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Filed
Pursuant to Rule 424(b)(3)
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PROSPECTUS SUPPLEMENT NO. 2 to
Post-Effective
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File
No. 333-140934
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Amendment No. 2 to
Form SB-2/A on Form S-1
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(to Prospectus Dated
August 12, 2008)
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Southwest
Casino Corporation
12,663,389
Shares
of
Common
Stock
This Prospectus Supplement No. 2 to
Post-Effective Amendment No. 2 to Form SB-2/A on Form S-1
supplements the prospectus dated August 12, 2008, as previously supplemented,
relating to the 12,663,389 shares of common stock of Southwest Casino
Corporation that may be offered for sale for the account of several
stockholders of Southwest Casino Corporation, their respective pledgees,
assignees or successors-in-interest, as stated under the heading Plan of
Distribution in the original prospectus.
This Prospectus Supplement No. 2 is being filed
to update the original prospectus with respect to developments in Southwest
Casino Corporations business that have occurred since the date of the original
prospectus and to include in the prospectus the Current Report on Form 8-K
that Southwest Casino Corporation filed on October 23, 2008. This
Prospectus Supplement No. 2 is not complete without, and may not be
delivered or utilized except in connection with, the original prospectus.
This Prospectus Supplement No. 2 is qualified by reference to the original
prospectus, except to the extent that the information contained in this
Prospectus Supplement No. 2 supersedes the information contained in the
original prospectus.
Recent Developments
Attached hereto and incorporated by reference herein
is the Current Report on Form 8-K as filed with the Securities and
Exchange Commission on October 23, 2008.
The common stock offered involves a
high degree of risk. We refer you to Risk Factors, beginning on page 2
of the original prospectus as supplemented by the Quarterly Report on Form 10-Q
filed August 14, 2008.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these securities or
determined if this Prospectus Supplement No. 2 is truthful or
complete. Any representation to the contrary is a criminal offense.
The date of this
Prospectus Supplement No. 2 is October 27, 2008.
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UNITED
STATES
|
OMB APPROVAL
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SECURITIES
AND EXCHANGE COMMISSION
|
OMB Approval:
3235-0060
Expires: April 30, 2009
Estimated average burden hours per response. . 5.0
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Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported)
October 19,
2008
SOUTHWEST CASINO CORPORATION
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(Exact name of registrant as specified in its charter)
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Nevada
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000-50572
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87-0686721
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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2001 Killebrew Drive, Suite 350, Minneapolis, MN
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55425
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrants telephone number, including area code
952-853-9990
(Former name or former address, if changed since last report.)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
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o
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Written communication
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item 1.01
Entry into a Material Definitive
Agreement
On October 19, 2008, Southwest Casino Corporation (Southwest) and
its wholly-owned subsidiary Southwest Casino & Hotel Corp. entered
into agreements with Black Diamond Commercial Finance, L.L.C. (Black Diamond),
as Agent for certain lenders to North Metro Harness Initiative, LLC (North
Metro), under which Southwest transferred its 50 percent membership interest
in North Metro (the Membership Interest). In the transaction, Southwest sold
the Membership Interest to Black Diamond, as agent for the lenders, for $1.00
and:
an agreement
not to sue Southwest under the terms of a $1 million Limited guaranty by
Southwest of North Metros debt and to terminate that limited guaranty upon
satisfaction of certain conditions;
an option to
repurchase the 50 percent membership interest in July 2009 for $1.00 plus buying
a $7.5 million subordinate interest in North Metros then outstanding debt to
Black Diamond and the lenders; and
retention of
Southwests right to receive $2.3 million in distributions before North Metro
makes distributions (other than tax distributions) to its members.
In addition, Southwest agreed to provide consulting
and transition services to Black Diamond for four months for a fee of $50,000
per month.
North Metro Harness Initiative, LLC owns and operates Running Aces
Harness Park in Columbus, Minnesota. Running Aces has offered pari-mutuel
wagering on live harness racing and simulcast races by all breeds of horses
since April 11, 2008. Running Aces opened a 50-table card room that offers
poker, blackjack and other casino card games on June 30, 2008, after
completing its 50
th
day of live racing.
Black Diamond has acted as agent for lenders (the Lenders) who provided
approximately $42 million in financing to North Metro for construction and some
start-up costs at Running Aces under a Credit Agreement dated April 20,
2007 (the Credit Agreement). North Metro has been in default under certain obligations
under the Credit Agreement since July 2008.
Under the Limited Liability Company Membership Interest Purchase Agreement
between Southwest Casino and Hotel Corp. and Black Diamond dated October 19,
2008 (the Purchase Agreement), Southwest Casino and Hotel Corp. sold its 50%
membership interest to Black Diamond, as Agent for the Lenders. Southwest had
pledged the Membership Interest as security for the construction and start-up
financing when North Metro entered into the Credit Agreement. Under the
Purchase Agreement, Southwest received the purchase price of $1.00 along with a
right to repurchase the Membership Interest in July 2009 for $1.00 plus buying
a $7.5 million last out, non-voting, fully subordinated participation interest
in North Metros then outstanding debt to Black Diamond and the Lenders. Southwest
also retained its right to receive distributions in the amount of $2,357,072 for
cash contributions, advances and loans by Southwest to North Metro that
exceeded Southwests required membership contributions. This amount is to be
repaid to Southwest before any distributions to the owners of North Metro
(except distributions for payment of taxes on the income of North Metro). Under
the Credit Agreement, payment of distributions, including the amount retained
by Southwest, is prohibited unless Running Aces exceeds certain financial
performance thresholds.
The transfer of the Membership Interest remains subject to the terms of
the North Metro Harness Initiative, LLC Member Control Agreement (the Member
Control Agreement), including the provisions of the Member Control Agreement
regarding transfer of membership interests.
Southwest also received relief under a $1 million Limited Guaranty by
Southwest of North Metros obligations under the Credit Agreement under a Limited
Covenant Not to Sue and Release of Limited Guaranty dated October 19, 2008
(the Covenant and Release). Under the terms of the Covenant and Release,
Black Diamond, as Agent, agreed not to sue to enforce the $1 million limited guarantee
so long as Southwest is not in default in its obligations in connection with
the sale of the Membership Interest and the Consulting Agreement described
below. In addition, the Covenant and Release provides that the $1 million
guarantee will terminate and be of no further force or effect
2
once Black Diamond, as Agent, receives full rights as a member of North
Metro under the terms of the Member Control Agreement in for the Membership
Interest purchased from Southwest and Southwest has performed its obligations
under the four-month Consulting Agreement described below.
Southwest also entered into a Settlement Agreement with Black Diamond, as
Agent, on October 19, 2008, under which Southwest and Black Diamond agreed
to enter into the transactions described in this Current Report. In addition,
Southwest agreed to release Black Diamond from any and all claims Southwest may
have or have had against Black Diamond up to and including October 19,
2008. In accordance with the terms of the Settlement Agreement, this release
will be null and void if Black Diamond attempts to enforce against Southwest
the $1 million limited guaranty that is the subject of the Covenant and
Release.
In addition, Southwest and Black Diamond entered into a Consulting
Agreement on October 19, 2008 (the Consulting Agreement) under which
Southwest will provide consulting and transition services to Black Diamond in
connection with Black Diamonds acquisition of the Membership Interest. Under
the Consulting Agreement, Southwest will continue to provide leadership,
management and consulting services at Running Aces and work to transition the
provision of those services to Black Diamond and personnel selected by Black
Diamond. In consideration of Southwests providing these services, Black
Diamond has agreed to pay Southwest consulting fees of $50,000 per month for
four months.
Copies of the Purchase Agreement, Covenant and Release, Settlement
Agreement and Consulting Agreement are attached to this Current Report as
Exhibits 10.1, 10.2, 10.3 and 10.4 respectively. The above descriptions of
these agreements are summaries only and are qualified in all respects by the
terms and conditions of the attached Exhibits.
Item
2.01
Completion of
Acquisition or Disposition of Assets
On October 19, 2008, Southwest Casino Corporation (Southwest) and
its wholly-owned subsidiary Southwest Casino & Hotel Corp. entered
into a series of agreements under which they sold to Black Diamond Commercial
Finance, L.L.C., as Agent for certain lenders, Southwest Casino &
Hotel Corp.s 50 percent membership interest in North Metro Harness Initiative,
LLC. Please see Item 1.01 and the Exhibits to this Current Report on Form 8-K
for information regarding the terms of the sale.
Item
7.01
Regulation FD Disclosure
On
October 23, 2008, Southwest Casino Corporation issued a press release announcing
the sale of its 50 percent membership interest in North Metro Harness
Initiative, LLC. A copy of that press release is attached to this report as Exhibit 99.1.
3
Item
9.01
Financial Statements and
Exhibits
(c)
Exhibits
.
Exhibit
No.
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Description
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Method of Filing
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10.1
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Limited Liability Company Interest Purchase
Agreement dated October 19, 2008 by and among Southwest Casino and Hotel
Corp. and Black Diamond Commercial Finance, L.L.C., as Agent
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Filed herewith
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10.2
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Limited Covenant Not to Sue and Release of
Limited Guaranty dated October 19, 2008 among Southwest Casino
Corporation, Southwest Casino and Hotel Corp. and Black Diamond Commercial
Finance, L.L.C., as Agent
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Filed herewith
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10.3
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Settlement Agreement dated October 19,
2008 among Southwest Casino Corporation, Southwest Casino and Hotel Corp. and
Black Diamond Commercial Finance, L.L.C., as Agent
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Filed herewith
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10.4
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Consulting Agreement dated October 19, 2008 among Southwest Casino and Hotel Corp. and
Black Diamond Commercial Finance, L.L.C., as Agent
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Filed herewith
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99.1
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Southwest Casino Corporation Press Release dated October 23,
2008.
