1
EXHIBIT 10.17
COMMERCIAL GUARANTY AGREEMENT
This Commercial Guaranty Agreement (this "Agreement") is made
and entered into effective as of February 15, 1999, by LAKES GAMING, INC., a
Minnesota corporation (herein sometimes referred to as "Grand Casinos"), GRAND
CASINOS OF LOUISIANA, LLC - TUNICA-BILOXI, a Minnesota limited liability company
(herein sometimes referred to as "Grand Casinos/TB") [Lakes Gaming and Grand
Casinos/TB are herein referred to individually as a "Guarantor" and collectively
as the "Guarantors"]) in favor of THE COTTONPORT BANK (the "Lender"),
guaranteeing the Indebtedness (as hereinafter defined) of the TUNICA-BILOXI
TRIBE OF LOUISIANA (the "Borrower").
W I T N E S S E T H:
FOR VALUE RECEIVED, and in consideration of and for credit and
financial accommodations extended, to be extended, or continued to or for the
account of the above named Borrower, each of the undersigned Guarantors, whether
one or more, hereby jointly, severally and solidarily, agrees as follows:
SECTION 1. Guaranty of Borrower's Indebtedness. Each Guarantor does
hereby absolutely and unconditionally guarantee the prompt and punctual payment
of all of the indebtedness, including principal, interest, attorneys' fees and
other amounts, of the Borrower to Lender incurred by the Borrower pursuant to
that certain Commercial Loan Agreement dated effective March 14, 1997, between
Borrower, as borrower, Lender, as lender, under the terms of which Lender agreed
to loan to Borrower the principal sum of Sixteen Million Five Hundred Thousand
and No/100 Dollars ($16,500,000.00), (the "Loan Agreement"), and pursuant to
that certain Promissory Note (the "Note") also dated effective March 14, 1997,
executed by the Borrower in favor of the Lender in the original principal amount
of Sixteen Million Five Hundred Thousand and No/100 Dollars ($16,500,000.00) in
connection with the Loan Agreement (all such indebtedness referred to herein as
the "Indebtedness"). Notwithstanding anything to the contrary contained herein,
the maximum amount of Indebtedness secured hereby is Sixteen Million Five
Hundred Thousand and No/100 Dollars ($16,500,000.00) (the "Maximum Amount").
SECTION 2. Joint, Several and Solidary Liability. Each Guarantor
further agrees that its obligations and liabilities for the prompt and punctual
payment, performance and satisfaction or purchase of all of Borrower's
Indebtedness shall be on a "joint and several" and "solidary" basis with
Borrower to the same degree and extent as if Guarantor had been and/or will be a
co-borrower, co-principal obligor and/or co-maker of all of Borrower's
Indebtedness, up to the Maximum Amount. In the event that there is more than one
guarantor under this Agreement, or in the event that there are other guarantors,
endorsers, or sureties of all or any portion of Borrower's Indebtedness,
Guarantor's obligations and liabilities hereunder shall be on a "joint and
several" and "solidary" basis along with such other guarantor or guarantors,
endorsers and/or sureties.
GUARANTY -- PAGE 1 OF 7
2
SECTION 3. Duration. This Agreement and each Guarantor's obligations
and liabilities hereunder shall remain in full force and effect until such time
as all of Borrower's Indebtedness shall be paid, performed and/or satisfied in
full, in principal, interests costs and attorney's fees, and the Loan Agreement
terminated.
SECTION 4. Default by Borrower.
A. Should an Event of Default as defined in the Loan Agreement
occur, Lender shall notify each of the Guarantors of such an
event. Guarantors shall have the right (but not the obligation)
to attempt to remedy an Event of Default within the time periods
specified in the Loan Agreement. Such notice shall be given to
Guarantors concurrently with notice thereof being given to the
Borrower under the Loan Agreement. Guarantors may attempt to
remedy such an Event of Default and, if Guarantors cure such an
Event of Default, Lender will accept such a cure thereof by
Guarantors.
B. Should an Event of Default as defined in the Loan Agreement occur
and not be timely cured, each Guarantor unconditionally and
absolutely agrees to pay within one-hundred and twenty days after
Lender notifies the Guarantors of such an Event of Default the
full unpaid amount of all of Borrower's Indebtedness guaranteed
hereunder. Such payment or payments shall be made at Lender's
offices as specified in the Loan Agreement immediately following
demand by Lender. Each Guarantor hereby waives notice of
acceptance of this Agreement and of any Indebtedness to which it
applies or may apply. Each Guarantor further waives presentment
and demand for payment of Borrower's Indebtedness, notice of
dishonor, notice of intention to accelerate, protest and notice
of protest, collection or institution of any suit or other action
by Lender in collection. Each Guarantor additionally waives any
and all rights and pleas of division and discussion as provided
under Louisiana law, as well as, to the degree applicable, any
similar rights as may be provided under the laws of any other
state.
