Document:

Exhibit 10.22

 

PROMISSORY NOTE

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No.

  	
   

  	
  Call / Call

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  
	
  $

  	
  450,000.00

  	
   

  	
  12-04-2003

  	
   

  	
  01-19-2005

  	
   

  	
  9003

  	
   

  	
   

  	
   

  	
  5088372

  	
   

  	
  M4L

  	
   

  	
   

  
																

 

References in the shaded area are for
Lender’s use only and do not limit the applicability of this document to any
particular loan or item.  Any item above
containing “***” has been omitted due to text length limitations.

 

	
  Borrower:

  	
  SOUTHWEST CASINO AND HOTEL CORP.

  	
  Lender:

  	
  ASSOCIATED BANK MINNESOTA,

  
	
   

  	
  2001 KILLEBREW DR #312

  	
   

  	
  NATIONAL ASSOCIATION

  
	
   

  	
  MINNEAPOLIS, MN 55425

  	
   

  	
  1801 RIVERSIDE AVENUE

  
	
   

  	
   

  	
   

  	
  MINNEAPOLIS, MN 55454

  

 

	
  Principal
  Amount: $450,000.00

  	
   

  	
  Initial Rate: 5.000%

  	
   

  	
  Date
  of Note: December 4, 2003

  

 

PROMISE
TO PAY.  SOUTHWEST
CASINO AND HOTEL CORP. (“Borrower”) promises to pay to ASSOCIATED BANK
MINNESOTA, NATIONAL ASSOCIATION (“Lender”), or order.  In lawful money of the United States of
America, the principal amount of Four Hundred Fifty Thousand & 00/100
Dollars ($450,000.00) or so much as may be outstanding, together with interest
on the unpaid outstanding principal balance of each advance.  Interest shall be calculated from the date of
each advance until repayment of each advance.

 

PAYMENT.  Borrower will pay this loan in one payment of
all outstanding principal plus all accrued unpaid interest on January 19,
2005.  In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of each payment
date, beginning January 19, 2004, with all subsequent interest payments to
be due on the same day of each month after that.  Unless otherwise agreed or required by
applicable law, payments will be applied first to any accrued unpaid interest;
then to principal; then to any unpaid collection costs; and then to any 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 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding.  Borrower will pay Lender at
Lender’s address shown above or at such other place as Lender may designate in
writing.

 

VARIABLE
INTEREST RATE.  The
interest rate on this Note is subject to change from time to time based on
changes in an index which is Lender’s Prime Rate (the “Index”).  This is the rate Lender charges, or would
charge, on 90-day unsecured loans to the most creditworthy corporate
customers.  This rate may or may not be the
lowest rate available from Lender at any given time.  Lender will tell Borrower the current Index
rate upon Borrower’s request.  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 4.000% per annum.  The
interest rate to be applied to the unpaid principal balance of this Note will
be at a rate of 1,000 percentage point over the Index, adjusted if necessary
for any minimum and maximum rate limitations described below, resulting in an
initial rate of 5.000% per annum. 
Notwithstanding the foregoing, the variable interest rate or rates
provided for in this Note will be subject to the following minimum and maximum
rates.  NOTICE:  Under no circumstances will the interest rate
on this Note be less than 5.000% per annum or more than the maximum rate
allowed by applicable law.

 

PREPAYMENT.  Borrower agrees that all loan fees and other
prepaid finance charges are earned fully as of the date of the loan and will
not be subject to refund upon early payment (whether voluntary or as a result
of default), except as otherwise required by law.  Except for the foregoing, Borrower may pay
without 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, relieve Borrower of Borrower’s obligation to
continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the
principal balance due.  Borrower agrees
not to send Lender payments marked “paid in full”, “without recourse”, or
similar language.  If Borrower sends such
a payment, Lender may

 

 

accept it without
losing any of Lender’s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender.  All written communications concerning
disputed amounts, including any check or other payment instrument that
indicates that the payment constitutes “payment in full” of the amount owed or
that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to:  ASSOCIATED BANK MINNESOTA, NATIONAL
ASSOCIATION; 1801 RIVERSIDE AVENUE; MINNEAPOLIS, MN  55454.

 

LATE
CHARGE.  If a payment
is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion
of the regularly scheduled payment.

 

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

 

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

 

Series
A Convertible Debentures

 

As of
August 5, 2004, we had outstanding series A convertible debentures in the
aggregate principal amount of $362,500 (plus accrued and unpaid interest
thereon).  The debentures are
convertible.  While Southwest does not
anticipate any further conversion, it reserves the right to permit the holders
of the to convert all or any portion of the remaining outstanding Debentures at
a conversion price deemed, in the discretion of the Board of Directors, to be
in the best interests of Southwest

 

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 documents or to
comply with or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.

 

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

 

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

 

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

 

Creditor
or Forfeiture Proceedings. 
Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower or by any governmental agency against any collateral
securing the loan.  This includes a
garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not
apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture

 

 

proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture proceeding
and desposits with Lender monies or a surety bond for the creditor or
forfeiture proceeding, in an amount determined by Lender, in the sole
discretion, as being an adequate reserve or bond for the dispute.

 

Events
Affecting Guarantor. 
Any of 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 or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this Note.  In the event of a death, Lender, at its
option, may, but shall not be required to, permit the guarantor’s estate to
assume unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure any Event of Default.

 

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

 

Adverse
Change.  A material
adverse change occurs in Borrower’s financial condition, or Lender believes the
prospect of payment or performance of this Note is impaired.

 

Insecurity.  Lender in good faith believes itself
insecure.