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Filed herewith
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4
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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SOUTHWEST CASINO CORPORATION
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Date: October 23, 2008
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By:
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/s/ Thomas E. Fox
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Name: Thomas E. Fox
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Title: President
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5
Exhibit 10.1
LIMITED LIABILITY COMPANY INTEREST PURCHASE
AGREEMENT
This LIMITED LIABILITY PURCHASE AGREEMENT (this
Agreement
) is made and entered
into as of October 19, 2008 by and among BLACK DIAMOND COMMERCIAL FINANCE,
L.L.C., a Delaware limited liability company, in its capacity as Agent (as such
term is defined in the Credit Agreement,
Agent
) under the Credit
Agreement (
BDCF
or
Buyer
), and SOUTHWEST CASINO AND HOTEL
CORP., a Minnesota corporation (
Seller
).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS, Seller owns a 50% Membership
Interest (as such term is defined in the Member Control Agreement) (the
Membership
Interest
) in North Metro Harness Initiative, LLC, a Minnesota limited
liability company (the
Company
), whose business and affairs are
governed by that certain Member Control Agreement of North Metro Harness
Initiative, LLC, entered into and effective as of June 8, 2004 (as amended
by that certain First Amendment to Member Control Agreement dated as of April 20,
2007, the
Member Control Agreement
);
WHEREAS, Sellers Membership Interest in the
Company includes a 50% Percentage Interest (as such term is defined in the
Member Control Agreement) in the Company;
WHEREAS, pursuant to the requirements of that
certain letter agreement, dated June 19, 2008, between Seller and an
affiliate of MTR Harness, Inc., a Minnesota corporation and owner of a 50%
Membership Interest (as such term is defined in the Member Control Agreement)
in the Company (
MTR Harness
), MTR Harness has waived its right to
receive the first $192,500 in distributions from the Company to which MTR
Harness would otherwise be entitled, and has directed that the Company pay such
$192,500 in distributions to Seller (Sellers right to receive such $192,500 in
distributions, the
$192,500 Distribution Right
);
WHEREAS, pursuant to Article IX and Article XV
of the Member Control Agreement, Seller is entitled to receive Distributions
(as such term is defined in the Member Control Agreement) with respect to its
Membership Interests from the Company of: (i) Unrecovered Unmatched
Pre-Licensing Costs (as such term is defined in the Member Control Agreement)
and (ii) Unrecovered Preferred Return (as such term is defined in the
Member Control Agreement), currently in the aggregate amount of $2,164,572 (the
right to a receive non-interest bearing, fixed amount of $2,164,572 of the
Distributions referenced in items (i) and (ii) (the
Unrecovered
Costs and Return Distribution Rights
), and, together with the $192,500
Distribution Right, collectively, the
Excluded Interest
);
WHEREAS, the $192,500 Distribution Right and
Unrecovered Costs and Return Distribution Rights comprising the Excluded
Interest: (i) constitute only the right of to Seller to receive an
aggregate amount equal to $2,357,072 in distributions from the Company in
accordance with the terms of the Member Control Agreement; and (ii) do not
provide Seller with any other rights with respect to the Company of any kind
whatsoever, including, without limitation, voting or control rights or any rights
of a Member under the Member Control Agreement or Minnesota law;
WHEREAS, the Excluded Interest does not
include the right of Seller to receive any amount of Preferred Return (as such
term is defined in the Member Control Agreement) accrued after the Closing Date
(as defined herein), and Seller shall earn no interest on any amounts due in
connection with the Excluded Interest;
WHEREAS, BDCF and the Company entered into
that certain Credit Agreement, dated as of April 20, 2007 (as has been and
may hereafter be amended, restated, supplemented or otherwise modified from
time to time, the
Credit Agreement
), by and among the Company, as
borrower, the Loan Parties (as such term is defined in the Credit Agreement),
the Lenders (as such term is defined in the Credit Agreement) and BDCF, as
Agent;
WHEREAS, Seller and Southwest Casino
Corporation, a Nevada corporation and owner of 100% of the capital stock of
Seller (
Seller Parent
), and BDCF, as Agent, are parties to that
certain Limited Guaranty dated as of July 1, 2008, pursuant to which
Seller and Seller Parent guaranteed the Obligations (as such term is defined in
the Credit Agreement) on a limited basis as set forth therein;
WHEREAS, pursuant to that certain Pledge
Agreement, dated as of April 20, 2007 (as amended restated, supplemented
or otherwise modified from time to time, the
Pledge Agreement
), by and
between Seller and BCDF, as Agent, Seller has pledged to BCDF, as Agent, for
the benefit of Agent and the benefit of Lenders (as such term is defined in the
Pledge Agreement), a first priority security interest in the Pledged Collateral
(as such term is defined in the Pledge Agreement);
WHEREAS, Seller, Seller Parent and Buyer,
contemporaneously with the execution and delivery of this Agreement, have
entered into that certain Settlement Agreement, dated as of the date hereof
(the
Settlement Agreement
); and
WHEREAS, in accordance with the Settlement
Agreement, Seller has agreed to sell to Buyer, and Buyer has agreed to purchase
from Seller, all of the Membership Interest and all Sellers right, title and
interest in the Company and under the Member Control Agreement of any kind,
including as a Managing Member, but excluding, however, the Excluded Interest
(such Membership Interest and all Sellers right, title and interest in the
Company and under the Member Control Agreement of any kind, including as a
Managing Member, but excluding, however, the Excluded Interest, the
Acquired
Interest
) on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the
foregoing, of the mutual covenants and agreements herein contained and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE ACQUIRED INTEREST; CLOSING
1.1
Purchase
and Sale
. Subject to and upon the terms and conditions of this Agreement,
at the Closing (as defined below), Seller shall sell, transfer and assign to
Buyer, and Buyer shall acquire from Seller all of Sellers right, title and
interest in and to the Acquired Interest, subject in all events to all rights
of the Agent under the Pledge Agreement. Upon the
2
transfer of the Acquired Interest
from Seller to Buyer: (i) subject to any applicable requirements of the
Member Control Agreement, Buyer shall be deemed a Substitute Member (as such
term is defined in the Member Control Agreement) of the Company; (ii) Seller
shall be deemed to have transferred any and all of its rights as a Member of
the Company under the Member Control Agreement and Minnesota law, and any other
right, title and interest in the Company and under the Member Control Agreement
of any kind, including as a Managing Member,
provided
,
however
,
that Seller shall retain all of its rights with respect to the Excluded
Interests; and (iii) subject to any applicable requirements of the Member
Control Agreement, Buyer shall be deemed a Managing Member (as such term is
defined in the Member Control Agreement) of the Company for all purposes and in
all respects. It is hereby acknowledged and agreed by Seller and Buyer that
upon completion of the purchase and sale contemplated by this
Section 1.1
,
the Acquired Interest shall be freely assignable and transferable by Buyer,
free and clear of any Lien or claim of Seller other than pursuant to
Section 5.1
of this Agreement, and subject in all events to all rights of the Agent under
the Pledge Agreement.
1.2
Consideration
. In consideration for
the Acquired Interest and subject to and upon the terms and conditions of this
Agreement, at the Closing, Buyer shall pay to Seller the amount of $1.00 (the
Purchase
Price
). The Purchase Price shall be payable by Buyer (or its designee) to
Seller at the Closing by wire transfer of immediately available funds to an
account designated by Seller, or by cashiers check or other cash payment.
1.3
Full and Complete Payment
. The
parties acknowledge and agree that the payment of the Purchase Price
constitutes full and complete payment for the Acquired Interest and all rights
and attributes related thereto. Except for the Purchase Price, Seller shall not
be entitled to any other rights, payments, returns and/or dividends, whether in
cash or property, from the Company or any other person or entity in respect of
the Acquired Interest or other interests in or with respect to the Company,
except for the Excluded Interest.
1.4
The Closing
. The closing of the
transactions contemplated by this Agreement (the
Closing
) shall take
place at the offices of Latham & Watkins LLP, Sears Tower, Suite 5800,
Chicago, Illinois 60606 on October 19, 2008 or on such other date as is
mutually agreeable to Seller and Buyer (such date, the
Closing Date
).
ARTICLE II
CONDITIONS TO CLOSING
2.1
Conditions to Buyers Obligations
. The
obligation of Buyer to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions as of the
Closing Date:
(a)
Representations and Warranties
.
The representations and warranties of Seller set forth in
Article III
hereof shall be true and correct in all material respects (except for any
representations or warranties qualified by materiality, which shall be true and
correct in all respects) when made and as of the Closing Date as though then
made and as though the Closing Date was substituted for the date of this
Agreement throughout such representations and warranties.
3
(b)
Governmental
Proceedings
. No injunction exists or proceeding has been commenced that is
reasonably likely to prevent, delay, make illegal, or otherwise interfere with,
the performance of this Agreement or the consummation of any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be rescinded.
(c)
Deliveries
. Seller
shall have delivered, or caused to be delivered, to Buyer:
(i)
a copy of this
Agreement, duly executed by Seller; and
(ii)
a membership
certificate evidencing Sellers Membership Interest, accompanied by an
assignment and assumption document, in the form attached hereto as
Exhibit A
(the
Assignment and Assumption
), duly executed by Seller and effecting
the assignment and transfer of the Acquired Interest to Buyer.
Any condition specified in this
Section 2.1
may be waived
in writing by Buyer in its sole discretion.
2.2
Conditions to Sellers Obligations
. The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions as of the
Closing Date:
(a)
Representations and
Warranties
. The representations and warranties of Buyer set forth in
Article IV
hereof shall be true and correct in all material respects when made and at and
as of the Closing Date as though then made and as though the Closing Date was
substituted for the date of this Agreement throughout such representations and
warranties.
(b)
Governmental
Proceedings
. No injunction exists or proceeding has been commenced that is
reasonably likely to prevent, delay, make illegal, or otherwise interfere with,
the performance of this Agreement or the consummation of any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded.
(c)
Deliveries
. Buyer
shall have delivered, or caused to be delivered, to Seller:
(i)
a copy of this
Agreement, duly executed by Buyer;
(ii)
the Assignment and
Assumption, duly executed by Buyer; and
(iii)
the Purchase Price.
Any condition specified in this
Section 2.2
may be waived
in writing by Seller in its sole discretion.
4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into and
perform this Agreement, Seller hereby makes the following representations,
warranties and covenant to Buyer as of the date hereof:
3.1
Status
. Seller is a duly formed,
validly existing corporation in good standing under the laws of the State of
Minnesota and has all requisite power and authority to own its properties and
assets and to carry on its business as currently conducted.
3.2
Commitments
. Except pursuant to the
Credit Agreement and this Agreement, there are no commitments, options,
contracts or other arrangements whatsoever, whether written or oral, under
which Seller is or may become obligated to sell, transfer, pledge, assign,
convey or otherwise dispose of the Acquired Interest or any right or interest
therein.
3.3
Title
. Seller has good and
indefeasible title to the Acquired Interest owned by it free and clear of all
mortgages, pledges, liens, claims, encumbrances, other security arrangements,
preferential arrangements or restrictions of any kind whatsoever (collectively,
Liens
) except for the
Lien in favor of the Agent pursuant to the Pledge Agreement. Upon delivery by
Buyer of the Purchase Price, Seller will transfer to Buyer good and
indefeasible title to the Acquired Interest free and clear of all Liens except
for the Lien in favor of the Agent pursuant to the Pledge Agreement.
3.4
Authority
. Seller has full power,
right and authority to execute and deliver this Agreement and, subject to the
terms of the Member Control Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized and approved by all
necessary action on the part of Seller.
3.5
Enforceability
. This Agreement has
been duly and validly executed by Seller and, upon delivery hereof by Seller,
will constitute a legally valid and binding obligation of Seller enforceable
against Seller in accordance with its terms, except to the extent that such
enforceability may be subject to, and limited by, applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws affecting
the enforcement of creditors rights generally, and general equitable
principles.
3.6
No Conflict
. The execution, delivery
and performance of this Agreement and the consummation by Seller of the
transactions contemplated hereby and compliance with the terms and provisions
hereof, does not and will not: (a) conflict
with, violate, result in the breach of, constitute a default under, give rise
to any right of acceleration, cancellation or termination of any material right
or obligation under, or require any consent, approval, authorization or action
or filing pursuant to, any agreement or other instrument to which Seller is a
party or by which Seller or any of its properties or assets are bound; or (b) violate
or require any consent, approval, authorization or action or filing pursuant
to, any code, statute, ordinance, rule, regulation, directive, order, decree,
ruling, writ, injunction, judgment or other law or binding pronouncement of any
governmental authority (collectively,
Laws
) applicable to Seller, or any of its properties
5
or assets, except consents and approvals
required under laws and regulations of the State of Minnesota applicable to the
acquisition of an ownership interest in an entity licensed to engage in
pari-mutuel wagering.
3.7
Litigation.
There are no claims,
demands, actions, investigations, audits, suits, causes of action, arbitration
proceedings or other proceedings pending, or to the knowledge of Seller,
threatened or otherwise being asserted against Seller, which, directly or
indirectly, would reasonably be expected to have a material adverse effect on
the Acquired Interest owned by Seller or the consummation of the transactions
contemplated hereby.
3.8
Brokerage
.
No agent, broker, investment banker, intermediary, finder or firm acting on
behalf of Seller will be entitled to any brokers or finders fee or any other
commission or similar fee, directly or indirectly, from Seller in connection
with the execution of this Agreement or upon consummation of the transactions
contemplated hereby
3.9
Excluded
Interest
. Sellers rights
to distributions from the Company are contingent upon the occurrence of those
events described in the Member Control Agreement. As of the Closing Date, the
maximum aggregate amount of distributions payable pursuant to the $192,500
Distribution Right and Unrecovered Costs and Return Distribution Rights equals
$2,357,072. Seller acknowledges and agrees that, other than the right to
receive distributions from the Company in the maximum aggregate amount of $2,357,072,
subject to and in accordance with the Member Control Agreement, the Excluded
Interest does not include any rights of any kind whatsoever in the Company or
under the Member Control Agreement (including any rights to Preferred Return,
as such term is defined in the Member Control Agreement) or as a Member of the
Company pursuant to the Member Control Agreement or Minnesota law. Seller
acknowledges and agrees that, after the date of this Agreement, Seller shall
earn no interest on any amounts due in connection with the Excluded Interest. Seller
covenants and agrees that, from and after the Closing Date, Seller shall not,
and shall cause its affiliates, successors and assigns not to: (i) make
any claim for any distributions or payments from the Company other than with
respect to the Excluded Interest and payments due under the Consulting
Agreement (as such term is defined in the Settlement Agreement) or any
agreement entered into on the date of this Agreement between Seller and Seller
Parent, on one hand, and Buyer on the other hand; (ii) make any claim to
any equity interest in or rights as a member of the Company, whether pursuant
to the Member Control Agreement, Minnesota law or otherwise; and (iii) make
any claim against Buyer with respect to the Excluded Interest.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into and
perform this Agreement, Buyer hereby makes the following representations and
warranties to Seller as of the date hereof:
4.1
Status
. Buyer is a duly formed,
validly existing limited liability company in good standing under the laws of
the State of Delaware and has all requisite power and authority to own its
properties and assets and to carry on its business as currently conducted.
6
4.2
Authority
. Buyer has full power,
right and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby. Buyers
execution, delivery and performance of this Agreement and the consummation by
Buyer of the transactions contemplated hereby have been duly authorized and
approved by all necessary action on the part of Buyer.
4.3
Enforceability
. This Agreement has
been duly and validly executed by Buyer and, upon delivery hereof by Buyer,
will constitute a legally valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms, except to the extent that such
enforceability may be subject to, and limited by, applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws affecting
the enforcement of creditors rights generally, and general equitable
principles.
