**Exhibit 10.2**

 

AssociatedBank

 

PROMISSORY NOTE
| Borrower:  | SOUTHWEST  CASINO AND HOTEL CORP.                 | Lender:    | ** **                                                         | ASSOCIATED BANK MINNESOTA, |
|------------|---------------------------------------------------|------------|--------------------------------------------------------------------|----------------------------|
| ** ** | 2001  KILLEBREW DRIVE #306  MINNEAPOLIS, MN 55425 | ** ** | NATIONAL ASSOCIATION  1801 RIVERSIDE AVENUE  MINNEAPOLIS, MN 55454 | ** **                 |

 
| **Principal Amount:  $450,000.00** | ** ** | **Initial Rate: 6.250%** | ** ** | **Date of Note: January 19,  2005** |
|------------------------------------|------------|--------------------------|------------|-------------------------------------|

 

PROMISETO PAY. SOUTHWEST CASNO AND HOTEL CORP. (“Borrower”) promises to pay to ASSOCIATEDBANK MINNESOTA,+ NATIONAL ASSOCIATION (“Lender), or order, in lawful money ofthe United States of America, the principal amount of Four Hundred FiftyThousand & 00/100 Dollars ($450,000.00) or so much as may be outstanding. Togetherwith**interest on the unpaid outstandingprincipal balance of each advance. Interest shall be calculated from the dateof each advance until repayment of each advance.

 

PAYMENT. Borrower will pay this loan in onepayment of all outstanding principal plus all accrued unpaid interest on April15, 2005. In addition, Borrower will pay regular monthly payments of all accruedunpaid interest due as of each payment date, beginning February 19, 2005, withall subsequent interest payments to be due on the same day of each month afterthat. Unless otherwise agreed or required by applicable law, payments will beapplied first to any accrued unpaid interest; then to principal; and then toany late charges.The annual interest rate for**this Note is computed on a 365/360 basis;that is, by applying the ratio of the annual interest rate over a year of 360days, 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.

 

VARIABLEINTEREST RATE. The interest rate**onthis Note is subject to change from time to time based on changes in an indexwhich is the LENDERS PRIME RATE (the “Index). This is the rate Lender charges,or would charge on short-term unsecured loans to its most creditworthy commercialcustomers. This rate may or may not be the lowest rate available from Lender atany given time. Lender will tell Borrower the current Index rate upon Borrower’srequest. The interest rate change will not occur more often than each DAY.Borrower understands that Lender may make loans based on other rates as well.The index currently is 5.250% per annum. The interest rate to be applied to theunpaid principal balance of this Note will be at a rate of 1.000 percentagepoint over the Index, adjusted if necessary for any minimum and maximum ratelimitations described below, resulting in an initial rate of 6.250% per annum.Notwithstanding the foregoing, the variable interest rate or rates provided forin this Note will be subject to the following minimum and maximum rates.NOTICE: Under no circumstances will the interestrate on this Note be less than 5.000% per annum or more than the maximum rateallowed by applicable law.

 

PREPAYMENT. Borrower may pay withoutpenalty all or a portion of the amount owed earlier than it is due. Earlypayments will not, unless agreed to by Lender in writing, relieve Borrower ofBorrower’s obligation to continue to make payments of accrued unpaidinterest.  Rather, early payments willreduce the principal balance due. Borrower agrees not to send Lender paymentsmarked “paid in full”, “‘without recourse”, or similar language. If Borrowersends such a payment, Lender may accept it without losing any of Lender’srights under this Note, and Borrower will remain obligated to pay any furtheramount owed to Lender.  All writtencommunications concerning disputed amounts, including any check or otherpayment instrument that indicates that the payment constitutes “payment in full”of the amount owed or that is tendered with other conditions or limitations oras full satisfaction of a disputed amount must be mailed or delivered to:ASSOCIATED BANK, P.O. BOX 19097, GREEN BAY, WI 54307-9097.

