Exhibit 10.13

 

Execution Version

 

ASSET PURCHASE AGREEMENT

 

DATED JUNE 26, 2018,

 

BY AND AMONG

 

TRUCKEE GAMING, LLC,

 

NEVADA GOLD & CASINOS LV, LLC

 

AND

 

NEVADA GOLD & CASINOS, INC.

 

 

 

 

TABLE OF CONTENTS

 

    Page       Article 1 PURCHASED ASSETS; LIABILITIES 1       1.1 Purchase and
Sale of Assets 1 1.2 Retained Assets 3 1.3 Assumed Liabilities 4 1.4 Retained
Liabilities 5 1.5 Assignability and Consents 7       Article 2 PURCHASE PRICE
AND DEPOSIT 7       2.1 Purchase Price 7 2.2 Escrow 8 2.3 Cash Count 8 2.4
Purchase Price Adjustments 8 2.5 Allocation of Purchase Price 10 2.6 Prorations
10       Article 3 CLOSING 10       3.1 Closing; Closing Date 10 3.2 Seller and
Parent Closing Deliveries 11 3.3 Buyer Closing Deliveries 12       Article 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT 13       4.1 Organization,
Standing and Corporate Power 13 4.2 Capitalization; Ownership Interests 13 4.3
Authority; Approvals 14 4.4 Absence of Conflicts 14 4.5 Financial Statements; No
Undisclosed Liabilities 14 4.6 Absence of Certain Changes 15 4.7 Real Property
17 4.8 Tangible Personal Property 18 4.9 Inventory 18 4.10 Proceedings; Orders
18 4.11 Compliance with Laws; Permits 19 4.12 Tax Matters 20 4.13 Employment
Matters 21 4.14 Employee Benefits 22 4.15 Intellectual Property 23 4.16 Systems
25 4.17 Immigration Matters 26 4.18 Insurance 26 4.19 Contracts 26 4.20
Environmental Matters 28 4.21 Suppliers 29

 

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4.22 Sufficiency of Purchased Assets 30 4.23 Brokers 30 4.24 No other
Representations and Warranties; As-Is, Where-Is 30       Article 5
REPRESENTATIONS AND WARRANTIES OF BUYER 30       5.1 Organization; Standing;
Corporate Power 30 5.2 Authority; Approvals 31 5.3 Absence of Conflicts 31 5.4
Proceedings 32 5.6 Brokers 32 5.7 Solvency 32 5.8 No Financing Conditions 33    
  Article 6 COVENANTS AND AGREEMENTS 33       6.1 Conduct of Business 33 6.2 No
Solicitation 36 6.3 Access to Business; Continued Due Diligence; Confidentiality
36 6.4 Reasonable Efforts; Filings; Notification 38 6.5 Certain Transactions 39
6.6 Employees 39 6.7 Repairs 41 6.8 Delivery of Financial Statements and
Reports; Filings 41       Article 7 OTHER COVENANTS AND AGREEMENTS 41       7.1
Public Announcement 41 7.2 Confidentiality 42 7.3 Payment of Retained
Liabilities; Preservation of Corporate Existence 43 7.4 Retention of and Access
to Records 44 7.5 Cooperation in Litigation 44 7.6 Use of Name 45 7.7 Further
Assurances 45       Article 8 TAX MATTERS 45       8.1 Cooperation 45 8.2 Real
and Personal Property Taxes 46 8.3 Conveyance Taxes 46 8.4 Other Taxes 46      
Article 9 CONDITIONS TO CLOSING 46       9.1 Conditions to Buyer’s and Seller’s
Obligations 46 9.2 Conditions to Buyer’s Obligations 47 9.3 Conditions to
Seller’s and Parent’s Obligation 48       Article 10 SURVIVAL AND
INDEMNIFICATION 49       10.1 Survival 49 10.2 Indemnification by Seller and
Parent 49 10.3 Indemnification by Buyer 51 10.4 Time and Other Limitations 51

 

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10.5 Indemnification Procedures for Third-Party Claims 52 10.6 Indemnification
Procedures for Non-Third-Party Claims 54 10.7 Effect of Investigation. 54 10.8
Satisfaction of Seller’s and Parent’s Indemnification Obligations 55 10.9
Subrogation 55 10.10 Exclusive Remedy 55 10.11 Purchase Price Adjustment 55    
  Article 11 TERMINATION 55       11.1 Right to Terminate 55 11.2 Effect of
Termination 56       Article 12 MISCELLANEOUS PROVISIONS 57       12.1
Interpretation and Usage 57 12.2 Amendment and Modification 58 12.3 Waiver of
Compliance; Consents 58 12.4 No Third-Party Beneficiaries 58 12.5 Expenses 58
12.6 Notices 59 12.7 Assignment 60 12.8 Governing Law and Venue 60 12.9
Counterparts 60 12.10 Enforcement 61 12.11 Entire Agreement 61 12.12
Severability 61 12.13 Waiver of Jury Trial 61 12.14 Guaranty 62

 

Exhibits       Exhibit A Estimated Purchase Price Exhibit B Escrow Agreement
Exhibit C Bill of Sale and Assignment and Assumption Agreement Exhibit D
Transition Services Agreement Exhibit E Deed Exhibit F Example Acquired Cash
Calculation Exhibit G Example EBITDA Calculation Exhibit H Example Working
Capital Calculation     Schedules       Schedule 1.0 Definitions and
Cross-References

 

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Seller Disclosure Schedules     Schedule 1.1(a) Tangible Personal Property
Schedule 1.1(c) Assigned Contracts Schedule 1.1(d) Intellectual Property
Schedule 1.1(e) Permits Schedule 1.1(k) Claims Schedule 1.2(l) Retained Assets
Schedule 1.5 Non-Assignable Assets Schedule 3.2(f) Required Consents Schedule
4.2 Capitalization Schedule 4.4 Conflicts Schedule 4.5(c) Financial Statements
Schedule 4.6 Certain Changes Schedule 4.7(a) Leased Real Property Schedule
4.7(b) Owned Real Property Schedule 4.7(c) Capital Expenditures Schedule 4.8(b)
Tangible Personal Property Schedule 4.10(a) Proceedings Schedule 4.11(a)
Compliance with Laws Schedule 4.12 Tax Matters Schedule 4.13(d) Employees
Schedule 4.13(e) Independent Contractors Schedule 4.14(a) Employee Benefit Plans
Schedule 4.14(e) Plan Exceptions Schedule 4.15(a) Registered Intellectual
Property Schedule 4.15(b) IP Ownership Schedule 4.15(g) Social Media Schedule
4.16(a) Systems Schedule 4.16(b) Systems Ownership Schedule 4.17 Immigration
Schedule 4.18 Insurance Schedule 4.19(a) Contracts Schedule 4.19(b) Absence of
Breach Schedule 4.20 Environmental Matters Schedule 4.20(b) Environmental
Permits Schedule 4.21 Suppliers Schedule 4.22 Sufficiency of Assets Schedule 6.1
Conduct of Business Schedule 6.4(a)(v) Consents Schedule 9.1(b) Gaming Approvals
Schedule 1.0-A Permitted Encumbrances

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”) is entered into as of June 26,
2018 (“Agreement Date”), by and among Truckee Gaming, LLC, a Delaware limited
liability company (“Buyer”), Nevada Gold & Casinos LV, LLC, a Nevada limited
liability company and wholly-owned subsidiary of Parent (“Seller”), and Nevada
Gold & Casinos, Inc., a Nevada corporation (“Parent”).

 

RECITALS

 

A.         Seller owns and operates the casino, restaurant, gift shop, parking
and all related facilities commonly known as Club Fortune Casino, located at 725
South Racetrack Road, Henderson, NV 89015 (collectively, the “Business”).

 

B.          Seller desires to sell, convey, assign and transfer to Buyer, and
Buyer desires to purchase, acquire and accept from Seller, Seller’s interest in
and to the Purchased Assets (as defined below), and Buyer desires to assume
certain Liabilities related to the Purchased Assets, all on the terms and
subject to the conditions set forth in this Agreement.

 

C.          Capitalized terms not defined herein shall have the meanings
provided in Schedule 1.0 hereto and incorporated herein by reference.

 

In consideration of the foregoing recitals which are incorporated herein, and
the representations, warranties, covenants and agreements contained herein, and
intending to be legally bound, the parties agree as follows:

 

Article 1

PURCHASED ASSETS; LIABILITIES

 

1.1         Purchase and Sale of Assets. Pursuant to the terms and subject to
the conditions contained in this Agreement, at the Closing, Seller will sell,
convey, transfer, assign and deliver to Buyer or its designated Affiliate, and
Buyer will purchase and receive from Seller, free and clear of any Encumbrances
other than Permitted Encumbrances, all of Seller’s right, title and interest in
and to all assets, properties and rights of Seller used in or related to the
Business or required for the continued operation of the Business by Buyer in
substantially the same manner as conducted by Seller on the Agreement Date, in
each case wherever located and whether or not the asset, property or right
appears on Seller’s books and records, including the following (collectively,
the “Purchased Assets”), used in or related to the Business, but in each
instance specifically excluding the Retained Assets:

 

(a)          all tangible assets owned by Seller, including machinery, equipment
(including gaming equipment and devices), gaming tables, tools, spare parts,
transportation equipment, operating supplies, furniture and office equipment,
fixtures, furnishings, artwork, utensils for kitchens, bars and restaurants,
laundries, public rooms, hall and lobby equipment, heating, ventilating and
air-conditioning systems, plumbing, electrical and refrigerating systems,
elevators, escalators, communication and security plants or systems with
appurtenant fixtures, uniforms, telephone systems, telecopiers, photocopiers and
computer hardware, all gaming chips and tokens with respect to the Business that
are branded with the name, design, logo or other similar indicia of the
Business, including the chips and tokens not in circulation; including those
items set forth on the attached Schedule 1.1(a) of the Seller Disclosure
Schedules (collectively, the “Tangible Personal Property”);

