only to the extent Lender is required to make
advances under the provisions of this Agreement.

         1.4 "Organizational Documents" shall mean the following documents, each
of which shall be in form and substance acceptable to Lender, in its sole and
absolute discretion:

                  1.4.1 A certified copy of the Articles of Organization for the


                  1.4.2 A copy of the Operating Agreement, for the Borrower,
         certified as true, correct and complete by an officer of the Borrower.

                  1.4.3 Copies of the Resolutions of all members and board of
         governors of Borrower authorizing the execution and delivery of this
         Agreement, the Note, and the other Collateral Documents certified as
         true, correct and complete by one or more officers of Borrower.

                  1.2.1. A copy of the Certificate of Good Standing for

                  1.2.2. A certified copy of the Articles of Organization for
         the Guarantor.

                  1.2.3. A copy of the Operating Agreement, for the Guarantor,
         certified as true, correct and complete by an officer of the Guarantor.

                  1.2.4. Copies of the resolutions of all members and board of
         governors of Guarantor authorizing the execution and delivery of the
         Guaranty and the other Collateral Documents to be executed by
         Guarantor, certified as true, correct and complete by one or more
         officers of Borrower.

                  1.2.5. A copy of the Certificate of Good Standing for

         1.5 "Project Costs" shall mean the costs of the materials, supplies,
furniture, equipment and labor actually incorporated into the Improvements, and
of the building permit therefore, all as itemized in the Sworn Construction and
Project Cost Statement for such Improvements, approved by Lender.

                  1.5.1 "Project Documents" shall mean the following documents,
         all of which shall be in form and substance acceptable to Lender, in
         its sole and absolute discretion:

                  1.5.2 The plans and specifications ("Plans") for the
         Improvements approved by Lender.

                  1.5.3 Executed sales and marketing Agreement between the
         Borrower and the Guarantor (the "Marketing Agreement").

                  1.5.4 Executed Commercial Lease Agreement between the
         Guarantor and Nevada Resort Properties Polo Towers Limited Partnership,
         a Nevada limited partnership that owns the Property, to which lease
         agreement the Borrower is a third party beneficiary (the "Lease").

                  1.5.5 Certificates or Policies, as Lender shall determine, of
         Builders' Risk 100% Non-Reporting Completed Value Form Insurance, in
         amounts approved by Lender.

                  1.5.6 Certificates of Public Liability Insurance providing for
         coverage of not less than $2,000,000.00 combined single limit, Workers'
         Compensation Insurance, fire and extended coverage insurance and all
         other insurance required by Lender.

                  1.5.7 A Sworn Construction and Project Cost Statement,
         certified to by Borrower, for the Improvements stating and itemizing in
         full the Project Costs for the Improvements and certifying that they
         are fair and reasonable.

                  1.5.8 A schedule of the estimated time and amount of the
         advances to be requested by Borrower under Article 5 hereof to complete
         the Improvements (the "Improvement Estimate").

                  1.5.9 If requested by Lender, signed copies of all
         construction contracts ("Construction Contracts") executed by Borrower
         and/or Borrower's contractors and subcontractors ("Contractors") for
         labor, equipment, materials or supplies with respect to the

                  1.5.10 If requested by Lender, an assignment or assignments of
         the Construction Contracts permitting Lender to complete the
         Improvements in the case of a default by Borrower. Lender in its
         reasonable discretion may require one or more of the Contractors to
         consent to such an assignment or assignments by Borrower to Lender.

                  1.5.11 All building and occupancy permits and such other
         evidence as Lender shall request to establish that all necessary
         building, zoning and rezoning, planned unit development, subdivision,
         platting and environmental protection and land use permits and
         approvals have been obtained, and that the Improvements, as
         constructed, and the occupancy thereof will comply in all respects with
         all applicable ordinances, including building, zoning and rezoning,
         planned unit development, subdivision, platting and environmental
         protection and land use

                  1.5.12 Copies of all contracts entered into by Borrower with
         architects and engineers relating to the Improvements.

         1.6 "Property" shall mean the "Premises" as defined in the Lease.

                                   ARTICLE 2.

