STATE OF LOUISIANA

 

PARISH OF LAFOURCHE

 

ASSET PURCHASE AGREEMENT

 

BE IT KNOWN, that before the undersigned Notaries Public, and in the presence of the undersigned competent witnesses, personally came and appeared:

 

LAROSE TRUCK PLAZA & CASINO, LLC, a Louisiana limited liability company (“Larose” and sometimes referred to herein as “Device Owner”), domiciled and having its principal place of business in the Parish of Lafourche and whose mailing address is declared to be P.O. Box 99, Larose, Louisiana 70373, herein represented by its duly authorized agent Joe F. Penn, Jr.;

 

MIDWAY RECREATION, L.L.C., a Louisiana limited liability company (“Midway”), domiciled and having its principal place of business in the Parish of Lafourche and whose mailing address is declared to be P.O. Box 99, Larose, Louisiana 70373, herein represented by its duly authorized agent Joe F. Penn, Jr.;

 

JOE F. PENN, JR., a Louisiana resident, whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791;

 

MELISSA PENN, a Louisiana resident, whose mailing address is declared to be 4411 Cherokee Rose Drive, Zachary, Louisiana 70791 (Joe F. Penn, Jr. and Melissa Penn are collectively, “Penn”);

 

(Larose, Midway and Penn shall collectively be referred to herein as “Sellers” and each individually as “Seller”);

 

and

 

GAMECO HOLDINGS, INC , a Delaware corporation (the “Purchaser”), domiciled and having a place of business in the County of New Kent, State of Virginia and whose mailing address is declared to be 1869 Mills Highway, Breaux Bridge, Louisiana 70517, herein represented by its duly authorized agent Jeffrey P. Jacobs,

 

each of whom did execute this Asset Purchase Agreement (“Agreement”), to be effective as of this 2nd day of November, 2005 (the “Agreement Date”).

 

INTRODUCTION

 

A.                                    Sellers own the assets of a truck stop located at 1825 Hwy 308, Lockport, Louisiana 70374 (the “Truck Stop”).

 

B.                                      The Truck Stop, inter alia , provides retail motor and diesel fuels, convenience store and restaurant operations for sale to or use by the general public as well as video draw poker devices for play by the general public.

 

C.                                      Buyer, for itself and its designees, desires to purchase and Sellers desire to sell the Truck Stop.

 

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NOW, THEREFORE, in consideration of the promises, obligations, representations and warranties contained herein, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions hereinafter set forth, the parties agree as follows:

 

Section 1.                                             Definitions and Related Matters .

 

1.1                                  Definitions . For the purposes of this Agreement, the following terms have the meanings set forth below (such meanings to be applicable to both the singular and plural forms of the terms defined):

 

“ Acquired Assets ” shall mean all assets, accounts receivable arising or accruing after the Closing Date, privileges, rights, real property, Devices, Intellectual Property Rights, licenses, interests and claims (whether personal, tangible or intangible) of every type and description owned by Sellers (subject only to the leases identified on Schedule 6.9(a)  and the Permitted Encumbrances) and used in the operation of the Business, other than the Excluded Assets. Acquired Assets, include, but are not limited to, each of the following:

 

(a)                               fee simple title (subject to Permitted Encumbrances hereinafter defined) in and to certain improved real property located at 11825 Hwy 308, Lockport, Louisiana 70374 (the “Real Property”), consisting of approximately                                    (                  ) acres, more or less, together with all improvements, buildings, structures, issues, profits and rents, fixtures and all rights pursuant to any leases, recorded or unrecorded, respecting all or any part of the Real Property; together with, to the extent legally transferable, all approvals, authorizations, consents, licenses, permits, privileges, rights, variances and waivers relating to the Real Property from any Governmental Body having jurisdiction over the Real Property, if any, including, but not by way of limitation, those with respect to building, effluent control, environmental protection, fire, foundation, pollution control, use, utilities and zoning heretofore held by or granted to Sellers; together with any and all easements, rights and privileges appurtenant thereto, including all right, title and interest of the Sellers in and to any land lying in the bed of any street, road or avenue currently adjoining, lying across or adjacent to or to be opened or proposed in front of or adjoining the Real Property, and all riparian rights; all of the foregoing being collectively referred to as the Premises (the “Premises”) and being further described in Exhibit A ;

 

(b)                                  all machinery, equipment, display cases, refrigerators, coolers, sinks, ovens, stoves, telephones, cash registers, furniture and other equipment, chattels and fixtures used in or supporting the Business, including, but not limited to, those items identified on Schedule 1.1(b) ;

 

(c)                                   all inventories of any kind related to or purchased for the operation of the Business, including, but not limited to, those items identified on Schedule 1.1(c) ;

 

(d)                                  all Intellectual Property Rights, subject to the qualifications in Section 6.10 , used in or for the benefit of the Business;

 

(e)                                   accurate, certified copies of all books and records relating to the Business, including, without limitation: (i) lists of all known potential or past customers and suppliers; (ii) records with respect to all equipment, including warranties and service agreements, inventory and machinery; (iii) any and all business plans and/or models; (iv) all financial records and reports; (v) all employee records; and (vi) all other books and records used by Sellers in the operation of the Business;

 

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(f)                                     all approvals, authorizations, consents, licenses, permits, registrations, certificates, privileges, rights, variances and waivers relating to or necessary for the operation of the Business from any Governmental Body having jurisdiction over the Business, to the extent the same are transferable;

 

(g)                                  all fixtures and improvements located on the Premises;

 

(h)                                  all goodwill of the Business;

 

(i)                                      those Contracts identified on Schedule 6.9(b) , under terms and conditions contained in Schedule 6.9(b) ; and

 

(j)                                      the Listed Devices, together with any and all parts, spare parts, paper readers or other equipment used therein or in support thereof.

 

“ Affiliate ” of any particular Person means any other Person directly or indirectly controlling, controlled by or under common control with such particular Person. The term “ control ” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of securities, by contract or otherwise.

 

“ Annualized EBITDA ” shall mean the sum of all monthly EBITDA (as defined below) arising from the operation of the Facility, calculated for the twelve (12) full calendar months prior to the month in which the Closing shall occur, after making appropriate adjustments for any non-recurring transactions.

 

 “ Assumed Contracts ” shall mean the contracts specifically identified in Schedule 6.9(b) .

 

“ Business ” shall mean all of the operations and business of the Truck Stop located at 1825 Hwy 308, Lockport, Louisiana 70374, including, but not limited to, its gaming operations, convenience store, restaurant facility and its motor and diesel fuel sales.

 

“ Business Day ” means any day other than a Saturday, Sunday or public holiday under the laws of the State of Louisiana or any other day on which banking institutions are obligated to close in Baton Rouge, Louisiana.

 

“ Capital Expenditures ” means all expenditures for any capital or fixed assets or improvements, or for replacements, substitutions or additions thereto, which have a useful life of more than one (1) year (including expenditures with respect to Capitalized Lease Obligations but excluding expenditures which are fully expensed in the period incurred in accordance with GAAP consistently applied).