 

 

 

 

(b)          all inventories of Seller, wherever located and whether in transit
or in storage, including all finished goods, works in process, raw and packaging
materials, spare and replacement parts, dice, food, beverages (including all
alcohol to the extent such alcohol is permitted to be transferred to Buyer under
applicable Law), cooking supplies, merchandise, gaming supplies, gaming device
parts inventory, engineering, maintenance and housekeeping supplies, cleaning
supplies, china, glassware, linens, silverware and similar amenities and all
other materials and supplies to be used, sold, resold or distributed by Seller,
together with all express or implied warranties, rights of return, rebate
rights, and all other rights relating to the foregoing (collectively, the
“Inventory”);

 

(c)          all Contracts and Leases to which Seller is a party relating to the
Business, including the Contracts and Leases listed on Schedule 1.1(c) of the
Seller Disclosure Schedules (collectively, the “Assigned Contracts”);

 

(d)          all Intellectual Property (other than the Parent Marks) owned by
Seller (including all Intellectual Property listed on Schedule 1.1(d) of the
Seller Disclosure Schedules), all tangible and electronic embodiments of such
Intellectual Property, the name “Club Fortune Casino” and any variants thereof
used in the Business, all rights to institute or maintain any Proceeding or
other action to protect such Intellectual Property or recover damages for any
past or present infringement thereof, and all income, royalties, damages and
payments due on or after the Closing Date with respect to such Intellectual
Property (collectively, the “Assigned IP”);

 

(e)          all Permits, including the Permits listed on Schedule 1.1(e) of the
Seller Disclosure Schedules, to the extent permitted to be transferred to Buyer
under applicable Law;

 

(f)           the Owned Real Property and Seller’s rights in the Leased Real
Property, together with the buildings and improvements thereon, fixtures related
thereto, and any rights, grants of variances, licenses or easements appurtenant
thereto, to the extent owned or held by Seller (collectively, the “Facilities”);

 

(g)          all information, books and records (not including income Tax books
and records, communications that are protected by an attorney-client privilege
or the attorney work-product privilege, and the other books and records
described in Sections 1.2(e), 1.2(f), and 1.2(h)) to the extent related to the
Purchased Assets, the Business or the Assumed Liabilities, including files,
computer discs and tapes, invoices, credit and sales records, personnel records
of Business Employees (subject to applicable Law), customer lists (including
copies of customer Contracts), supplier lists (including supplier cost
information), prospect lists (including mailing and calling lists), manuals,
drawings, business plans and other plans and specifications, accounting and
financial books and records, sales literature, current price lists and
discounts, promotional signs and literature, marketing and sales programs,
current and former product specifications, equipment tracking databases and
regulatory, manufacturing and quality control records and procedures
(collectively, the “Business Information”);

 

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(h)          all cash, negotiable instruments and other cash equivalents of
Seller located at the Facilities as of the Closing Date, including (i) cash,
negotiable instruments and other cash equivalents of Seller located in ATMs,
cages, drop boxes, slot machines and other gaming devices located at the
Facilities, and (ii) cash on hand for the Facilities manager’s petty cash fund
and cashiers’ banks, coins and slot hoppers, carousels and slot vault at the
Facilities (collectively, and subject to the terms of this paragraph, the
“Acquired Cash”); notwithstanding anything to the contrary contained herein,
Acquired Cash shall be calculated net of issued but uncleared checks and drafts
and outstanding and unredeemed gaming tokens and chips;

 

(i)           all billed and unbilled trade accounts receivable of the Business;

 

(j)           all other intangible rights and properties, including goodwill,
telephone and facsimile numbers, e-mail addresses, the Players Club and Players
Club Database and all rights to institute or maintain any action to protect the
same and recover damages for any misappropriation or misuse thereof; and

 

(k)          all claims of Seller against Third Parties or any other Person to
the extent arising from or relating to the Purchased Assets, the Business or the
Assumed Liabilities (whether choate or inchoate, known or unknown, contingent or
not contingent, including all rights arising from or relating to deposits,
prepaid expenses, claims for refunds and rights to set-off that constitute
Purchased Assets.

 

1.2         Retained Assets. Buyer is not purchasing from Seller, and Seller is
not selling to Buyer, and, where applicable, Seller shall retain all of its
right, title and interest in and to, each of the following assets, properties
and rights of Seller (collectively, the “Retained Assets”):

 

(a)          all cash and cash equivalents of Seller not located at the
Facilities;

 

(b)          all Contracts other than the Assigned Contracts;

 

(c)          all Plans, and the assets thereof;

 

(d)          all (i) intercompany accounts receivable of Seller, and notes for
those accounts receivable, of the Business where the obligee is Seller and the
obligor is Parent or an Affiliate of Seller, and (ii) all other accounts and
notes receivable of Seller (other than billed and unbilled trade accounts
receivable of the Business), regardless of when due and payable, together with
the full benefit of all security and other rights relating thereto;

 

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(e)          copies of all of the Assigned Contracts and all Business
Information, other than the Customer Database, copies of such documents as are
reasonably needed by Seller to pursue or defend claims related to the Retained
Assets or Retained Liabilities, and all employee-related or employee
benefit-related files or records, other than personnel files of Transferred
Employees, and any other books and records which Seller is prohibited from
disclosing or transferring to Buyer under applicable Law and is required by
applicable Law to retain;

 

(f)           Seller’s organizational documents, taxpayer and other
identification numbers, seals, minute books, membership interest records and all
other similar limited liability company books and records of Seller, including
communications that are protected by an attorney-client privilege or the
attorney work-product privilege;

 

(g)          all rights of Seller and its Affiliates under this Agreement and
the Ancillary Documents and any claims in respect thereof;

 

(h)          all (i) Tax Returns (including supporting schedules) other than
those included in the Purchased Assets pursuant to Section 1.2(g) and (ii)
refunds, credits, claims or entitlements with respect to Taxes to the extent
arising out of or relating to the Purchased Assets or the Business for any
pre-Closing Date portions of any Straddle Periods;

 

(i)           all insurance policies of Seller, and all rights to applicable
claims and proceeds thereunder;

 

(j)           the Parent Marks;

 

(k)          all rights, claims, causes of action, credits or rights of setoff
against Third Parties (including all indemnities, warranties and similar rights)
in favor of the Seller or any of its Representatives to the extent relating to
(i) any Retained Asset or (ii) any Retained Liability; and

 

(l)           those contracts set forth on Schedule 1.2(l) of the Seller
Disclosure Schedules.

 

1.3         Assumed Liabilities. Buyer will, as of the Closing, assume and agree
to pay, perform and discharge only the following Liabilities of Seller
(collectively, and subject to the exclusions set forth below, the “Assumed
Liabilities”):

 

(a)          all Liabilities arising or to be performed under the Assigned
Contracts and the Permits from and after the Closing (but not any Liability
arising out of or in connection with any breach of any such Assigned Contract or
Permit occurring prior to the Closing);

 

(b)          all Liabilities associated with the Players Club, other than any
Liabilities resulting from Seller’s violation of the terms and conditions of the
Players Club prior to the Closing (as assumed, the “Players Club Liabilities”);

 

(c)          all Liabilities with respect any Proceeding or Order that is
commenced or issued after the Closing Date that arises from Buyer’s ownership of
the Purchased Assets or operation of the Business from and after the Closing;

 

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(d)          all Liabilities for replacement of, or refund for, damaged,
defective or returned goods relating to items purchased in a gift shop or
similar facility at the Business;

 

(e)          all Liabilities with respect to the Transferred Employees arising
after the Closing Date;

 

(f)           outstanding and unredeemed vouchers and comps (to the extent
included as a liability in the calculation of Working Capital), Liabilities with
respect gaming tokens and chips poker and slot participation and all Progressive
Liabilities;

 

(g)          accrued but unpaid (as of the Closing Date) vacation and/or
personal time off (as applicable) associated with the Transferred Employees;

 

(h)          all trade accounts payable of Seller with respect to the Business
as reflected on the Reference Balance Sheet (subject to increases or decreases
thereof as may occur prior to the Closing in the Ordinary Course of Business and
not in violation of Section 6.1), in each case to the extent including in the
calculation of Working Capital;

 

(i)           all Liabilities for any Taxes of the Buyer or arising from Buyer’s
use, ownership or operation of the Purchased Assets or the conduct of the
Business after the effective time of Closing, including any Taxes described in
Section 8.2 attributable to post-Closing Date portions of any Straddle Periods;

 

(j)           all Liabilities relating to or arising out of the ownership of the
Purchased Assets or the conduct of the Business in respect of periods following
the Closing; and

 

(k)          all other Liabilities set forth as liabilities in the calculation
of Working Capital used to determine the Purchase Price pursuant to Sections 2.1
and 2.4 hereof.