                                    THE LOAN

         2.1 Lender shall, subject to the terms and conditions of this
Agreement, lend to Borrower, and Borrower shall borrow from Lender, up to the
aggregate principal amount of One Million and No/100 Dollars ($1,000,000.00) for
the purpose of Borrower's reimbursement of the Project Costs incurred by
Guarantor under the Marketing Agreement. The Loan and Borrower's obligation to
repay the Loan shall be evidenced by the Note. The Loan, or so much thereof as
is from time to time outstanding, shall bear interest as set forth in the Note.
All such interest shall commence as of the date of advances by Lender made
pursuant to this Agreement. The Loan shall be advanced in stages in accordance
with, and subject to the terms and conditions of Articles 3, 4 and 5 of this
Agreement. The Loan shall be due and payable from the first available cash flow
of the Borrower, excluding any member's required capital contribution, and prior
to any distribution to any of the Borrower's members, and in any event shall be
payable in full upon the earliest of the following:

                  2.1.1 The closing of any construction financing with respect
         to Borrower's time-share units.

                  2.1.2 Such time as Lender is no longer a member of the
         Borrower; provided that Lender is not in violation of the Operating
         Agreement of the Borrower.

                  2.1.3 Such time as the Lender reasonably believes that the
         Guarantor has abandoned the Project or is no longer able to complete
         the Project due to financial or other reasons.

                  2.1.4 October 1, 2004.

         2.2 Anything herein to the contrary notwithstanding, it is specifically
understood and agreed that all funds furnished by the Lender and employed in
performance of the obligations of the Borrower under this Agreement shall be
deemed advanced by the Lender under an obligation to do so regardless of the
identity of the person or persons to whom such funds are furnished. Funds
advanced by the Lender in the reasonable exercise of its judgment that the same
are needed to complete the Improvements or to protect its security are to be
deemed obligatory advances hereunder and are to be added to the total
indebtedness secured by the Note and Mortgage and other Collateral Documents and
said indebtedness shall be increased accordingly.

         2.3 Until the Loan has been paid in full, Borrower (i) shall not make
any distributions to its members, pursuant to its Operating Agreement or
otherwise; and (2) shall not make any payments on any loan to Borrower from the

                                   ARTICLE 3.


         3.1 The following shall be conditions precedent to the first advance
and all subsequent advances for the construction of Improvements under this

         3.2 Borrower shall deliver, without expense to Lender, the Collateral
Documents, and Organizational Documents, each to be duly executed to the extent
required by Lender and approved by Lender's legal counsel and if applicable,
recorded with the appropriate public recording office. All filing fees, charges
and expenses shall have been paid by Borrower.

                  3.2.1 Borrower shall not be in default under this Agreement or
         under any of the Collateral Documents.

                  3.2.2 There shall have been no material adverse change in the
         financial condition of Borrower prior to any advance.

                  3.2.3 Borrower shall deliver, without expense to Lender and
         for review and comment by Lender, a copy of the construction bid for
         the Improvements.

                  3.2.4 Borrower shall deliver, without expense to Lender,
         copies of all Project Documents for the Improvements, each to be duly
         executed to the extent required by Lender and approved by Lender's
         legal counsel.

                  3.2.5 Borrower shall provide Lender with the name of each
         Contractor who contracts, either directly or indirectly, for any work
         to be done, material supplied or services furnished in connection with
         constructing the Improvements. Borrower will keep advised at all times
         of the names of all Contractors, and the type of work or material and
         the amount covered by each of their respective Construction Contracts
         and will furnish Lender with copies of all such Construction Contracts.
         It is understood that only Contractors who actually perform work or
         supply material and whose names and contract descriptions have been
         furnished to Lender shall be entitled to receive advances under this

                                   ARTICLE 4.


         4.1 Upon at least five (5) days' prior written request by Borrower for
an advance under the Loan, made no more often than once a month, Lender shall
advance to Borrower for Project Costs pursuant to a draw request ("Draw
Request") in form and substance prescribed by Lender and containing a breakdown
of the Project Costs. Borrower shall submit to Lender all lien waivers and other
evidence required by Lender from the previous advances prior to disbursement of
any further advance. No portion of any advance shall be used for any purpose
other than the payment of Project Costs.

         4.2 If interest has accrued on the Loan and is unpaid, or if Borrower
has failed to make when due any payments required under the terms and conditions
of this Agreement or the Collateral Documents, or if fees are payable to Lender
hereunder, Lender shall be, and hereby is, authorized to advance, for payment to
Lender from the proceeds of the Loan, the total amount of such accrued interest,
payments and fees (whether or not a Draw Request has been submitted by
Borrower), and the same shall be deemed to be an advance of the proceeds of the
Loan under this Agreement in the same manner and with the same effect as if
advanced under the provisions of Section 2.2 above.