SECTION 5. Guarantor's Subordination of Rights. In the event that a
Guarantor should for any reason (A) advance or lend monies to Borrower, whether
or not such funds are used by Borrower to make payment(s) under Borrower's
Indebtedness, and/or (B) make any payment(s) to Lender or others for and on
behalf of Borrower under Borrower's Indebtedness, and/or (C) make any payment to
Lender in total or partial satisfaction of Guarantor's obligations and
liabilities under this Agreement, each such Guarantor hereby agrees that any and
all rights that Guarantor may have or acquire to collect from or to be
reimbursed by Borrower (or from or by any other guarantor, endorser or surety of
Borrower's Indebtedness), whether Guarantor's rights of collection or
reimbursement arise by way of subrogation to the rights of Lender or otherwise,
shall in all respects, whether or not Borrower is presently or subsequently
becomes insolvent, be subordinate, inferior and junior to the rights of Lender
to collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness is fully paid
and satisfied. So long as no Event of Default as defined in the Loan Agreement
exists, Guarantor may be repaid by Borrower as to any subordinated debt
permitted by the Loan Agreement. In the event of Borrower's insolvency or
consequent liquidation of Borrower's assets, through bankruptcy, by an
assignment
GUARANTY -- PAGE 2 OF 7
3
for the benefit of creditors, by voluntary liquidation, or otherwise,
the assets of Borrower applicable to the payment of claims of both Lender and
Guarantor shall be paid to Lender and shall be first applied by Lender to
Borrower's then remaining Indebtedness. Notwithstanding the foregoing, unless
and until Lender notifies Guarantors of an Event of default pursuant to Section
4(A), each Guarantor may continue to receive from the Borrower any scheduled
payments due under existing indebtedness owed by the Borrower to the Guarantors.
SECTION 6. Covenants Relating to the Indebtedness. No course of dealing
between Lender and Borrower (or any other Guarantor, surety or endorser of
Borrower's Indebtedness), nor any failure or delay on the part of Lender to
exercise any of Lender's rights and remedies, or any other agreement or
agreements by and between Lender and Borrower (or any other Guarantor, surety or
endorser) shall have the affect of impairing or releasing any Guarantor's
obligations and liabilities to Lender or of waiving any of Lender's rights and
remedies. Any partial exercise of any rights and remedies granted to Lender
shall furthermore not constitute a waiver of any of Lender's other rights and
remedies, it being each Guarantor's intent and agreement that Lender's rights
and remedies shall be cumulative in nature. Each Guarantor further agrees that,
should Borrower default under any of Borrower's Indebtedness, any waiver or
forbearance on the part of Lender to pursue the rights and remedies available to
Lender shall be binding upon Lender only to the extent that Lender specifically
agrees to such waiver or forbearance in writing. A waiver or forbearance on the
part of Lender as to one event of default shall not constitute a waiver or
forbearance as to any other default.
SECTION 7. No Release of Guarantor. Each Guarantor's obligations and
liabilities under this Agreement shall not be released, impaired, reduced or
otherwise affected by, and shall continue in full force and effect,
notwithstanding the occurrence of any event, including without limitation any
one or more of the following events:
A. Insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution or
lack of authority (whether corporate, partnership or
trust) of Borrower (or any person acting on Borrower's
behalf), or any other guarantor, surety or endorser of
any of Borrower's Indebtedness;
B. Partial payment or payments of any amount due and/or
outstanding under any of Borrower's Indebtedness;
C. Any payment by Borrower or any other party to Lender is
held to constitute a preferential transfer or a
fraudulent conveyance under any applicable law, or for
any reason, Lender is required to refund such payment
or pay such amount to Borrower or to any other person;
D. Any dissolution of Borrower or any sale, lease or
transfer of all or any part of Borrower's assets;
and/or
GUARANTY -- PAGE 3 OF 7
4
E. Any failure of Lender to notify Guarantor of the
acceptance of this Agreement or of the making of
loans or other extensions of credit in reliance on
this Agreement.