4.4
No Conflict
. The execution, delivery
and performance of this Agreement and the consummation by Buyer of the
transactions contemplated hereby, and compliance with the terms and provisions
hereof and thereof, do not and will not:
(a) conflict with, violate, result in the breach of, or constitute
a default under any provision of Buyers charter or by-laws; (b) conflict
with, violate, result in the breach of, constitute a default under, give rise
to any right of acceleration, cancellation or termination of any right or
obligation of Buyer under, or require any consent, approval, authorization or
action or filing pursuant to, any agreement or other instrument to which Buyer
is a party or by which Buyer or any of its properties or assets are bound; or (c) violate
or require any consent, approval, authorization or action or filing pursuant
to, any Laws applicable to
Buyer, or any of its properties or assets, except consents and approvals
required under the laws and regulations of the State of Minnesota applicable to
the acquisition of an ownership interest in an entity licensed to engage in
pari-mutuel wagering.
4.5
Brokerage
. No agent, broker,
investment banker, intermediary, finder or firm acting on behalf of Buyer will
be entitled to any brokers or finders fee or any other commission or similar
fee, directly or indirectly, from Buyer or in connection with the execution of
this Agreement or upon consummation of the transactions contemplated hereby.
ARTICLE V
CONTINGENT PURCHASE OPTION
5.1
Contingent Option to Repurchase
.
(a)
Seller shall have the
right, at any time on or after July 20, 2009, but on or before July 24,
2009 (the
Option Period
), to purchase all, but not less than all, of
the Acquired Interest from BDCF at a price equal to $1.00,
provided
that
Seller shall have also purchased at par, on the date of the acquisition of the
Acquired Interest pursuant to the exercise of the Option Right (as defined
herein), a last out, non-voting, fully subordinated participation interest in
the Obligations (as such term is defined in the Credit Agreement) (the
Participation
Interest
) from BDCF in the aggregate principal amount equal to $7,500,000
pursuant to documentation reasonably satisfactory to BDCF (such contingent
right to purchase the Acquired Interest, the
Option Right
). For the
avoidance of doubt, the Option Right shall not be available to Seller unless
and until it
7
has acquired the Participation Interest from
BDCF. Between the Closing Date and the date of exercise of the Option Right,
Buyer shall not take any action or permit any action of the Company to be taken
that would cause such 50% Membership Interest (excluding the Retained Interest)
to constitute less than 50% of the Membership Interests in the Company
(excluding the Retained Interest).
(b)
Seller acknowledges and
agrees that the Option Right does not include any rights of any kind with
respect to the Company or under the Member Control Agreement or applicable law,
other than as expressly set forth in this
Section 5.1
. Without
limiting the generality of the preceding sentence, Seller shall have no voting,
control or other rights as a Member of the Company, whether under the Member
Control Agreement or under Minnesota law, as a result of this
Section 5.1
.
(c)
No later than thirty
(30) days prior to Sellers exercise of the Option Right, Seller shall deliver
an irrevocable notice pursuant to
Section 7.5
below, which notice
shall set forth a date for closing which shall be during the Option Period.
(d)
In connection with the
exercise of the Option Right, Seller shall, at the closing of the purchase of
the Acquired Interest: (i) acquire the Participation Interest by delivery
of documentation reasonably satisfactory to BDCF; (ii) execute and deliver
a pledge agreement in favor of BDCF, as Agent, in form and substance substantially
similar to the Pledge Agreement (the
New Pledge Agreement
), to effect
the granting of a first lien and security interest in the Acquired Interest to
secure all obligations owed under the Credit Agreement; and (iii) subject to any applicable requirements of the
Member Control Agreement, acquire the Acquired Interest at a purchase
price of $1.00.
(e)
In connection with the
exercise of the Option Right, BDCF shall deliver to Seller at closing, subject
to the New Pledge Agreement, a membership certificate evidencing the Membership
Interest, accompanied by an assignment and acceptance document, substantially
in the form attached hereto as
Exhibit A
, duly executed by BDCF
and, subject to any applicable
requirements of the Member Control Agreement, effecting the assignment
and transfer of the Acquired Interest to Seller. In connection with the
transfer by BDCF of the Acquired Interest to Seller pursuant to the exercise of
the Option Right, BDCF shall not be required to make any representations or warranties
to Seller in connection with such transfer, except as to (i) good and
valid title to the Acquired Interest being transferred to Seller; (ii) its
valid existence and good standing (if applicable); (iii) the legal
capacity and authority for, and validity, binding effect and enforceability of
(as against BDCF), any agreement entered into by BDCF in connection with the
transfer of the Acquired Interest; and (iv) the fact that no brokers
commission or finders fee is payable by BDCF as a result of BDCFs conduct in
connection with the transfer of the Acquired Interest pursuant to this
Article V
.
The Acquired Interest shall at all times remain subject to rights of the Agent
pursuant to the New Pledge Agreement.
(f)
The Option Right set
forth in this
Section 5.1
shall expire if the closing of the
acquisition of the Acquired Interest does not occur during the Option Period,
except if such failure to close is due to BCDFs unreasonable delay or failure
to comply with the requirements of this
Section 5.1
.
8
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.1
Survival
of Representations, Warranties and Covenants
. The representations,
warranties and covenants contained herein shall survive the Closing
indefinitely.
ARTICLE VII
MISCELLANEOUS
7.1
Severability
.
If any provision of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal or unenforceable, such provision shall be severed and
enforced to the extent possible or modified in such a way as to make it
enforceable, and the invalidity, illegality or unenforceability thereof shall
not affect the validity, legality or enforceability of the remaining provisions
of this Agreement.
7.2
Governing
Law
. THIS AGREEMENT
AND EACH OF THE OTHER ACQUISITION DOCUMENTS WHICH DOES NOT EXPRESSLY
SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
7.3
Consent to
Jurisdiction
. EACH OF SELLER AND BUYER HEREBY CONSENTS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, STATE OF NEW YORK
AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
LITIGATED IN SUCH COURTS. EACH OF SELLER AND BUYER EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS. EACH OF SELLER AND BUYER HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE UPON SELLER OR BUYER, AS APPLICABLE, BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SELLER OR
BUYER, AS APPLICABLE, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE
SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME
HAS BEEN POSTED.
7.4
Waiver of
Jury Trial
.
BUYER AND SELLER
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER ACQUISITION
DOCUMENTS. BUYER AND SELLER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER ACQUISITION DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BUYER AND SELLER WARRANT AND REPRESENT THAT EACH HAS
9
HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
7.5
Notices
.
Any notice or other communication required shall be in writing addressed to the
respective party as set forth below and may be personally served, sent by
e-mail, telecopied, sent by overnight courier service or U.S. mail and shall be
deemed to have been given: (a) if delivered in person, when delivered; (b) if
delivered by fax, on the date of transmission if transmitted on a business day
before 4:00 p.m. New York time;
(c) if
sent by e-mail, by the senders receipt of an e-mail acknowledgment confirming
delivery thereof, (d) if delivered by overnight courier, one (1) business
day after delivery to the courier properly addressed; or (e) if delivered
by U.S. mail, four (4) business days after deposit with postage prepaid
and properly addressed.
Notices
shall be addressed as follows:
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|
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If to Seller:
|
Southwest Casino and Hotel Corp.
|
|
2001 Killebrew Drive
|
|
Bloomington, MN 55425
|
|
ATTN: Thomas E. Fox
|
|
Fax: (952) 853-9991
|
|
|
With a copy to:
|
Oppenheimer Wolff & Donnelly, LLP
|
|
Plaza VII, Suite 3200
|
|
35 South 7th Street
|
|
Minneapolis, MN 55402
|
|
ATTN: D. William Kaufman
|
|
Fax: (612) 607-7100
|
|
|
If to Buyer:
|
Black Diamond Commercial Finance, L.L.C.
|
|
100 Field Drive
|
|
Lake Forest, IL 60045-2580
|
|
ATTN: Hugo H. Gravenhorst
|
|
Fax: (847) 615-9064
|
|
|
With a copy to:
|
Black Diamond Capital Management, L.L.C.
|
|
One Sound Shore Drive
|
|
Suite 200
|
|
Greenwich, CT 06830
|
|
ATTN: Bob Rosenbloom
|
|
Fax: (203) 552-1014
|
|
|
and:
|
Latham & Watkins LLP
|
|
233 South Wacker Drive
|
|
Suite 5800, Sears Tower
|
|
Chicago, Illinois 60606
|
|
ATTN: Jeff Moran
|
|
Fax: (312) 993-9767
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10
7.6
References,
Pronouns and Headings
. Except as otherwise specifically indicated, all
references to Section or Subsection numbers refer to Sections and
Subsections of this Agreement and all references to Exhibits refer to the
Exhibits attached hereto. The words hereby, hereof, herein, hereto, hereunder,
and words of similar import refer to this Agreement as a whole and not to any
particular Section or Subsection hereof. The word hereafter shall mean
after, and the term heretofore shall mean before, the date of this Agreement.
The word or means and/or and the words include and including shall not
be construed as terms of limitation. As used herein, all pronouns shall include
the masculine, feminine, neuter, singular and plural thereof wherever the
context and facts require such construction. The headings, titles and subtitles
herein are inserted for convenience of reference only and are to be ignored in
any construction of the provisions hereof.
7.7
Assignment
.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto, and their respective heirs, personal
representatives, successors and permitted assigns. Notwithstanding the
foregoing, no party hereto may assign any of its rights or obligations under
this Agreement without the prior written consent of Buyer, in the case of an
assignment by Seller, or of Seller, in the case of an assignment by Buyer, and
any purported assignment without such consent shall be null and void;
provided
,
however
, that Seller and Buyer
may make such an assignment without consent to (i) its affiliates or (ii) a
successor to all or a material portion of its assets or business, whether in a
merger, sale of stock, sale of assets or other transaction, the definitive
written agreement for which shall contain an express assumption by the
successor or assignee of Sellers or Buyers, as the case may be, obligations
hereunder; and
provided
,
further
, that Buyer may make such an
assignment without consent to any Lender (as such term is defined in the Credit
Agreement).
7.8
No
Waiver
. Any extension or waiver of the obligations herein of either party
shall be valid only if set forth in an instrument in writing referring to this
section and signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
7.9
No
Oral Modification
. Neither this Agreement nor any of its terms or
provisions may be amended, modified, waived, discharged or terminated, except
by a written instrument signed by the parties hereto.
7.10
Expenses
.
Except as otherwise specified in this Agreement, all costs and expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement shall be
paid by the party incurring such cost and expenses.
7.11
Entire
Agreement
. This Agreement, including the other documents referred to herein
which form a part hereof, and the Settlement Agreement, dated as of the date
hereof, by and between Seller, Seller Parent and Buyer, as Agent, contain the
full agreement between the parties hereto on its subject matters, and
supersedes and renders null and void all prior
11
agreements or understandings, whether written
or oral, which exist or may have existed between the parties with respect to
its subject matters.
7.12
Construction
.
Buyer and Seller acknowledge that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review this
Agreement and the other Acquisition Documents and that this Agreement and the
other Acquisition Documents shall be construed as if jointly drafted by Buyer
and Seller.
7.13
Additional
Documents
. The parties hereto will, without additional consideration,
execute and deliver such further instruments and take such other action as may
be reasonably requested by any other party hereto in order to carry out the
purposes of this Agreement.
7.14
No Third Party Beneficiaries
. Nothing in this Agreement, express or
implied, is intended to confer upon any person or entity other than the parties
hereto any rights or remedies of any nature whatsoever under or by reason of
this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their respective successors and permitted
assigns.
7.15
Counterparts
.
This Agreement may be executed in counterparts, each of which shall be an
original, and all of which, taken together, shall constitute one and the same
instrument. The parties agree that telecopied or electronically scanned copies
of signatures will be sufficient, with original signature pages to be
supplied and exchanged at a later date.
Signature Page Follows.
12
IN WITNESS WHEREOF the parties hereto have
executed this Agreement as of the date first above written.
|
BUYER
:
|
|
|
|
BLACK DIAMOND COMMERCIAL
FINANCE, L.L.C., as Agent
|
|
|
|
|
|
By:
|
/s/
Hugo H. Gravenhorst
|
|
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Hugo H.
Gravenhorst
|
|
|
Managing Director
|
|
|
|
|
|
SELLER
:
|
|
|
|
|
|
SOUTHWEST CASINO AND HOTEL CORP.
|
|
|
|
|
|
By:
|
/s/
Thomas E. Fox
|
|
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Thomas E.
Fox
|
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President
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Exhibit 10.2
LIMITED
COVENANT NOT TO SUE AND RELEASE OF LIMITED GUARANTY
This Limited Covenant Not to Sue and Release of Limited Guaranty (
Agreement
)
is made and entered into as of October 19, 2008 by and among Southwest
Casino Corporation, a Nevada corporation (
SCC
), Southwest Casino and
Hotel Corp., a Minnesota corporation (
SCH
) (SCC and SCH are referred
to herein each individually as a
Guarantor
and collectively, as the
Southwest
Guarantors
), and Black Diamond Commercial Finance, L.L.C., a Delaware
limited liability company, as Agent (
Agent
). Unless otherwise
specified herein, capitalized terms used in this Agreement shall have the
meanings ascribed to them in the Credit Agreement (as hereinafter defined).