 

1.4         Retained Liabilities. Except for the Assumed Liabilities, Buyer is
not assuming and expressly disclaims the assumption of any Liabilities of
Seller, whether or not such Liabilities arise from or relate to the Purchased
Assets or the operation of the Business prior to the Closing (collectively, the
“Retained Liabilities”). Without limiting the generality of the foregoing, and
solely for purposes of clarity, the Retained Liabilities include:

 

(a)          all Liabilities arising from or relating to products sold, or
services provided, on or prior to the Closing Date that do not constitute
Assumed Liabilities;

 

(b)          all Liabilities arising from or relating to accrued expenses,
accounts payable, indebtedness or other payment obligations that do not
constitute Assumed Liabilities;

 

(c)          all Liabilities arising from or relating to any Encumbrances (other
than Permitted Encumbrances) related to Seller’s ownership of the Purchased
Assets or the Business and surviving the Closing;

 

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(d)          all Liabilities arising out of or in connection with any breach of
the Assigned Contracts occurring prior to the Closing, and all Liabilities
arising from or relating to Contracts to which Seller is party that are not
Assigned Contracts;

 

(e)          all Liabilities for any Taxes arising from Seller’s use, ownership
or operation of the Purchased Assets or the conduct of the Business by Seller on
and prior to the effective time of Closing, including any income Taxes that may
be owing by Seller as a result of the sale of the Purchased Assets and including
any Taxes described in Section 8.2 attributable to pre-Closing Date portions of
any Straddle Periods, but excluding any Taxes described in Section 8.2
attributable to post-Closing Date portions of any Straddle Periods whether, in
each case, payable before or after Closing;

 

(f)           all Liabilities arising from or relating to any Proceeding or
Order to which Seller is a party or is otherwise bound as of the Closing to the
extent arising or related to a period prior to the Closing Date;

 

(g)          all Liabilities arising from or relating to Breaches of Law
(including Environmental and Safety Requirements), including any Breach of a
Permit, occurring prior to the Closing;

 

(h)          all Liabilities of Parent;

 

(i)           except as provided in the proviso of Section 6.6(b)(i), all
Liabilities of Seller arising from or relating to the employment, retention or
termination by Seller, or with respect to the Business, Parent, of any of their
current or former officers, directors, employees or independent contractors,
including but not limited to all Liabilities for salaries, bonuses, withholding,
expense reimbursements, benefits or severance payments (unless otherwise
allocated between the parties elsewhere in this Agreement), all Liabilities
arising from or relating to Seller’s or Parent’s compliance with applicable
employment Laws, all Liabilities arising from or relating to any employment
agreements that Seller or Parent may have executed with its employees and all
Liabilities to indemnify, reimburse or advance any amounts to any officer,
director, employee, consultant or other agent or representative of Seller or
Parent (whether in connection with the transactions contemplated by this
Agreement or otherwise); and

 

(j)           all Liabilities otherwise arising from or relating to Seller’s
use, ownership or operation of the Purchased Assets or the conduct of the
Business prior to Closing that do not constitute Assumed Liabilities.

 

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1.5         Assignability and Consents. Nothing in this Agreement nor the
consummation of the transactions contemplated hereby shall be construed as an
attempt or agreement to assign any Purchased Asset, including any Contract,
Permit, certificate, approval, authorization or other right, that by its terms
or by Law is non-assignable without the consent of a Third Party (including any
Authority) or is cancelable by a Third Party in the event of an assignment (a
“Non-Assignable Asset”), unless and until consent from such Third Party shall
have been obtained. With respect to all Non-Assignable Assets, including those
set forth on Schedule 1.5 of the Seller Disclosure Schedules, Seller and Parent
shall use commercially reasonable efforts to cooperate with Buyer at its request
for up to six (6) months following the Closing Date in endeavoring to obtain
such consents; provided, however, that such efforts shall not require Seller,
Parent or any of their Affiliates to incur any expenses or Liabilities, provide
any financial accommodation, or remain secondarily or contingently liable for
any Assumed Liability to obtain any such consent and any failure to obtain any
consent by Seller for any reason in and of itself shall not constitute a breach
of this Agreement. To the extent permitted by applicable Law and the terms of
the Non-Assignable Assets, in the event that consents to the assignment thereof
cannot be obtained, such Non-Assignable Assets shall be held, as of and from the
Closing Date, by Seller (or the applicable Affiliate of Seller) for the benefit
of Buyer, and the covenants and obligations thereunder shall be performed by
Buyer at Buyer’s expense and in Seller’s name, and all benefits and obligations
existing thereunder shall be for Buyer’s account (and Seller shall promptly pay
over to Buyer all money received by it under such Non-Assignable Assets in
respect of periods after the Closing Date); provided, that Seller may, after
providing prior written notice to Buyer with reasonable detail, withhold any
performance under a Non-Assignable Asset that may otherwise be reasonably
requested by Buyer until Buyer shall have provided Seller with all funds and
other resources necessary for such performance. As of and from the Closing Date,
Seller authorizes Buyer, to the extent permitted by applicable Law and the terms
of the Non-Assignable Assets, at Buyer’s expense, to perform all the obligations
and receive all the benefits of Seller under the Non-Assignable Assets. Buyer
agrees to indemnify and hold Seller and its Representatives, successors and
assigns harmless from and against any and all Liabilities and Losses based upon,
arising out of or relating to Buyer’s performance of, or failure to perform,
obligations under the Non-Assignable Assets to the extent such Liability would
have been an Assumed Liability if the assignment of the Non-Assigned Assets to
Buyer had occurred on the Closing Date.

 

Article 2

PURCHASE PRICE AND DEPOSIT

 

2.1         Purchase Price.

 

(a)          The aggregate consideration to be paid by Buyer to Seller for the
conveyance, assignment and transfer of the Purchased Assets at the Closing shall
be an amount equal to Fourteen Million Six Hundred Thousand Dollars
($14,600,000), plus or minus (as applicable) (i) the Acquired Cash Adjustment,
and (ii) the Working Capital Adjustment (such amount, as adjusted, the “Purchase
Price”).

 

(b)          Estimated Purchase Price. Not later than ten (10) Business Days
prior to the Closing, Seller shall deliver to Buyer a good faith estimate, made
consistent with the terms and conditions of this Agreement and based upon
information available to it, of the Purchase Price (the “Estimated Purchase
Price”), in the form attached hereto as Exhibit A.

 

(c)          Cash Payment by Buyer at Closing. At Closing, Buyer shall pay to
Seller an aggregate amount in cash, by electronic transfer of immediately
available funds, to an account designated by Seller, equal to (i) the Estimated
Purchase Price, minus (ii) the Escrow Amount (collectively, the “Closing Cash
Payment”).

 

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2.2         Escrow. At the Closing, the Escrow Amount shall be deposited by
Buyer into escrow with the Escrow Agent pursuant to an escrow agreement,
substantially in the form of Exhibit B hereto (the “Escrow Agreement”), and
shall be held to satisfy any claims made by Buyer or any of the Buyer
Indemnitees against Seller or Parent pursuant to Article 10 for a period of
twelve (12) months. All costs and expenses related to holding in escrow the
Escrow Amount, including the fees of the Escrow Agent, shall be borne equally by
Buyer and Seller.

 

2.3         Cash Count. At the close of business on the Closing Date (or at such
other day or time as mutually agreed by Buyer and Seller or otherwise dictated
by applicable Gaming Laws), Seller shall conduct a physical count of all cash
contained in cages, ATMs, slot booths, count rooms, gaming devices, drop boxes
and any other location where cash is held by Seller at the Facilities (the “Cash
Count”). The Cash Count shall be conducted in accordance with the policies,
procedures and methodologies mutually agreed by the parties and otherwise in
accordance with applicable Gaming Laws. Buyer shall be entitled to have
Representatives present during the Cash Count, which Representatives shall, to
the extent permitted by Law, have full access to the Cash Count proceedings and
cooperate with Seller’s Representatives in good faith to resolve any disputes
regarding the conduct of the Cash Count. Such Cash Count will be used in the
preparation of the Closing Payment Statement.

 

2.4         Purchase Price Adjustments.

 

(a)          As soon as reasonably practicable following the Closing Date, but
in no event more than ninety (90) days after the Closing Date, Buyer shall cause
to be prepared and delivered to Seller a statement (the “Closing Payment
Statement”) setting forth in reasonable detail, as of the Closing Date, its
calculation of (i) the Acquired Cash Adjustment, (ii) the Working Capital
Adjustment, and (iii) the Purchase Price. The Acquired Cash Adjustment
calculation shall incorporate the results of the Cash Count as provided in
Section 2.4. The Acquired Cash Adjustment, the Working Capital Adjustment, and
the Purchase Price calculations shall be determined in accordance with the
definitions and principles set forth in this Agreement and the other terms and
conditions of this Agreement, and in accordance with GAAP applied on a basis
consistent with the application of such principles in the preparation of the
Reference Balance Sheet and the Purchase Price. The Closing Payment Statement
shall be prepared in accordance with, and in the format of, Exhibit A, and shall
include calculation of (A) the Acquired Cash Adjustment, which shall be prepared
in accordance with, and in the format of, Exhibit F, and (B) the Working Capital
Adjustment, which shall be prepared in accordance with, and in the format of,
Exhibit H. Subject to applicable Law, Seller will use commercially reasonable
efforts to cooperate with Buyer in connection with the preparation of the
Closing Payment Statement and will provide Buyer with reasonable access to any
of Seller’s records not otherwise available to Buyer as a result of the
transactions contemplated by this Agreement, to the extent necessary for the
preparation of the Closing Payment Statement (excluding income Tax books or
records and communications that are protected by the attorney-client privilege
or the work-product privilege).

