**Exhibit 10.1**

** **

**PROMISSORYNOTE**

 

| **$5,000,000.00** |   | Las  Vegas, Nevada          |
|-------------------|--------|-----------------------------|
|              |   | Dated:  March 13, 2002 |

** **

**FORVALUE RECEIVED**,**PDS GAMING CORPORATION**, aMinnesota corporation (“***PDS***”),**PDS GAMING CORPORATION-NEVADA**, aNevada corporation (“***PDS-NV***”),**PDS GAMING CORPORATION-MISSISSIPPI**,a Mississippi corporation (“***PDS-MS***”), and **PDSGAMING CORPORATION-COLORADO**, a Colorado corporation (“***PDS-CO***”) jointly andseverally (PDS, PDS-NV, PDS-MS and PDS-CO are collectively referred to hereinas the “***Undersigned***”),agree and promise to pay to the order of **FIRSTSAVINGS BANK** (the “***Lender***”), its endorsees, successors, participants andassigns (collectively, the “***Holder***”), at its principal office at 201 North 3rd Street,Beresford, South Dakota 57004, or at such other place as the Holder may fromtime to time designate, the principal sum of **FiveMillion and 00/100 Dollars****($5,000,000.00)**or so much as may from time to time be disbursed hereon in accordance with theterms of the Loan Agreement, together with interest on the Principal Balance atthe rate of interest hereinafter set forth, in coin or currency, which, at thetime or times of payment, is legal tender for the payment of public and privatedebts in the United States of America. The terms of this Note shall be read to the extent possible in a mannerconsistent with the terms of the Loan Agreement (defined below), but in thecase of a conflict between the terms of this Note and the Loan Agreement, theterms of this Note shall control.  ThisNote shall be payable in the following manner and on all the following termsand at the following times:

**1.     DEFINITIONS.**  For purposes of this Note the following terms shall have thefollowing meanings:

**a.    **“***Default***” shall havethe meaning given to such term in Section 11 below.

**b.    **“***Default Rate***” shallhave the meaning given to such term in Section 3(b) below.

**c.    **“***Installment Payment Date***”shall have the meaning given to such term in Section 7 below.

**d.    **“***Loan***” shall mean theLoan defined in the Loan Agreement, evidenced by the Note.

**e.    **“***Loan Agreement***” shallmean the Master Loan Agreement of even date entered into between theUndersigned, as Borrower, and Lender, wherein Lender has agreed to loan to theUndersigned the Principal of this Note subject to compliance with the terms andconditions of such agreement.

**f.     **“***Maturity Date***” shallmean **April 1, 2005**.

**g.    **“***Note***” shall mean thisNote and any other promissory note evidencing the Loan.

 

----

 

**h.    **“***Principal Balance***”shall mean the Principal from time to time outstanding and unpaid on this Note.

**i.     **“***Participation Agreement***”shall mean the Loan Participation and Servicing Agreement of even date herewithbetween Lender and all Buyers, as such term is defined in the ParticipationAgreement, as the same may be amended or supplemented from time to time inaccordance with its terms.

**j.     **“***Required Payment Amount***”shall have the meaning given to such term in the Loan Agreement.

Terms not defined herein or elsewhere in thisNote shall have the same meaning as defined in the Loan Agreement.

**2.     DISBURSEMENTS.**  Disbursements under this Note are to be made pursuant to theterms and conditions of the Loan Agreement.

**3.     INTERESTRATE.**  The Principal Balance of this Noteoutstanding at the close of each day shall bear interest at the following perannum rates of interest:

**a.     Loan Rate.**  From and after the date of the initialadvance, this Note shall bear interest at a definite and certain per annum rateof interest equal to **eight and one quarterpercent (8.25%)**.

**b.     Default Rate.**  If a Default (as later defined) occurs underthis Note then, at the option of the Holder hereof, during the entire periodduring which such Default shall occur and be continuing interest shall bepayable on the Principal Balance at a per annum rate of interest equal to thelesser of (i) the maximum lawful rate of interest permitted to be paid on thisNote or (ii) Four Percent (4.00%) plus the Loan Rate (“***Default Rate***”)whether or not the Holder has exercised its option to accelerate the maturityof this Note and declare the entire Principal Balance due and payable.

**4.     BASISOF COMPUTATION.**  Interest shall be computed and charged onthe basis the actual number of days elapsed and a 365/360 day year.  Interest shall commence as to the PrincipalBalance as such Principal Balance is advanced.

**5.     LATECHARGE.**  In the event that any payment requiredhereunder is not paid when due, the Undersigned agrees to pay a late charge of$.05 per $1.00 of unpaid payment to defray the costs of the Holder incident tocollecting such late payment.  This latecharge shall apply individually to all payments past due and there will be nodaily pro rata adjustment.  Thisprovision shall not be deemed to excuse a late payment or be deemed a waiver ofany other rights the Holder may have including the right to declare the entirePrincipal Balance and interest immediately due and payable.