         4.3 No advance will be made for payment of any profit or overhead to
Borrower unless specifically approved by Lender.

         4.4 If Borrower shall withhold any sums from any Contractor, Lender may
withhold from Borrower a like sum or sums. Such sums withheld by Lender, when
paid out, will be paid out directly to the Contractor.

         4.5 All sums advanced and disbursed under this Agreement shall be
disbursed under and secured by the Collateral Documents.

                                   ARTICLE 5.

                           AND AGREEMENTS OF BORROWER

         5.1 Borrower warrants and represents:

         5.2 that the Borrower is a Nevada limited liability company, duly
organized and validly existing under the laws of the State of Nevada.

                  5.2.1 That the making and performance of this Agreement and
         the execution and delivery of the Note and other Collateral Documents
         do not result in the breach of, or constitute a default under, or
         result in the creation of any lien or encumbrance upon any property or
         assets of Borrower pursuant to any indenture or loan or credit
         agreement or other agreement or instrument to which Borrower is a party
         or by which Borrower or its property may be bound or affected (other
         than the Collateral Documents).

                  5.2.2 That this Agreement and the Collateral Documents are the
         legal, valid and binding obligations of Borrower enforceable against
         Borrower in accordance with their respective terms.

                  5.2.3 That the Note, when duly executed and delivered for
         value, will constitute the legal, valid and binding obligation of
         Borrower enforceable in accordance with its terms.

                  5.2.4 That there are no actions, suits or proceedings pending
         or, to the knowledge of Borrower, threatened against or affecting
         Borrower or the properties of Borrower before any court or governmental
         department, commission, board, bureau, agency or instrumentality,
         which, if determined adversely to Borrower, would have a material
         adverse effect on the financial condition, properties or operations of
         Borrower or on the ability of Borrower to perform this Agreement.

         5.3 Borrower covenants and agrees:

                  5.3.1 That all advances under the Loan after payment of
         existing mortgage liens on the Property shall be used solely to pay
         Project Costs; that the Property and Improvements do and shall comply
         with all applicable ordinances, regulations and laws of governmental
         departments and agencies having jurisdiction over the Property and do
         not and shall not violate any set-back requirements, private
         restrictions or covenants or encroach upon or interfere with easements
         affecting the Property; that Borrower will carry on continuously,
         diligently and with reasonable dispatch the construction of the
         Improvements in accordance with the Plans, free from all mechanic's,
         laborer's, and materialman's liens and in a good and workmanlike manner
         and shall complete construction of the Improvements in a timely manner.

                  5.3.2 To keep, perform, enforce and maintain in full force and
effect all of the terms, covenants, conditions and requirements of this
Agreement, the Collateral Documents and the Project Documents; not to amend,
cancel, change, terminate, supplement or waive any of the terms, covenants or
conditions of the Collateral Documents or Project Documents without the consent
of Lender.

                  5.3.3 Upon the demand of Lender for reasonable cause, from
time to time and at any time, to deliver to Lender updated and recertified
copies of the Collateral Documents and Project Documents.

                  5.3.4 Not to create, permit to be created, or allow to exist
any liens, charges or encumbrances on the Property and Improvements.

                  5.3.5 Not to assign this Agreement or any interest herein or
all or any part of any advances to be made hereunder except with Lender's prior
written consent.

                  5.3.6 To pay to Lender, upon demand, all filing fees and all
other out-of-pocket expenses, if any, directly incurred and from time to time
hereafter incurred by Lender in enforcing the terms and conditions of this
Agreement or any document herein referred to (other than the Operating Agreement
is effect with respect to the Borrower, which shall remain unaffected by this
Agreement), or in exercising any of the rights granted to Lender herein or in
any such document herein referred to, whether suit be brought or not. Borrower
shall remain obligated to pay such out-of-pocket expenses incurred by Lender in
connection with the Loan notwithstanding any cancellation of this Agreement.