 

LATE CHARGE.  If a payment is 11days or more late, Borrower will be charged 5.000% of the unpaid portion of theregularly 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 points overthe Index. The interest rate will not exceed the maximum rate permitted byapplicable law.

 

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

 

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

 

                                                          Other Defaults.Borrower fails to comply with or to perform any other term, obligation,covenant or condition contained in this Note or in any of the related documentsor to comply with or to perform any term, obligation, covenant or conditioncontained in any other agreement between Lender and Borrower.

 

 Default in Favor of Third Parties. Borrower orany Grantor defaults under any loan, extension of credit, security agreement,purchase or sales agreement, or any other agreement, in favor of any othercreditor or person that may materially affect any of Borrowers property or Borrower’sability to repay this Note or perform Borrower’s obligations under this Note orany of the related documents.

 

                                                          FalseStatements. Any warranty, representation or statement made or furnished toLender by Borrower or on Borrower’s behalf under this Note or the relateddocuments is false or misleading in any material respect, either now or

 

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atthe time made or furnished or becomes false or misleading at any timethereafter.

 

                                                          Insolvency. Thedissolution or termination of Borrower’s existence as a going business, theinsolvency of Borrower, the appointment of a receiver for any part of Borrower’sproperty, any assignment for the benefit of creditors, any type of creditorworkout, or the commencement of any proceeding under any bankruptcy orinsolvency laws by or against Borrower.

 

Creditor or ForfeitureProceedings.  Commencement of foreclosureor forfeiture proceedings, whether by judicial proceeding, self-help,repossession or any other method, by any creditor of Borrower or by anygovernmental agency against any collateral securing the loan. This includes agarnishment of any of Borrower’s accounts, including deposit accounts, withLender. However, this Event of Default shall not apply if there is a good faithdispute by Borrower as to the validity or reasonableness of the claim which isthe basis of the creditor or forfeiture proceeding and if Borrower gives Lenderwritten notice of the creditor or forfeiture proceeding and deposits withLender monies or a surety bond for the creditor or forfeiture proceeding, in anamount determined by Lender, in its sole discretion, as being an adequate

reserve or bond for thedispute.

 

Events Affecting Guarantor.  Anyof the preceding events occurs with respect to any guarantor, endorser, surety,or accommodation party of any of the indebtedness or any guarantor, endorser,surety, or accommodation party dies or becomes incompetent, or revokes ordisputes the validity of, or liability under, any guaranty of the indebtednessevidenced 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 s impaired.

 

Insecurity. Lender in goodfaith believes itself insecure.

 

LENDER’SRIGHTS. Upon default, Lender may declare the entire unpaid principal balance onthis Note and all accrued unpaid interest immediately due, and then Borrowerwill pay that 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 reasonableattorneys’ fees, expenses for bankruptcy proceedings (including efforts tomodify or vacate any automatic stay or injunction), and appeals. If notprohibited by applicable law, Borrower also will pay any court costs, inaddition to all other 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.

 

DISHONOREDITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes apayment on Borrower’s loan and the check or preauthorized charge with whichBorrower pays is later dishonored.

 

RIGHTOF SETOFF. To the extent permitted by applicable law, Lender reserves a rightof setoff in all Borrower’s accounts with Lender (whether checking, savings, orsome other account). This includes all accounts Borrower holds jointly withsomeone else and all accounts Borrower may open in the future. However, thisdoes not include any IRA or Keogh accounts, or any trust accounts for whichsetoff would be prohibited by law. Borrower authorizes Lender, to the extentpermitted by applicable law, to charge or setoff all sums owing on theindebtedness against any and all such accounts, and, at Lender’s option, toadministratively freeze all such accounts to allow Lender to protect Lender’scharge and setotf rights provided in this paragraph.

 

COLLATERAL.Borrower acknowledges this Mote is secured by all security agreements,guarantees, mortgages, and other security instruments previously granted,contemporaneously granted, and granted in the future.