WITNESSETH:
WHEREAS,
pursuant to
that certain Credit Agreement, dated as of April 20, 2007 (as heretofore
amended, amended and restated, supplemented or otherwise modified, the
Credit
Agreement
), by and among Borrower, North Metro Hotel, LLC, a Minnesota
limited liability company, as a guarantor and a Loan Party (
Hotel LLC
),
the financial institutions party thereto from time to time as lenders
(collectively, the
Lenders
), and Agent, Lenders have made certain
loans and financial accommodations to Borrower;
WHEREAS
, SCC, SCH
and Agent are parties to that certain Limited Guaranty dated as of July 1,
2008 (the
Southwest Guaranty
), pursuant to which the Southwest
Guarantors unconditionally guaranteed the Obligations on a limited basis as set
forth therein, and SCH and Agent are parties to that certain Pledge Agreement,
dated as of April 20, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the
Southwest Pledge Agreement
),
pursuant to which SCH pledged to Agent, for the benefit of itself and the
benefit of Lenders, a first priority security interest in the Pledged
Collateral (as defined in the Southwest Pledge Agreement);
WHEREAS
, MTR-Harness, Inc.,
a Minnesota corporation (
MTR Harness
), MTR Gaming Group, Inc., a Delaware corporation (
MTR Gaming
)
(MTR Harness and MTR Gaming are referred to herein each individually as
an
MTR Guarantor
and collectively, as the
MTR Guarantors
) and
Agent are parties to that certain Limited Guaranty dated as of July 1,
2008 (the
MTR Guaranty
), and MTR Harness and Agent are parties to that
certain Pledge Agreement, dated as of April 20, 2007 (as amended,
restated, supplemented or otherwise modified from time to time, the
MTR
Pledge Agreement
);
WHEREAS
, certain
Events of Default have occurred and are continuing under the Credit Agreement
as of the date hereof (the
Existing Defaults
), and as a result of the
Existing Defaults, Agent and the Lenders have terminated their obligation to
make further extensions of credit to or for the benefit of Borrower and are
entitled to exercise any and all default-related rights and remedies under the
Credit Agreement, other Loan Documents (which term, for purposes of this
Agreement, does not include the MTR Pledge Agreement or the MTR Guaranty)
and/or applicable law;
WHEREAS,
the parties
hereto are also party to that certain Settlement Agreement of even date
herewith, which contemplates the execution of this Agreement in conjunction
with certain other Agreements to be executed concurrently herewith; and
WHEREAS,
in
consideration of SCHs entry into the Settlement Agreement, Agent has agreed
that, subject to the terms and conditions hereof, it would not sue to enforce
the Southwest Guaranty.
NOW THEREFORE
, in
consideration of one dollar and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1.
Conditions
Precedent
. The obligations of Agent under this Agreement are subject to the
satisfaction of all of the applicable conditions set forth below:
(a)
Agent shall have received a fully executed copy of
that certain Settlement Agreement among SCH, SCC and Agent, dated as of the date hereof (the
Settlement
Agreement
);
(b)
Agent shall have received a fully executed copy of
that certain Limited Liability Company Interest Purchase Agreement
between SCH and Agent, dated as of the date hereof (the
Purchase Agreement
);
(c)
Agent shall have received a fully executed
Consulting Agreement between SCH and Agent, dated as of the date hereof (the
Consulting
Agreement
, and, collectively with this Agreement, the Settlement Agreement
and the Purchase Agreement, the
Transaction Documents
); and
(d)
The transactions contemplated by the Purchase
Agreement shall have closed and been consummated by no later than October 19,
2008.
2.
Covenant
Not To Sue
. Agent, on behalf of itself and its affiliates, successors and assigns, hereby agrees not to initiate
against the Southwest Guarantors or any of their respective successors,
assigns, insurers, administrators, heirs, and beneficiaries (the
Southwest
Parties
), any proceeding of any nature based on any claim seeking to
enforce the Southwest Guaranty or otherwise recover any amounts due thereunder
from any of the Southwest Parties during the period from the date hereof until
the earliest to occur of any of the following:
(a) the occurrence of any default or
event of default under any of the Transaction Documents (other than a default
or event of default arising as a result of the action or inaction of Agent), or
the breach (by any party other than Agent) of any term or condition of any of
the Transaction Documents; and
2
(b)
the date on which any
court or any federal, state or local agency, or any other tribunal or body of
competent jurisdiction determines, or the date on which one or more of the
Southwest Guarantors asserts or alleges (whether in a claim or cause of action
commenced by any party in any court or before any federal, state or local
agency, or any other tribunal or body, or otherwise in any writing to Agent)
that any of the Transaction Documents or any of the transactions contemplated
thereby are invalid or unenforceable in whole or in part.
3.
Release
and Termination of Southwest Guaranty
. Any and all rights and obligations
of SCC, SCH, Agent and Lenders under the Southwest Guaranty will be released
on, and the Southwest Guaranty will be of no further force and effect as of,
the later to occur of:
(a)
the earlier to occur
of the following:
(1)
a final determination by a court of
competent jurisdiction that Agent: (i) has duly and properly acquired all
right, title and interest in and to the Acquired Interest (as such term is
defined in the Purchase Agreement, the
Acquired Interest
) formerly
owned by SCH, (ii) has properly succeeded to SCHs Membership Interest (as
such term is defined in the Purchase Agreement, the
Membership Interest
)
in North Metro Harness Initiative, LLC, a Minnesota limited liability company (
North
Metro
), except that portion of the Membership Interest comprising the
Retained Interest (as such term is defined in the Purchase Agreement, the
Retained
Interest
), and (iii) is a Member, Substitute Member and Managing
Member (as such terms are defined in the Member Control Agreement) for all
purposes and in all respects under the Member Control Agreement (as such term
is defined in the Purchase Agreement, the
Member Control Agreement
);
and
(2)
the receipt by Agent of documentation, in
form and substance reasonably acceptable to Agent, executed and delivered by
all of the Members (as such term is defined in the Member Control Agreement) of
North Metro: (i) acknowledging and consenting to Agents acquisition of
the Acquired Interest; (ii) admitting Agent as a Member, Substitute
Member and Managing Member (as such terms are defined in the Member Control
Agreement) under the Member Control Agreement for all purposes and in all
respects; and (iii) acknowledging and consenting to Agents succession to
SCHs Membership Interest in North Metro, except that portion of the Membership
Interest comprising the Retained Interest; and
(b) the satisfaction of all obligations
of SCH under the Consulting Agreement.
4.
Reservation
of Rights; No Effect on Obligations or Liens of Agent
. Except to the extent
explicitly set forth herein and in the Transaction Documents, Agent expressly
reserves all of its rights, powers, privileges and remedies under the Credit
Agreement,
3
the Southwest Guaranty, the MTR Guaranty, the
Southwest Pledge Agreement, the MTR Pledge Agreement and all other Loan
Documents and/or applicable law, including, without limitation, its right at
any time, as applicable, (i) to accelerate the Obligations, (ii) to
commence any legal or other action to collect any or all of the Obligations
from any or all of the Borrower and the other Loan Parties and/or any
Collateral or any property pledged by any other person or entity as security
for the Obligations (the
Other Collateral
), (iii) to foreclose or
otherwise realize on any or all of the Collateral or Other Collateral and/or as
appropriate (including to foreclose on the Pledged Collateral under the
Southwest Pledge Agreement and/or the MTR Pledge Agreement), set-off or apply
to the payment of any or all of the Obligations, any or all of the Collateral
or Other Collateral, (iv) to take any other enforcement action or
otherwise exercise any or all rights and remedies provided for by any or all of
the Credit Agreement, the Southwest Guaranty, the MTR Guaranty, the Southwest
Pledge Agreement, the MTR Pledge Agreement and all other Loan Documents and/or
applicable law, and (v) to reject any forbearance, financial restructuring
or other proposal, other than the transactions contemplated in this Agreement
and the Transaction Documents, made by or on behalf of the Borrower, any other
Loan Party or any creditor or equity holder. No oral representations or course
of dealing on the part of Agent, any Lender or any of its officers, employees
or agents, and no failure or delay by Agent or any Lender with respect to the
exercise of any right, power, privilege or remedy under any of the Credit
Agreement, the Southwest Guaranty, the MTR Guaranty, the Southwest Pledge
Agreement, the MTR Pledge Agreement or any of the other Loan Documents or
applicable law shall operate as a waiver thereof, and the single or partial
exercise of any such right, power, privilege or remedy shall not preclude any
later exercise of any other right, power, privilege or remedy. Nothing herein
or in the Settlement Agreement, the Purchase Agreement or the Consulting
Agreement shall have any effect on the validity or enforceability of the
Obligations or the liens and security interests of Agent securing the
Obligations.
5.
Severability
.
If any provision of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal or unenforceable, such provision shall be severed and
enforced to the extent possible or modified in such a way as to make it
enforceable, and the invalidity, illegality or unenforceability thereof shall
not affect the validity, legality or enforceability of the remaining provisions
of this Agreement.
6.
Governing
Law
. THIS AGREEMENT AND EACH OF THE OTHER TRANSACTION DOCUMENTS WHICH DOES
NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
7.
Consent
to Jurisdiction
. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY,
STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENTS ELECTION,
4
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. EACH OF THE PARTIES TO THIS AGREEMENT EXPRESSLY
SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. EACH OF THE SOUTHWEST GUARANTORS HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS
MAY BE MADE UPON THE
SOUTHWEST GUARANTORS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO THE SOUTHWEST GUARANTORS, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE
SO MADE
SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
8.
Waiver
of Jury Trial
. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS. EACH OF THE
PARTIES TO THIS AGREEMENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH OF THE PARTIES TO THIS AGREEMENT WARRANTS AND REPRESENTS THAT IT HAS HAD
THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
9.
Notices
.
Any notice or other communication required shall be in writing addressed to the
respective party as set forth below and may be personally served, sent by
e-mail, telecopied, sent by overnight courier service or U.S. mail and shall be
deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by fax, on the date
of transmission if transmitted on a Business Day before 4:00 p.m. New York
time;
(c) if sent by e-mail,
by the senders receipt of an e-mail acknowledgment confirming delivery
thereof, (d) if delivered by overnight courier, one (1) Business Day
after delivery to the courier properly addressed; or (e) if delivered by
U.S. mail, four (4) Business Days after deposit with postage prepaid and
properly addressed
5
Notices shall be addressed as follows:
If to the
Southwest Guarantors:
|
Southwest
Casino Corporation and Southwest
|
|
Casino and
Hotel Corp
|
|
2001
Killebrew Drive, Suite 350
|
|
Minneapolis,
MN 55425
|
|
ATTN:
President
|
|
Fax:
952-853-9991
|
|
|
With a copy
to:
|
Oppenheimer
Wolff & Donnelly, LLP
|
|
Plaza VII,
Suite 3200
|
|
35 South 7
th
Street
|
|
Minneapolis,
MN 55402
|
|
ATTN: D.
William Kaufman
|
|
Fax:
612-607-7100
|
|
|
If to Agent:
|
Black
Diamond Commercial Finance, L.L.C.
|
|
100 Field
Drive
|
|
Lake Forest,
IL 60045-2580
|
|
ATTN: Hugo
H. Gravenhorst
|
|
Fax:
847-615-9064
|
|
|
With a copy
to:
|
Black
Diamond Capital Management, L.L.C.
|
|
One Sound
Shore Drive
|
|
Suite 200
|
|
Greenwich,
Connecticut 06830
|
|
ATTN: Bob
Rosenbloom
|
|
Fax:
203-552-1014
|
|
|
And to:
|
Latham &
Watkins LLP
|
|
233 South
Wacker Drive
|
|
Suite 5800,
Sears Tower
|
|
Chicago,
Illinois 60606
|
|
ATTN: Jeff
Moran
|
|
Fax:
312-993-9767
|
10.
References,
Pronouns And Headings
. Except as otherwise specifically indicated, all
references to Section or Subsection numbers refer to Sections and
Subsections of this Agreement and all references to Exhibits refer to the
Exhibits attached hereto. The words hereby, hereof, herein, hereto, hereunder,
and words of similar import refer to this Agreement as a whole and not to any
particular Section or Subsection hereof. The word hereafter shall mean
after, and the term heretofore shall mean before, the date of this Agreement.
The word or means and/or and the words include and including shall not
be construed as terms of limitation. As used herein, all pronouns shall include
the masculine, feminine, neuter, singular and
6
plural thereof wherever the context and facts
require such construction. The headings, titles and subtitles herein are
inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.
11.