 

“ Capitalized Lease ” means a lease under which the obligations of the lessee should, in accordance with GAAP consistently applied, be included in determining total liabilities as shown on the liability side of a balance sheet of the lessee.

 

“ Capitalized Lease Obligations ” means the amount of the liability reflecting the aggregate discounted amount of future payments under all Capitalized Leases calculated in accordance with GAAP consistently applied and Statement of Financial Accounting Standards No. 13.

 

 “ Closing ” has the meaning set forth in Section 2.2.

 

“ Closing Certificate ” has the meaning set forth in Section 7.1(c).

 

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“ Closing Date ” has the meaning set forth in Section 2.2.

 

“ Closing Reports ” shall mean (i) the “coin-in”, prize and pay-out sheets generated by the Business; (ii) the fuel sales reports of the Business; and (iii) the financial reports of the Business setting forth the income, expenses, assets, liabilities and cashflow of the Business monthly, from January 1, 2004 through the Closing Date.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

 

“ Contract ” has the meaning set forth in Section 6.9(a).

 

“ Deposit ” shall mean the sum of Fifty Thousand and no/100 Dollars ($50,000.00).

 

 “ Devices ” shall mean “Video Draw Poker Devices” as defined in the Video Draw Poker Devices Control Law, Louisiana Revised Statutes, Title 27:301 et seq ., as amended from time to time.

 

“ EBITDA ” shall mean for any one (1) calendar month period the sum of: (i) net income, plus (ii) interest expenses, plus (iii) the aggregate amount of federal, state and local taxes on or measured by income (whether or not payable during that period), and plus (iv) depreciation and amortization, all as shall be computed by the Purchaser’s accountants which computation shall be made strictly in accordance with GAAP, consistently applied, and verified by an accountant chosen by the Sellers. Notwithstanding the past practices of the Sellers, when calculating EBITDA hereunder, the parties agree to use the accrual method of accounting, including, but not limited to, accruing for all licenses, permits, any gaming licenses and occupational fees, insurance costs, vacation benefits and real property taxes. In addition, the Purchaser and the Sellers will mutually agree on the treatment in the calculation of Annualized EBITDA of those expenses currently being deducted by any of the Sellers but which the parties agree will not continue after the Closing.

 

 “ Environmental and Safety Requirements ” means all federal, state, parish and local statutes, regulations, rules, ordinances and similar provisions having the force or effect of law, all licenses, permits, authorizations, approvals, covenants or criteria having the force or effect of law, all guidelines having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law and equitable doctrines (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability), in each case concerning public health and safety, worker health and safety and pollution or protection of the environment (including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as amended and as now or hereafter in effect, including, by way of illustration and not limitation, the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651, et seq. , the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§9601, et seq. , the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901, et seq. , the Clean Air Act, 42 U.S.C. §§ 7401, et seq. , the Solid Waste Disposal Act, 42 U.S.C. §§ 6901, et seq. , the Clean Water Act, 33 U.S.C. §§1251, et seq. , and the

 

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Toxic Substances Control Act, 15 U.S.C. §§ 2601, et seq. , and any similar or corresponding state, local, municipal and/or parish ordinance, rule, regulation, law or act, (or any successor legislation thereto).

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time and any regulations promulgated thereunder.

 

“ Escrow Agent ” shall mean Lawyer’s Title of Baton Rouge, having an address at 8352 Bluebonnet Boulevard, Baton Rouge, Louisiana 70810-2825.

 

“ Escrow Hold Back ” shall equal Fifty Thousand and no/100 Dollars ($50,000.00).

 

“ Establishment License ” shall mean a Type V license to operate Devices at a qualified truck stop facility as defined in the Video Draw Poker Devices Control Law, Louisiana Revised Statutes, Title 27:301 et seq ., and in Chapter 42 of the Louisiana Administrative Code, both as amended from time to time, for the Premises.

 

“ Excluded Assets ” shall mean the following:

 

(a)                                   The original copies of all books and records of the Sellers and related to the Truck Stop;

 

(b)                                  Rights of the Sellers pursuant to or under this Agreement;

 

(c)                                   Any federal, state or local tax refunds or tax credits of the Sellers;

 

(d)                                  Any leases, not necessary to or used in the operation of the Business, by Sellers of any personal property other than the Assumed Contracts;

 

(e)                                   All notes, bonds, guarantees or other evidence of indebtedness of any Person held by the Sellers;

 

(f)                                     All cash, cash equivalents, investments and all deposits of the Sellers, excepting there from, all cash, cash equivalents, investments and all deposits arising from or related to the Business on or after the Closing Date which shall be the property of the Purchaser;

 

(g)                                  Any and all insurance policies of the Sellers or any of their Affiliates and all rights to any refunds in connection therewith; provided, however, the Purchaser shall have no responsibility for any loss of prepaid premiums or other costs, expenses or charges arising from or associated with the foregoing;

 

(h)                                  The license held by the Sellers, or any Affiliates, and necessary for the ownership of the Devices (commonly referred to as a “Device Owners License”);

 

(i)                                      All accounts receivable, and all rights, claims or security interests arising out of or in connection therewith, relating to the Business and arising or existing at any time prior to the Closing Date (collectively, the “Sellers’ Accounts Receivable”);

 

(j)                                      All rights, claims and causes of action relating to any of the property included in the preceding description of Excluded Assets.

 

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“ GAAP ” means United States generally accepted accounting principles as promulgated by the Financial Accounting Standards Board, as in effect from time to time.

 

“ Governmental Body ” means any federal, state, parish, municipal or other governmental or quasi-governmental agency, department, board, commission, bureau or other like entity or instrumentality.

 

“ Indebtedness ” means at a particular time, any indebtedness in any form, nature or type whatsoever, including but not limited to: (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money; (ii) any indebtedness evidenced by any note, bond, debenture or other debt instrument; (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise; (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit); (v) any obligations for which a Person is obligated pursuant to a guarantee; (vi) any obligations under Capitalized Leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss; (vii) any indebtedness secured by a Lien on a Person’s assets; and (viii) net obligations under hedging arrangements (including, without limitation, derivatives) designed to protect a Person against fluctuations in interest rates, currency exchange rates, commodity prices or other financial transactions.

 

“ Intellectual Property Rights ” means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, logos and business names and registrations and applications for registration thereof, together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, databases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and other information), (vii) other intellectual property rights and (viii) copies and tangible embodiments thereof (in whatever form or medium).

 

“ Investment ” as applied to any Person means (i) any direct or indirect ownership, purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interests (including partnership interests, membership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

 

“ Knowledge ” or any derivation thereof whether or not capitalized, shall mean, actual knowledge of a condition or set of facts as has been obtained from any source, including, regardless of any common law or statutory definition of the foregoing, information which would cause a reasonable person to inquire further.

 

“ Lien ” means any mortgage, deed of trust, pledge, security interest, encumbrance, lien, claims, charge or other restriction of any kind whatsoever (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the Business, any filing of or agreement to file a financing statement as debtor under the Uniform Commercial Code or any

 

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similar statute other than to reflect ownership by a third party of property leased to the Sellers for use in the Business under a lease which is not in the nature of a conditional sale or title retention agreement.