 

Cure
Provisions.  If any
default, other than a default in payment is curable and if Borrower has not
been given a notice of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default:  (1)
cures the default within thirty (30) days; or (2) if the cure requires more
than thirty (30) days, immediately initiates steps which Lender deems in
Lender’s sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to
produce compliance as soon as reasonably practical.

 

LENDER’S
RIGHTS.  Upon default,
Lender may declare the entire unpaid principal balance on this Note and all
accrued unpaid interest immediately due, and then Borrower will pay that
amount.

 

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

 

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

 

RIGHT
OF SETOFF.  To the
extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower’s accounts with Lender (whether checking, savings, or some other
account).  This includes all accounts
Borrower holds jointly with someone else and all accounts Borrower may open in
the future.  However, this does not
include any IRA or Keogh accounts, or any trust accounts for which setoff would
be prohibited by law.  Borrower
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all sums owing on the indebtedness against any and all such accounts,
and, at Lender’s option, to administratively freeze all such accounts to allow
Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

LINE
OF CREDIT.  This Note
evidences a revolving line of credit. 
Advances under this Note may be requested either orally or in writing by
Borrower or by an authorized person.  Lender
may, but need not, require that all oral requests be confirmed in writing.  All communications, instructions, or
directions by telephone or

 

 

otherwise to
Lender are to be directed to Lender’s office shown above.  Borrower agrees to be liable for all sums
either:  (A) advanced in accordance with
the instructions or an 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 by
endorsements on this Note or by Lender’s internal records, including daily
computer print-outs.  Lender will have no
obligation to advance funds under this Note if: 
(A) Borrower or any guarantor is in default under the terms of this Note
or any agreement that Borrower or any guarantor has with Lender, including any
agreement made in connection with the signing of this Note; (B) Borrower or any
guarantor ceases doing business or is insolvent; (C) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor’s
guarantee of this Note or any other loan with Lender; (D) Borrower has applied
funds provided pursuant to this Note for purposes other than those authorized
by Lender; or (E) Lender in good faith believes itself insecure.

 

INITIAL
NOTE RATE PROVISION. 
The Initial Note Rate is as of DECEMBER 4, 2003.

 

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

 

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

 

SECTION DISCLOSURE.  This loan is made under Minnesota Statutes,
Section 47.59.

 

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

 

	
  BORROWER:

  
	
   

  
	
  SOUTHWEST
  CASINO AND HOTEL CORP.

  
	
   

  
	
   

  
	
  BY:

  	
   

  	
   

  
	
   

  	
  /s/
  THOMAS E. FOX, CFO of SOUTHWEST CASINO

  
	
   

  	
  AND
  HOTEL CORP.Exhibit
10.23

 

	
  OPPENHEIMER

  	
   

  	
  Oppenheimer
  & Co. Inc.

  
	
   

  	
   

  	
  900 Second
  Avenue S.

  
	
   

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
  Minneapolis, MN
  55402

  
	
   

  	
   

  	
  612-337-2700

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Member of All
  Principal Exchanges

  

 

October 14, 2003

 

Mr. James B. Druck

President

Southwest Casino & Hotel Corp.

c/o North Metro Harness Initiative, LLC

2001 Killebrew Drive

Suite 306

Minneapolis, MN 55425

 

Dear Mr. Druck:

 

I am writing to provide
you with our letter of commitment for debt financing for a loan in an
approximate amount of $25,000,000 for the construction and permanent financing
of the harness track and card club (the “Track”) to be constructed in Columbus
Township, Minnesota, and owned by North Metro Harness Initiative, LLC.

 

As a Senior Vice
President with Oppenheimer & Co. Inc., an investment bank, I am responsible
for the Fixed Income Originations group in the Minneapolis, Minnesota
office.  Oppenheimer is a publicly traded
company on the NYSE under the symbol “OPY”. 
Our firm dates back to 1881 as Fahnestock & Co., Inc. and is
headquartered at 125 Broad Street in New York, New York under the Oppenheimer
banner.  We currently have a net capital
position in excess of $350,000,000 and have over one hundred twenty offices in
twenty-two states with a total of over 2000 brokers selling both institutional
and retail securities to the marketplace.

 

I have personally worked
in the fixed income originations business since 1982 and have specialized in
both the private and public sectors.  I
have been involved with a multitude of successful originations, both local and
national, like the one proposed for the Track. 
Examples would include, work with the Phoenix Coyotes NHL Hockey Team in
placing over $38,000,000 in Taxable Sports Facilities Revenue Bonds for their
new arena in suburban Glendale, Arizona. 
Additionally, we recently secured debt financing for the John Q. Hammons
Baseball Stadium in Springfield, Missouri in a financing totaling $23,000,000.

 

Regarding the Track, we
are anxious to move quickly to finalize this financing.  We have carefully reviewed your plans and the
related feasibility analysis.  We believe
strongly in this project and the economic boost it will provide to the north
suburban metro area and the entire State of Minnesota.

 

 

Our financing commitment
is contingent upon the Minnesota Racing Commission’s approval of your
application and our continuing due diligence. 
Market conditions may affect the rate in the event of force majeure.

 

We understand that our
letter may be included with your final application to the Minnesota Racing
Commission and local government officials. 
If you have any questions, please do not hesitate to contact me at my
direct telephone number:  (612) 337-2780.

 

With personal regards, I
am

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Ralph L. McGinley

  	
   

  
	
   

  	
   

  
	
   

  	
  Ralph L. McGinley

  
	
   

  	
  Senior Vice President

  

 

RLM/rls

 

2

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