Assignment
.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto, and their respective heirs, personal
representatives, successors and permitted assigns. Notwithstanding the
foregoing, no party hereto may assign any of its rights or obligations under
this Agreement without the prior written consent of Agent, in the case of an
assignment by SCC or SCH, or of SCC and SCH, in the case of an assignment by
Agent, and any purported assignment without such consent shall be null and
void;
provided
,
however
, that (a) SCC, SCH and Agent may
make such an assignment without consent to (i) its affiliates or (ii) a
successor to all or a material portion of its assets or business, whether in a
merger, sale of stock, sale of assets or other transaction, the definitive
written agreement for which shall contain an express assumption by the
successor or assignee of the obligations of SCC, SCH or Agent, as the case may
be, hereunder and (b) Agent may make such assignment without consent to
any Lender under the Credit Agreement.
12.
No
Waiver
. Any extension or waiver of the obligations herein of either party
shall be valid only if set forth in an instrument in writing referring to this
section and signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
13.
No
Oral Modification
. Neither this Agreement nor any of its terms or
provisions may be amended, modified, waived, discharged or terminated, except
by a written instrument signed by the parties hereto.
14.
Expenses
.
Except as otherwise specified in this Agreement, all costs and expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement shall be
paid by the party incurring such cost and expenses.
15.
Entire
Agreement
. This Agreement, including the other documents referred to herein
which form a part hereof (including the Transaction Documents), contains the
full agreement between the parties hereto on its subject matters, and
supersedes and renders null and void all prior agreements or understandings,
whether written or oral, which exist or may have existed between the parties
with respect to its subject matters.
16.
Construction
.
Each of the parties hereto acknowledges that it has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review this
Agreement and the other Transaction Documents and that this Agreement and the
7
other Transaction Documents shall be
construed as if jointly drafted by the parties hereto and thereto.
17.
Additional
Documents
. The parties hereto will, without additional consideration,
execute and deliver such further instruments and take such other action as may
be reasonably requested by any other party hereto in order to carry out the
purposes of this Agreement and the other Transaction Documents.
18.
No
Third Party Beneficiaries
. Nothing in this Agreement, express or implied,
is intended to confer upon any person or entity other than the parties hereto
any rights or remedies of any nature whatsoever under or by reason of this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their respective successors and permitted assigns.
19.
Counterparts
.
This Agreement may be executed in counterparts, each of which shall be an
original, and all of which, taken together, shall constitute one and the same
instrument. The parties agree that telecopied copies of signatures will be
sufficient, with original signature pages to be supplied and exchanged at
a later date.
Signature page follows.
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
|
SOUTHWEST CASINO CORPORATION
|
|
|
|
|
|
By:
|
/s/ Thomas E. Fox
|
|
Name:
|
Thomas E. Fox
|
|
Its:
|
President
|
|
|
|
|
|
SOUTHWEST CASINO AND HOTEL CORP.
|
|
|
|
|
|
By:
|
/s/ Thomas E. Fox
|
|
Name:
|
Thomas E. Fox
|
|
Its:
|
President
|
|
|
|
|
|
BLACK DIAMOND COMMERCIAL FINANCE,
L.L.C.
, as Agent
|
|
|
|
|
|
By:
|
/s/ Hugo H. Gravenhorst
|
|
Name:
|
Hugo H. Gravenhorst
|
|
Its:
|
Managing Director
|
|
|
|
|
9
Exhibit 10.3
SETTLEMENT AGREEMENT
This
Settlement Agreement (
Agreement
) is made and entered into as of October 19,
2008 by and among Southwest Casino Corporation, a Nevada corporation (
SCC
),
Southwest Casino and Hotel Corp., a Minnesota corporation (SCH) (SCC and SCH
are referred to herein each individually as a
Guarantor
and
collectively, as the
Southwest Guarantors
) and Black Diamond
Commercial Finance, L.L.C., a Delaware limited liability company, as Agent (
Agent
). Unless otherwise specified herein,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Credit Agreement (as hereinafter defined).
WITNESSETH:
WHEREAS,
SCC owns 100% of the capital stock of SCH;
WHEREAS,
SCH owns a 50% Membership Interest (as such term is defined in the Member
Control Agreement, as defined below) (the
Membership Interest
) in
North Metro Harness Initiative, LLC, a Minnesota limited liability company (the
Borrower
), whose business and affairs are governed by that certain Member
Control Agreement of North Metro Harness Initiative, LLC, entered into and
effective as of June 8, 2004 (as has been and may hereafter be amended,
restated, supplemented or otherwise modified from time to time, the
Member
Control Agreement
);
WHEREAS,
SCHs Membership Interest in the Company includes a 50% Percentage Interest (as
such term is defined in the Member Control Agreement) in the Borrower;
WHEREAS,
MTR-Harness, Inc., a Minnesota corporation (
MTR Harness
), is
owner of a 50% Membership Interest (as such term is defined in the Member
Control Agreement) in the Borrower;
WHEREAS,
pursuant to that certain Credit Agreement, dated as of April 20, 2007 (as
heretofore amended, amended and restated, supplemented or otherwise modified,
the
Credit Agreement
), by and among Borrower, North Metro Hotel, LLC,
a Minnesota limited liability company, as a guarantor and a Loan Party (
Hotel
LLC
), the financial institutions party thereto from time to time as
lenders (collectively, the
Lenders
), and Agent, Lenders have made
certain loans and financial accommodations to Borrower;
WHEREAS,
SCC, SCH and Agent are parties to that certain Limited Guaranty dated as of July 1,
2008 (the
Southwest Guaranty
), pursuant to which the Southwest
Guarantors unconditionally guaranteed the Obligations on a limited basis as set
forth therein, and SCH and Agent are parties to that certain Pledge Agreement,
dated as of April 20, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the
Southwest Pledge Agreement
),
pursuant to which SCH pledged to Agent, for the benefit of itself and the
benefit of Lenders, a first priority security interest in the Pledged
Collateral (as defined in the Southwest Pledge Agreement);
WHEREAS
,
MTR Harness, MTR Gaming Group, Inc.,
a Delaware corporation (
MTR Gaming
) (MTR Harness and MTR Gaming
are referred to herein each individually as an
MTR Guarantor
and
collectively, as the
MTR Guarantors
) and Agent are parties to that
certain Limited Guaranty dated as of July 1, 2008 (the
MTR Guaranty
),
and MTR Harness and Agent are parties to that certain Pledge Agreement, dated
as of April 20, 2007 (as amended, restated, supplemented or otherwise
modified from time to time, the
MTR Pledge Agreement
);
WHEREAS,
certain Events of Default have occurred and are continuing under the Credit
Agreement as of the date hereof, including the Event of Default arising as a
result of the failure to comply with Section 6.16 of the Credit Agreement,
the Event of Default arising as a result of the failure to comply with Section 7.1
(b) of the Credit Agreement for the period ending June 30, 2008, the
anticipated Event of Default arising from the anticipated failure to comply
with Section 7.1 (b) of the Credit Agreement for the period ending September 30,
2008, and the Event of Default arising as a result of the failure to make an
interest payment to Agent due on October 17, 2008 (each such Event of
Default, an
Existing Default
, and, collectively, the
Existing
Defaults
), and as a result of the Existing Defaults, Agent and the Lenders
terminated their obligation to make further extensions of credit to or for the
benefit of Borrower on September 11, 2008 and are entitled to exercise any
and all default-related rights and remedies under the Credit Agreement, the
Southwest Guaranty, the MTR Guaranty, the Southwest Pledge Agreement, the MTR
Pledge Agreement and the other Loan Documents (which term, for purposes of this
Agreement, does not include the MTR Guaranty or the MTR Pledge Agreement)
and/or applicable law, including but not limited to foreclose on the Pledged
Collateral, as defined in and pursuant to the provisions of the Southwest
Pledge Agreement and the MTR Pledge Agreement, respectively; and
WHEREAS,
as
a result of the Existing Defaults and the financial difficulties of the
Borrower, the parties hereto desire to enter into the documents and
transactions identified and described herein.
NOW
THEREFORE
, in consideration of one dollar and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1.
Concurrent
Transactions
. Concurrently herewith,
the parties hereto intend to execute and deliver the following agreements and
effect the following transactions, all of which, collectively, are intended to
constitute one transaction. All documents or other deliveries
required to be made by the parties hereto at Closing (as defined below), and
all transactions required to be consummated concurrently with Closing, shall be
deemed to have been delivered and to have been consummated simultaneously with
all other transactions and all other deliveries, and no delivery shall be
deemed to have been made, and no transaction shall be deemed to have been
consummated, until all deliveries required by the parties hereto have been
made, and all concurrent or other transactions shall have been consummated.
(a)
Purchase Agreement
. On
the date hereof, Agent and SCH shall enter into that
2
certain Limited Liability Company Interest Purchase Agreement dated of
the date hereof (the
Purchase Agreement
);
(b)
Limited
Covenant Not to Sue
. On the date
hereof, Agent and the Southwest Guarantors shall enter into that certain
Limited Covenant Not to Sue and Release of Limited Guaranty dated as of the
date hereof (the
Covenant Not to Sue
);
(c)
Consulting
Agreement
. On the date hereof, Agent
and SCH shall enter into that certain
Consulting Agreement dated as of the date hereof (the
Consulting
Agreement
, and, collectively with this Agreement, the Purchase Agreement
and the Covenant Not to Sue, the
Transaction Documents
);
(d)
Closing
. The transactions contemplated
by the Purchase Agreement, the Covenant Not to Sue and the Consulting Agreement
shall have closed and been consummated by no later than October 19, 2008
(the
Closing
); and
(e)
Delivery
. The obligation of Agent to
consummate the transactions contemplated by this Agreement is subject to the
delivery by each of the Southwest Guarantors of certified copies of resolutions
of the governing bodies of each of the Southwest Guarantors authorizing and
approving the transactions contemplated by this Agreement.
2.
Acknowledgements
of Southwest Guarantors; Existing Defaults; Outstanding Obligations
.
(a)
Outstanding
Obligations
. Each of the Southwest
Guarantors acknowledges and agrees that the aggregate balance of the
outstanding Obligations under and as defined in the Credit Agreement as of October 17,
2008 was not less than $42,192,394.
The foregoing amount does not include any of the interest, fees, costs,
and expenses to which Agent and/or any Lender is entitled under the Credit
Agreement or other Loan Documents. All
of the foregoing Obligations are outstanding, and each of the Southwest
Guarantors acknowledges and agrees that (i) they are jointly and severally
liable for the Obligations to the extent provided under the Southwest Guaranty,
and (ii) they have no right of offset, defense, or counterclaim with
respect to any of the Obligations.
Pursuant to the Credit Agreement and other Loan Documents, each of the
Southwest Guarantors acknowledges, ratifies, reaffirms, confirms and agrees
that the Agent and Lenders have, and shall continue to have, valid, enforceable
and perfected first priority Liens, subject to Permitted Encumbrances that are
entitled to priority under applicable law, upon all of the Collateral as
security for payment of the Obligations to the extent provided under the Credit
Agreement and other Loan Documents.
(b)
Existing
Defaults
. Each of the Southwest
Guarantors acknowledges and agrees
3
that (i) each of the Existing Defaults has occurred and is
continuing as of the date hereof, (ii) none of the Existing Defaults has
been cured as of the date hereof, (iii) except for the Existing Defaults,
no other Defaults and/or Events of Default have occurred and are continuing as
of the date hereof and (iv) as a result of each of the Existing Defaults,
Agent and the Lenders have no obligation to make further extensions of credit
to or for the benefit of Borrower, and the Agent is entitled to exercise any
and all default-related rights and remedies under the Credit Agreement, the
other Loan Documents and/or applicable law, including, without limitation, its
right at any time, as applicable, (1) to accelerate the Obligations, (2) to
commence any legal or other action to collect any or all of the Obligations
from any or all of the Borrower and the other Loan Parties and/or any
Collateral or any property pledged by the Southwest Guarantors as security for
the Obligations (the
Other Collateral
), (3) to foreclose or
otherwise realize on any or all of the Collateral or Other Collateral and/or as
appropriate (including to foreclose on the Pledged Collateral under the
Southwest Pledge Agreement), set-off or apply to the payment of any or all of
the Obligations, any or all of the Collateral or Other Collateral, (4) to
take any other enforcement action or otherwise exercise any or all rights and
remedies provided for by any or all of the Credit Agreement, the Southwest
Guaranty, the Southwest Pledge Agreement and all other Loan Documents and/or
applicable law, and (5) to reject any forbearance, financial restructuring
or other proposal made by or on behalf of the Borrower, any other Loan Party or
any creditor or equity holder.
(c)
Directors
of Borrower
. The parties hereto
acknowledge, agree and consent to the following: (i) immediately prior to the Closing,
Agent has rescinded its letter to SCH and MTR Harness dated October 16,
2008 regarding Removal and Appointment of Directors and (ii) immediately
prior to the Closing, SCH has removed the two Directors previously appointed by
SCH to the Board of Directors of the Borrower and has appointed in their place
Mark D. Thompson and Erwin A. Marks to the Board of Directors of the Borrower
in accordance with Article VII, Section 4.2 of the Member Control
Agreement.