 

“ Liquor and Gaming Laws of the State of Louisiana ” shall mean the laws promulgated in the Louisiana Revised Statutes Title 27:1 et seq ., and Title 26:1 et seq ., as amended from time to time and the Louisiana Administrative Code provisions interpreting the same.

 

“ Listed Devices ” shall mean those Devices listed on Schedule 1.1(Listed Devices) .

 

“ Material Adverse Effect ” or “ Material Adverse Change ” means any matter or matters which would, alone or in the aggregate, have an adverse effect on (i) the financial condition, operating results, assets, liabilities, operations, condition (financial or otherwise), business or prospects of the Sellers, the Business or any Affiliate of the Sellers, (ii) the ability of the Sellers or the Business to perform any of their obligations related to the operations of the Business (each, a “Material Adverse Effect”), or (iii) the ability of the Premises to qualify as a truck stop facility under the Liquor and Gaming Laws of the State of Louisiana. Material Adverse Effect or Material Adverse Change specifically includes, but is not limited to: (a) any violation by the Sellers or the Business, in any form and for any reason, of the Liquor and Gaming Laws of the State of Louisiana; or (ii) the revocation or suspension, for any period of time, of any liquor or gaming license issued by the State of Louisiana to the Sellers or the Business and used in the operations of the Business, or (iii) the ability of the Premises to qualify as a truck stop facility under the Liquor and Gaming Laws of the State of Louisiana.

 

“ Permitted Encumbrances ” means:

 

(a)                                   real estate and ad valorem taxes not yet due and payable;

 

(b)                                  interests or title of a lessor or lessee under any lease identified in Schedule 6.9(b) ; and

 

(c)                                   to the extent existing on the Closing Date hereof, matters which are described on Schedule 1.1(Permitted Encumbrances) , and approved of in writing by the Purchaser prior to the Closing.

 

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity or any department, agency or political subdivision thereof and any other entity.

 

“ Purchase Price ” shall mean Six Million and no/100 Dollars ($6,000,000.00).

 

“ Purchaser ” means Gameco Holdings, Inc., a Delaware corporation, its successors, assigns and/or designees, in its sole discretion.

 

 “ Settlement Statement ” shall mean a statement, signed by the Sellers and the Purchaser and to be received by the Escrow Agent at least twenty-four (24) hours prior to the Closing, identifying all funds to be received by the Escrow Agent as of the Closing and further identifying how and to whom all such funds are to be paid by the Escrow Agent, such that all Acquired Assets are transferred to the Purchaser free and clear of any and all Liens whatsoever, except Permitted Encumbrances.

 

“ Survey ” shall have the meaning given it in Section 3.4 .

 

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“ Tax ” or “ Taxes ” means any federal, state, county, parish, local, foreign or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, gaming, environmental, communications, real or personal property, capital stock, membership interest, license, payroll, wage or other withholding, employment, social security, severance, stamp, occupation, alternative or add-on minimum, estimated and other taxes or fees of any kind whatsoever (including deficiencies, penalties, additions to tax or fees, and interest attributable thereto) whether disputed or not.

 

“ Tax Return ” means any return, information report or filing with respect to Taxes, including any schedules attached thereto and including any amendment thereof.

 

“ Title Company ” shall mean Lawyer’s Title of Baton Rouge having an address at 8352 Bluebonnet Boulevard, Baton Rouge, Louisiana 70810-2825.

 

“ Title Evidence ” shall mean the Title Policy and the Survey, as defined in Sections 3.3 and 3.4 , respectively.

 

1.2                                  Accounting Principles . The classification, character and amount of all assets, liabilities, capital accounts and reserves and of all items of income and expense to be determined, and any consolidation or other accounting computation to be made, and the interpretation of any definition containing any financial term, pursuant to this Agreement shall be determined and made in accordance with GAAP consistently applied.

 

1.3                                  Other Interpretive Matters . In this Agreement, unless a clear contrary intention appears:  (a) the singular number includes the plural number and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement and the Schedules and Exhibits hereto), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof (and without giving effect to any amendment or modification that would not be permitted in accordance with the terms hereof); (e) reference to any applicable law means such applicable law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any particular provision of any applicable law shall be interpreted to include any revision of or successor to that provision regardless of how numbered or classified; (f) reference to any Article, Section or Exhibit means such Article or Section hereof or such Exhibit hereto; (g) “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; and (h) ”including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term.

 

Section 2.                                             Purchase of Assets and Closing .

 

2.1                                  Purchase and Sale of the Acquired Assets .

 

(a)                                   At the Closing, subject to the terms and conditions contained in this Agreement, the Sellers, as applicable, shall sell, assign, set-over, convey, deliver and transfer to the Purchaser, or its designee, free and clear of any and all Liens and Indebtedness whatsoever, excepting only Permitted

 

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Encumbrances, and the Purchaser shall purchase from the Sellers, as applicable, all of their rights, title and interests in and to the Acquired Assets for the Purchase Price.

 

(b)                                  Within ten (10) days following the execution of this Agreement by all parties hereto, the Purchaser shall deliver the Deposit to the Escrow Agent. The Deposit shall be applied as a credit toward the Purchase Price by the Escrow Agent at the Closing. In the event Purchaser shall terminate this Agreement for any reason in the Purchaser’s sole discretion prior to the Closing Date, other than a default by the Purchaser, upon notice to the Escrow Agent and the Sellers of the Purchaser’s election to terminate this Agreement, the Escrow Agent shall release the Deposit to the Purchaser. Should the Purchaser breach any provisions of this Agreement and not otherwise cure such breach pursuant to the terms and conditions hereof, the Deposit shall be forfeited by the Purchaser to the Sellers as the full and final measure of their liquidated damages hereunder, and not as a penalty, and, with the exception of the Purchaser’s indemnity set forth in Section 3.1(b)  below, thereafter this Agreement shall be null and void and of no further force and effect.

 

(c)                                   The Closing of the purchase and sale of the Acquired Assets shall take place at the offices of the Title Company or at such other place as may be mutually agreeable to the Sellers and the Purchaser. At the Closing, upon payment of the Purchase Price, the Sellers, as applicable, shall deliver to the Purchaser the Acquired Assets, together with such bills of sale, powers of assignment, certificates, deed(s) and other documents and instruments of conveyance as shall be reasonably satisfactory to the Purchaser and its counsel to transfer record ownership of the Acquired Assets, including, but not limited to, those items identified in Section 10 below.

 

(d)                                  Sellers each acknowledge and agree that Purchaser may pay the entire Purchase Price to any one of the Sellers as directed by all of the Sellers at the Closing and that payment of the Purchase Price pursuant to the directions of the Sellers shall satisfy any and all of the Purchaser’s obligations for payment of the Purchase Price hereunder to each of the Sellers. Notwithstanding the foregoing, the parties agree that ten percent (10%) of the Purchase Price, allocated equally between the Sellers is the monetary consideration paid for the “covenant not to do” as contained in Section 11.21 . The parties acknowledge and agree that this allocation is a reasonable allocation given the entities’ and their relative abilities and experience in the gaming industry. The parties each further acknowledge and agree that payment of the Purchase Price to the Sellers as outlined on the Settlement Statement is appropriate consideration and reasonably related to the value of the interests each party is transferring under this Agreement.

