TRANSITION LOAN NOTE
$7,500,000 July 8, 1999 Dowagiac, Michigan
FOR VALUE RECEIVED, The Pokagon Band of Potawatomi Indians (the "Band") promises to pay to LAKES
GAMING, INC., a Minnesota corporation ("Lakes"), such sums as may be advanced by Lakes to the Band
under Section 8.3 of a Development Agreement between the Band and Lakes dated as of July 8, 1999 (the
"Development Agreement"); provided that the principal amount due hereunder shall not exceed Seven Million
Five Hundred Thousand Dollars ($ 7,500,000.00).
1. Advances. 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 disbursement from the Escrow Account, and shall not begin to accrue on deposit by Lakes into the
2. Interest. No interest shall accrue on amounts outstanding hereunder until two years after the date hereof.
Beginning on the second annual anniversary of the date hereof, interest shall begin accruing on the outstanding
balance 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").
If the Bank Closing occurs after the second annual anniversary of the date hereof, 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 Journ