3.
Reservation
of Rights; No Effect on Obligations or Liens of Agent
. Except to the extent explicitly set forth
herein and in the Transaction Documents, Agent expressly reserves all of its
rights, powers, privileges and remedies under the Credit Agreement, the
Southwest Guaranty, the MTR Guaranty, the Southwest Pledge Agreement, the MTR
Pledge Agreement and all other Loan Documents and/or applicable law, including,
without limitation, its right at any time, as applicable, (i) to
accelerate the Obligations, (ii) to commence any legal or other action to
collect any or all of the Obligations from any or all of the Borrower and the
other Loan Parties and/or any Collateral or Other Collateral, (iii) to
foreclose or otherwise realize on any or all of the Collateral or Other
Collateral and/or as appropriate (including to foreclose on the Pledged
Collateral under the Southwest Pledge Agreement and/or the MTR Pledge
Agreement), set-off or apply to the payment of any or all of the Obligations,
any or all of the Collateral or Other Collateral, (iv) to take any other
enforcement action or otherwise exercise any or all rights and remedies
provided for by any or all of the
4
Credit Agreement, the Southwest Guaranty, the
MTR Guaranty, the Southwest Pledge Agreement, the MTR Pledge Agreement and all
other Loan Documents and/or applicable law, and (v) to reject any
forbearance, financial restructuring or other proposal, other than the
transactions contemplated in this Agreement and the Transaction Documents, made
by or on behalf of the Borrower, any other Loan Party or any creditor or equity
holder. No oral representations or
course of dealing on the part of Agent, any Lender or any of its officers,
employees or agents, and no failure or delay by Agent or any Lender with
respect to the exercise of any right, power, privilege or remedy under any of
the Credit Agreement, the Southwest Guaranty, the MTR Guaranty, the Southwest
Pledge Agreement, the MTR Pledge Agreement or any of the other Loan Documents
or applicable law shall operate as a waiver thereof, and the single or partial
exercise of any such right, power, privilege or remedy shall not preclude any
later exercise of any other right, power, privilege or remedy. Nothing herein or in the Covenant Not to Sue,
the Purchase Agreement or the Consulting Agreement shall have any effect on the
validity or enforceability of the Obligations or the Liens and security
interests of Agent securing the Obligations.
4.
Release
. In exchange for the agreements of Agent set
forth in the Covenant Not to Sue and the other Transaction Documents, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, each of the Southwest Guarantors, on behalf of itself and
its affiliates, successors and assigns, fully
and forever remises, releases and discharges Agent, Lenders and each of their
subsidiaries and affiliates, and each and all of their directors, officers,
employees, attorneys, accountants, consultants, and other agents, of and from
all manner of actions, choses in action, causes of action, expenses, losses,
damages, judgments, executions, claims and demands, of whatsoever kind or
nature, of law or in equity, whether known or unknown, arising out of or
relating in any manner, to any cause or thing whatsoever, which any Southwest
Guarantor may have had, now has, or which any Southwest Guarantor hereafter
can, shall or may have, for or by reason of any manner, cause or thing
whatsoever, whenever arising, to and including the date of the Closing,
including, without limitation, any and all claims in any way relating to the
Credit Agreement, the other Loan Documents, the MTR Guaranty, or the MTR Pledge
Agreement. Notwithstanding any of the
foregoing, if the Agent initiates against the Southwest Guarantors or any of
their respective successors, assigns, insurers, administrators, heirs, and
beneficiaries (the
Southwest Parties
), any proceeding of any nature
based on any claim seeking to enforce the Southwest Guaranty or otherwise
recover any amounts due thereunder from any of the Southwest Parties, then the
release set forth in this paragraph shall be null and void and of no further
force or effect.
5.
Representations
and Warranties of Southwest Guarantors
.
Each of the Southwest Guarantors represents and warrants to Agent as follows:
(a)
Status
. Each of the Southwest Guarantors is a duly
formed, validly existing corporation in good standing under the laws of the
state of its formation and has all
5
requisite
power and authority to own its properties and assets and to carry on its
business as currently conducted.
(b)
Authority
. Each of the Southwest Guarantors has full
power, right and authority to execute and deliver this Agreement and the other
Transaction Documents, and, subject to the terms of the Member Control
Agreement, to perform its obligations hereunder and under the other Transaction
Documents and consummate the transactions contemplated hereby and thereby. The Southwest Guarantors execution, delivery
and performance of this Agreement and the other Transaction Documents, and the
consummation by the Southwest Guarantors of the transactions contemplated
hereby have been duly authorized and approved by all necessary action on the
part of each of the Southwest Guarantors.
(c)
Enforceability
. This Agreement and each of the other
Transaction Documents has been duly and validly executed by each of the
Southwest Guarantors and, upon delivery thereof by the Southwest Guarantors,
will constitute a legally valid and binding obligation of the Southwest
Guarantors enforceable against the Southwest Guarantors in accordance with its
terms, except to the extent that such enforceability may be subject to, and
limited by, applicable bankruptcy, insolvency, reorganization, moratorium,
receivership and similar laws affecting the enforcement of creditors rights
generally, and general equitable principles.
(d)
No Conflict
. The execution, delivery and performance of
this Agreement and the other Transaction Documents, and the consummation by the
Southwest Guarantors of the transactions contemplated hereby and thereby, and
compliance with the terms and provisions hereof and thereof, do not and will
not: (i) conflict with, violate,
result in the breach of, or constitute a default under any provision of the
Southwest Guarantors respective charter or by-laws; (ii) conflict with,
violate, result in the breach of, constitute a default under, give rise to any
right of acceleration, cancellation or termination of any right or obligation
of the Southwest Guarantors under, or require any consent, approval,
authorization or action or filing pursuant to, any agreement or other
instrument to which either of the Southwest Guarantors is a party or by which
either of the Southwest Guarantors or any of their properties or assets are
bound; or (iii) violate or require any consent, approval, authorization or
action or filing pursuant to, any Laws applicable to the Southwest Guarantors,
or any of their properties or assets, except laws and regulations of the State
of Minnesota applicable to the acquisition of an ownership interest in an
entity licensed to engage in pari-mutuel wagering.
6.
Representations
and Warranties of Agent
. The Agent
represents and warrants to the other parties hereto as follows:
(a)
Status
. The Agent is a duly formed, validly existing
limited liability company in good standing under the laws of Delaware and has
all requisite power and authority to
6
own its
properties and assets and to carry on its business as currently conducted.
(b)
Authority
. The Agent has full power, right and authority
to execute and deliver this Agreement and the other Transaction Documents, to
perform its obligations hereunder and under the other Transaction Documents,
and to consummate the transactions contemplated hereby and thereby. The Agents execution, delivery and
performance of this Agreement and the other Transaction Documents, and the
consummation by Agent of the transactions contemplated hereby have been duly
authorized and approved by all necessary action on the part of the Agent.
(c)
Enforceability
. This Agreement and each of the other
Transaction Documents has been duly and validly executed by the Agent and, upon
delivery thereof by the Agent, will constitute a legally valid and binding
obligation of the Agent enforceable against the Agent in accordance with its
terms, except to the extent that such enforceability may be subject to, and
limited by, applicable bankruptcy, insolvency, reorganization, moratorium,
receivership and similar laws affecting the enforcement of creditors rights
generally, and general equitable principles.
(d)
No Conflict
. The execution, delivery and performance of
this Agreement and the other Transaction Documents, and the consummation by the
Agent of the transactions contemplated hereby and thereby, and compliance with
the terms and provisions hereof and thereof, do not and will not: (i) conflict with, violate, result in
the breach of, or constitute a default under any provision of the Agents
charter or by-laws; (ii) conflict with, violate, result in the breach of,
constitute a default under, give rise to any right of acceleration,
cancellation or termination of any right or obligation of the Agent under, or
require any consent, approval, authorization or action or filing pursuant to,
any agreement or other instrument to which the Agent is a party or by which the
Agent or any of its properties or assets are bound; or (iii) violate or
require any consent, approval, authorization or action or filing pursuant to,
any Laws applicable to the Agent, or any of its properties or assets, except
laws and regulations of the State of Minnesota applicable to the acquisition of
an ownership interest in an entity licensed to engage in pari-mutuel wagering.
7.
Enforceability;
Severability
. If any provision of
this Agreement or any of the other Transaction Documents is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such provision
shall be severed and enforced to the extent possible or modified in such a way
as to make it enforceable, and the invalidity, illegality or unenforceability
thereof shall not affect the validity, legality or enforceability of the
remaining provisions of this Agreement and the other Transaction
Documents. Notwithstanding the
foregoing, in the event that the sale contemplated by the Purchase Agreement is
held to be wholly or partially unenforceable or invalid in any circumstance,
then each of the Transaction Documents shall be invalid and unenforceable in
their entirety, and of no further force or effect.
7
8.
Governing
Law
. THIS AGREEMENT AND EACH OF THE
OTHER TRANSACTION DOCUMENTS WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW
SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
9.
Consent
to Jurisdiction
. EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT, SUBJECT TO AGENTS ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. EACH OF THE
PARTIES TO THIS AGREEMENT EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH OF THE SOUTHWEST GUARANTORS HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS
MAY BE MADE UPON
THE SOUTHWEST GUARANTORS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO THE SOUTHWEST GUARANTORS, AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND SERVICE
SO MADE
SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
10.
Waiver
of Jury Trial
. EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE
OTHER TRANSACTION DOCUMENTS. EACH OF THE
PARTIES TO THIS AGREEMENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE
DEALINGS. EACH OF THE PARTIES TO THIS
AGREEMENT WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING
THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS.
11.
Notices
. Any notice or other communication required
shall be in writing addressed to the respective party as set forth below and
may be personally served, sent by e-mail, telecopied, sent by overnight courier
service or U.S. mail and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. New York time;
(c) if sent by e-mail, by the senders
receipt of an e-mail acknowledgment confirming delivery thereof, (d) if
delivered by overnight courier, one (1) Business
8
Day after delivery to the courier properly
addressed; or (e) if delivered by U.S. mail, four (4) Business Days
after deposit with postage prepaid and properly addressed
Notices shall be addressed as follows:
If to the
Southwest Guarantors:
|
|
Southwest
Casino Corporation and Southwest
|
|
|
Casino and
Hotel Corp
|
|
|
2001
Killebrew Drive, Suite 350
|
|
|
Minneapolis,
MN 55425
|
|
|
ATTN:
President
|
|
|
Fax:
952-853-9991
|
|
|
|
With a copy
to:
|
|
Oppenheimer
Wolff & Donnelly, LLP
|
|
|
Plaza VII,
Suite 3200
|
|
|
35 South 7
th
Street
|
|
|
Minneapolis,
MN 55402
|
|
|
Attn: D.
William Kaufman
|
|
|
Fax:
612-607-7100
|
|
|
|
If to Agent:
|
|
Black
Diamond Commercial Finance, L.L.C.
|
|
|
100 Field
Drive
|
|
|
Lake Forest,
IL 60045-2580
|
|
|
ATTN: Hugo
H. Gravenhorst
|
|
|
Fax:
847-615-9064
|
|
|
|
With a copy
to:
|
|
Black
Diamond Capital Management, L.L.C.
|
|
|
One Sound
Shore Drive
|
|
|
Suite 200
|
|
|
Greenwich,
Connecticut 06830
|
|
|
ATTN: Bob
Rosenbloom
|
|
|
Fax:
203-552-1014
|
|
|
|
And to:
|
|
Latham &
Watkins LLP
|
|
|
233 South
Wacker Drive
|
|
|
Suite 5800,
Sears Tower
|
|
|
Chicago,
Illinois 60606
|
|
|
ATTN: Jeff
Moran
|
|
|
Fax: (312)
993-9767
|
12.
References,
Pronouns And Headings
. Except as
otherwise specifically indicated, all references to Section or Subsection
numbers refer to Sections and Subsections of this Agreement and all references
to Exhibits refer to the Exhibits attached hereto. The words hereby, hereof, herein, hereto,
hereunder, and words of similar
9
import refer to this Agreement as a whole and
not to any particular Section or Subsection hereof. The word hereafter shall mean after, and
the term heretofore shall mean before, the date of this Agreement. The word or means and/or and the words include
and including shall not be construed as terms of limitation. As used herein, all pronouns shall include
the masculine, feminine, neuter, singular and plural thereof wherever the
context and facts require such construction.
The headings, titles and subtitles herein are inserted for convenience
of reference only and are to be ignored in any construction of the provisions
hereof.
13.