 

2.2                                  Closing.

 

(a)                                   The sale and transfer of the Acquired Assets from the Sellers, as applicable, to the Purchaser (“Closing”), pursuant to the terms and subject to the conditions hereof shall take place on a date determined by the Purchaser which date shall not be later than December 19, 2005 (“Closing Date”).

 

(b)                                  It shall be a condition of the Closing that the Annualized EBITDA as of the Closing Date shall be not less than One Million Three Hundred Thousand and no/100 Dollars ($1,300,000.00).

 

2.3                                  Release of Sellers’ Interest and Claims against the Business and the Acquired Assets . Sellers agree, concurrently with the Closing, to release all of their interests in and to and any claims against any of the Business or the Acquired Assets. Sellers shall deliver to the Escrow Agent a fully executed assignment, termination and/or modification agreement, to be effective as of and only upon the

 

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Closing, in form and substance reasonably acceptable to the Purchaser, terminating all interests and claims of the Sellers in the Business to the Acquired Assets as of the Closing Date. Nothing contained in the foregoing is intended to nor shall it operate to release any claims or causes of action the Sellers’ or any one of them may have arising out of or under this Agreement.

 

2.4                                  Non-Assumption of Liabilities by Purchaser . Except for the Assumed Obligations (as hereinafter defined), the Purchaser does not assume and shall not be liable for any of the Indebtedness, debts, obligations, expenses, claims, liabilities or commitments, of any nature whatsoever (collectively “Obligations”) of the Sellers, whether arising prior to, on or after the Closing, including, but not limited to, Obligations arising from or related to the Acquired Assets and/or the Business. The Sellers agree, individually, that all Obligations, other than Obligations under the Assumed Contracts that accrue after the transfer of the Acquired Assets (collectively, the “Assumed Obligations”), shall remain the obligations of the Sellers, as applicable. The Sellers, jointly and severally, do hereby indemnify, defend and hold Purchaser harmless from and against any and all claims, losses, expenses, damages or liabilities asserted against or suffered by Purchaser arising out of or resulting from the Obligations (other than the Assumed Obligations).

 

2.5                                  Release of Funds .

 

(a)                                   Upon completion of the transfers and deliveries described in Sections 2.1, 2.2, 2.3 and 2.4 above and the discharge of all Liens and Indebtedness, the Escrow Agent shall release, pursuant to the Settlement Statement, any and all funds then on deposit hereunder. Any fees charged by the Escrow Agent for its services hereunder shall be borne solely by the Purchaser.

 

(b)                                  Notwithstanding the foregoing, the parties agree that this Agreement and the Closing Date shall be subject to the issuance to or receipt by the Purchaser of the Consents (as defined on Schedule 6.13 below). If the Consents have not been received or issued as of the Closing Date, the Closing Date shall be extended from day to day for no more than thirty (30) Business Days until the third (3 ^rd ) day following the date each such Consent is received, satisfied or waived. In such an event, the Sellers shall continue to operate the Business and the gaming and other operations thereof in accordance with the requirements of this Agreement. Notwithstanding the foregoing, nothing contained in this paragraph shall delay the Closing for more than thirty (30) Business Days. After the expiration of such thirty (30) days period, any party may upon written notice terminate this Agreement, and with the exception of the Purchaser’s indemnity under Section 3.1(b)  below, thereafter this Agreement shall be null and void and of no further force and effect.

 

Section 3.                                             Due Diligence . Beginning on the Agreement Date and continuing to and including December 10, 2005 (the “Due Diligence Period”), Purchaser shall have the right to perform the following due diligence pursuant to the terms and conditions hereof.

 

3.1                                  General Testing and Inspections .

 

(a)                                   During the Due Diligence Period, Purchaser shall have the right to conduct such engineering, environmental, general business and feasibility studies, inspections, testing, audits and/or reviews of the Acquired Assets, the Premises and the Business and its assets, liabilities, operations (including gaming operations and records), financial performance and affairs as Purchaser deems necessary, including soil tests, borings, drainage tests and similar tests on any land or improvement owned by the Sellers and used in the Business, and audits and reviews of all of the Business’s or Sellers’

 

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financial and business records, operations, documents and instruments, including a financial and tax audit of the Business. Such studies shall be conducted by Purchaser and its agents at the Purchaser’s sole cost and expense.

 

(b)                                  Subject to reasonable advance notice, the Sellers agree to allow Purchaser and/or its agents access to all assets, records, documents and instruments of the Business or the Acquired Assets to conduct such studies, tests, inspections, reviews and audits, provided such access shall not unreasonably interfere with the activities of the Sellers. Purchaser shall save, defend, indemnify and hold the Sellers harmless from and against all claims, lawsuits, judgments, losses, liabilities or expenses of any kind or nature which may be asserted against or incurred by the Sellers as the result of the examination, tests, inspections, reviews, audits or studies of the Acquired Assets, the Premises or the Business by the Purchaser or any of its manager’s, members, employees, agents, contractors or designees (excluding the discovery of any preexisting condition on the Premises and any consequential damages arising from the foregoing). Notwithstanding anything contained herein to the contrary, Purchaser’s indemnity obligations set forth in this Section 3.1(b)  shall survive any termination of this Agreement.

 

3.2                                  Zoning. Prior to Closing, Purchaser shall have confirmed that the Premises and the current and intended uses thereof will be in compliance, as of the Closing Date, with all applicable building and zoning codes and any restrictions unique thereto.

 

3.3                                  Title Commitment; Defects .

 

(a)                                   Within twenty (20) days following the Agreement Date, the Purchaser shall cause the Title Company to issue and deliver its commitment (the “Commitment”) for issuance of an ALTA Owners Policy (Form B - revised 10-17-70) of title insurance covering the Premises in the full amount of the Purchase Price, which Commitment shall show marketable, fee simple title to the Premises to be vested in the Sellers, subject only to the Permitted Encumbrances. Copies of the Commitment together with copies of each document affecting title to the Premises referenced therein, except for monetary encumbrances which are to be released at Closing, shall be delivered to Purchaser and the Sellers.

 

(b)                                  Purchaser shall notify Sellers of Purchaser’s disapproval of any matter contained in the Title Evidence within five (5) days after Purchaser’s receipt of all of the Title Evidence and copies of the documents referred to in the Title Evidence as exceptions or exclusions from coverage. If the Title Evidence is not satisfactory to Purchaser (collectively, “Defects”), those Defects shall, as a condition to Purchaser’s obligations under this Agreement, be cured or removed from the Title Evidence at or prior to the Closing. If Sellers elect not to or are otherwise unable to cure and remove all Defects at or prior to the Closing Date (or any extension thereof), this Agreement may be terminated, at Purchaser’s sole election, by written notice given to Sellers within five (5) days after expiration of the period allowed for cure and the Deposit shall be promptly released by the Escrow Agent to the Purchaser, or Purchaser may, at Purchaser’s sole election, waive such uncured Defects and proceed to close this transaction with no diminution of the Purchase Price.