 

 8 

 

 

(b)          If Seller shall have any disagreement with the Closing Payment
Statement, it shall, on or prior to thirty (30) days after its receipt of the
Closing Payment Statement, notify Buyer of such disagreement in writing, setting
forth in reasonable detail the particulars of such disagreement. In connection
therewith and subject to applicable Law, Buyer will make available to Seller all
workpapers and other books and records utilized by Buyer in the preparation of
the Closing Payment Statement and those Representatives of Seller involved in
the preparation of the Closing Payment Statement, and will provide Seller
reasonable access to such other Business records not otherwise available to
Seller as a result of the transactions contemplated by this Agreement (excluding
income Tax books or records and communications that are protected by the
attorney-client privilege or the work-product privilege), to the extent Seller
deems necessary for Seller’s review of the Closing Payment Statement. If Seller
does not provide such notice of disagreement within such thirty (30) day period,
Seller shall be deemed to have accepted the Closing Payment Statement delivered
by Buyer and such determination shall be final, binding and conclusive for all
purposes of this Agreement. Any purported failure by Seller to provide the
aforementioned “reasonable detail” shall not be used as the basis for an
assertion by Buyer that Seller’s notice of disagreement was not timely
delivered. If any such notice of disagreement is timely provided, Buyer and
Seller, in conjunction with their respective independent accounting firms, shall
use commercially reasonable efforts for a period of thirty (30) days from the
date of Seller’s notice of disagreement (or such longer period as they may
mutually agree) to resolve any disagreements with respect to the Closing Payment
Statement. If, at the end of such period, they are unable to resolve such
disagreements, then Ernst & Young LLP or such other independent accounting firm
as the parties may mutually agree upon (as determined, the “Auditor”) shall
resolve any remaining disagreements. The Auditor shall determine as promptly as
practicable (but in any event shall be instructed to deliver its determination
within sixty (60) days after its engagement), only with respect to the
disagreements submitted to the Auditor, whether the Closing Payment Statement
was prepared in accordance with the standards set forth in this Agreement and,
only with respect to the disagreements submitted to the Auditor, whether and to
what extent (if any) the Closing Payment Statement requires adjustment, and
shall be instructed not to otherwise investigate matters independently. The
Auditor shall promptly deliver to Buyer and Seller its determination in writing,
which determination shall be made subject to the definitions and principles set
forth in this Agreement, and shall be (i) consistent with either the position of
Seller or Buyer or (ii) between the positions of Seller and Buyer. The fees and
expenses of the Auditor shall be borne equally by Buyer and Seller. The
determination of the Auditor shall be final, binding and conclusive for purposes
of this Agreement and not subject to any further recourse by Buyer or Seller
under any provision hereof, including Article 10, and judgment may be entered
thereon in a court of competent jurisdiction.

 

(c)          If the Purchase Price, as finally determined in accordance with
Section 2.4(b), exceeds the Estimated Purchase Price, then Buyer shall, within
seven (7) Business Days of the determination date, pay to Seller such difference
by wire transfer of immediately available funds to such account or accounts
designated by Seller in writing (or in the absence of any such designation, by
corporate check mailed to Seller).

 

(d)          If the Purchase Price, as finally determined in accordance with
Section 2.4(b), is less than the Estimated Purchase Price, then Seller or Parent
shall, within seven (7) Business Days of the determination date, pay to Buyer
such difference by wire transfer of immediately available funds to such account
or accounts designated by Buyer in writing (or in the absence of any such
designation, by corporate check mailed to Buyer).

 

 9 

 

 

2.5         Allocation of Purchase Price. Within twenty (20) Business Days after
the Purchase Price is finally determined in accordance with Section 2.4(b),
Buyer shall deliver to Seller a schedule (an “Allocation Schedule”) allocating
the Purchase Price among the Purchased Assets in accordance with Section 1060 of
the Code. If within twenty (20) Business Days after receipt of the applicable
Allocation Schedule, Seller does not provide notice as set forth in the
following sentence, such Allocation Schedule shall be final and binding on the
parties. If within twenty (20) Business Days after receipt of the applicable
Allocation Schedule, Seller notifies Buyer in writing that Seller objects to one
or more items reflected on such Allocation Schedule, Buyer and Seller shall
negotiate in good faith to resolve such dispute. If Buyer and Seller fail to
resolve any such dispute within twenty (20) Business Days after Buyer’s receipt
of Seller’s notice of an objection to the applicable Allocation Schedule, each
of the parties may file an Allocation Schedule of its own choosing for Tax
reporting purposes. Any adjustment to the Purchase Price shall be allocated and
any Allocation Schedule that Seller did not dispute shall be adjusted as
provided by Treasury Regulation § 1.1060-1(c).

 

2.6         Prorations. On the Closing Date, all utility charges and other
similar periodic obligations and expenses (but not including those items
prorated under Article 8 and those items reflected in the calculation of the
Working Capital Adjustment as finally determined pursuant to Section 2.4),
related to the Purchased Assets will be prorated as of the Closing Date, with
Seller responsible for such charges, obligations and expenses for the period up
to the Closing Date, and Buyer to be responsible for the period on and after the
Closing Date. Whenever possible, such prorations will be based on actual,
current payments by Seller, and to the extent such actual amounts are not
available, such prorations will be estimated as of the Closing Date based on
actual amounts for the most recent comparable billing period. When the actual
amounts become known, such prorations will be recalculated by Buyer and Seller,
and Buyer or Seller, as the case may be, promptly (but not later than five (5)
Business Days after notice of payment due) will make any additional payment or
refund so that the correct prorated amount is paid by each of Buyer and Seller.
Buyer shall bear the cost of a title policy issued to Buyer insuring the
Facilities, and any survey or survey update ordered for such title policy.

 

Article 3

CLOSING

 

3.1         Closing; Closing Date. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall take place at 10:00 a.m. (Las Vegas,
Nevada time) on the fifth (5th) Business Day following the satisfaction or
waiver of the conditions in Article 9 (other than those conditions that by their
nature are to be satisfied or waived at the Closing, but subject to their
satisfaction or waiver at the Closing), or at such other time and date as may be
mutually agreed by Buyer and Seller; provided, however, that the parties agree
to use commercially reasonable efforts to cause the Closing to occur on the
first Business Day of a calendar month. The Closing shall take place at the
offices of the Escrow Agent or at such other location and time as is mutually
agreeable to Buyer and Seller. The date on which the Closing shall occur is
referred to herein as the “Closing Date.” The effective time of the Closing for
tax and accounting purposes shall be 11:59 p.m. Pacific Time on the Closing Date
(or such other time as shall constitute the end of the “gaming day” of the
Business as determined pursuant to applicable Gaming Laws or by the Gaming
Authorities).

 

 10 

 

 

3.2         Seller and Parent Closing Deliveries. At the Closing, Seller and
Parent will deliver or cause to be delivered to Buyer all of the following:

 

(a)          a bill of sale and assignment and assumption agreement duly
executed by Buyer and Seller, in form and substance substantially as set forth
in Exhibit C (the “Conveyance Agreement”);

 

(b)          a certificate, executed on behalf of Parent and Seller by a duly
authorized officer of Parent and Seller, in form and substance reasonably
satisfactory to Buyer, dated the Closing Date, confirming that the conditions
precedent in Sections 9.2(a) 9.2(b) and 9.2(c) have been satisfied;

 

(c)          a certificate executed on behalf of Seller by a duly authorized
officer of Seller, in form and substance reasonably satisfactory to Buyer, dated
the Closing Date, together with copies of (i) the resolutions adopted by Seller
and Parent authorizing the execution, delivery and performance of this Agreement
and the completion of the transactions contemplated hereby, (ii) a written
certification identifying the individuals duly authorized to execute this
Agreement on Seller’s and Parent’s behalf and any Ancillary Document, or any
other instruments or documents related hereto or thereto to which Seller or
Parent is or will at the Closing be a party as the binding obligation of Seller
and/or Parent, as applicable; (iii) the articles of organization of Seller,
(iv) the operating agreement of Seller, and (v) a certificate dated within ten
(10) Business Days prior to the Closing Date, issued by the Nevada Secretary of
State, evidencing the good standing of Seller in the State of Nevada, which
certification will confirm that such copies are correct and complete and that
such resolutions were duly adopted, have not been amended or rescinded and are
in full force and effect;

 

(d)          a transition services agreement duly executed by Seller pursuant to
which Seller will provide the services described in Exhibit D to Buyer, in form
and substance reasonably satisfactory to Seller and Buyer (the “Transition
Services Agreement”);

 

(e)          a grant, bargain and sale deed with respect to the Owned Real
Property, in form and substance substantially as set forth in Exhibit E (the
“Deed), duly executed by Seller;

 11 

 

 

(f)           the Consents identified in Schedule 3.2(f) of the Seller
Disclosure Schedules, in form and substance reasonably satisfactory to Buyer
(the “Required Consents”) or, to the extent that any such Required Consent
identified in Schedule 3.2(f) of the Seller Disclosure Schedules (other than the
Required Consent identified as item 1 therein) shall not have been obtained on
or prior to the Closing, Seller shall retain and continue to hold the Contract
to which such Required Consent related and ensure that Buyer receives the full
benefits of the provisions of such Contract for the duration of its term in
accordance with Section 1.5;

 

(g)          the Escrow Agreement, duly executed by Seller;

 

(h)          a certificate from Seller (or the taxpayer as to which Seller is
disregarded as separate) stating that Seller (or such taxpayer) is not a
“foreign person” as defined in Section 1445 of the Code, and otherwise meeting
the requirements of Section 1.1445-2(b) of the Treasury Regulations, along with
a properly completed IRS Form W-9 of Seller (or such taxpayer);

 

(i)            evidence reasonably satisfactory to Buyer that all recorded
Encumbrances on the Purchased Assets have been released or removed, except for
any Permitted Encumbrances; and

 

(j)          such other typical and customary certificates, documents and
instruments as Buyer may reasonably request related to the transactions
contemplated hereby.

