**Exhibit10.1**

 

**Associated Bank**

**PROMISSORY NOTE**
| **Borrower:** | **SOUTHWEST  CASINO AND HOTEL CORP.  2001 KILLEBREW DRIVE #350  MINNEAPOLIS, MN 55425** | **Lender:** | **ASSOCIATED  BANK MINNESOTA, NATIONAL ASSOCIATION  1801 RIVERSIDE AVENUE  MINNEAPOLIS, MN 55454** |
|---------------|-----------------------------------------------------------------------------------------|-------------|----------------------------------------------------------------------------------------------------|

 
| **Principal Amount: $500,000.00** | **Initial  Rate: 5.750%** | **Date of Note: October 12, 2004** |
|-----------------------------------|---------------------------|------------------------------------|

 

 

PROMISE TO PAY. SOUTHWESTCASINO AND HOTEL CORP. (“Borrower”) promises to pay to ASSOCIATED BANKMINNESOTA, NATIONAL ASSOCIATION (“Lender”), or order, in lawful money of theUnited States of America, the principal amount of Five Hundred Thousand &00/100 Dollars ($500,000.00) or so much as may be outstanding, together withinterest on the unpaid outstanding principal balance of each advance.  Interest shall be calculated from the date ofeach advance until repayment of each advance.

 

PAYMENT. Borrower will paythis loan in accordance with the following payment schedule:

 

Subject to any paymentchanges resulting from changes in the Index, Borrower will pay this loan in 12payments of $42,993.86 each payment. Borrower’s first payment is due NOVEMBER12, 2004, and all subsequent payments are due on the same day of each monthafter that. Borrower’s final payment will be due on OCTOBER 12, 2005, and willbe for all principal and accrued interest not yet paid. Payments includeprincipal and interest.

 

Unless otherwise agreed orrequired by applicable law, payments will be applied first to any accruedunpaid interest; then to principal; and then to any late charges. The annualinterest rate for this Note is computed on a 365/360 basis; that is, byapplying the ratio of the annual interest rate over a year of 360 days,multiplied by the outstanding principal balance, multiplied by the actualnumber of days the principal balance is outstanding. Borrower will pay Lenderat Lender’s address shown above or at such other place as Lender may designatein writing.

 

VARIABLE INTEREST RATE. Theinterest rate on this Note is subject to change from time to time based onchanges in an index which is the Lenders Prime Rate (the “Index’). This is therate Lender charges, or would charge, on short-term unsecured loans to its mostcreditworthy commercial customers. This rate may or may not be the lowest rateavailable from Lender at any given time. Lender will tell Borrower the currentIndex rate upon Borrower’s request. The interest rate change will not occurmore often than each DAY. Borrower understands that Lender may make loans basedon other rates as well. The Index currently is 4.750% per annum. The interestrate to be applied to the unpaid principal balance of this Note will be at arate of 1.000 percentage point over the Index, adjusted if necessary for anyminimum and maximum rate limitations described below, resulting in an initialrate of 5.750% per annum. Notwithstanding the foregoing, the variable interestrate or rates provided for in this Note will be subject to the followingminimum and maximum rates. NOTICE: Under no circumstances will the interestrate on this Note be less than 5.750% per annum or more than the maximum rateallowed by applicable law.

 

PREPAYMENT. Borrower agrees that all loan fees and other prepaid financecharges are earned fully as of the date of the loan and will not be subject torefund upon early payment (whether voluntary or as a result of default), exceptas otherwise required by law. Except for the foregoing, Borrower may paywithout penalty all or a portion of the amount owed earlier than it is due.Early payments will not, unless agreed to by Lender in writing, relieveBorrower of Borrower’s obligation to continue to make payments of accruedunpaid interest. Rather, early payments will reduce the principal balance due.Borrower agrees not to send Lender payments marked “paid in full”, “withoutrecourse”, or similar language. If Borrower sends such a payment, Lender mayaccept it without losing any of Lender’s rights under this Note, and Borrowerwill remain obligated to pay any further amount owed to Lender.  All written communications concerning disputedamounts, including any check or other payment instrument that indicates thatthe payment constitutes “payment in full” of the amount owed or that istendered with other conditions or limitations or as full satisfaction of adisputed amount must be mailed or delivered to: ASSOCIATED BANK, P.O. BOX19097, GREEN BAY, WI 54307-9097.

 

LATE CHARGE. If a payment is 11 days or more late, Borrower will becharged 5.000% of the unpaid portion of the regularly scheduled payment.

 

INTEREST AFTER DEFAULT. Upon default, including failure to pay uponfinal maturity, Lender, at its option, may, if permitted under applicable law,increase the variable interest rate on this Note to 6.000 percentage pointsover the Index. The interest rate will not exceed the maximum rate permitted byapplicable law.