**6.     TERMSOF PAYMENT.**  This Note shall be payable as follows:

**a.    **Beginning on **May 1, 2002**, and on the first day of eachcalendar month thereafter (each an “***Installment Payment Date***”) monthly installmentsof principal and interest shall be due and payable until this Note is paid infull.  Each monthly payment shall be inan 

 

2

----

 

amountequal to the monthly amount necessary to fully amortize the then outstandingPrincipal Balance and accrued interest under this Note in equal monthlyinstallments by the Maturity Date.

**b.    **The PrincipalBalance shall be payable on the earlier to occur of the following:

**i.             **The MaturityDate; or

**ii.           **Such earlierdate as to which payment shall have been accelerated by virtue of he occurrenceof an Event of Default hereunder; or

**iii.          **The InstallmentPayment Date next following the Installment Payment Date on which the PrincipalBalance declines below $25,000.00;

at which time the entire Principal Balance andall accrued and unpaid interest thereon, and all other charges payable pursuantto the terms hereof shall in any event be fully due and payable.

**7.     APPLICATIONOF PAYMENTS.**  So long as a Default does not exist, allpayments shall be applied first to any costs of collection, then to latecharges, then to interest and then to the Principal Balance, and all accruedunpaid interest thereon, except that if any advance made by Lender on behalf ofthe Holder under the terms of any instruments securing this Note is not repaid,any monies received, at the option of Lender, may first be applied to repaysuch advances, plus interest hereon, and the balance, if any, shall be appliedas above.  If a Default exists, Lendermay apply any payments received on this Note to the Principal Balance,interest, late charges or other amounts due from the Undersigned in such orderas Lender, in its sole discretion shall determine.

**8.     PREPAYMENT.**  At the option of the Borrower, the Principal Balance of the Loanmay be prepaid in whole or in part, at any time after the first year, withoutpenalty.  Any prepayment shall be madeon thirty (30) days advance written notice to Lender and shall be made only onan Installment Payment Date and any partial prepayment shall be made indenominations of no less than $25,000.00. Such partial prepayments shall be applied to the Principal Balance ininverse order of installment payment dates. No prepayment shall postpone the due dates of monthly installmentpayments.  Amounts paid or prepaid underthis Note may not be reborrowed.  Aftera prepayment, the then outstanding Principal Balance and accrued interest willbe reamortized over the period remaining between the date of the prepayment andthe Maturity Date.

**9.         SECURITY.**  The payment and performance of this Note issecured by the Security Agreement and other security instruments each of evendate herewith given by the Undersigned to the Lender, each encumbering certainassets of the Undersigned.

**10.      DEFAULT.**  If (i) a default be made in any payment when due in accordancewith the terms and conditions of this Note, (ii) an Event of Default (asdefined herein and therein) occurs under this Note, or (iii) an Event ofDefault (as defined therein) occurs under the Loan Agreement (any of the eventsdescribed in clauses (i), (ii), and (iii) above are herein singularly andcollectively referred to as a “***Default***”), the entire Principal Balance together withaccrued interest thereon and late charges, if any, shall become immediately dueand payable at the option of Lender, exercised as provided for in theParticipation Agreement.

 

3

----

 

**11.      TIMEOF ESSENCE.**  Time is of the essence.  No delay or omission on the part of theHolder or Lender in exercising any right hereunder shall operate as a waiver ofsuch right of any other remedy under the Loan Agreement or this Note.  A waiver on any one occasion shall not beconstrued as a bar to or waiver of any such right or remedy on a future occasion.

**12.      COSTSOF COLLECTION.**  In the event of any Default hereunder theUndersigned agrees to pay the costs of collection including court costs,arbitration proceedings, and reasonable attorney’s fees (prior to trial, attrial, and on appeal) incurred by Lender in collecting the indebtedness securedhereby, or in exercising or defending, or obtaining the right to exercise, therights of Lender or any Participant hereunder or under any of the LoanDocuments (as defined in the Loan Agreement).

**13.      WAIVEROF PRESENTMENT, ETC.**  Presentment for payment, protest and noticeof non-payment are waived.  Consent isgiven to any extension or alteration of the time or terms of payment hereof,any renewal, any release of all or any part of the security given for the paymenthereof, any acceptance of additional security of any kind, and any release of,or resort to, any party liable for payment hereof.

