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, Seller’s 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 (Seller’s 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 Seller’s 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 Seller’s 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 Seller’s 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 cashier’s 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 Buyer’s 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 Seller’s 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 Seller’s 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 broker’s or finder’s 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. Seller’s 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. Buyer’s
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 Buyer’s 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 broker’s or finder’s 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 Seller’s 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 broker’s
commission or finder’s fee is payable by BDCF as a result of BDCF’s 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 BCDF’s 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 sender’s 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:

  
	
   

  	
   

  
	
  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

  



 


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 Seller’s or Buyer’s, 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

  
	
   

  	
   

  	
  Hugo H.
  Gravenhorst

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOUTHWEST CASINO AND HOTEL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas E. Fox

  
	
   

  	
   

  	
  Thomas E.
  Fox

  
	
   

  	
   

  	
  President