 

DEFAULT. Each of the following shall constitute an event of default (“Eventof Default”) under this Note:

 

Payment Default. Borrowerfails to make any payment when due under this Note.

 

Other Defaults. Borrowerfails to comply with or to perform any other term, obligation, covenant orcondition contained in this Note or in any of the related documents or tocomply with or to perform any term, obligation, covenant or condition containedin any other agreement between Lender and Borrower.

 

Default in Favor of ThirdParties. Borrower or any Grantor defaults under any loan, extension of credit,security agreement,

 

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purchase or sales agreement,or any other agreement, in favor of any other creditor or person that maymaterially affect any of Borrower’s property or Borrower’s ability to repaythis Note or perform Borrower’s obligations under this Note or any of therelated documents.

 

False Statements. Anywarranty, representation or statement made or furnished to Lender by Borroweror on Borrower’s behalf under this Note or the related documents is false ormisleading in any material respect, either now or at the time made or furnishedor becomes false or misleading at any time thereafter.

 

Insolvency. The dissolutionor termination of Borrower’s existence as a going business, the insolvency ofBorrower, the appointment of a receiver for any part of Borrower’s property,any assignment for the benefit of creditors, any type of creditor workout, orthe commencement of any proceeding under any bankruptcy or insolvency laws byor against Borrower.

 

Creditor or ForfeitureProceedings. Commencement of foreclosure or forfeiture proceedings, whether byjudicial proceeding, self-help, repossession or any other method, by anycreditor of Borrower or by any governmental agency against any collateralsecuring the loan. This includes a garnishment of any of Borrower’s accounts,including deposit accounts, with Lender. However, this Event of Default shallnot apply if there is a good faith dispute by Borrower as to the validity orreasonableness of the claim which is the basis of the creditor or forfeitureproceeding and if Borrower gives Lender written notice of the creditor orforfeiture proceeding and deposits with Lender monies or a surety bond for thecreditor or forfeiture proceeding, in an amount determined by Lender, in itssole discretion, as being an adequate reserve or bond for the dispute.

 

EventsAffecting Guarantor. Any of the preceding events occurs with respect to anyGuarantor of any of the indebtedness or any Guarantor dies or becomesincompetent, or revokes or disputes the validity of, or liability under, anyguaranty of the indebtedness evidenced by this Note.

 

ChangeIn Ownership. Any change in ownership of twenty-five percent (25%) or more ofthe common stock of Borrower.

 

Adverse Change. A materialadverse change occurs in Borrower’s financial condition, or Lender believes theprospect of payment or performance of this Note is impaired.

 

Insecurity. Lender in goodfaith believes itself insecure.

 

LENDER’S RIGHTS. Upondefault, Lender may declare the entire unpaid principal balance on this Noteand all accrued unpaid interest immediately due, and then Borrower will paythat amount.

 

ATTORNEYS’ FEES; EXPENSES.Lender may hire or pay someone else to help collect this Note if Borrower doesnot pay. Borrower will pay Lender that amount. This includes, subject to anylimits under applicable law, Lender’s reasonable attorneys’ fees and Lender’slegal expenses, whether or not there is a lawsuit, including reasonable attorneys’fees, expenses for bankruptcy proceedings (including efforts to modify orvacate any automatic stay or injunction), and appeals. If not prohibited byapplicable law, Borrower also will pay any court costs, in addition to allother sums provided by law.

 

JURY WAIVER. Lender andBorrower hereby waive the right to any jury trial in any action, proceeding, orcounterclaim brought by either Lender or Borrower against the other.

 

GOVERNING LAW. This Note willbe governed by, construed and enforced in accordance with federal law and thelaws of the State of Minnesota. This Note has been accepted by Lender in theState of Minnesota.

 

DISHONORED ITEM FEE. Borrowerwill pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower’sloan and the check or preauthorized charge with which Borrower pays is laterdishonored.

 

RIGHT OF SETOFF. To theextent permitted by applicable law, Lender reserves a right of setoff in allBorrower’s accounts with Lender (whether checking, savings, or some otheraccount). This includes all accounts Borrower holds jointly with someone elseand all accounts Borrower may open in the future. However, this does notinclude any IRA or Keogh accounts, or any trust accounts for which setoff wouldbe prohibited by law. Borrower authorizes Lender, to the extent permitted byapplicable law, to charge or setoff all sums owing on the indebtedness againstany and all such accounts, and, at Lender’s option, to administratively freezeall such accounts to allow Lender to protect Lender’s charge and setoff rightsprovided in this paragraph.