This Agreement and each Guarantor's obligations and liabilities hereunder shall
continue to be effective, and/or shall automatically and retroactively be
reinstated if a release or discharge has occurred, as the case may be, if at any
time any payment or part thereof to Lender with respect to any of Borrower's
Indebtedness is rescinded or must otherwise be restored by Lender pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Borrower or to any other party. In the event that Lender must
rescind or restore any payment received by Lender in satisfaction of Borrower's
Indebtedness, any prior release or discharge from the terms of this Agreement
given to Guarantor shall be without effect, and this Agreement and each
Guarantor's obligations and liabilities hereunder shall automatically be renewed
or reinstated and shall remain in full force and effect to the same degree and
extent as if such a release or discharge was never granted. It is the intention
of Lender and each Guarantor that Guarantor's obligations and liabilities
hereunder shall not be discharged except by Guarantor's full and complete
performance of such obligations and liabilities and then only to the extent of
such performance.
SECTION 8. Representations and Warranties. Each Guarantor
represents and warrants to the Lender that:
A. To the best of its knowledge, the execution and
delivery of this Agreement will not result in any
violation of, or be in conflict with, or constitute a
default under any mortgage, indenture, deed of trust,
security agreement, lease, contract, agreement,
instrument, obligation, judgment, decree, order,
statute, regulation, or rule applicable to such
Guarantor;
B. this Agreement is valid, enforceable, and binding upon
the Guarantor in accordance with its terms, conditions,
and provisions; and
C. each Guarantor has received and reviewed an executed
copy of the Loan Agreement.
SECTION 9. Enforcement of Guarantor's Obligations and Liabilities.
Subject to the provision of Section 4 hereof, each Guarantor agrees that
following the occurrence of an Event of Default as defined in the Loan
Agreement, should Lender deem it necessary to file an appropriate collection
action to enforce Guarantor's obligations and liabilities under this Agreement,
Lender may commence such a civil action against Guarantor without the necessity
of first (i) attempting to collect Borrower's Indebtedness from Borrower or from
any other guarantor, surety or endorser, whether through filing of suit or
otherwise, (ii) attempting to exercise against any collateral directly or
indirectly securing repayment of any of Borrower's Indebtedness, whether through
the filing of an appropriate foreclosure action or otherwise, or (iii) including
Borrower or any other guarantor, surety or endorser of any of Borrower's
Indebtedness as an additional party defendant in such a collection action
against Guarantor. If there is more than one guarantor under this Agreement,
each Guarantor additionally agrees that Lender may file an appropriate
collection and/or enforcement action against any one or more of them, without
impairing the rights of Lender against any other
GUARANTY -- PAGE 4 OF 7
5
Guarantor under this Agreement. In the event that Lender should ever deem it
necessary to refer this Agreement to an attorney-at-law for the purpose of
enforcing Guarantor's obligations and liabilities hereunder, or of protecting or
preserving Lender's rights hereunder, each Guarantor agrees to reimburse Lender
for the reasonable fees of such an attorney. Each Guarantor additionally agrees
that Lender shall not be liable for failure to use diligence in the collection
of any of Borrower's Indebtedness or any collateral security therefor, or in
creating or preserving the liability of any person liable on any such
Indebtedness, or in creating, perfecting or preserving any security for any such
Indebtedness.
SECTION 10. Environmental Condition. Neither Guarantor is obligated
pursuant to this Agreement to remediate any environmental or other condition
located in the Hotel (as defined in the Loan Agreement) or the land on which the
Hotel is located.
SECTION 11. No Changes. Lender shall not alter, change or amend the
Loan Agreement, the Note or the other documents executed by the Borrower and/ or
Lender in connection therewith, without the prior written consent of the
Guarantors.
SECTION 12. Additional Documents. Upon the reasonable request of
Lender, each Guarantor will, at any time, and from time to time, duly execute
and deliver to Lender any and all such further instruments and documents, and
supply such additional information, as may be necessary or advisable in the
opinion of Lender, to further evidence or perfect this Agreement, provided that
the foregoing does not expand the scope of the Guarantors' obligation or limit
Guarantors' rights hereunder.
SECTION 13. Transfer of Indebtedness.
A. This Agreement is for the benefit of Lender and for
such other person or persons as may from time to time
become or be the holders of any of Borrower's
Indebtedness hereby guaranteed and this Agreement shall
be transferrable and negotiable, with the same force
and effect and to the same extent as Borrower's
Indebtedness may be transferrable, it being understood
that, upon the transfer or assignment by Lender of any
of Borrower's Indebtedness hereby guaranteed, the legal
holder of such Indebtedness shall have all of the
rights granted to Lender under this Agreement.