 

LINEOF CREDIT. This Note evidences a revolving line of credit. Up to the principalamount of this Note and subject to the terms and conditions hereof, Borrowermay borrow, repay, and re-borrow.  Advances under this Note, as well asdirections for payment from Borrower’s accounts, may be requested orally or inwriting by Borrower or by an authorized person. Lender may, but need not,require that all oral requests be confirmed in writing. Borrower agrees to beliable for all sums either: (A) advanced in accordance with the instructions ofan authorized person or (B) credited to any of Borrower’s accounts with Lender.The unpaid principal balance owing on this Note at any time may be evidenced byendorsements on this Note or by Lender’s internal records, including dailycomputer print-outs. Lender will have no obligation to advance funds under thisNote if: (A) Borrower or any guarantor is in default under the terms of thisNote or any agreement that Borrower or any guarantor has with Lender, includingany agreement made in connection with the signing of this Note; (B) Borrower orany guarantor ceases doing business or is insolvent; (C) any guarantor seeks,claims or otherwise attempts to limit, modify or revoke such guarantor’sguarantee of this Note or any other loan with Lender; (D) Borrower has appliedfunds provided pursuant to this Note for purposes other than those authorizedby Lender; or (E) Lender in good faith believes itself insecure.

 

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LETTEROF CREDIT LIMITATION. In the event Lender either contemporaneously or hereafterissues a Letter of Credit on behalf of Borrower (“Credit”), the amount of suchCredit, or the aggregate amount of all such Credits, shall be applied againstthe available credit under this Note. Such limitation on available credit shall continue as long as Lender isobligated under any outstanding Credit.

 

    INITIAL NOTE RATE PROVISiON. The Initial Note Rate is as ofJANUARY 14, 2005.

 

FINANCIALSTATEMENT. Borrower shall furnish to Lender annual financial statements within90 days following the close of Borrower’s fiscal or calendar year, as applicable,and such other financial information respecting Borrower at such times and insuch form as Lender may request from time to time. In addition to being anEvent of Default, Borrower shall pay Lender a $25.00 fee for failure to providethe financial statements within said 90 days or failure to provide such otherfinancial information within 30 days of the request therefore. The $25.00 feeshall continue to be imposed thereafter for each additional 30 day period orpart thereof, that the financial statements or other financial information havenot been 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.

 

OTHERLOAN AGREEMENTS. If Borrower and Lender have either previously orcontemporaneously entered into a Loan Agreement, it is agreed that this Note issubject to the terms and conditions of such Loan Agreement. For purposes ofthis provision, Loan Agreement shall include, but not be limited to, a BusinessLoan Agreement, Agricultural Loan Agreement, Construction Loan Agreement, anyother LASER PRO Loan Agreement, and/or any attorney drafted lending agreement.

 

SUCCESSORINTERESTS. The terms of this Note shall be binding upon Borrower, and uponBorrower’s heirs, personal representatives, successors and assigns, and shallinure to the benefit of Lender and its successors and assigns.

 

GENERALPROVISIONS. Lender may delay or forgo enforcing any of its rights or remediesunder this Note without losing them. Borrower and any other person who signs, guaranteesor endorses this Note, to the extent allowed by law, waive presentment, demandfor payment, 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(repeatedly and for any length of time) this loan or release any party orguarantor or collateral; or impair, fail to realize upon or perfect Lender’ssecurity interest in the collateral; and take any other action deemed necessaryby Lender without the consent of or notice to anyone. All such parties alsoagree that Lender may modify this loan without the consent of or notice toanyone other than the party with whom the modification is made. The obligationsunder this Note are joint and several.

 

                                                          SECTIONDISCLOSURE. This loan is made under Minnesota Statutes, Section 48.1 95.

 

PRIORTO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THISNOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THETERMS OF THE NOTE.

 

BORROWERACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER:

 

 

SOUTHWESTCASINO AND HOTEL CORP.

 

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

 

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