 

(c)                                   Notwithstanding any provision of this Section 3.3 to the contrary, Sellers shall have the obligation, on or prior to the Closing Date, to secure releases, discharges or satisfactions, or otherwise cure at no cost to Purchaser, any Defect which is a Lien for the payment of money only (except real estate and ad valorem taxes and assessments which shall be prorated in accordance with Section 10 ), including, without limitation, all mortgages, any Lien or encumbrance which may be released or discharged by the

 

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payment of a definite sum of money or any exception to title which arose as the result of the act or violation of Sellers or anyone claiming by, from, through or under Sellers.

 

(d)                                  It shall be a condition precedent to Purchaser’s obligation to consummate the transaction contemplated hereby that the Title Company will, upon filing the instruments for conveyance of record, issue its ALTA Owner’s Fee Policy (Form B revised 10-17-70) of title insurance (the “Title Policy”) in the full amount of the Purchase Price, at standard rates, insuring Purchaser in fee simple title to the Premises subject only to the Permitted Encumbrances, and without the exception for certain of the standard printed exceptions (encroachments, overlaps, boundary line dispute, or any other matters which would be disclosed by an accurate survey or inspection of the Premises, easements or claims of easements not shown by the public records, or any lien or right to a lien for services, labor or materials furnished to the Premises, imposed by law, and not shown by the public records), unless and except to the extent that any such matters included in the so-called standard printed exceptions have been approved or waived by Purchaser. The Title Policy shall also affirmatively insure:  (i) Purchaser’s right to use any appurtenant easements in accordance with their terms and conditions; (ii) contiguity of the parcels described in Exhibit A (if more than one parcel); (iii) that the Premises have the benefit of full and free ingress and egress, both pedestrian and vehicular, directly to and from a public highway; and (iv) such other and additional endorsements or conditions as the Purchaser may require. Sellers agree to execute and deliver to the Title Company such affidavits and instruments as may be reasonably required to permit the Title Company to issue Purchaser’s Title Evidence in the form required by this subsection and to provide a copy of such affidavits and instruments to Purchaser. The cost and expense of such Owner’s Policy shall be borne solely by the Purchaser.

 

3.4  Survey . Within ten (10) days of the Agreement Date, Sellers shall deliver to the Purchaser any surveys of the Premises in Sellers’ possession, together with a copy of any reports, documents, notices, citations or records of any type or form in the possession of the Sellers relating to or identifying: (i) a physical deficiency in the Premises; (ii) an adverse effect on the Premises, including, but not limited to, any records, notices or citations relating to or concerning any aspect of the environmental condition of the Premises; or (iii) a change in the current, zoning, accessibility, physical characteristics, insurability, damage, condemnation, takings of or to any portion of the Premises. Following the Agreement Date, Purchaser shall have the right, at its sole election, to cause a registered surveyor or professional engineer to prepare a survey (the “Survey”) in form sufficient to enable the Title Company to delete from the Title Policy the so-called standard exception for matters disclosed by an accurate Survey. A perimeter legal description of the Premises as prepared by such surveyor or engineer shall be used to describe the Premises in the Deed and in Exhibit A . The cost and expense of such Survey shall be borne by the Purchaser. A copy of the Survey shall be furnished to the Sellers. In the event the Survey discloses any encroachments, overlaps, boundary line disputes or any other matter affecting the Premises or which violates any law, rule or regulation or is otherwise unacceptable to the Purchaser, such matter(s) shall be considered to be a Defect(s) and the relative rights and obligations of the parties with respect thereto shall be governed by the provisions of Section 3.3 hereof.

 

3.5                                  Environmental Matters .

 

Purchaser, at its sole election, may cause an environmental evaluation and/or consulting firm (the “Consultant”) selected by Purchaser to conduct an environmental inspection and audit of the Premises (the “Audit”), including, without limitation, a Phase I, II or III site assessment study. The cost and expense of such Audit shall be borne by the Purchaser. To the extent environmental audits for the Premises have been previously obtained by Sellers; Sellers, as applicable, shall deliver copies of same to

 

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Purchaser within fifteen (15) days of the Agreement Date. Purchaser and Sellers shall cooperate in an attempt to achieve the result that the Audit is performed as soon as practicable and is completed no later than the expiration of the Due Diligence Period. In addition to providing any information reasonably requested by the Consultant, Sellers shall cooperate with Purchaser and the Consultant throughout the course of the Audit and shall cooperate in any other way reasonably requested by Purchaser or the Consultant.

 

3.6                                  Other Records and Documents .

 

(a)                                   In addition to the foregoing and to the extent the below-listed documents are in the possession of the Sellers, the Sellers agree to deliver to the Purchaser, within fifteen (15) days of the Agreement Date, a full and accurate list and reasonably complete details concerning each item described below and a copy of each document to the extent such copies are in the possession or control of the Sellers:

 

(i)                                      copies of any and all certificates of title, liens, encumbrances, deeds of trust, mortgages, judgments, rights-of-way, easements, covenants, conditions or restrictions, other exceptions or matters of record relating to or affecting any real or personal property used in the Business;

 

(ii)                                   copies of all certificates of occupancy, zoning variances, licenses, permits, authorizations and approvals relating to the Premises or the Business from any Governmental Body having jurisdiction over the Premises or the Business, together with any other notices and agreements related thereto, including, but not limited to, any and all gaming and liquor licenses and permits and renewals of the same or applications therefore;

 

(iii)                                to the extent not already required above, copies of any and all environmental permits, notices, demands, action letters, reports, assessments, audits, directives from any Governmental Body, documentation of any environmental matter related to the Premises; identification of which portion of the Premises has ever been or is now being used for the storage, generation, treatment, manufacture, disposal or release of any “hazardous substance” as defined by the Comprehensive Environmental Response Compensation and Liability Act, identification of all waste disposal sites and the location of all underground storage tanks or lines, whether in use or abandoned; a summary of all environmental testing done by the Sellers; and identification of any event of non-compliance with an Environmental and Safety Requirement;

 

(iv)                               copies of all real estate, personal property, fuel and ad valorem taxes, assessments, general and special, bills and returns, gaming and liquor license fees and renewals and any and all notices of violations, delinquencies and/or assessments of the same received by the Sellers within twenty-four (24) months preceding the Agreement Date;

 

(v)                                  copies of any and all leases affecting the Premises or the Business in any manner;

 

(vi)                               copies of all fuel sales reports whether maintained for the Business’s sole use or submitted to any federal, state or local governmental agency (and will continue to provide Purchaser this information within fifteen (15) days of the end of each calendar month during the term of this Agreement);

 

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(vii)                            copies of monthly financial statements, including an income and balance sheet statement for each of the twenty-four (24) months preceding the Agreement Date, showing the financial condition of every aspect of the Business (and will continue to provide Purchaser this information within fifteen (15) days of the end of each calendar month during the term of this Agreement);

 

(viii)                         copies of any and all Contracts (as defined hereinafter) affecting the Premises or the Business in any manner; and

 

(ix)                                 any other documents and information reasonably requested by the Purchaser.