                  5.3.7 To set up and maintain accurate and complete books,
accounts and records pertaining to the construction of the Improvements and the
Project Costs in a manner consistent with generally accepted accounting
principles and practices. Lender and its representatives, shall have the right
at all reasonable times to inspect, examine and copy all books and records of
Borrower relating to the Improvements and Project Costs, and to enter and have
free access to the Property and to inspect all work done, labor performed and
material furnished in or about the same. Notwithstanding the foregoing, Borrower
shall be responsible for making inspections of the Improvements during the
course of construction and shall determine to its own satisfaction that the work
done or materials supplied by the Contractors have been properly supplied in
accordance with the applicable Construction Contract. Borrower shall defend and
hold Lender harmless and Lender has and shall have no liability or obligation of
any kind to Borrower or creditors of Borrower, in connection with any defective,
improper or inadequate workmanship or materials brought in or arising out of the
Improvements or the Property, or any mechanic's liens arising as a result of any
workmanship or materials expended or placed in or on the Improvements or the
Property. Upon Lender's request, Borrower shall replace or cause to be replaced
any such defective, improper or inadequate workmanship or materials. Any
inspections made by Inspector are for the sole benefit of Lender and neither
Borrower nor any creditor of Borrower shall be entitled to rely on any

                  5.3.8 To make no changes in the Plans for the Improvements
aggregating more than $25,000.00 and/or aggregating more than $50,000.00 for all
of the anticipated


improvements constructed without prior approval of Lender and Borrower's
proposed manner of paying for any such changes shall also be subject to Lender's
prior approval.

                  5.3.9 Not to lease, sell, assign, mortgage, encumber or convey
(whether by contract for deed or otherwise), or otherwise transfer, all or any
part of the interest of Borrower in all or any part of the Property and
Improvements, without obtaining, in each instance, the prior written approval of
Lender which approval can be withheld for any reason.

                  5.3.10 To pay all real estate taxes and installments of
special assessments payable therewith as and when they become due and payable,
and insurance premiums with respect to the insurance required to be maintained
by Borrower under the terms of this Agreement or any of the Collateral
Documents, and utility charges incurred by Borrower prior to or during the term
of this Agreement.

                  5.3.11 To comply with the Marketing Agreement and the Lease.

         5.4 The warranties, agreements, covenants and representations in this
Article 6 shall be deemed to have been renewed and restated by Borrower at the
time of each advance under the Loan after the date hereof, unless Borrower
notifies Lender in writing of any change therein prior to the time of such

                                   ARTICLE 6.

                              DEFAULT AND REMEDIES

         6.1 The occurrence of any of the following events shall constitute a
default under this Agreement:

                  6.1.1 If Borrower shall fail to pay principal or interest when
due under the Note; and such amount remains unpaid for a period of ten (10) days
after the date on which the Lender has given Borrower written notice of such

                  6.1.2 If Borrower or Borrower's Contractors, abandons
construction of the Improvements or unreasonably delays or ceases work thereon
for a period of thirty (30) days, or delays construction or permits construction
to be delayed for any period of time so that the completion of the Improvements
cannot be accomplished, in the reasonable judgment of Lender, in a timely

                  6.1.3 If Borrower, or Borrower's Contractors, shall fail to
keep, enforce, perform and maintain in full force and effect any provision of
this Agreement or any of the Collateral Documents or Project Documents, provided
if such failure is for other than the nonpayment of money when due, then such
failure shall continue for a period of fifteen (15) days after notice of such
failure is given to Borrower by Lender or for such longer period of time as is
required to cure the default if the same cannot reasonably be cured within said
15 day period and Borrower is using all reasonable efforts to cure the same but
in no event more than 60 days.

                  6.1.4 If any representation or warranty is made by Borrower
herein, or in any certificate or document furnished pursuant hereto, or
submitted with or in support of the


application to Lender for the Loan, proves untrue in any material respect in the
reasonable opinion of Lender.

                  6.1.5 If Borrower shall become insolvent, however defined, or
shall initiate or have initiated against it, voluntarily or involuntarily, any
act, process or proceeding under any insolvency law or other statute or law
providing for the modification or adjustment of the rights of creditors,
including but not limited to filing for protection under the bankruptcy laws or
having bankruptcy proceedings commenced against it.

                  6.1.6 If the Improvements are materially damaged or destroyed
by fire or other casualty and the loss is not adequately covered by equity funds
of Borrower or insurance proceeds actually collected or in the process of

                  6.1.7 If at any time any advance under the Loan is requested
by Borrower there is, in Lender's sole opinion, any material adverse change in
Borrower's business or financial condition from that which existed on the date

                  6.1.8 If Borrower shall sell or otherwise transfer the
Property or Improvements, or any interest therein, or Borrower shall further
encumber the same, without prior written approval of Lender.

