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Loan Participation Agreement

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Sectors: Leisure and Entertainment
Governing Law: North Dakota, View North Dakota State Laws
Effective Date: June 28, 1996
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PARTICIPATION AGREEMENT


THIS AGREEMENT made as of June 28, 1996, by and between BNC National Bank (the "Originator'), and Casino Magic American Corp. (the "Participant"),


WITNESSETH


WHEREAS, the Originator has granted the Sisseton-Wahpeton Sioux Tribe (the "Borrower"), a line of credit and term loan of up to $17,500,000 to construct and operate a gaming facility on the Lake Traverse Reservation in North Dakota, which is evidenced by a Construction and Term Loan Agreement, a Promissory Note, a Security Agreement and a Depository Agreement (collectively called the "Credit Agreement"), copies of which have been provided to the Participant, and


WHEREAS, the Originator and the Participant have agreed that the Participant shall participate in the loans under the Credit Agreement upon the following terms and conditions,


NOW, THEREFORE, in consideration of the premises of and of the mutual agreements herein made, the Originator and the Participant hereby agree that:


1.(a) The Participant shall be obligated to purchase a participation in each advance under the Credit Agreement in an amount equal to its Percentage of such advance, up to a maximum amount equal to its Commitment. The Participant's "Percentage" and "Commitment" shall be as set forth on Exhibit A hereto. Except as provided in paragraph 7 and in subparagraphs (b) and (c), the Participant shall be entitled to its Percentage of each payment (whether of principal, interest, late fees, prepayment premiums, or otherwise) received from the Borrower and of any proceeds of the disposition of collateral.


THIS LOAN PARTICIPATION CONSTITUTES A SALE OF A PERCENTAGE OWNERSHIP INTEREST IN THE REFERENCED INDEBTEDNESS, AND, COLLATERAL SECURITY AND IN THE "LOAN DOCUMENTS" (AS DEFINED BELOW) AND SHALL NOT BE CONSTRUED AS AN EXTENSION OF CREDIT BY THE PARTICIPANT TO THE ORIGINATOR.


(b) Each payment received from the Borrower and all proceeds of the disposition of any collateral shall (after making allowance for expenses, as provided in paragraph 7) be applied first to the payment of interest payable under the Credit Agreement next to the payment of late fees, next to payment of the principal of the advances, and finally to the payment of prepayment premiums. The Participant shall be entitled to receive interest on its participation at a rate of 10% per annum (13% per annum following the occurrence and during the continuance of any Event of Default as defined in the Credit Agreement), computed based on actual days elapsed in a 360-day year. The Originator shall be entitled to retain for its own account all interest in excess of the interest payable to Participant and other participants.


(c) The initial advance under the Credit Agreement will include amounts required to pay origination and placement fees to which the Borrower has agreed. The Participant and each other participant shall be entitled to receive at the time of the first advance an amount equal to its "Origination Fees," set forth on Exhibit A hereto, and the Originator shall be entitled to retain for its own account all additional amounts advanced to the Borrower to pay origination and placement fees.


2. The Originator warrants that it has provided to the Participant true copies of the Construction and Term Loan Agreement, the Note, the Security Agreement and the Depository Agreement, and that originals or true copies of all other materials pertinent to the Credit Agreement, including all certificates, filings and other instruments, agreements and writings issued or presented in connection therewith (the "Loan Documents") are available for inspection by the Participant at the Originator's Bismarck, North Dakota office, and that it will provide all material financial information concerning the Borrower to the Participant upon receipt, so long as the Participant has any interest in loans under this Participation Agreement. The Participant acknowledges its approval, as to form and content, of the Credit Agreement and the other Loan Documents which have been made available for its inspection.


3. Neither the Originator nor the Participant (i) shall be liable or responsible for representations or warranties made by, or for obligations binding upon or assumed by, the Borrower or anyone else; or (ii) makes any representation or warranty as to the genuineness, legality, validity, perfection, priority, enforceability or sufficiency of the loans under the Credit Agreement; or of any other collateral rights and remedies securing such loans; or of any of the Loan Documents or any other agreement made or instrument, document or writing issued thereunder, in connection therewith, or as a result thereof; or (iii) makes any representation or warranty as to the Borrower, as to any financial statements or collateral reports submitted by or for the Borrower, as to any risk of loss with respect to this transaction or as to any matter whatsoever, except that the Originator warrants to the Participant that it has good title to the participating interest acquired by the Participant hereunder; or (iv) shall have any right of recourse against the other party hereto.


4.(a) The Originator will notify the Participant by 12:30 p.m. Bismarck, North Dakota time, on the same day upon which an advance is to be made to the Borrower under the Credit Agreement of the amount of the requested advance and the amount of the Participant's Percentage of s
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