 

Section 4.                                             Termination . Notwithstanding anything contained in this Agreement to the contrary and in addition to any other rights of termination of the Purchaser under this Agreement, if at any time prior to the Closing Date, any of the studies, Title Evidence, Survey, audits, inspections, testing, reviews or other activities performed pursuant to Sections 3.1, 3.2, 3.3, 3.4, 3.5 or 3.6 , or any other information (including information related to the Purchaser’s financing), however gathered or obtained, shall reveal information or conditions unacceptable to the Purchaser, in its sole discretion, then Purchaser shall have the option to terminate this Agreement. Upon receipt of such notice, this Agreement shall terminate and thereafter be null and void and of no further force and effect, and the Escrow Agent shall promptly return to the Purchaser then deposit.

 

Section 5.                                             Sellers’ Accounts Receivable . Following the Closing, Buyer shall use its reasonable commercial efforts to collect the Sellers’ Accounts Receivables. Seller agrees to maintain accurate records of each such Account Receivable and the balance remaining on the same and to provide such reasonable documentation as may be requested from time to time by the Purchaser or any obligor under the same. Seller agrees to forebear taking any legal action, including the filing of any claim, to collect any Accounts Receivable following the Closing Date. Purchaser shall, within the first ten (10) days of each calendar month, remit to Seller all amounts collected on any Seller’s Accounts Receivable during the immediately preceding calendar month. During any calendar month, should an obligor under any of the Seller’s Accounts Receivable also have an account with the Purchaser, the Purchaser shall apply any sums collected from such obligor first against such obligor’s Seller’s Accounts Receivable until paid in full and then against the amounts owed the Purchaser. Notwithstanding anything contained herein to the contrary, in no event, whatsoever, shall the Purchaser have any liability for any of the Sellers’ Account Receivable that are uncollected or determined to be uncollectible, nor shall the Purchaser be obligated to expend any funds in furtherance of such collection efforts. On and after the first (1st) anniversary of the Closing Date, Purchaser shall have no further obligations to collect any sums under any of the Sellers’ Accounts Receivable.

 

Section 6.                                             Representations and Warranties of the Sellers . As a material inducement to the Purchaser to enter into this Agreement and purchase the Acquired Assets hereunder, the Sellers each hereby, jointly and severally, represent and warrant to the Purchaser as follows:

 

6.1                                  Organization, Power and Licenses .

 

(a)                                   Larose is duly formed, validly existing and in full force and effect under the laws of the State of Louisiana and is qualified to do business in Louisiana and every other jurisdiction in which its ownership of property or the conduct of business requires it to qualify. Larose possesses all requisite

 

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power and authority, and all licenses, permits and authorizations necessary, to own and operate its properties, to carry on its businesses as now conducted and to carry out the transactions contemplated by this Agreement. Larose is not in violation of any of the provisions of its Articles of Organization or Operating Agreements.

 

(b)                                  Each Penn is a Louisiana resident, of the age of majority and of sound mind. Together, Penn is the owner of one hundred percent (100%) of all outstanding and issued membership interests of Larose and no other person has any Investment in Larose, nor any right, by option, warrant, right of first refusal or by law or in equity to acquire the same.

 

(c)                                   Sellers, as applicable, own one hundred percent (100%) of all rights, title and interests in and to the Acquired Assets, free and clear of any Liens or Indebtedness, excepting only the Permitted Encumbrances, with full, valid, unencumbered power and authority to convey the same, excluding only those assets identified on Schedule 6.9(a) . There are no preemptive rights, warrants, options, or rights of first refusal with respect to the transfer of the Acquired Assets hereunder. The Acquired Assets are all of the assets used in or necessary to the operation of the Business.

 

(d)                                  Any individuals who have any spousal or dower rights in any of the Acquired Assets, the Premises or the Business, under any federal, state or local law have joined in the execution of this Agreement and have consented to the transfers contemplated herein and upon such transfers shall have waived any and all interests, rights or titles they may have in and to the Acquired Assets or the Business.

 

6.2                                  Affiliates; Subsidiaries; Investments . There are no Affiliates or other Persons in which the Sellers own, of record or beneficially, any direct or indirect equity, Investment or other interest or any right (contingent or otherwise) to acquire the same, or in which the Sellers otherwise participate, which would have or has any interest in the Business or the Acquired Assets.

 

6.3                                  Authorization; No Breach . The execution, delivery and performance of this Agreement and all other agreements, instruments and transactions contemplated hereby and thereby to which any Seller is a party have been duly authorized by all requisite organizational approvals. This Agreement and all other agreements and instruments contemplated hereby to which any Seller is a party each constitutes a valid and binding obligation of the Sellers, as applicable, enforceable in accordance with its terms. Assuming the payment of all Liens by the Sellers at the Closing, the execution and delivery by the Sellers of this Agreement and all other agreements and instruments contemplated hereby to which the Sellers are a party, the offering and sale of the Acquired Assets hereunder and the fulfillment of and compliance with the respective terms hereof by the Sellers, does not and shall not: (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any Lien upon the Acquired Assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or Governmental Body pursuant to, the Articles of Organization or Operating Agreements of the applicable Sellers or any law, statute, rule or regulation to which the Sellers are subject or any agreement, instrument, order, judgment or decree to which the Sellers or their assets are subject, other than: (a) appropriate notifications to the Louisiana State Police and Louisiana gaming authorities of the consummations of the transfers contemplated by this Agreement; and (b) appropriate licensure and/or findings of suitability of the transferee of the Listed Devices by the Louisiana Gaming Control Board.

 

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6.4                                  Closing Reports and Absence of Liabilities .

 

(a)                                   The Closing Reports, certified by Penn and attached hereto as Schedule 6.4(a) , are: (i) true, accurate and complete; (ii) contain the same information as has been actually filed with the Louisiana State Police and any other Governmental Body; (iii) are reflected in the books and records of the Sellers; and (iv) fairly and accurately present the financial condition of the Business as of the dates thereof. After giving effect to the transactions to occur at the Closing, neither the Business nor the Sellers will have any liabilities or Indebtedness, including, but not limited to, income tax liabilities, contingent or otherwise, other than as described on Schedule 6.4(a) . The Closing Reports shall be updated on the Closing Date and shall be true, accurate and complete and consistent with any and all filings with any federal, state or local authorities or agencies as of the most recent reporting date prior to the Closing Date.