B. Each Guarantor hereby recognizes and agrees that Lender
may, from time to time, one or more times, transfer any
portion (but not all) of Borrower's Indebtedness to one
or more third parties provided that the Lender retains
a portion of the Indebtedness. Such transfers may
include, but are not limited to, sales of a
participation interest in such Indebtedness in favor of
one or more third party lenders, provided that the
Lender remains the lead or agent bank. Each Guarantor
specifically agrees and consents to all such transfers
and assignments and each Guarantor further waives any
subsequent notice of and right to consent to any such
transfers and assignments as may be provided under
applicable Louisiana law. Each Guarantor additionally
agrees that the purchaser of a participation interest
GUARANTY -- PAGE 5 OF 7
6
in Borrower's Indebtedness will be considered as the
absolute owner of a percentage interest of such
Indebtedness and that such a purchaser will have all of
the rights granted to the purchaser under any
participation agreement governing the sale of such a
participation interest.
SECTION 14. Notice. Lender agrees to deliver to each Guarantor a copy
of each and every written notice Lender is required to deliver to Borrower under
the Loan Agreement and the Loan Documents (as that term is defined in the Loan
Agreement). Lender shall deliver such notices to the Guarantors in the manner
required by the Loan Agreement, to the following address:
Lakes Gaming, Inc.
130 Cheshire Lane
Minnetonka, MN 55305
Grand Casinos of Louisiana, LLC. - Tunica-Biloxi
130 Cheshire Lane
Minnetonka, MN 55305.
SECTION 15. Subordination. In the event Guarantors, or any of them,
pays to Lender all sums due under Borrower's Indebtedness up to the Maximum
Amount, then immediately upon such payment, the paying Guarantor or Guarantors,
as the case may be, shall automatically subrogate to any and all rights and
remedies available to Lender against Borrower under the Loan Agreement and the
Loan Documents.
SECTION 16. Miscellaneous.
A. Construction. The provisions of this Agreement shall be in
addition to and cumulative of, and not in substitution, novation or discharge
of, any and all prior or contemporaneous guaranty or other agreements by
Guarantor (or any one or more of them), in favor of Lender or assigned to Lender
by others, all of which shall be construed as complementing each other. Nothing
herein contained shall prevent Lender from enforcing any and all such other
guaranties or agreements in accordance with their respective terms.
B. Amendment. No amendment, modification, consent or waiver of
any provision of this Agreement, and no consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing signed by a
duly authorized officer of Lender, and then shall be effective only to the
specific instance and for the specific purpose for which given.
C. Successors and Assigns Bound. Each Guarantor's obligations
and liabilities under this Agreement shall be binding upon Guarantor's
successors, heirs, legatees, devisees, administrators, executors and assigns.
The rights and remedies granted to Lender under this Agreement shall also inure
to the benefit of Lender's successors and assigns, as well as to any and all
subsequent holder or holders of any of Borrower's Indebtedness subject to this
Agreement.
GUARANTY -- PAGE 6 OF 7
7
D. Caption Headings. Caption headings of the sections of this
Agreement are for convenience purposes only and are not to be used to interpret
or to define their provisions. In this Agreement, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.
E. Governing Law. This Agreement shall be governed and
construed in accordance with the substantive laws of the State of Louisiana.
F. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Agreement
shall be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
G. Consent to Jurisdiction. GUARANTOR HEREBY IRREVOCABLY
CONSENTS TO THE JURISDICTION OF THE STATE COURTS OF LOUISIANA AND THE FEDERAL
COURTS IN LOUISIANA, AND AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR
BROUGHT TO ENFORCE THE PROVISIONS OF THIS AGREEMENT MAY BE BROUGHT IN ANY COURT
HAVING SUBJECT MATTER JURISDICTION.
IN WITNESS WHEREOF, each Guarantor has executed this Agreement
in favor of Lender on the day, month and year first written above.
LAKES GAMING, INC. GRAND CASINOS OF LOUISIANA, LLC. -
TUNICA-BILOXI
By: /s/ Timothy Cope By: /s/ Timothy Cope
---------------------------------- ----------------------------------
Timothy Cope, Chief Financial Officer Timothy Cope, Chief Financial Officer
Date: March 5, 1999 Date: March 5, 1999
ACCEPTED:
THE COTTONPORT NATIONAL BANK
By:
------------------------------
--------------,---------------
Date:
----------------------------
GUARANTY -- PAGE 7 OF 7