 

3.3         Buyer Closing Deliveries. At the Closing, Buyer will deliver or
cause to be delivered:

 

(a)          an amount equal to the Closing Cash Payment, which amount will be
directed to Seller by wire transfer of immediately available funds to an account
designated by Seller in writing at least two (2) Business Days prior to the
Closing;

 

(b)          the Escrow Amount to the Escrow Agent, via wire transfer of
immediately available funds;

 

(c)          to Seller and, if applicable, Parent, the Conveyance Agreement,
Escrow Agreement, and Transition Services Agreement, duly executed by Buyer;

 

(d)          to Seller, a certificate, executed on behalf of Buyer by a duly
authorized officer of Buyer, in form and substance reasonably satisfactory to
Seller, dated the Closing Date, confirming that the conditions precedent in
Sections 9.3(a) and 9.3(b) have been satisfied;

 

(e)          to Seller, a certificate, executed on behalf of Buyer by a duly
authorized officer of Buyer, in form and substance reasonably satisfactory to
Seller, dated the Closing Date, together with copies of (i) the resolutions
adopted by Buyer authorizing the execution, delivery and performance of this
Agreement and the completion of the transactions contemplated hereby, and (ii) a
written certification identifying the individuals duly authorized to execute
this Agreement on Buyer’s behalf and any Ancillary Document, or any other
instruments or documents related hereto or thereto to which Buyer is or will at
the Closing be a party as the binding obligation of Buyer, which certification
will confirm that such copies are correct and complete and that such resolutions
were duly adopted, have not been amended or rescinded and are in full force and
effect.; and

 

 12 

 

 

(f)           such other typical and customary certificates, documents and
instruments as Seller may reasonably request related to the transactions
contemplated hereby.

 

Article 4

REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

 

Seller and Parent jointly and severally represent and warrant to Buyer, except
as set forth in the Disclosure Schedules delivered by Seller and Parent to Buyer
on the Agreement Date (the “Seller Disclosure Schedules”) as follows:

 

4.1         Organization, Standing and Corporate Power.

 

(a)          Seller is a limited liability company, and Parent is a corporation,
in each case duly organized, validly existing and in good standing under the
laws of the State of Nevada, and Seller is duly qualified, licensed or
registered to do business in every other jurisdiction in which the nature of its
business or the ownership of its property requires it to be qualified, except
where the failure to be so qualified, licensed or registered would not
reasonably be expected to result in a Material Adverse Effect. Seller and Parent
each has all requisite limited liability company or corporate power and
authority to conduct its business and affairs as currently being conducted and
to own, lease and operate its properties and assets.

 

(b)          Seller has no Subsidiaries and neither Seller nor Parent has
Affiliates who are involved in the Business other than Parent or Seller, and
Seller does not directly or indirectly hold any capital stock or other equity
securities, options, warrants, convertible debt, or other derivative securities
of any Person or otherwise have any direct or indirect ownership interest in any
Person or business, except the Business.

 

(c)          Seller has provided Buyer with correct and complete copies of
Seller’s Governing Documents, including all amendments thereto. Seller is not in
Breach of any of its Governing Documents.

 

4.2         Capitalization; Ownership Interests. Parent is the sole record and
beneficial owner of a 100% membership interest in Seller, which interest has
been validly issued and is nonassessable. Except as set forth on Schedule 4.2 of
the Seller Disclosure Schedules, (a) there are no other equity interests of
Seller issued or outstanding, and (b) there are no options, warrants,
convertible debt, or other derivative securities, phantom equity rights or
similar rights or interests issued by Seller or relating to any equity interests
or voting securities of Seller.

 13 

 

 

4.3         Authority; Approvals. Seller and Parent each have all necessary
limited liability company or corporate power and authority to execute and
deliver this Agreement and the Ancillary Documents to which Seller and/or Parent
is or will be a party, and to complete the transactions contemplated by this
Agreement. Seller and Parent have taken all action required by Law, Seller’s
Governing Documents and otherwise to authorize Seller’s and Parent’s execution
and delivery of this Agreement and the Ancillary Documents to which Seller or
Parent is or will be a party and the performance of Seller’s and Parent’s
obligations hereunder and thereunder. No other limited liability company or
corporate proceeding or action on the part of Seller or Parent is necessary to
approve and authorize Seller’s or Parent’s execution and delivery of this
Agreement or any of the Ancillary Documents to which Seller or Parent is or will
be a party or the performance of its obligations hereunder or thereunder. Seller
and Parent have each duly and validly executed and delivered this Agreement, and
the Ancillary Documents to be executed and delivered by Seller and/or Parent
will at the Closing be duly executed and delivered by Seller and/or Parent, as
applicable. Assuming the due authorization, execution and delivery of this
Agreement by Buyer, this Agreement constitutes, and at the Closing each
Ancillary Document to be executed and delivered by Seller and/or Parent,
assuming the due authorization, execution and delivery by Buyer of each such
Ancillary Document to which Buyer is or will be a party, will constitute, the
legal and valid binding obligation of Seller and/or Parent, as applicable,
enforceable against Seller and/or Buyer, as applicable, in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar Laws relating to creditors’ rights generally and to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).

 

4.4         Absence of Conflicts. Except as set forth on Schedule 4.4 of the
Seller Disclosure Schedules, neither the execution, delivery nor performance of
this Agreement or any Ancillary Document to which Seller or Parent is or will be
a party, nor the consummation by Seller and Parent of the transactions
contemplated hereby or thereby does or will: (a) conflict with or result in any
breach of any of the provisions of, (b) constitute a default under, (c) result
in a violation of, (d) give any Third Party the right to terminate or to
accelerate any obligation under, (e) result in the creation of any Encumbrance
upon any assets of Seller, the Business or the Purchased Assets, or (f) require
any authorization, consent, approval, exemption or other action by or notice to
or filing with any Authority or any other Person, except for such
authorizations, consents, approvals, exemptions or other actions by or notices
to or filings with any Authority required under applicable Gaming Laws or Liquor
Laws, in each case under (i) the provisions of the articles of organization or
operating agreement of Seller, (ii) any material indenture, license, mortgage,
loan agreement or other agreement, instrument or Contract to which Seller is
bound or the Business, or any of the Purchased Assets are affected, or (iii)
subject to the authorizations, consents, approvals, exemptions or other actions
by or notices to or filings with any Authority required under applicable Gaming
Laws or Liquor Laws, any Law to which Seller, the Business, or any of the
Purchased Assets is subject.

 

4.5         Financial Statements; No Undisclosed Liabilities.

 

(a)          Seller has made available to Buyer correct and complete copies of
the unaudited balance sheets of Seller dated April 30, 2018, 2017 and 2016, and
the related unaudited statements of income and cash flows for the fiscal years
then ended (collectively, the “Financial Statements”, the balance sheet of
Seller as of April 30, 2018 is referred to herein as the “Reference Balance
Sheet” and April 30, 2018 is referred to herein as the “Reference Balance Sheet
Date”).

 

 14 

 

 

(b)          The Financial Statements are consistent with the books and records
of Seller and fairly present in all material respects the financial position of
Seller as of the dates indicated and the results of operations of Seller for the
periods indicated, in conformity with GAAP applied on a consistent basis
throughout the periods specified, except as expressly set forth therein and
except that the Financial Statements omit footnotes and the disclosures required
therein.

 

(c)          As relates to the Business or the Purchased Assets, as of the
Agreement Date, Seller does not have any material Liabilities, except for
(i) Liabilities which are adequately reflected or reserved against in the
Reference Balance Sheet, (ii) Liabilities which have arisen after the Reference
Balance Sheet Date in the Ordinary Course of Business, (iii) Liabilities
relating to or arising under Leases, Contracts, Permits and Permitted
Encumbrances which do not result from or arise out of breaches thereof,
(iv) Liabilities for Taxes that do not violate the representations and
warranties contained in Section 4.12, or (v) those set forth in Section 4.5(c)
of the Seller Disclosure Schedules.

 

4.6         Absence of Certain Changes. Except as set forth in Schedule 4.6 of
the Seller Disclosure Schedules, between the Reference Balance Sheet Date and
the Agreement Date, (i) there has not been any change, event or occurrence that
has had a Material Adverse Effect, and (ii) neither Seller nor, as it relates to
the Business, Parent has:

 

(a)          sold, leased, transferred, or assigned any material assets of
Seller, tangible or intangible (including Intellectual Property), other than
Inventory sold in the Ordinary Course of Business;

 

(b)          entered into any agreement, Contract, lease, license or permit (or
series of related agreements, Contracts, leases, licenses and permits with the
same Person), either (i) involving payments to or by Seller of more than $25,000
(individually or in the aggregate), other than slot participation agreements
entered into in the Ordinary Course of Business, or (ii) outside the Ordinary
Course of Business;

 

(c)          entered into any Contract with any Authority or accelerated,
terminated, modified, or cancelled any Contract with any Authority to which
Seller is a party or by which it is bound;

 

(d)          entered into any agreement, Contract, lease or license (or series
of related agreements, Contracts, leases or licenses with the same Person) with
any Affiliate of Seller or Parent;

 

(e)          waived any right of material value that would otherwise constitute
a Purchased Asset;

 

(f)           except in the Ordinary Course of Business, terminated or
cancelled, or modified in any material respect, any Contract (or series of
related Contracts with the same Person) involving payments to or by Seller of
more than $25,000 (individually or in the aggregate) to which Seller is a party
or by which it is bound;

 

 15 

 

 

(g)          imposed (or allowed to be imposed) any Encumbrances (other than
Permitted Encumbrances) upon any of assets of Seller, tangible or intangible
(including any Assigned IP);

 

(h)          made any capital expenditure (or series of related capital
expenditures) that involves more than $25,000 other than capital expenditures
set forth in Seller’s budget for the applicable period(s), copies of which have
been provided to Buyer;

 