 

(b)                                  Except as described on Schedule 6.4(b), none of the Sellers has:

 

(i)                                      any liabilities or Indebtedness (whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due, whether known or unknown, and regardless of when asserted) which will remain a Lien upon the Business or the Acquired Assets following the Closing hereof, nor which will become a liability, Indebtedness or obligation of the Purchaser on or after the Closing, other than the Assumed Contracts;

 

(ii)                                   made any Capital Expenditures for which liability, in any form, will remain after the Closing Date; or

 

(iii)                                issued: (a) any notes, bonds or other debt securities which will remain or become an obligation of the Acquired Assets, the Business or the Purchaser on or after the Closing Date, or (b) any shareholder/owner interests or other equity securities, membership interests or any securities convertible, exchangeable or exercisable into any ownership interests in the Business or Acquired Assets; or

 

(iv)                               sold, assigned or transferred any of the Business’s Intellectual Property Rights or other intangible assets, or disclosed any of the Business’s proprietary confidential information to any Person; or

 

(v)                                  made any loans or advances to, guarantees for the benefit of, or any Investments in the Business or the Acquired Assets, that will not have been completely repaid and/or terminated as of the Closing Date; or

 

(vi)                               knowledge of, or have caused the Business or any Acquired Asset to suffer any, damage, destruction or casualty loss which has had or may in the future have a Material Adverse Effect on the Business, whether or not covered by insurance; or

 

(vii)                            as relates to the Business, borrowed any amount of, incurred or become subject to, any liabilities, except current liabilities consisting solely of accounts payable and trade payables incurred in the ordinary course of business and liabilities under leases identified elsewhere in this Agreement; or

 

(viii)                         discharged or satisfied any Lien or paid any obligation or liability, other than current liabilities paid in the ordinary course of business; or

 

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(ix)                                 mortgaged or pledged any of its properties or assets or subjected them to any Lien, except Permitted Encumbrances; or

 

(x)                                    sold, assigned or transferred any of its tangible assets, except in the ordinary course of business, or cancelled any debts or claims; or

 

(xi)                                 suffered any extraordinary losses or waived any rights of value, whether or not in the ordinary course of business or consistent with past practice; or

 

(xii)                              made any commitments for Capital Expenditures that have not expired as of the Agreement Date; or

 

(xiii)                           agreed to do any of the foregoing.

 

6.5                                  No Adverse Change. From the Agreement Date to and through the Closing Date, there has not been nor shall there be any adverse change in the operating results, operations, condition (financial or otherwise), prospects, employee relations or customer or supplier relations of the Business or the Acquired Assets, as applicable. From the Agreement Date to and through the Closing Date, Sellers shall promptly give Purchaser notice of any adverse change in the operating results, operations, condition (financial or otherwise), prospects, employee relations or customer or supplier relations of the Business or the Acquired Assets, as applicable.

 

6.6                                  Absence of Undisclosed Liabilities . No Seller nor any Affiliate has any obligation or liability (whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due and regardless of when asserted) related or attaching to or affecting in any manner the Business or the Acquired Assets and arising out of transactions entered into at or prior to the Closing, or any action or inaction at or prior to the Closing, or any state of facts existing at or prior to the Closing, other than (a) liabilities set forth on the Closing Reports, and (b) other liabilities and obligations expressly disclosed on Schedule 6.6 .

 

6.7                                  Business Property . The Sellers, as applicable, have good, valid and one hundred percent (100%) complete title to all of the Acquired Assets, free and clear of any Lien other than Permitted Encumbrances, and have full power and authority to convey and transfer the same free and clear of any and all claims by any Person whatsoever. The Acquired Assets constitute all of the assets and real property and improvements used by any of the Sellers in or necessary for the operation of the Business as of the Closing Date.

 

6.8                                  Tax Matters . The Purchaser shall have no liability for or exposure to any Taxes arising from the operation(s) of the Business prior to the Closing Date. All necessary and required Tax Returns have been timely filed and are correct in all material respects as to the amount of tax owed and have been prepared in compliance with all applicable laws and regulations in all respects; the Sellers have paid all Taxes due and owing by any of them (whether or not such Taxes are required to be shown on a Tax Return) and have withheld and paid over to the appropriate taxing authority all Taxes which it or they are required to withhold from amounts paid or owing to any employee, member, creditor or other third party; no Seller has waived any statute of limitations with respect to any Taxes or agreed to any extension of time with respect to any material Tax assessment or deficiency; as of the Agreement Date, no foreign, federal, state, parish or local tax audits or administrative or judicial proceedings are pending or being conducted with respect to the Business or any of the Acquired Assets; no information related to Tax

 

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matters has been requested by any foreign, federal, state or local taxing authority and no written notice indicating an intent to open an audit or other review has been received by Sellers from any foreign, federal, state, parish or local taxing authority.

 

6.9                                  Contracts and Commitments .

 

(a)                                   Except as listed on Schedule 6.9(a) , there are no agreements, contracts, leases, licenses, commitments or instruments (including any and all amendments thereto) (collectively, the “Contracts”) to which the Business is a party or by which the Business or any of the Acquired Assets are bound or subject. There are no commitments or agreements with any third-party or Governmental Body affecting the Business or the Acquired Assets which are not listed on Schedule 6.9(a) . Except as otherwise expressly noted on Schedule 6.9(a) , each agreement listed on Schedule 6.9(a)  is in full force and effect and constitutes a legal, valid and binding obligation of Business, assignable to the Purchaser hereunder, upon Purchaser’s written consent to assume the same. Except as otherwise expressly noted on Schedule 6.9(a) , no such Contract is in default or breach (with or without the giving of notice or the passage of time or both) and no other party is in default or breach of any such Contracts and the Sellers under each such Contract are or will be as of the Closing Date timely in their payments of any and all sums or any performance obligations under each such Contract.

 

(b)                                  Sellers agree to execute and deliver on the Closing Date such documents and instruments as are necessary and reasonably acceptable to the Purchaser and Purchaser’s counsel to completely transfer, set-over and assign to the Purchaser those contracts and only those contracts listed on Schedule 6.9(b) .

 

6.10                            Intellectual Property Rights .

 

(a)                                   Schedule 6.10 contains a complete and accurate list of all Intellectual Property Rights, if any, owned or used by Sellers in the Business, other than rights under licenses of any original equipment manufacturers (“OEM”), i.e Windows, etc., or off-the-shelf software, such as word processing programs, etc.; provided, however, all of the Sellers’ ownership rights, if any, in and to any of the foregoing, shall constitute Acquired Assets and shall be transferred to the Purchaser hereunder.

 

(b)                                  The Sellers own all right, title and interest in and to all of the Intellectual Property Rights listed on Schedule 6.10 , free and clear of all Liens and there have been no claims made against Sellers asserting the invalidity, misuse or unenforceability of any of such Intellectual Property Rights.

 

(c)                                   All Intellectual Property Rights used in or for the Business, whether listed or not listed on Schedule 6.10 , shall be considered Acquired Assets hereunder and shall be transferred to the Purchaser for the Purchaser Price on the Closing Date. Sellers agree to execute and deliver on the Closing Date such documents and instruments as are necessary and acceptable to the Purchaser and Purchaser’s counsel to completely transfer, set-over and assign each and every Intellectual Property Right to the Purchaser.

 

6.11                            Litigation, etc.

 

(a)                                   Except as set forth on Schedule 6.11 , there are no actions, suits, proceedings, orders, investigations or claims pending or, to the Sellers’ knowledge, threatened against or affecting the Sellers, the Business, the Acquired Assets or pending or threatened by the Sellers against any third party, at law or in equity, and affecting in any manner the Business or the Acquired Assets or the prospects thereof,

 

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before or by any federal, foreign, state, parish or local court, or Governmental Body (including any actions, suits, proceedings or investigations with respect to or threatening the transactions contemplated by this Agreement); nor has there been any such actions, suits, proceedings, orders, investigations or claims pending against or affecting the Business or the Acquired Assets during the two (2) years preceding the Agreement Date. None of the Sellers, or any of their Affiliates involved in the operation of the Business, are subject to any arbitration proceedings or any governmental investigations or inquiries (including inquiries as to the qualification to hold or receive any license or permit, including, but not limited to, the right to have Devices or sell liquor and sell or store petroleum products or byproducts); and, to the Sellers’ knowledge, there is no basis for any of the foregoing. None of the Sellers nor any of their Affiliates is subject to any judgment, order or decree of any court or other governmental agency, and has not received any written opinion or memorandum from legal counsel to the effect that it or they are exposed, from a legal standpoint, to any liability which may involve or be related, in any manner, to the Business or the Acquired Assets.