 

COLLATERAL. Borroweracknowledges this Note is secured by all security agreements, guarantees,mortgages, and other security instruments previously granted, contemporaneouslygranted, and granted in the future.

 

LINE OF CREDIT. This Noteevidences a straight line of credit. Once the total amount of principal hasbeen advanced, Borrower is not entitled to further loan advances. Advancesunder this Note, as well as directions for payment from Borrower’s accounts,may be requested orally or in writing by Borrower or by an authorized person.Lender may, but need not, require that all oral requests be confirmed inwriting. Borrower agrees to be liable for all sums either: (A) advanced inaccordance with the instructions of an authorized person or (B) credited to anyof Borrower’s accounts with Lender. The unpaid principal balance owing on thisNote at any time may be evidenced by endorsements on this Note or by Lender’sinternal records, including daily computer print-outs. Lender will have noobligation to advance funds under this Note if: (IA) Borrower or any guarantoris in default under the terms of this Note or any agreement that Borrower orany guarantor has with Lender, including any agreement made in connection withthe signing of this Note; (B) Borrower or any guarantor ceases doing businessor is insolvent; (C) any guarantor seeks, claims or otherwise attempts tolimit, modify or revoke such guarantor’s guarantee of this Note or any otherloan with Lender; (D) Borrower has applied funds provided pursuant to this Notefor purposes other than those authorized by Lender;

 

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or (E) Lender in good faithbelieves itself insecure.

 

LETTER OF CREDIT LIMITATION.In the event Lender either contemporaneously or hereafter issues a Letter ofCredit on behalf of Borrower (“Credit”), the amount of such Credit, or theaggregate amount of all such Credits, shall be applied against the availablecredit under this Note.  Such limitationon available credit shall continue as long as Lender is obligated under anyoutstanding Credit.

 

INITIAL NOTE RATE PROVISION.The Initial Note Rate is as of OCTOBER 12, 2004.

 

FINANCIAL STATEMENT. Borrowershall furnish to Lender annual financial statements within 90 days followingthe close of Borrower’s fiscal or calendar year, as applicable, and such otherfinancial information respecting Borrower at such times and in such form asLender may request from time to time. In addition to being an Event of Default,Borrower shall pay Lender a $25.00 fee for failure to provide the financialstatements within said 90 days or failure to provide such other financialinformation within 30 days of the request therefore. The $25.00 fee shallcontinue to be imposed thereafter for each additional 30 day period or partthereof, that the financial statements or other financial information have notbeen provided to Lender. If Borrower does not reimburse Lender for the feesimposed by this section on demand therefore, Lender may add the fees to theloan balance outstanding.

 

OTHER LOAN AGREEMENTS. IfBorrower and Lender have either previously or contemporaneously entered into aLoan Agreement, it is agreed that this Note is subject to the terms andconditions of such Loan Agreement. For purposes of this provision, LoanAgreement shall include, but not be limited to, a Business Loan Agreement,Agricultural Loan Agreement, Construction Loan Agreement, any other LASER PROLoan Agreement, and/or any attorney drafted lending agreement.

 

SUCCESSOR INTERESTS. Theterms of this Note shall be binding upon Borrower, and upon Borrower’s heirs,personal representatives, successors and assigns, and shall inure to thebenefit of Lender and its successors and assigns.

 

GENERAL PROVISIONS. Lendermay delay or forgo enforcing any of its rights or remedies under this Notewithout losing them. Borrower and any other person who signs, guarantees orendorses this Note, to the extent allowed by law, waive presentment, demand forpayment, and notice of dishonor. Upon any change in the terms of this Note, andunless otherwise expressly stated in writing, no party who signs this Note,whether as maker, guarantor, accommodation maker or endorser, shall be releasedfrom liability. All such parties agree that Lender may renew or extend (repeatedlyand for any length of time) this loan or release any party or guarantor orcollateral; or impair, fail to realize upon or perfect Lender’s securityinterest in the collateral; and take any other action deemed necessary byLender without the consent of or notice to anyone. All such parties also agreethat Lender may modify this loan without the consent of or notice to anyoneother than the party with whom the modification is made. The obligations underthis Note are joint and several.

 

SECTION DISCLOSURE. This loan is made under Minnesota Statutes, Section48.195.

 

 

PRIOR TO SIGNING THIS NOTE,BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. INCLUDING THEVARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPTOF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

 

BORROWER:

 

 

   SOUTHWEST CASINO AND HOTEL CORP.

 

 
| By:    |                                       |
|--------|--------------------------------------------|
|   | THOMAS E. FOX, Chief  Financial Officer of |
|   | SOUTHWEST CASINO AND HOTEL  CORP.          |

 

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