Promissory Note - Pokagon Band of Potawatomi Indians and Lakes Gaming Inc.
LAKES NOTE
$ 43,000,000 July 8, 1999
Dowagiac, Michigan
FOR VALUE RECEIVED, The Pokagon Band of Potawatomi Indians (the "Band")
promises to pay to LAKES GAMING, INC., a Minnesota corporation ("Lakes"), such
sums as may be advanced by Lakes to the Band in accordance with ss.ss. 8.4 and
9.2.1 of a Development Agreement between the Band and Lakes dated as of July 8,
1999 (the "Development Agreement"); provided that the principal amount due
hereunder shall not exceed Forty Three Million Dollars ($ 43,000,000.00).
1. Advances; Funding. Advances under this Note shall be made (a) upon
written request by the Band to Lakes in the form of Draw Request attached as
Exhibit A, or (b) through advances by Lakes to the Enterprise Bank Accounts to
pay Development Expenditures in accordance with either (a) the Approved
Development Budget or, prior to the adoption of the Approved Development Budget,
the approval of the Business Board or the Band; and (b) the Development
Agreement. Draw Requests submitted by the Band shall be sent in accordance with
ss. 15.4 of the Development Agreement. Advances under this Note may, at Lakes'
option, be funded through transfer of funds from the Escrow Account; provided
that interest shall only accrue under this Note on funds advanced through the
Escrow Account after transfer from the Escrow Account to the Band Enterprise
Account, and shall not begin to accrue on deposit by Lakes into the Escrow
Account. All Draw Requests submitted by the Band shall be funded within ten (10)
days of the date of the draw request. By making any advance to the Enterprise
Bank Accounts, Lakes shall certify that the amounts so advanced are necessary
for, and shall be used to pay, Development Expenditures in accordance with
either (a) the Approved Development Budget or, prior to the adoption of the
Approved Development Budget, the approval of the Business Board or the Band; and
(b) the Development Agreement.
2. Interest. Interest shall accrue on the outstanding balance under
this Note as follows:
(a) if the Bank Closing occurs, at a fixed rate equal to the lesser of
(i) Base Rate as of the Bank Closing plus 1% or (ii) 10% (the "Band
Interest Rate"); or
(b) If the Bank Closing does not occur, at a variable rate equal to the
lesser of (i) Base Rate plus 1% or (ii) 10% (the lesser of (i) and (ii)
being referred to as the
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"Variable Interest Rate"). Lakes shall adjust the Variable Interest
Rate on the then unpaid principal balance, by way of increase or
decrease, in accordance with changes in the Base Rate. Such changes
shall be effective as of the change in the Base Rate (the "Effective
Date").
Upon the Bank Closing, interest accruing under this Note prior to the Bank
Closing shall be adjusted retroactively to reflect the Band Interest Rate. "Base
Rate" means the lowest Prime Rate as is published daily in The Wall Street
Journal. In the event that the Wall Street Journal ceases to publish the Prime
Rate, then the holder hereof may in its reasonable discretion select some other
generally recognized comparable indicator of the national Prime Rate.
3. Repayment.
If the Commencement Date occurs, the Band shall, beginning on the 15th
day of the month following the Commencement Date, make equal monthly payments to
Lakes of principal and interest in an amount sufficient to amortize the
principal amount outstanding as of the Commencement Date over a sixty (60) month
period at the Band Interest Rate, and shall thereafter continue to make payments
in such amount on the 15th day of each succeeding month to and including the
fifteenth day of the sixtieth month following the Commencement Date, when all
remaining principal and interest shall be due and payable.
If the Commencement Date does not occur, principal and interest shall
be repayable to the extent and in the manner provided in the Development
Agreement; provided that payments shall in any event be due and made only from
Subsequent Gaming Facility Revenues in accordance with the Development
Agreement. If Gaming commences at such a facility and payment is due under this
Note in accordance with the Development Agreement, the Band shall, beginning on
the 15th day of the month following such commencement date, make equal monthly
payments to Lakes of principal and interest in an amount sufficient to amortize
the principal amount outstanding as of such commencement date over a sixty (60)
month period at the Variable Interest Rate, and shall thereafter continue to
make such payments on the 15th day of each succeeding month to and including the
fifteenth day of the sixtieth month following such commencement date, when all
remaining principal and interest shall be due and payable. As of the Effective
Date of a change in the Base Rate, Lakes shall adjust the monthly installments
of principal and interest as of the installment next following the Effective
Date so that the then unpaid principal balance would be amortized in full at the
revised Variable Interest Rate five years after such commencement of gaming.
Lakes shall
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promptly notify the Band in writing of any changes in the Base Rate and in the
instalment payment due.
4. Prepayment. This Note may be prepaid at any time without penalty.
5. Subordination. Payment of amounts due hereunder shall be
subordinated to the Bank Development Loan, the Equipment Loan and any other
third-party loans or equipment leases to the Band relating to the Facility or,
if the Commencement Date does not occur, or to any loans relating to any other
Gaming facility in Michigan owned by the Band, on such terms as such third
party lender shall reasonably require.
6. Limited Recourse. The obligations of the Band under this Note and
any related awards, judgments or decrees shall be payable solely out of
undistributed or future Net Revenues of the Enterprise and shall be a Limited
Recourse obligation of the Band, with no recourse to tribal assets other than
such Net Revenues and mortgages, if any, held by Lakes on the Gaming Site if the
Gaming Site has not been transferred into trust (except that, if the
Commencement Date does not occur, Lakes shall also have recourse to Subsequent
Gaming Facility Revenues to the extent provided in the Development Agreement).