**14.      SAVINGSCLAUSE.**  Notwithstanding anything to the contrary setforth in this instrument, if at any time until payment in full of all of theindebtedness due hereunder, the interest rate on such indebtedness exceeds thehighest rate of interest permissible under any law which a court of competentjurisdiction shall, in a final determination, deem applicable hereto (the “***Maximum Lawful Rate***”),then in such event and so long as the Maximum Lawful Rate would be so exceeded,the interest rate shall be equal to the Maximum Lawful Rate; provided,however, that if at any time thereafter the interest rate is less than theMaximum Lawful Rate, the Undersigned shall continue to pay interest hereunderat the Maximum Lawful Rate until such time as the total interest received bythe Holder from the making of advances hereunder is equal to the total interestwhich the Holder would have received had the interest rate been (but for theoperation of this paragraph) the interest rate payable since the initialfunding of the Loan.  Thereafter, theinterest rate payable hereunder shall be the interest rate provided for in thisinstrument unless and until the interest rate so provided for again exceeds theMaximum Lawful Rate, in which event this paragraph shall again apply.  In no event shall the total interestreceived by the Holder pursuant to the terms hereof exceed the amount whichsuch Holder could lawfully have received had the interest due hereunder beencalculated for the full term hereof at the Maximum Lawful Rate.  In the event that a court of competentjurisdiction, notwithstanding the provisions of this paragraph, shall make afinal determination that the Holder has received interest in excess of theMaximum Lawful Rate, the Holder shall, to the extent permitted by applicablelaw, promptly apply such excess first to any interest due and not yet paidunder this instrument, then to the outstanding Principal Balance due under thisinstrument, then to other unpaid indebtedness and thereafter shall refund anyexcess to Undersigned or as a court of competent jurisdiction may otherwiseorder.

**15.      USEOF PROCEEDS.**  The Undersigned warrants and represents thatall funds advanced under this Note shall be applied and are intended solely forthe purposes set forth in the Loan Agreement and not for any personal, familyor household purposes.

**16.      GOVERNINGLAW; JURISDICTION.**  The obligation evidenced by this Note wasnegotiated, delivered and accepted in the State of Nevada, the laws of whichstate shall in all 

 

4

----

 

respectsbe controlling in the interpretation and validity of this Note and allobligations evidenced hereby.  TheUndersigned hereby submits itself to the jurisdiction of the State of Nevada,and the federal courts of the United States located in such state in respect ofall actions arising out of or in connection with the interpretation or enforcementof this Note and the documents related hereto.

**17.      PARTICIPATIONAGREEMENT.**  This Note evidences the Undersigned’s debtwith respect to the Loan, and is secured by the Security Agreement.  Any payment of principal or interest, orpremiums or penalty on this Note shall be paid to Lender.  Notwithstanding any other provision hereinor in the Loan Agreement, this Note and all rights hereunder shall be subjectalways to the terms of the Participation Agreement, regardless of any transfer,assignment or endorsement of this Note.

**18.      JOINTAND SEVERAL LIABILITY.**  Each of the Undersigned agrees that it isliable, jointly and severally with each other Undersigned, for the payment ofthis Note and all other obligations of the Undersigned under the Loan Agreement,and that the Holder can enforce such obligations against any Undersigned, inthe Holder’s sole and unlimited discretion. Without in any way limiting the generality of the foregoing, each of theUndersigned acknowledges and agrees to the provisions of the Loan Agreement andby this reference hereby incorporates such provisions herein as thoughexpressly set forth herein.

**19.      WAIVEROF JURY TRIAL.**  The Undersigned hereby irrevocably waivesany and all right to trial by jury in any legal proceeding arising out of orrelating to this Note or any of the documents executed in connection therewithor the transactions contemplated hereby or thereby.

                Executed as of the date firstabove written.

 
| **“PDS”**         | **“PDS-NV”**       |
|-----------------------------|------------------------------|
|                        |                         |
| **PDS  GAMING CORPORATION** | **PDS  GAMING CORPORATION-** |
|                        | **NEVADA**                   |
|                        |                         |
| By:                         | *s/ Peter D. Cleary*         |   | By: | *s/ Peter D. Cleary* |   |
| Print  Name:                | Peter  D. Cleary             |   | Print  Name: | Peter  D. Cleary |   |
| Its:                        | President                    |   | Its: | President |   |
|                             |                              |  |  |  |  |  |  |  |  |  |

 

**[Signatures continued on next page]**

 

5

----

 

 
| **“PDS-CO”**       | **“PDS-MS”**       |
|------------------------------|------------------------------|
|                         |                         |
| **PDS  GAMING CORPORATION-** | **PDS  GAMING CORPORATION-** |
| **COLORADO**                 | **MISSISSIPPI**              |
|                         |                         |
| By:                          | *s/ Peter D. Cleary*         |   | By: | *s/ Peter D. Cleary* |   |
| Print  Name:                 | Peter  D. Cleary             |   | Print  Name: | Peter  D. Cleary |   |
| Its:                         | President                    |   | Its: | President |   |
|                              |                              |  |  |  |  |  |  |  |  |  |

 

 

6

----