(i)           made any capital investment in, any loan to (other than (i)
advances of expenses to employees in the Ordinary Course of Business and (ii)
player markers issued in the Ordinary Course of Business and reflected in the
Business’s records), or any acquisition of the securities or assets of, any
other Person;

 

(j)           issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money in an
aggregate amount exceeding $25,000;

 

(k)          delayed or postponed the payment of any accounts payable or other
Liabilities of Seller outside the Ordinary Course of Business;

 

(l)           declared, set aside, or paid any dividend or made any distribution
with respect to the membership interests or other equity interests of Seller
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of the membership interests or other equity interests of Seller which in each
case would remain an obligation of or Encumbrance upon the Purchased Assets or
the Business following the Closing;

 

(m)         entered into any employment Contract or collective bargaining
agreement;

 

(n)          except in the Ordinary Course of Business, as required by Law or as
required by the terms of any Plan, adopted, amended, modified or terminated any
Plan;

 

(o)          made any Tax election or adopted or changed in any Tax accounting
method or policy, filed any amended Tax Return, consented to or entered into any
closing agreement or similar written agreement with any Taxing Authority or
consented to or settled or compromised any Tax claim or assessment that, as to
any such action, would have the effect of increasing the Tax Liability or
reducing any Tax asset of Buyer with respect to the Business or the Purchased
Assets in any post-Closing Tax period;

 

(p)          made or granted any bonus or any wage, salary or compensation
increase in excess of $10,000 per year to any employee or independent contractor
of Seller;

 

(q)          (i) transferred or assigned, or allowed to lapse or go abandoned,
any material rights under or with respect to any Assigned IP; or (ii) granted
any license or sublicense of any Assigned IP, other than in the case of clause
(i) and (ii) in the Ordinary Course of Business;

 

 16 

 

 

(r)           excluding normal wear and tear, experienced any physical damage,
destruction or loss (whether or not covered by insurance) to the Tangible
Personal Property or the Facilities in excess of $25,000 in the aggregate;

 

(s)          changed in any material respect its accounting policies and
practices as in effect on the Reference Balance Sheet Date, except as required
by GAAP or applicable Law or changed its fiscal year; or

 

(t)           agreed or committed (whether or not in writing) to do any of the
foregoing.

 

4.7         Real Property.

 

(a)          Schedule 4.7(a) of the Seller Disclosure Schedules contains a true
and complete list, as of the Agreement Date, of all of the leases, licenses,
subleases and all other similar occupancy agreements, including all amendments
or other modifications thereto (collectively, the “Leases”), pursuant to which
Seller leases, licenses, subleases or otherwise occupies real property (such
real property, collectively, the “Leased Real Property”). The Leased Real
Property is the only real property leased, subleased, licensed or otherwise
occupied by Seller that is used in the Business, other than the Owned Real
Property. With respect to the Leases and the Leased Real Property: (i) Seller
has a good and valid leasehold interest in all of the Leased Real Property, free
and clear of any Encumbrances (other than Permitted Encumbrances), (ii) the
Leases are in full force and effect, (iii) neither Seller nor, to the Knowledge
of Seller, any other party to any Lease, is in material default under any Lease,
and (iv) to the Knowledge of Seller, no event has occurred which, with notice or
lapse of time, would constitute a material breach or default by Seller under any
of the Leases. Seller has made or prior to Closing will make available to Buyer
or its Representatives true, correct and complete copies of the Leases and, to
the extent in possession or control of Parent or Seller, all certificates of
occupancy and surveys relating to the Leased Real Property. To the Knowledge of
Seller, neither the current use of the Leased Real Property by Seller, nor the
Leased Real Property itself contravenes or violates any building, zoning,
administrative, occupational safety and health or other applicable Law in any
material respect.

 

(b)          Schedule 4.7(b) of the Seller Disclosure Schedules contains a true
and complete list of all real property owned by Seller (the “Owned Real
Property”). Seller has good and valid title to all of the Owned Real Property,
free and clear of any Encumbrances (other than Permitted Encumbrances). To the
Knowledge of Seller, none of the Owned Real Property, or the use thereof,
contravenes or violates any building, zoning, administrative, occupational
safety and health or other applicable Law in any material respect. Seller has
made or prior to Closing will make available to Buyer or its Representatives
copies of all leases, certificates of occupancy, surveys, environmental reports
and documents evidencing unrecorded easements, rights of way and similar
restrictions and rights (and all amendments thereto) with respect to the Owned
Real Property, to the extent the same are in Parent’s or Seller’s possession or
control. Other than as set forth on Schedule 4.7(b) of the Seller Disclosure
Schedules, Seller is not party to any lease, license, sublease or similar
occupancy agreement under which it leases, licenses, subleases or otherwise
makes any of the Owned Real Property available for occupancy by any Third Party.

 17 

 

 

(c)          After giving effect to capital expenditures currently budgeted or
being undertaken by Seller, each as specifically disclosed on Schedule 4.7(c) of
the Seller Disclosure Schedules, all material improvements, structures,
facilities, fixtures and equipment located on the Leased Real Property and the
Owned Real Property and currently used in the Business are in all material
respects good operating condition, ordinary, wear and tear excepted.

 

4.8         Tangible Personal Property.

 

(a)          Seller has good and transferable right, title and interest in and
to all of the Tangible Personal Property, and at the Closing Seller will
transfer all Tangible Personal Property to Buyer, free and clear of any
Encumbrances other than Permitted Encumbrances. Other than the Tangible Personal
Property and Inventory, Seller does not own any tangible personal property that
is used in or solely related to the Business.

 

(b)          Except as listed on Schedule 4.8(b) of the Seller Disclosure
Schedules, after giving effect to capital expenditures currently budgeted or
being undertaken by Seller, as of the Agreement Date, all material Tangible
Personal Property currently used in the Business is (i) in all material respects
good repair and in operating condition, ordinary wear and tear excepted and (ii)
free from material defects and in Seller’s possession and control at the
location of the Business. The Tangible Personal Property comprises all of the
tangible assets used in, related to or required for the continued operation by
Buyer of the Business in the same manner as currently conducted by Seller.
Except for the Retained Assets and Non-Assignable Assets, immediately following
the consummation of the Closing, there will be no tangible assets currently used
by the Business which will not be owned by Buyer or leased or licensed to Buyer
under either the Transition Services Agreement or Assigned Contracts as a result
of the transactions contemplated hereby.

 

4.9         Inventory. Seller has good and transferable right, title and
interest in and to all of the Inventory. At the Closing, Seller will transfer
the Inventory to Buyer free and clear of any Encumbrances other than Permitted
Encumbrances.

 

4.10       Proceedings; Orders.

 

(a)          Schedule 4.10(a) of the Seller Disclosure Schedules sets forth a
list, as of the Agreement Date, of: (i) all material Proceedings pending or, to
the Knowledge of Seller, threatened in writing, against Parent or Seller
relating to the Business or Seller, or any director, officer, employee,
consultant or other agent or other representative of Seller (but only in their
capacity as such) and (ii) all material Proceedings relating to the Business or
Seller that have been decided by any Authority or otherwise settled, resolved,
abandoned or expired during the period from December 1, 2015 through the
Agreement Date.

 

 18 

 

 

(b)          As of the Agreement Date, none of Seller, any of the Purchased
Assets or the Business is subject to any material Order other than those of
general applicability. To the Seller’s Knowledge, no manager, officer, employee
or other agent of Seller, in their capacity as such, is subject to any material
Order relating to Seller or any of the Purchased Assets or the Business.

 

4.11       Compliance with Laws; Permits.

 

(a)          Except as set forth on Schedule 4.11(a) of the Seller Disclosure
Schedules, (x)  the Business is being conducted in compliance in all material
respects with all applicable Laws and as of the Agreement Date no Authority or
other Person has given written notice or alleged in writing to Seller or Parent
that Seller or Parent, in relation to the Business, is currently in Breach of
any applicable Law, except in respect of instances of non-compliance that are
not material, individually or in the aggregate, and (y) during the period from
December 1, 2015 to the Agreement Date, Seller and Parent have, in relation to
the Business, complied with all applicable Laws and no Authority or other Person
has given written notice or alleged in writing to Seller or Parent that Seller
or Parent has, in relation to the Business, Breached any applicable Law, except
in respect of instances of non-compliance that are not material, individually or
in the aggregate.

 

(b)          Seller holds all material Permits currently required to own and
operate the Business and Purchased Assets in all material respects in the manner
it in which it is currently conducted in compliance in all material respects
with applicable Laws. Each such Permit is in full force and effect, and to the
Knowledge of Seller, no event has occurred, and no circumstance exists that was
caused by Seller or Parent, and to the Knowledge of Seller, no other event has
occurred or circumstance exists, that would reasonably be expected to (with or
without notice or lapse of time) constitute or result in a revocation,
cancellation, termination or material Breach of any such Permit or material
modification thereof. No Authority or other Person has given written notice or
alleged in writing to Seller (or, to the Knowledge of Seller, otherwise alleged)
that Seller is currently required to hold a material Permit that it does not
hold.

 

(c)          To the Knowledge of Seller, each of Parent’s and Seller’s
directors, managers, officers and employees hold all material permits,
registrations, findings of suitability, licenses, variances, exemptions, orders
and approvals of all Authorities necessary for their conduct of the Business as
currently conducted by Seller, each of which is in full force and effect. There
has occurred no material default, revocation or suspension under any such
permits, registrations, findings of suitability, licenses, variances,
exemptions, orders and approvals of any Authorities.