In no event shall Lakes or any other claimant under this Note have recourse to
(a) the physical property of the Facility, (b) Tribal Distributions, (c) assets
of the Band purchased with Tribal Distributions, (d) revenues or assets of any
other gaming facility owned or operated by the Band, or (e) any other asset of
the Band (other than (i), if the Commencement Date does not occur, Subsequent
Gaming Facility Revenues to the extent provided in the Development Agreement,
(ii) such Net Revenues of the Enterprise, and (iii) such mortgages on the Gaming
Site prior to its transfer into trust. Such mortgages shall be subject to the
provisions of the Development Agreement, including, without limitation, Article
14 thereof. Lakes covenants and agrees that it shall promptly release any such
mortgages upon transfer of such lands into trust or as otherwise provided in the
Development Agreement.
7. Default; Acceleration. All outstanding principal together with
accrued interest shall become immediately due and payable in full, subject to
the limitations on recourse provided above, upon default in the payment of
principal or interest due under this Note if such default is not remedied within
thirty (30) days after receipt by the Band of written notice thereof as provided
in the Development Agreement.
8. Band's Waiver of Sovereign Immunity and Consent to Suit. The Band
expressly waives its sovereign immunity from suit for the purpose of permitting
or compelling arbitration to enforce this Note as provided in Article 14 of the
Development
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Agreement and consents to be sued in the United States District Court for the
District in which the Gaming Site is located (or, if the Gaming Site has not
been designated, for the Western District of Michigan - Southern Division), the
United States Court of Appeals for the Sixth Circuit, and the United States
Supreme Court for the purpose of compelling arbitration or enforcing any
arbitration award or judgment arising out of this Note. If the United States
District Court lacks jurisdiction, the Band consents to be sued in the Michigan
State Court system for the same limited purpose. The Band waives any requirement
of exhaustion of tribal remedies. Without in any way limiting the generality of
the foregoing, the Band expressly authorizes any governmental authorities who
have the right and duty under applicable law to take any action authorized or
ordered by any such court, and to take such action, including without
limitation, repossessing or foreclosing on any real property not in trust, or
otherwise giving effect to any judgment entered; provided, however, that
liability of the Band under any judgment shall always be Limited Recourse, and
in no instance shall any enforcement of any kind whatsoever be allowed against
any assets of the Band other than (i), if the Commencement Date does not occur,
Subsequent Gaming Facility Revenues to the extent provided in the Development
Agreement, (ii) Net Revenues of the Enterprise, and (iii) mortgages on the
Gaming Site prior to its transfer into trust. The Band appoints the Chairman of
the Pokagon Council and the Secretary of the Pokagon Council as its agents for
service of all process under or relating to the Agreements. The Band agrees that
service in hand or by certified mail, return receipt requested, shall be
effective for all purposes under or relating to the Agreements if served on such
agents.
9. Arbitration. All disputes, controversies or claims arising out of or
relating to this Note shall be settled by binding arbitration as provided in
Article 14 of the Development Agreement.
10. Business Purposes; Applicable Law. This Note evidences a loan for
business and commercial purposes and not for personal, household, family or
agricultural purposes, and shall be governed by the law of the State of Michigan
and, to the extent applicable, federal law.
11. Notices. All notices under this Note shall be given in accordance
with ss. 15.4 of the Development Agreement; except that copies of draw requests
need not be sent to attorneys.
12. Defined Terms. Capitalized terms used herein shall have the same
meanings assigned to them in the Development Agreement, and, if not defined in
the Development Agreement, in the Management Agreement between the Band and
Lakes of even date.
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13. Miscellaneous.
a. Time is of the essence.
b. The benefits and obligations of this Note shall inure to
and be binding upon the parties hereto and their respective
successors and assigns,
provided that any succession or assignment is permitted under
the Development Agreement.
c. Waiver of any one default shall not cause or imply a waiver
any subsequent default.
d. This Note, together with the Development Agreement, the
Management Agreement, the Escrow Agreement, the Transition
Loan Note and the Non-Gaming Land Acquisition Line of Credit,
the exhibits thereto and all related documents of near or even
date herewith, sets forth the entire agreement between the
parties hereto with respect to the subject matter hereof. All
agreements, covenants, representations, and warranties,
express or implied, oral or written, of the parties with
respect to the subject matter hereof are contained herein and
therein. This Note shall not be supplemented, amended or
modified by any course of dealing, course of performance or
uses of trade and may only be amended or modified by a written
instrument duly executed by officers of both parties.
THE POKAGON BAND OF POTAWATOMI INDIANS
By: /s/ John Miller
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Its: Council Chairman
By: /s/ Kevin Daugherty
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Its: Secretary
LAKES GAMING, INC.
By: /s/ Timothy J. Cope
-----------------------------------
Its: Chief Financial Officer
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EXHIBIT A
DRAW REQUEST
The Pokagon Band of Potawatomi Indians (the "Band") requests that Lakes
Gaming, Inc. ("Lakes") advance $ under the Lakes
Development Loan Note. The Band certifies that the amounts drawn under this
Request will be used for purposes set out in ss. 8.4 of the Development
Agreement or for Development Expenditures, as per the attached itemization.
Advances should be made [pursuant to wire transfer instructions
previously given to Lakes] [as follows: ].
Dated: THE POKAGON BAND OF POTAWATOMI INDIANS
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By:
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Its: Council Chairman
By:
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Its: Secretary
[or other persons designated by the Band pursuant to the Development Agreement]
1341
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