                  6.1.9 If the undisbursed Loan proceeds are insufficient, in
the sole opinion of Lender, to complete the Improvements and pay the remaining
Project Costs, and Borrower has failed , upon demand by Lender, to give the
Lender reasonable assurance that Borrower has sufficient funds to pay such
excess costs.

                  6.1.10 If Borrower shall default on any other obligation of
Borrower to Lender.

     6.2 In the event of a default as defined in Section 7.1 hereof, Lender, at
its option, in addition to any other remedies to which it might by law be
entitled, shall have the right to do one or more of the following:

                  6.2.1 To refrain from making any advance under this Agreement,
but Lender may make advances after the happening of any such event without
hereby waiving the right to refrain from making other or further advances or to
exercise any of the other rights Lender may have.

                  6.2.2 To perform any and all work and labor necessary to
complete all or part of the Improvements contemplated by this Agreement and to
do all things necessary or incidental thereto. Lender may, in its discretion, at
any time, abandon work on the Improvements after having commenced such work, and
may recommence such work at any time, it being understood that nothing herein
shall impose any obligation on Lender to complete the Improvements.

                  6.2.3 To perform such other acts or deeds which may be
necessary to cure any default existing under this Agreement or under the
Collateral Documents or Project Documents and, to this end, it is hereby agreed
as follows:


         All sums expended by Lender in effectuating its rights
under this Agreement shall be deemed to have been paid to Borrower hereunder and
shall become a part of Borrower's indebtedness to Lender under this Agreement
and shall be secured by the Collateral Documents, whether or not such sums, when
added to all previous advances made hereunder, exceed the Loan, such additional
sums advanced by Lender if in the reasonable exercise of Lender's discretion are
necessary to complete the Improvements shall be deemed obligatory advances

                 Borrower hereby constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution
either in the name of Lender or in the name of Borrower:

                 To complete or cause to be completed all or
any part of the Improvements; to use the Plans; to make such reasonable
additions and changes and corrections in the Plans which Lender shall deem
reasonably necessary or desirable to complete all or any part of the
Improvements; to use any funds which may remain unadvanced under this Agreement;
to employ such contractors, subcontractors, agents, architects and inspectors
and enter into such contracts and arrangements as shall be required for such
purposes; to pay, settle or compromise all existing bills and claims which may
be liens against the Property or Improvements or as may be necessary or
reasonably desirable for the completion of the work or clearance of title; to
examine and execute all applications and certificates relating to construction
of the Improvements in the name of Borrower, to prosecute and defend all actions
or proceedings in connection with the construction work on, or any other matter
relating to, the Property or Improvements and to do any and every act in
connection with the matters contemplated by this Agreement which Borrower might
do in its own behalf;

                 To enforce by any means that Lender then
deems necessary or advisable, all of the terms, covenants, and conditions of the
Collateral Documents and Project Documents;

                 Without limiting the foregoing, to perform
each of the terms, covenants and conditions to be kept and performed by Borrower
under this Agreement, and any of the Collateral Documents and Project Documents;

                 To do all things that Lender then deems
necessary or advisable, including, without limitation, the execution of
instruments in the name of Borrower or as attorney-in-fact for Borrower, for the
purpose of carrying out the powers enumerated in of this subsection;
provided, however, that Lender (i) shall limit the exercise of its powers herein
granted solely to acts in connection with the Property and the Improvements, and
to completion of the Improvements and payment of all costs and expenses
therefor; (ii) if it enters into new contracts for the completion of the
Improvements, shall do so in its name and not as agent or attorney for Borrower;
and (iii) in exercising its powers herein granted, shall not add to or increase
Borrower's obligations or liabilities beyond those undertaken or agreed to by
Borrower by this Agreement. The immediately preceding provisions (i), (ii), and
(iii) shall not relieve Borrower of its obligation under this Agreement to
provide the equity funds necessary to complete the Improvements.

             The powers herein granted to Lender shall be deemed to be powers
coupled with an interest and the same are irrevocable.

         6.3 To cancel this Agreement.

                  6.3.1 To bring appropriate action to enforce such performance
         and the correction of such failure or default.

                  6.3.2 To declare the entire unpaid principal of the Note and
         any other note between Borrower and Lender, and all accrued interest
         thereon immediately due and payable without notice.