Assignment
. This Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto, and their
respective heirs, personal representatives, successors and permitted
assigns. Notwithstanding the foregoing,
no party hereto may assign any of its rights or obligations under this
Agreement without the prior written consent of Agent, in the case of an
assignment by SCC or SCH, or of SCC and SCH, in the case of an assignment by
Agent, and any purported assignment without such consent shall be null and
void;
provided
,
however
, that (a) SCC, SCH and Agent may
make such an assignment without consent to (i) its affiliates or (ii) a
successor to all or a material portion of its assets or business, whether in a
merger, sale of stock, sale of assets or other transaction, the definitive
written agreement for which shall contain an express assumption by the successor
or assignee of the obligations of SCC, SCH or Agent, as the case may be,
hereunder and (b) Agent may make such assignment without consent to any
Lender under the Credit Agreement.
14.
No
Waiver
. Any extension or waiver of
the obligations herein of either party shall be valid only if set forth in an
instrument in writing referring to this section and signed by the party to be
bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
15.
No
Oral Modification
. Neither this
Agreement nor any of its terms or provisions may be amended, modified, waived,
discharged or terminated, except by a written instrument signed by the parties
hereto.
16.
Expenses
. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement shall be paid by the party incurring such cost
and expenses.
17.
Entire
Agreement
. This Agreement, including
the other documents referred to herein which form a part hereof (including the
Transaction Documents), contains the full agreement between the parties hereto
on its subject matters, and supersedes and renders null and void all prior
agreements or understandings, whether written or oral, which exist or may have
existed between the parties with respect to its subject
10
matters.
18.
Construction
. Each of the parties hereto acknowledges that
it has had the benefit of legal counsel of its own choice and has been afforded
an opportunity to review this Agreement and the other Transaction Documents and
that this Agreement and the other Transaction Documents shall be construed as
if jointly drafted by the parties hereto and thereto.
19.
Additional
Documents
. The parties hereto will,
without additional consideration, execute and deliver such further instruments
and take such other action as may be reasonably requested by any other party
hereto in order to carry out the purposes of this Agreement and the other
Transaction Documents.
20.
No
Third Party Beneficiaries
. Nothing
in this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto any rights or remedies of any nature
whatsoever under or by reason of this Agreement or any provision of this
Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their respective successors and permitted assigns.
21.
Counterparts
. This Agreement may be executed in
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute one and the same instrument. The parties agree that telecopied copies of
signatures will be sufficient, with original signature pages to be
supplied and exchanged at a later date.
Signature page follows.
11
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
|
SOUTHWEST
CASINO CORPORATION
|
|
|
|
|
|
By:
|
/s/ Thomas E. Fox
|
|
Name:
|
Thomas E.
Fox
|
|
Its:
|
President
|
|
|
|
|
|
SOUTHWEST
CASINO AND HOTEL CORP.
|
|
|
|
|
|
By:
|
/s/ Thomas E. Fox
|
|
Name:
|
Thomas E.
Fox
|
|
Its:
|
President
|
|
|
|
|
|
BLACK DIAMOND COMMERCIAL FINANCE,
L.L.C., as Agent
|
|
|
|
|
|
By:
|
/s/ Thomas E. Fox
|
|
Name:
|
Hugo H.
Gravenhorst
|
|
Its:
|
Managing
Director
|
|
|
|
|
|
12
Exhibit 10.4
CONSULTING
AGREEMENT
Southwest Casino and Hotel
Corp., a Minnesota corporation (
Southwest
), and Black Diamond
Commercial Finance, L.L.C., a Delaware limited liability company, in its
capacity as Agent (as such term is defined in the Credit Agreement,
Agent
)
under the Credit Agreement (
BDCF
), enter into this Consulting
Agreement (this
Agreement
) effective as of October 19, 2008 (the Effective
Date).
WITNESSETH
WHEREAS,
Southwest owns a 50% Membership Interest (as such term is defined in the Member
Control Agreement, as defined below) (the
Membership Interest
) in
North Metro Harness Initiative, LLC, a Minnesota limited liability company
d/b/a Running Aces Harness Park (
Running Aces
), whose business and
affairs are governed by that certain Member Control Agreement of North Metro
Harness Initiative, LLC, entered into and effective as of June 8, 2004 (as
amended by that certain First Amendment to Member Control Agreement dated as of
April 20, 2007, the
Member Control Agreement
);
WHEREAS,
BDCF and Running Aces entered into that certain Credit Agreement, dated as of April 20,
2007 (as has been amended, restated, supplemented or other modified from time
to time, the
Credit Agreement
), by and among Running Aces, as
borrower, the Loan Parties (as such term is defined in the Credit Agreement)
and BDCF, as Agent;
WHEREAS,
as a result of the Existing Defaults (as such term is defined in the Settlement
Agreement) and the financial difficulties of Running Aces, Southwest, Southwest
Casino Corporation, a Nevada corporation and owner of 100% of the capital stock
of Southwest, and BDCF, contemporaneously with the execution and delivery of
this Agreement, have entered into that certain Settlement Agreement, dated as
of the date hereof (the
Settlement Agreement
), which Settlement
Agreement, among other things, requires the transfer of Southwests Membership
Interest to BCDF, as Agent, and the execution and delivery of this Consulting
Agreement;
WHEREAS,
prior to the transfer of Southwests Membership Interests as contemplated by
the Settlement Agreement, Southwest, through its officers and employees, has
provided leadership, management, consulting and other services to Running Aces
and its staff;
WHEREAS,
in order for Running Aces to continue its operations without interruption
following the sale of its Membership Interests as contemplated by the
Settlement Agreement, BDCF has requested that Southwest provide or cause to be
provided certain services to Running Aces for a limited time; and
WHEREAS,
Southwest is willing to provide or cause to be provided such services on the
terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
AGREEMENT
1.
CONSULTING SERVICES
. BDCF engages Southwest to provide
leadership, management and consulting services to Running Aces and BDCF, as
Agent, with a level of care and diligence and in a manner consistent with
Southwests provision of leadership, management and consulting services prior
to the sale of the Membership Interest (collectively, the
Consulting Services
),
on the terms and subject to the conditions of this Agreement. Southwest
hereby represents to BCDF, and BCDF hereby acknowledges, that the Consulting
Services to be provided hereunder shall be provided in good faith and in an
manner consistent with the historical delivery of such Consulting Services to
Running Aces, substantially for the same purposes, in the same manner, with the
same personnel, with the same quality and with the same degree of care as
Southwest has provided such Consulting Services to Running Aces immediately
prior to the Effective Date.
2.
TRANSITION SERVICES
.
In addition to providing the
Consulting Services, Southwest agrees to assist BDCF, as Agent, in the
transition of the management and operation of Running Aces from Southwest to
BDCF. The services to be provided by
Southwest in connection with this transition (the
Transition Services
and, together with the Consulting Services, the
Services
) will consist
of:
2.1
Working with BDCF to train any new management
and operational personnel selected by BDCF (
New Management
), if any,
to operate and manage Running Aces;
2.2
Working with BDCF and New Management to
establish working relationships between BDCF and New Management, on one hand,
and each group or agency with whom relationships are required to manage or
operate Running Aces, including, without limitation, Commissioners and staff of
the Minnesota Racing Commission (the
Commission
), governmental
authorities of Columbus Township and horsemens guilds.
2.3
Working with Running Aces staff, BDCF and New
Management to maintain and renew any and all licenses held by Running Aces that
are necessary or proper to enable the uninterrupted operation of Running Aces.
2.4
Working with Running Aces staff, BDCF and New
Management to obtain approval for Running Aces 2009 live and simulcast race
schedules.
2.5
Working with Running Aces staff, BDCF and New
Management in each and all capacities necessary to ensure the uninterrupted
operation of the business of Running Aces, in all cases in good faith and in
the case of current Running Aces staff in a manner consistent with the
historical practices of Southwest, substantially for the same purposes, in the
same manner, with the same personnel, with the same quality and with the same
degree of care as Southwest has worked with Running Aces staff immediately
prior to the Effective Date.
3.
LIMITATION OF
CONSULTING AND TRANSITION SERVICES
.
Southwest
agrees to provide the Services as it reasonably determines necessary to meet
the standards of care set forth in
Section 1
and
Section 2
during the Term of this Agreement. BDCF
acknowledges and agrees that it is the desire of Southwest and BDCF that,
through the provision of the Transition Services, the need for and amount of
Services provided by Southwest may diminish over the Term of this
Agreement. The aggregate monthly
compensation to Southwest is for all services to
2
be
provided under this Agreement and any expenses incurred by Southwest in
connection with the provision of the Services, and any reduction in the amount
of services provided over the course of this Agreement will not result in a
reduction in the monthly compensation due to Southwest.
4.
COMPENSATION OF SOUTHWEST
.
In consideration for the
Services provided by Southwest under this Agreement, BDCF will pay to Southwest
a consulting fee equal to $50,000 per month (the
Consulting Fee
). BDCF will make the initial $50,000 payment
within 5 business days of the Effective Date.
BDCF will then make successive $50,000 payments on the next 3 monthly
anniversaries of the Effective Date.
5.
TERM
. The term of this Agreement begins on the
Effective Date and extends until the 4 month anniversary of the Effective Date
(the
Term
), unless extended by written agreement of Southwest and BDCF
or terminated pursuant to
Section 11
.
6.
AUTHORITY.
Each of Southwest and BDCF represents and
warrants that: (i) it has full power, right and authority to execute and
deliver this Agreement and enter into and perform its obligations hereunder and
to consummate the transactions contemplated hereby; and (ii) the
execution, delivery and performance of this Agreement by it and the
consummation by it of the transactions contemplated hereby have been duly authorized
and approved by all necessary action of the part of Southwest or BDCF, as
applicable. The undersigned
representatives of Southwest and BDCF have full power and authority to enter
into this Agreement and to bind Southwest and BDCF, respectively.
7.
COMPLIANCE WITH LAWS; LICENSING.
Neither Southwest nor BDCF will have any
rights or obligations under this Agreement to the extent that performance under
this Agreement violates any law or regulation, except that BDCF will remain
obligated to pay the Consulting Fee if the violation of law or regulation
results from any action or inaction of BDCF or the inability of BDCF to obtain
or maintain any license required by BDCF in connection with BDCFs ownership of
the Membership Interest.
8.
INDEPENDENT CONTRACTOR
.
Both
BDCF and Southwest agree that Southwest will act strictly as an independent
contractor in the performance of its duties under this Agreement and, under no
circumstances, will be deemed the agent of BDCF. Accordingly, Southwest will be wholly responsible
for all Southwest employees and payment of all taxes arising out of Southwests
activities in accordance with this contract, including by way of illustration
but not by limitation, federal and state income tax, social security tax,
unemployment insurance taxes, and any other taxes or gaming or business license
fees as required.
9.
NO PARTNERSHIP.
Nothing in this Agreement will be
deemed as creating a partnership, joint venture or similar business
relationship between Southwest and BDCF.
Nothing in this Agreement will be construed to create any contract right
on the part of any third party or any duty or obligation to such third party on
the part of Southwest or BDCF whatsoever.
10.
CONFIDENTIAL INFORMATION.
Each party agrees that any information
received by it or any agent, employee or consultant retained by it, concerning
the other party, or with respect to Southwest, concerning Running Aces, during
the performance of this Agreement, regarding the parties, or with respect to
Southwest, Running Aces organization, financial matters, marketing plans, or
other information of a proprietary nature, will be treated by both parties in
full
3
confidence and, except as
required by law, will not be revealed to any other persons, firms or
organizations without the written permission of the other party. In addition, BDCF acknowledges and agrees
that Southwest is a public company that is required to file periodic reports
and other information with United States Securities and Exchange Commission and
provide public information in accordance with the rules and regulations of
the Securities and Exchange Commission.
Nothing in this Agreement limits the ability of Southwest to make such
filings and announcements as Southwest reasonably determines, in its sole
discretion, are required or advisable under applicable securities laws. This provision will survive the termination
of this Agreement. Southwest will take
all measures deemed reasonably necessary by Southwest to protect BDCFs and
Running Aces data that comes into the possession of Southwest from
destruction, deletion, loss or unauthorized change and to cause its recovery in
events of force majure.
11.
TERMINATION AND DEFAULT.
11.1
INVOLUNTARY TERMINATION DUE TO CHANGES IN OR
COMPLIANCE WITH APPLICABLE LAWS.
It is the understanding of the parties that
the operation of Running Aces will comply with all applicable laws. If this Agreement is determined by a court of
competent jurisdiction no longer to be lawful, the obligations of the parties
will immediately cease, except that BDCF will remain obligated to pay the
Consulting Fee if the determination of unlawfulness results directly from any
action or inaction of BDCF or the inability of BDCF to obtain or maintain any
license required by BDCF in connection with BDCFs ownership of the Membership
Interest. If Southwest determines
Running Aces or its operations may not comply with rules, regulations or laws
applicable to Running Aces, BDCF or Southwest, Southwest may terminate this
Agreement, and any obligation of BDCF to pay the Consulting Fee shall also be
terminated.
11.2
EVENTS OF DEFAULT.