 

 19 

 

 

4.12       Tax Matters. Other than as set forth on Schedule 4.12 of the Seller
Disclosure Schedules:

 

(a)          Seller has duly and timely filed (taking into account any extension
of time within which to file) all Relevant Tax Returns that it was required to
file under applicable Law, and all such Tax Returns were true correct and
complete and in substantial compliance with applicable Law when filed. Seller
has timely and properly paid all Relevant Taxes required to be paid by it under
applicable Law, whether or not disputed and whether or not shown to be due and
payable on any Tax Return. Seller is not currently the beneficiary of any
extension of time within which to file any Relevant Tax Return. There are no
Encumbrances on any of the Purchased Assets that arose in connection with any
failure (or alleged failure) to pay any Tax. For purposes of this Section 4.12,
“Relevant” shall mean, when modifying “Taxes” or “Tax Returns,” such Taxes or
Tax Returns, as appropriate, that relate to the Purchased Assets or the Business
or that, or that may reasonably be expected to, result in an Encumbrance on the
Purchased Assets or the Business after the Closing.

 

(b)          Seller has withheld or collected and paid over on a timely basis to
the appropriate Authorities (or is properly holding for such timely payment) all
Relevant Taxes required by applicable Law to be withheld or collected by Seller
in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, member of Seller or other Person and all
Relevant Tax Returns (including, but not limited to, Forms W-2 and 1099)
required with respect thereto have been properly completed and timely filed.

 

(c)          No Taxing Authority has given written notice or alleged in writing
to Seller (or, to the Knowledge of Seller, has otherwise alleged) that Seller
has or may have Breached any applicable Law regarding the preparation or filing
of any Tax Returns or the payment or withholding of any Relevant Taxes
(including any claim that Seller is required to pay Taxes in any jurisdiction
where it does not currently file a Tax Return or may be subject to Tax in such
jurisdiction). Seller has not granted any waiver, extension or comparable
Consent for the payment of Relevant Taxes or filing of Relevant Tax Returns that
remains outstanding, and no request for any such waiver, extension or comparable
Consent from Seller has been received by Seller or Parent that is pending.

 

(d)          Seller has not received any written notice of any pending or, to
the Knowledge of Seller, threatened request, audit, inquiry or other Proceeding
in relation to Relevant Taxes or Relevant Tax Returns, and, to the Knowledge of
Seller, no such request, audit, inquiry or other Proceeding is pending, ongoing,
scheduled or threatened. Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.

 

(e)          There are no Tax rulings, requests for rulings, technical advice
memoranda, applications for change in accounting methods, closing agreements or
any similar rulings, memoranda or agreements that would reasonably be expected
to affect Liabilities for Relevant Taxes for any Taxable Period (or portion
thereof) after the Closing Date. Seller has no Liability for the Taxes of any
other Person under Section 1.1502-6 of the Treasury Regulations (or any similar
provision of state, local, or non-U.S. law), as a transferee or successor, by
Contract or otherwise, that, or that may reasonably be expected to, result in an
Encumbrance on the Purchased Assets or the Business.

 

 20 

 

 

4.13       Employment Matters.

 

(a)          Seller is not currently in material Breach of, and during the
period from December 1, 2015 to the Agreement Date, Seller has not materially
Breached, any applicable Law concerning employment, employment practices and
employee rights, or the calculation and payment of wages (including all
applicable Laws concerning terms and conditions of employment, employment
classifications (as to both classification as an employee as well as
classification as an exempt or non-exempt employee), minimum wage, overtime, pay
deductions, hours of work, termination, equal employment opportunity,
discrimination, disability rights or benefits, affirmative action, employee
leave issues, child labor, immigration, health and safety, plant closures and
layoffs, workers’ compensation, unemployment, the payment of employment related
Taxes and labor relations and unfair labor practices) with respect to the
Business Employees, and during the period from December 1, 2015 to the Agreement
Date, no Authority or other Person has given written notice or alleged in
writing to Seller that Seller has or may have Breached any such Law relating to
the employment of the Business Employees.

 

(b)          During the period from December 1, 2015 to the Agreement Date,
there have been no actual or, to the Knowledge of Seller, threatened material
work stoppages, slowdowns, lockouts, labor strikes or other material labor
disputes involving any Business Employee. To the Knowledge of Seller, during the
period from December 1, 2015 to the Agreement Date, there has been no attempt to
form any labor union, labor organization, trade union, works council or similar
organization or association of employees in relation to the Business.

 

(c)          Seller, with respect to the Business Employees, is not a party to,
bound by or subject to (and no assets or properties of Seller related to the
Business are bound by or subject to) any labor agreement or collective
bargaining agreement. No Business Employee is represented by any labor union,
labor organization, trade union or works council with respect to their
employment by Seller.

 

(d)          Listed on Schedule 4.13(d) of the Seller Disclosure Schedules is
each Person who, as of the Agreement Date, primarily provides service to Seller
with respect to the Business (the “Business Employees”), together with their
title, exempt/non-exempt status under the Fair Labor Standards Act, current
salary or hourly rate, hire date, and bonus rate.

 

(e)          Listed on Schedule 4.13(e) of the Seller Disclosure Schedules is
each individual Person performing services with respect to the Business as an
independent contractor or leased employee, which independent contractor or
leased employee is properly classified.

 

 21 

 

 

4.14       Employee Benefits.

 

(a)          Schedule 4.14(a) of the Seller Disclosure Schedules sets forth a
list, as of the Agreement Date, of all “employee benefit plans” as defined by
Section 3(3) of ERISA, all material specified fringe plans as defined in
Section 6039D of the Code and all other material employment, bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock appreciation, restricted stock, stock option, “phantom”
stock, performance, retirement, thrift, savings, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance, change-in-control, disability,
accident, death benefit, hospitalization, health, medical, vision, insurance,
welfare benefit or other plan, program, policy, practice, arrangement or
agreement which is sponsored by Seller or otherwise provided to or made
available for the benefit of any of the Business Employees (whether or not
subject to the Employee Retirement Income Security Act of 1974) (the “Plans”).
For each Plan, Seller has made available to Buyer correct and complete copies of
the following documents, to the extent applicable:

 

(i)          the most recent determination letter (or opinion letter) received
by Seller from the IRS;

 

(ii)         all pending applications for rulings, determinations, opinions, no
action letters and similar or related matters filed with any Authority;

 

(iii)        the annual report/return (Form Series 5500) with financial
statements and attachments for each of the three (3) most recent plan years for
which such reports/returns have been filed;

 

(iv)        current plan documents, summary plan descriptions, trust agreements,
insurance contracts, service agreements and all related Contracts and other
similar or related documents (including any employee summaries and material
employee communications); and

 

(v)         all closing letters, audit finding letters, revenue agent findings
and other similar or related documents.

 

(b)          Each Plan that is intended to be qualified under Section 401(a) of
the Code has received an opinion or advisory letter that is qualified from the
IRS. No such determination has been revoked and no such revocation has been
threatened in writing to Seller (or to the Knowledge of Seller, otherwise
threatened), and to the Knowledge of Seller, there are no facts or circumstances
that would constitute a reasonable basis for any such revocation. Nothing has
occurred since the date of such favorable determination which would adversely
affect the status of such Plan. No Plan requires the approval of, nor is
regulated by, any Authority outside of the United States.

 

(c)          No Plan and no pension plan maintained by or to which Seller,
Parent or any ERISA Affiliate may have an obligation is subject to Title IV of
ERISA or Section 412 of the Code (pension plans). Neither Seller nor Parent nor
any ERISA Affiliate has merged with or acquired substantially all of the assets
of (or is otherwise related to within the meaning of Section 302(d)(3) or
4001(b) of ERISA) any Person that was or may become subject to a Liability under
Title IV of ERISA.

 

(d)          Neither Seller nor Parent nor any ERISA Affiliate has ever
contributed to a “multiemployer plan” (as defined in Sections 3(37) or
4001(a)(3) of ERISA).

 

 22 

 

 

(e)          With respect to each Plan, except as set forth in Schedule 4.14(e)
of the Seller Disclosure Schedules:

 

(i)          (1) all contributions, premiums, fees or charges due and owing to
or in respect of the Plan have been paid in accordance with the terms of the
Plan and applicable Law; (2) all such payments accrued to date as Liabilities
which have not been paid have been and will be properly recorded on Seller’s
books; and (3) no Taxes, penalties or fees are owing in connection with the
Plan;

 

(ii)         the Plan has at all times, and no Authority or other Person has
given written notice or alleged in writing to Seller (or, to Seller’s Knowledge
has otherwise alleged) that the Plan has not, been operated in material
compliance with ERISA, the Code, all other applicable Laws (including all
reporting and disclosure requirements thereunder) and the terms of the Plan;

 

(iii)        To the Knowledge of Seller, Seller has no Liabilities thereunder
other than claims for benefits in accordance with the terms of the Plan and
other contributions, premiums, Taxes, fees and expenses arising in the Ordinary
Course of Business in connection with the Plan; and

 

(iv)        there are no pending, and Seller received no written notice of any
threatened (or, to Seller’s Knowledge, are any other threatened), Proceedings
other than ordinary and usual claims for benefits thereunder.

 

(f)          Seller can amend or terminate such Plan without material Liability
other than ordinary administrative costs of termination.

 

(g)          Seller has not made or committed to make any material increase in
contributions or benefits under any Plan that would become effective either on
or after the Agreement Date.

 

4.15       Intellectual Property.

 

(a)          Generally. Schedule 4.15(a) of the Seller Disclosure Schedules sets
forth a complete and correct list of (i) all Assigned IP for which registration
has issued or has been applied for and is pending (“Registered IP”) that is
owned by Seller; and (ii) all telephone and facsimile numbers and email
addresses owned by, allocated or issued to Seller or used in connection with the
Business. To the Knowledge of Seller, all Registered IP is valid and
enforceable. The Assigned IP and the Intellectual Property licensed to Seller
pursuant to Contracts disclosed on Schedule 4.19(a) of the Seller Disclosure
Schedules collectively constitutes all of the Intellectual Property used in or
necessary to conduct the Business as it is currently conducted.