                  6.3.3 Terminate Lender's obligations under this Agreement
         without notice to Borrower.

                  6.3.4 Commence an action to enforce specifically Borrower's
         performance of its obligations under the Loan Documents.

                  6.3.5 Exercise any and all other rights and remedies available
         at law or in equity.

         6.4 No right or remedy by this Agreement, or by any document or
instrument delivered by Borrower pursuant hereto, conferred upon or reserved to
Lender shall be or is intended to be exclusive of any other right or remedy, and
each and every right or remedy shall be cumulative and in addition to any other
right or remedy now or hereafter existing at law or in equity or by statute.

         6.5 Except as Lender may hereafter or otherwise agree in writing, no
waiver by Lender of any breach by or default of Borrower, in any of its
obligations, agreements or covenants under this Agreement shall be deemed to be
a waiver of any subsequent breach of the same, or any other obligation,
agreement or covenant, nor shall any forbearance by Lender to seek a remedy for
such breach be deemed a waiver of its rights and remedies with respect to such
breach, nor shall Lender be deemed to have waived any of its rights and remedies
unless it be in writing and executed with the same formality as this Agreement

                                   ARTICLE 7.


         7.1 All notices provided for herein shall be in writing and shall be
deemed to have been given when delivered personally or when deposited in the
United States mail, registered or certified mail, postage prepaid, and addressed
to the locations set forth on page 1 hereof, or addressed to any such party at
such other address as such party shall hereafter furnish by such notice to the
other parties.

         7.2 This Agreement shall be construed according to the internal laws
(other than conflict laws) of the State of Minnesota. However, Clark County,
Nevada shall be the exclusive


venue for any action brought in Federal or state court by any party in any way
related to this Agreement.

         7.3 If any term, condition, or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be held
to be invalid or unenforceable, the remainder thereof and the application of
such term, provision, and condition to persons or circumstances other than those
as to whom it shall be held invalid or unenforceable shall not be affected
thereby, and this Agreement and all the terms, provisions and conditions hereof
shall, in all other respects, continue to be effective and to be complied with
to the full extent permitted by law. No change in the provisions hereof shall be
valid unless in writing and signed by Borrower and Lender.

         7.4 Borrower acknowledges that Lender may, and shall have the right to,
sell participation interests in the Loan.

         7.5 During the construction period of the Improvements, Lender shall
have the right to inspect the Improvements. If Lender determines that the
construction of the Improvements is not in accordance with the Plans, Borrower
agrees to take such actions as is necessary to bring the construction into
compliance with the Plans.

         7.6 If the interest provided for by the Note and this Agreement shall
become in conflict with the applicable statutory interest rate limitations now
or hereafter in effect, Borrower shall pay only such interest as would legally
be permitted; provided, however, that if the defense of usury is unavailable to
Borrower, Borrower shall pay interest as provided for in the Notes. If for any
reason interest in excess of the amount as limited in the foregoing sentence
shall have been paid under the Note, whether by reason of acceleration or
otherwise, then any such excess interest shall constitute and be treated as a
payment of principal thereunder and shall operate to reduce such principal by
the amount of such excess, or if more than the then principal indebtedness, such
excess shall be refunded.

         7.7 Borrower hereby consents to the personal jurisdiction of the state
and federal courts located in the State of Minnesota in connection with any
controversy related in any way to this Agreement, the Note, any other Collateral
Documents or any security or guaranty for the Note, waives any argument that
venue in such forums is not convenient. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their respective heirs,
successors and assigns in interest.

         7.8 Notwithstanding any provision contained herein or in the Collateral
Documents to the contrary, it is agreed that the maximum principal amount of
advances to be made by Lender to Borrower under the Collateral Documents shall
be $1,000,000.00.

         7.9 This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their respective heirs, successors and assigns in

         7.10 All Collateral Documents shall be construed to give full force and
effect to each provision thereof. However, to the extent there is an express
conflict between any of the provisions of any of the Collateral Documents, the
provisions of the Mortgage, to the extent permitted by law, shall control.



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


                                            THE CHATEAUX, LLC

                                            By:      /s/ Stephen J. Cloobeck
                                              Its:   Managing Member


                                            GRAND CASINOS NEVADA I, INC.

                                            By:      /s/ Lyle Berman
                                              Its:   CEO