EXHIBIT 10.174
EXECUTION VERSION
THIRD AMENDED AND RESTATED LAKES DEVELOPMENT NOTE
$46,000,000 January 25, 2006
Dowagiac, Michigan
FOR VALUE RECEIVED, the Pokagon Band of Potawatomi Indians (the "Band")
promises to pay to Great Lakes Gaming of Michigan, LLC, a Minnesota limited
liability company ("Lakes"), such sums as may be advanced by Lakes to the Band
in accordance with Sections 8.4 and 9.2.1 of a Development Agreement between the
Band and Lakes Entertainment, Inc., f/k/a Lakes Gaming, Inc. dated as of July 8,
1999, (as assigned by Lakes Entertainment, Inc. to and assumed by Lakes pursuant
to that certain Assignment and Assumption Agreement dated as of October 16, 2000
by and among the Band, Lakes Entertainment, Inc. and Lakes, and amended by a
Second Amended and Restated Assignment and Assumption Agreement of even date
hereof (the "Assignment Agreement")); and as amended and restated by a First
Amended and Restated Development Agreement dated as of October 16, 2000, a
Second Amended and Restated Development Agreement dated as of December 22, 2004,
and a Third Amended and Restated Development Agreement of even date hereof
(collectively, and as heretofore and hereafter further amended, substituted,
restated and modified, the "Development Agreement"); provided that the principal
amount due hereunder shall not exceed Forty-Six Million Dollars ($46,000,000.00)
except as otherwise provided in Section 9.2.1(a) of the Development Agreement.
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, (b) through a Draw Request approved by the Band pursuant to the
Control Agreement, (c) through other written requests by the Band to Lakes
permitted by the Development Agreement or any applicable Transaction Document,
or (d) through advances by Lakes to the Enterprise Bank Accounts to pay
Development Expenditures in accordance with either (I) the Approved Development
Budget or, prior to the adoption of the Approved Development Budget, the
approval of the Business Board or the Band; and (II) the Development Agreement.
Draw Requests submitted by the Band shall be sent in accordance with Section
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 or otherwise under the Development Agreement, 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 "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.
I. If the Commencement Date occurs, the Band shall repay the amount
of principal and accrued interest outstanding hereunder as of the
Commencement Date monthly in arrears, beginning on the 15th day
of the month after the month in which the Commencement Date
occurs, in equal monthly payments of principal and interest in an
amount sufficient to amortize such principal and accrued interest
over (a), if pursuant to the Development Agreement the term of
the Lakes Development Loan is seven (7) years, the successive
eighty-four months of that term; or (b), if pursuant to the
Development Agreement the term of the Lakes Development Loan is
five (5) years, the successive 60 months of that term; and, if
not sooner paid, in full at the end of the Term (except as
provided in Section 13.7 of the Development Agreement).
II. 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 the sources specified in Sections
14.3 and 14.4 of the Development Agreement. If Gaming commences
at a Subsequent Gaming 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
2
(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 promptly notify the Band in writing of any
changes in the Base Rate and in the installment payment due.
4. Prepayment. This Note may be prepaid at any time without penalty. This
Note shall also be subject to prepayment as and when required under the terms of
any Transaction Documents.
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 to the extent provided in
the Development Agreement or, if the Commencement Date does not occur, or to any
loans relating to any other Gaming facility in Michigan owned by the Band to the
extent provided in the Development Agreement. The holder of this Note agrees to
execute and deliver subordination agreements evidencing such subordination in
form reasonably acceptable to the holder and the Bank Lender, the Equipment
Lender, or any other third-party lender or equipment lessor.
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
the limited assets of the Band specified in the definition of Limited Recourse
and Section 14.3(a) of 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 Agreement and consents to be sued in the United States District
Court 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
3
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 the limited
assets of the Band specified in the definition of Limited Recourse and Section
14.3(a) of the Development Agreement. 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. This Note shall be interpreted and construed in
accordance with Michigan law, to the extent not preempted by federal law. Use of
Michigan law for the foregoing limited purpose of interpretation and
construction is not intended by the parties to and shall not otherwise (i)
incorporate substantive Michigan laws or regulations, including but not limited
to Michigan usury laws or any other present or future provision of the laws of
Michigan that would restrict the rate of interest upon any loan contemplated
hereunder; or (ii) grant any jurisdiction to the State or any political
subdivision thereof over the Gaming Site or the Facility.
11. Notices. All notices under this Note shall be given in accordance with
Section 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, as amended.
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.
4
c. Waiver of any one default shall not cause or imply a waiver any
subsequent default.
d. This Note, together with the documents listed in Section 15.17 of
the Development Agreement, as each has been amended to date, 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.
e. This Note has been executed and delivered as a complete amendment
and restatement in its entirety of that certain Lakes Note dated as of
July 8, 1999 made payable by the Band to Lakes Entertainment, Inc.,
f/k/a Lakes Gaming, Inc., in the original principal amount of
$43,000,000, as assigned by Lakes Entertainment, Inc., f/k/a Lakes
Gaming, Inc to Lakes pursuant to the Assignment Agreement and as
amended and restated by a First Amended and Restated Lakes Development
Note dated as of October 16, 2000 and a Second Amended and Restated
Lakes Development Note dated as of December 22, 2004, but does not
extinguish, satisfy, discharge or constitute a novation thereof, and
the Band hereby reaffirms, subject to the provisions of this Note, the
indebtedness evidenced thereby. Lakes agrees to return to the Band the
original Lakes Note dated as of July 8, 1999, the original First
Amended and Restated Development Note dated as of October 16, 2000 and
the original Second Amended and Restated Development Note dated as of
December 22, 2004.
f. Any other provision of this Note to the contrary notwithstanding:
(i) in no event shall the rate of interest payable under this Note
exceed the maximum rate permitted by law (the "Legal Rate"); (ii) if
at any time the rate of interest computed as provided above (the
"Computed Rate") exceeds the Legal Rate, then interest shall accrue
thereafter at the Legal Rate regardless of whether the Computed Rate
is greater or less than the Legal Rate until the total amount of
interest payable hereunder equals the amount that would have been
payable without regard to this sentence, or until this Note is paid in
full, whichever occurs first; and (iii) if the holder receives any
interest in excess of the maximum rate permitted by this sentence, the
excess shall be credited against the principal hereof or refunded, at
the holder's option.
5
THE POKAGON BAND OF POTAWATOMI INDIANS
By: /s/ John Miller
------------------------------------
Its Council Chairman
By: /s/ Daniel Rapp
------------------------------------
Its Secretary
6
EXHIBIT A
DRAW REQUEST
The Pokagon Band of Potawatomi Indians (the "Band") requests that Great
Lakes Gaming of Michigan, LLC ("Lakes") advance $_______________ under the Lakes
Development Note. The Band certifies that the amounts drawn under this Request
will be used for purposes set out in Section 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
------------------------------
BY:
------------------------------------
Its Council Chairman
By:
------------------------------------
Its Secretary
[or other persons designated by the Band pursuant to the Development
Agreement]
7