Any one or more of the following will
constitute an event of default (an
Event of Default
) as that term is
used in this Agreement:
11.2.A
Default in the
payment of any amount due under this Agreement, if such default continues for
more than 5 days after written notice of such default is delivered by Southwest
to BCDF; or
11.2.B
Default
in the observance or performance of any covenant, condition, or agreement by
either BDCF or Southwest that continues for more than 30 days after written
notice to cure the default.
11.3
TERMINATION UPON EVENT OF DEFAULT.
BDCF or Southwest may terminate
this Agreement immediately upon an Event of Default by the other party.
11.4
RIGHTS ON TERMINATION.
If BDCF exercises its right to terminate this
Agreement, BDCF will pay Southwest all Consulting Fees due Southwest under this
Agreement up to the date this Agreement terminates as determined under Section 10.3
(the
Early Termination Date
).
BDCF will pay all such fees on or before the Early Termination
Date. If Southwest exercises its right
to terminate this Agreement, BDCF shall have no obligation to pay the Consulting
Fee for any periods after the Early Termination Date. Following the termination or expiration of
this Agreement, all obligations of the parties hereto shall terminate, except
that
4
the provisions of
Section 10
,
14
,
15
,
16
,
17
,
21
and
22
shall remain in full
force and effect following such termination or expiration.
12.
FORCE MAJEURE.
All
obligations set forth in this Agreement will be subject to impossibility of
performance as a consequence of any strike, lock-out, fire, destruction, acts
of God, restrictions of any governmental authority, civil commotion,
unavoidable casualty or other cause beyond the control of either party.
13.
SEVERABILITY.
If any
provision of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal or unenforceable, such provision will be severed and
considered deleted from this Agreement and the remainder of that provision and
this Agreement will be unaffected and will continue in full force and effect or
modified in such a way as to make it enforceable, and the invalidity,
illegality or unenforceability thereof shall not affect the validity, legality
or enforceability of the remaining provisions of this Agreement.
14.
GOVERNING LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
15.
CONSENT TO JURISDICTION
. EACH OF SOUTHWEST AND BDCF HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY,
STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL BE LITIGATED IN SUCH COURTS.
EACH OF SOUTHWEST AND BDCF EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH OF SOUTHWEST AND BDCF
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH
SERVICE OF PROCESS
MAY BE
MADE UPON SOUTHWEST OR BDCF, AS APPLICABLE, BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO SOUTHWEST OR BDCF, AS APPLICABLE, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE
SO
MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
16.
WAIVER OF JURY TRIAL
. SOUTHWEST AND BDCF HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. SOUTHWEST
AND BDCF ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THE OTHER ACQUISITION DOCUMENTS AND THAT EACH WILL CONTINUE TO
RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. SOUTHWEST AND BDCF WARRANT AND REPRESENT THAT
EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
5
17.
NOTICES.
Any notice or
other communication required shall be in writing addressed to the respective
party as set forth below and may be personally served, sent by e-mail,
telecopied, sent by overnight courier service or U.S. mail and shall be deemed
to have been given: (a) if
delivered in person, when delivered; (b) if delivered by fax, on the date
of transmission if transmitted on a business day before 4:00 p.m. New York
time;
(c) if sent by e-mail, by the
senders receipt of an e-mail acknowledgment confirming delivery thereof, (d) if
delivered by overnight courier, one (1) Business Day after delivery to the
courier properly addressed; or (e) if delivered by U.S. mail, four (4) Business
Days after deposit with postage prepaid and properly addressed:
To BDCF at:
Black Diamond Commercial Finance, L.L.C.
100 Field Drive
Lake Forest, IL 60045-2580
ATTN:
Hugo H. Gravenhorst
Fax:
(847) 615-9064
With a copy to:
Black Diamond Capital Management, L.L.C.
One Sound Shore Drive
Suite 200
Greenwich, CT 06830
ATTN:
Bob Rosenbloom
Fax:
(203) 552-1014
and:
Latham & Watkins LLP
233 South Wacker Drive
Suite 5800, Sears Tower
Chicago, Illinois 60606
ATTN:
Jeff Moran
Fax:
(312) 993-9767
To Southwest at:
Southwest Casino Corporation
2001 Killebrew Drive, Suite 306
Minneapolis, Minnesota 55425
Attention: Thomas E. Fox, President
Fax:
(952) 853-9991
With a copy to:
Oppenheimer Wolff & Donnelly, LLP
Plaza VII, Suite 3200
35 South 7th Street
Minneapolis, MN 55402
ATTN:
D. William Kaufman
Fax:
(612) 607-7100
6
The above addresses may be changed at any
time by written notice.
18.
ASSIGNMENTS.
This
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto, and their respective heirs, personal representatives,
successors and permitted assigns.
Notwithstanding the foregoing, this Agreement is for personal services
and specialized experience and expertise of Southwest and may not be assigned
by either party without the prior written consent of the other party, except
that Agent may assign this agreement without prior consent to any Lender (as
such term is defined in the Credit Agreement).
19.
ENTIRE AGREEMENT.
This
Agreement, together with the Settlement Agreement and the other documents
referred to therein, contains the entire agreement of the parties on the
subject matters stated herein, and supersedes and renders null and void all
prior agreements or understandings, whether written or oral, which exist or may
have existed between the parties with respect to its subject matters. This document will be deemed drafted by both
parties and will not be construed against any party by virtue of such
draftsmanship.
20.
NATURE OF SERVICES AND RECOMMENDATIONS.
Southwest will use commercially reasonable
efforts when providing its services under this agreement. Southwest and BDCF agree that the nature of
the services and recommendations that Southwest will provide under this
agreement require Southwest to apply its experience and expertise on behalf of
BDCF and Running Aces, which requires the application of considerable judgment
and the making of assumptions, all of which may prove inaccurate. BDCF and Southwest acknowledge and agree that
in providing the Services under this Agreement, Southwest is not guaranteeing
the success of Running Aces and nothing in this Agreement can be construed as
an assurance or guarantee of any operating result or level of performance of
Running Aces.
BDCF further acknowledges and agrees that: (a) except
as provided under
Section 2.3
, BDCF has not requested and Southwest
will not provide any services in connection with any licenses or approvals that
BDCF or New Management must obtain in connection with the sale of the
Membership Interest; (b) the Commission is an independent regulatory body
over which Southwest has no control; (c) the ability of BDCF and New
Management to establish working relationships with the Commission is ultimately
the responsibility of BDCF and New Management; (d) Southwest does not know
and cannot control how the Commission will respond to the sale of the
Membership Interest; and (e) Southwest will have no liability or
responsibility to BDCF or Running Aces in connection with any decision made,
action taken, or failure to act by the Commission.
21.
INDEMNIFICATION OF BDCF
. Southwest hereby agrees to indemnify and hold
harmless BDCF and its affiliates and their respective officers, directors,
managers, employees, agents and representatives from and against any and all
claims, losses, damages, liabilities, deficiencies, obligations or out-of-pocket
costs or expenses, including, without limitation, reasonable attorneys fees
and expenses and costs and expenses of investigation (collectively
Losses
),
arising out of or resulting from (a) any breach of this Agreement by
Southwest, or
7
(b) the gross negligence
or willful misconduct of Southwest in the performance of any obligations
hereunder, except to the extent such Losses result directly from the breach of
this Agreement by BDCF or the gross negligence or willful misconduct of BDCF in
the performance of any obligations hereunder.
22.
LIMITATION ON LIABILITY
. In no event will Southwest be liable
hereunder, for any payment to BDCF or Running Aces in excess of the fees
actually paid to Southwest by BDCF nor will Southwest be liable to BDCF or
Running Aces, whether in contract, warranty, tort (including negligence or
strict liability) or otherwise for any special, indirect, incidental or
consequential damages of any kind or nature whatsoever.
23.
AMENDMENTS
. This Agreement may only be amended in a
writing signed by both parties.
24.
NO WAIVER
. Any extension or waiver of the obligations
herein of either party shall be valid only if set forth in an instrument in
writing referring to this section and signed by the party to be bound
hereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any such rights.
25.
EXPENSES
. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement shall be paid by the party incurring such costs
and expenses.
26.
ADDITIONAL DOCUMENTS
. The parties hereto will, without additional
consideration, execute and deliver such further instruments or take such other
action as may be reasonably requested by any other party hereto in order to
carry out the purposes of this Agreement.
27.
OTHER BUSINESS
. Nothing in this Agreement shall prevent any
party from providing any service to any other person. Nothing in this Agreement shall prevent BDCF
from obtaining services the same or substantially the same as the Services from
its own employees or from providers other than Southwest.
28.
COMMUNICATION
. Each of Southwest and BDCF shall designate in
writing to the other party its general representative who shall be the primary
liaison between Southwest and BDCF in the implementation of this Agreement and
who shall be copied on all correspondence between the parties. These general representatives shall
correspond regularly and in good faith to insure that, whenever possible, both
parties concerns as to the day-to-day management of the business are acted
upon and resolved to the mutual satisfaction of the parties.
29.
COUNTERPARTS
. This Agreement may be executed in
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute one and the same instrument. The parties agree that telecopied or
electronically scanned pages of signatures will be sufficient, with
original signature pages to be supplied and exchanged at a later date.
Signature page follows.
8
IN
WITNESS WHEREOF
,
Southwest and BDCF have executed this Agreement as of the Effective Date.
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SOUTHWEST CASINO AND HOTEL CORP.
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By:
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/s/
Thomas E. Fox
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Thomas E. Fox
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President
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BLACK DIAMOND COMMERCIAL
FINANCE, L.L.C., as Agent
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By:
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/s/
Hugo H. Gravenhorst
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Hugo H. Gravenhorst
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Managing Director
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Exhibit 99.1
SOUTHWEST CASINO
CORPORATION STRIKES NEW OWNERSHIP
DEAL FOR RUNNING ACES HARNESS PARK
Transaction Intended to Improve
Tracks Financial Future and Preserve Jobs
Minneapolis, MN - October 23, 2008
Southwest
Casino Corporation (OTCBB: SWCC) representatives announced today they have
completed a transfer of its ownership interest in North Metro Harness
Initiative, LLC to Black Diamond Commercial Finance, L.L.C. that is intended to
improve the long-term viability and preserve hundreds of jobs at Running Aces
Harness Park, the popular, state-of-the art card room and harness racing track in
Columbus, MN.
We remain committed to the success of Running Aces
and its continuing to contribute to the City of Columbus, Anoka County and the
State of Minnesota in the form of jobs, taxes and economic activity, Southwest
CEO James Druck said.
On October 19, Southwest Casino Corporation and
its wholly owned subsidiary, Southwest Casino and Hotel Corp., transferred its
50% membership interest in North Metro Harness Initiative, LLC to Black
Diamond. In exchange, Southwest receives:
·
The option to
repurchase its 50% Membership Interest in Running Aces.
·
The retention
of Southwests right to receive preferential distributions for previous cash advances
and loans made by Southwest to North Metro.
·
Relief from a
limited guaranty by Southwest of a portion of North Metros debt.
Druck said he is encouraged by the financial
capabilities of the new ownership group. He said the marketing dollars and
working capital that Southwest understands Black Diamond intends to provide are
essential to the tracks future.
Southwest, meanwhile, will provide consulting
services to Black Diamond for four months. We look forward to working with
Black Diamond to insure improved operating results and, ultimately, the ability
to repurchase our 50% equity interest in the track, Druck said.
About Southwest Casino
Corporation
Southwest Casino Corporation develops, owns,
operates, manages and provides consulting services to casinos, gaming
facilities and related amenities.
Southwest owns and operates the Gold Rush Hotel and Casino and Gold
Diggers Casino in Cripple Creek, Colorado.
Southwest also provides consulting services to Palace Resorts in
connection with the development of a casino at its luxury resort under
construction in Punta Cana, Dominican Republic and has entered into an
agreement to manage the casino after it opens in early 2009. Southwests corporate offices are located at
2001 Killebrew Drive, Suite 350, Minneapolis, Minnesota 55425.
This Press Release does not constitute an offer of
to sell or solicitation of an offer to buy any securities.
This Press Release contains forward-looking
statements about Southwests ongoing business. These forward-looking statements
involve risks and uncertainties that could cause the
statements to be incorrect or cause actual results
to differ materially. Many of those
risks are described in the Risk Factors section of Southwests Quarterly Report
on Form 10-Q filed August 14, 2008.
Other risks applicable to these forward-looking statements are described
elsewhere in the Quarterly Report and the companys Annual Report on Form 10-KSB
filed March 31, 2008 as well as the companys other periodic reports filed
with the Securities and Exchange Commission. Southwest does not undertake to
update any forward-looking statements it makes; but may choose from time to
time to update them and, if it does, will disseminate the updates to the
investing public.
Contact:
Southwest Casino Corporation
Thomas E. Fox, 952-853-9990
President
Or
Investor Relations:
Strategic Growth International
Stan Altschuler,
212-838-1444
saltschuler@sgi-ir.com
or
Richard Cooper, 212-838-1444
rcooper@sgi-ir.com
2
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