 

(b)                                  The Sellers do, jointly and severally, hereby indemnify, defend and hold harmless the Purchaser, and its owners, shareholders, members, directors, managers, officers, employees, agents, successors and assigns, from and against any and all expenses, claims, fees, fines, damages or losses, including reasonable attorney’s fees, which the Purchaser may suffer as a result of any litigation matter, claim, investigation or choses in action existing or accruing as of the Closing Date (whether or not set forth on Schedule 6.11 ) or arising or filed at anytime and related, in any manner, to the operation of the Business or ownership of the Acquired Assets by the Sellers (each, a “Litigation Matter”). Purchaser shall have the right, at its sole election, to participate in the defense of any Litigation Matter, including, but not limited to, requiring the defense to be conducted by legal counsel of its choice.

 

6.12                            Brokerage . There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement binding upon Sellers.

 

6.13                            Required Consents . Except as listed on Schedule 6.13 (the “Consents”), no consents, approvals or other like permission are required or necessary from any Governmental Body or from any third party for the consummation of the transactions contemplated by this Agreement.

 

6.14                            Insurance .

 

(a)                                   All assets, properties and risks of the Business or the Acquired Assets are, and for the period of their operation and/ownership by the Sellers have been, covered by valid and currently effective insurance policies or binders of insurance (including general liability and property insurance) issued in favor of the Sellers, in each case with responsible insurance companies, in such types and amounts and covering such risks as are consistent with customary practices and standards of companies engaged in businesses and operations similar to those of the Business and such coverage shall continue through midnight of the Closing Date. All refunds or costs associated with the cancellation of such policies shall be the sole asset of and responsibility of the Sellers.

 

(b)                                  In the event that any of the Acquired Assets or any portion of the Business is damaged or otherwise the subject of a casualty or condemnation on or prior to the Closing Date, and the reduction in the fair market value of the Acquired Assets or the Business as a result of the casualty or condemnation reasonably exceeds Two Hundred Fifty Thousand and no/100 Dollars ($250,000.00), then either the Purchaser or Sellers shall have, in their sole, independent discretion, the right to terminate this

 

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Agreement. If the reduction in the fair market value as a result of any casualty or condemnation is less than Two Hundred Fifty Thousand and no/100 Dollars ($250,000.00), only the Purchaser shall have the right to elect to terminate this Agreement. If following a condemnation or casualty that occurs on or prior to the Closing Date, neither party elects to terminate this Agreement, then Purchaser shall proceed to close without any reduction in the Purchase Price and any and all insurance proceeds and the right to contest or make a claim for the same shall become the property of the Purchaser after the Closing Date and no Seller shall have any right, title or interest in or to the same and each does hereby relinquish any and all interest therein; provided, however, each of the foregoing shall fully cooperate in assigning and securing any and all insurance proceeds on behalf of the Purchaser. In the event Purchaser or Sellers shall elect to terminate this Agreement pursuant to this Section 6.14(b)  with the exception of the Purchaser’s indemnity set forth at Section 3.1(b), this Agreement shall thereafter be null and void and of no further force and effect and no party hereto shall have any further obligation or liability hereunder, and the Escrow Agent shall promptly thereafter return the Deposit to the Purchaser.

 

6.15                            Transactions with Affiliates . Except as disclosed on Schedule 6.15 or as otherwise provided for herein, the Business has no outstanding contracts, agreements, loans, obligations, debts or other legally binding arrangement with the Sellers or any of their Affiliates that will survive the Closing.

 

6.16                            Employees, Officer and Directors .

 

(a)                                   No Seller, on behalf of the Business, has ever maintained or contributed to, any employee benefit plan (as defined in Section 3(3) of ERISA) or any bonus, incentive, retirement, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, or any employment, termination, severance or other contracts or agreements, and, except as set forth on Schedule 6.16(a) , there exists no employee benefit plan for which the Sellers could incur liability on behalf of the Business under Section 4069 of ERISA in the event such plan has been or were to be terminated. Any employee of the Business may be terminated without cause at any time for any lawful reason without obligation on the part of the Sellers to make any payment therefore.

 

(b)                                  The Sellers, as appropriate, agree to terminate and dismiss, for any lawful reason, without creating any financial or other obligation to the Business or the Purchaser any employee or agent of the Business, as may be requested by the Purchaser, which termination shall be effective not later than midnight on the Closing Date.

 

(c)                                   Notwithstanding the foregoing, nothing contained in this Agreement shall prohibit the Purchaser, or its designee, from entering into an employment relationship under such terms and conditions as are acceptable to the Purchaser, with any employee, manager or agent of the Business.

 

6.17                            Labor Matters . Except as set forth in Schedule 6.17 , the Sellers employ all personnel working at the Premises or in the Business and none of the foregoing is a party to any collective bargaining or other labor union contract applicable to persons employed for the benefit of the Business, no collective bargaining agreement is being negotiated by the Sellers and none of the Sellers has knowledge of any activities or proceedings (a) involving any unorganized employees of the Business seeking to certify a collective bargaining unit or (b) of any labor union to organize any of the employees of the Business. There is no labor dispute, strike or work stoppage against the Sellers affecting or threatening to affect the Business pending or threatened which may interfere with the operation of the Premises or the Business.

 

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6.18                            Compliance with Laws .

 

(a)                                   To each of the Sellers’ or their Affiliates knowledge, each Seller and the Business is now and at all times has been in material compliance (provided the lack of any compliance will not have or have had a Material Adverse Effect on the Business or the Acquired Assets) with all applicable federal, state and local statutes, ordinances, rules, regulations, permits, consents, licenses, orders or other authorizations governing or related to the Acquired Assets or the Business and the Business’s liquor and gaming related activities, including, but not limited to, the Liquor and Gaming Laws of the State of Louisiana, as amended, and the rules and regulations promulgated thereunder, and no Seller nor any Affiliates thereof, have received any notice, demand, complaint or order from any Governmental Body asserting that a license of or related to the Business should be revoked, suspended, not issued or issued with qualifications, or that they or the Business are not in full compliance with the same. Larose, both as of the Agreement Date and the Closing Date, has a validly issued Device Owner’s License permitting the ownership and operation of Devices at the Premises and such Device Owner’s License is not currently subject to any investigation or notice of investigation, suspension or revocation from any state, federal, local or parish agency or authority. Purchaser acknowledges that the Louisiana State Police have not yet issued an Establishment License to Larose and/or Midway, as applicable, and that at present there is still pe