 

(b)          Ownership; Infringement. Except as set forth on Schedule 4.15(b) of
the Seller Disclosure Schedules, (i) Seller, solely and exclusively, owns and
possesses all right, title and interest in and to all Assigned IP, free and
clear of all Encumbrances (other than Permitted Encumbrances), (ii) all of
Seller’s rights in and to the Assigned IP are freely assignable by Seller,
(iii) no written claim by any Third Party contesting the validity,
enforceability, use or ownership of any Assigned IP is currently outstanding or,
to the Knowledge of Seller, is or has been threatened in writing, (iv) no
written claim challenging the validity or enforceability of any Assigned IP is
pending, or, to the Knowledge of Seller, has been threatened in writing, (v)
Seller has not received any written notice of any infringement, violation,
dilution or misappropriation by, or any conflict with, any Third Party with
respect to any Assigned IP, including any demand or request that Seller license
rights from a Third Party, and (vi) to the Knowledge of Seller, the conduct of
the Business as currently conducted and the Assigned IP does not infringe,
violate or misappropriate the Intellectual Property of any Third Party.

 

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(c)          Restrictions. There are no settlements, injunctions, forbearances
to sue, consents, coexistence agreements, judgments, or orders or similar
obligations to which Seller is a party or is otherwise bound, which restrict in
any respect the rights of Seller to use any Assigned IP. Seller has not licensed
or sublicensed its rights in any Assigned IP to Third Parties other than in the
Ordinary Course of Business and no royalties, honoraria or other fees are
payable by Seller for the use of, or right to use, any Assigned IP, except
pursuant to one or more of the Contracts disclosed on Schedule 4.19(a) of the
Seller Disclosure Schedules or Contracts for “shrinkwrap,” “clickwrap,” or other
similar “off-the-shelf” software licensed to Seller.

 

(d)          Protective Measures. Seller has taken reasonable measures to
protect the Assigned IP, including the confidentiality of all Confidential
Information included in the Assigned IP. To the Knowledge of Seller, no
Confidential Information has been disclosed by Seller or authorized to be
disclosed by Seller to any Third Party other than pursuant to a written
non-disclosure agreement or legal, fiduciary or contractual confidentiality
obligations, and, to the Knowledge of Seller, no Third Party that is a party to
any non-disclosure agreement with Seller is in material breach or default
thereof. To the Knowledge of Seller, no Confidential Information of Seller has
been improperly disclosed or misappropriated by another Person.

 

(e)          Personal Information. At all times from December 1, 2015 to the
Agreement Date, Seller has (i) complied with all applicable Laws regarding the
collection, use, storage, transfer, or disposal of Personal Information, (ii)
had a privacy policy regarding the collection, use, and disclosure of Personal
Information in Seller’s possession, custody, or control, or otherwise held or
processed on its behalf, and (iii) is and has been in compliance with such
privacy policy. True and complete copies of all such privacy policies have been
provided to Buyer. Seller has not received any complaint or notice of any
investigation or inquiry relating to Seller’s privacy practices related to the
Business, or the loss of or unauthorized disclosure or transfer of Personal
Information by Seller related to the Business during the period from December 1,
2015 to the Agreement Date. The transfer of Personal Information in connection
with the consummation of the transactions contemplated by this Agreement will
not violate any applicable Law; the privacy policy of Seller as it currently
exists or as it existed at any time during which any Personal Information was
collected or obtained by or on behalf of Seller; or other privacy and data
security requirements imposed on Seller under any Contracts binding on Seller.
Upon the Closing, Buyer will continue to have the right to use such Personal
Information on identical terms and conditions as Seller enjoyed immediately
prior to the Closing.

 

 24 

 

 

(f)          Security Measures. Seller has established and implemented necessary
and appropriate policies, programs, and procedures to protect the
confidentiality, integrity, and security of Personal Information and other
confidential or proprietary information or data in its possession, custody, or
control against unauthorized access, use, modification, disclosure, or other
misuse. To the Knowledge of Seller, during the period from December 1, 2015 to
the Agreement Date, Seller has not experienced any loss, damage, or unauthorized
access, disclosure, use, or breach of security of any Personal Information or
other confidential or proprietary information or data in the possession,
custody, or control of Seller. To the Knowledge of Seller, there has occurred no
breaches, hacking or usurpation of any Personal Information held by the
Business. Neither Seller nor the Business has during the two (2) years prior to
the Agreement Date conducted any text, facsimile or other solicitations in
violation of the Telephone Consumer Protection Act or any related Laws.

 

(g)          Social Media. Schedule 4.15(g) of the Seller Disclosure Schedules
contains a complete and correct list of all social media accounts used by Seller
in the conduct of the Business. Seller has complied with all terms of use, terms
of service, and other agreements and all associated policies and guidelines
relating to its use of any social media platforms, sites, or services in the
conduct of the Business.

 

4.16         Systems.

 

(a)          Schedule 4.16(a) of the Seller Disclosure Schedules sets forth a
list of all of the computer, telephone and point-of-sale (P.O.S.) systems,
including the software, hardware, networks and interfaces (collectively,
“Systems”), used by Seller in the conduct of the Business (i) are in
sufficiently good working condition to perform in all material respects all
information technology operations of the Business as currently conducted,
(ii) are in all material respects sufficient for the current needs of the
Business, including as to capacity, scalability, and ability to process current
and reasonably anticipated peak data volumes in a timely manner and
(iii) include sufficient licensed capacity (whether in terms of authorized
sites, units, users, seats, or otherwise) for all software to conduct the
Business as it is currently conducted. During the period from December 1, 2015
to the Agreement Date, to the Knowledge of Seller, there has been no
unauthorized access, use, intrusion, or breach of security, or failure,
breakdown, performance reduction or other adverse event affecting any Systems
used in the Business, that has caused any: (A) substantial disruption of or
interruption in or to the use of such Systems or the conduct of the Business;
(B) material loss or destruction of or damage or harm to the Business or its
personnel, property, or other assets; or (C) material liability of any kind to
the Business. Seller has taken commercially reasonable actions, consistent with
applicable industry practices, to protect the integrity and security of the
Systems used in the Business and the data and other information stored or
processed thereon.

 

(b)          Except as set forth on the attached Schedule 4.16(b) of the Seller
Disclosure Schedules, all Systems used in the Business are owned and operated by
and are under the control of Seller and are not wholly or partly dependent on
any facilities that are not under the ownership, operation or control of Seller.

 

 25 

 

 

(c)          Seller (i) maintains commercially reasonable backup and data
recovery, disaster recovery, and business continuity plans, procedures, and
facilities; (ii) acts in all material respects compliance therewith; and (iii)
tests such plans and procedures on a regular basis, and such plans and
procedures have been proven effective upon such testing.

 

4.17       Immigration Matters. Except as set forth on Schedule 4.17 of the
Seller Disclosure Schedules:

 

(a)          Seller has properly utilized Form I-9 to verify the identity and
work authorization status of each of its employees in compliance with the
Immigration and Nationality Act, as amended, the Immigration Reform and Control
Act of 1986, as amended, and related promulgating regulations.

 

(b)          No employee of Seller presented any temporary work authorization
document at the time of hire that is presently or at any future date will be
subject to I-9 re-verification.

 

(c)          No employee of Seller is employed under an H-1B, L-1A or L-1B visa,
or any other employer-petitioned non-immigrant U.S. work authorization.

 

(d)          Seller is not petitioning for employment-based lawful permanent
residence status on behalf of any employee of Seller and Seller has not filed
any Application for Alien Employment Certification (ETA Form 750), Application
for Permanent Employment Certification (ETA Form 9089), or any Form I-140
(Immigrant Petition for Alien Workers) that remains pending

 

(e)          Parent nor Seller has received any correspondence from any Person
or Authority during the period from December 1, 2015 to the Agreement Date
questioning the validity of the social security number of any employee of
Seller.

 

4.18       Insurance. Schedule 4.18 of the Seller Disclosure Schedules sets
forth a list of all insurance policies currently carried by Seller (and any
former occurrence based policies for which Seller continues to retain coverage
for prior activities) and related to the operation of the Business. With respect
to each such policy, (i) it is in full force and effect; (ii) all premiums
thereunder covering all periods through and including the Agreement Date have
been paid; and (iii) no written notice of cancellation or termination has been
received by Seller.

 

4.19       Contracts.

 

(a)          Schedule 4.19(a) of the Seller Disclosure Schedules lists, as of
the Agreement Date, and Seller has made available to Buyer correct and complete
copies of, the following Contracts to which Seller is a party:

 

(i)          each Contract or group of related Contracts with the same Person
for the performance of services or the delivery of any goods, equipment or
materials by Seller (other than the Contracts or group of related Contracts with
the same Person entered into by Seller in the Ordinary Course of Business
involving aggregate payments to or by Seller of less than $25,000 during any
12-month period);

 

 26 

 

 

(ii)         each collective bargaining agreement;

 

(iii)        each Contract which provides for the payment of any severance
benefits, retention bonuses or sale bonuses to any Business Employee, other than
bonuses paid in the Ordinary Course of Business;

 

(iv)        agreements between Seller, on the one hand, and Parent or any other
of its Affiliates, on the other;

 

(v)         each Contract or group of related Contracts with the same Person
relating to the lease of tangible assets, personal property or equipment,
specifying in each case whether Seller is the lessee or lessor (other than
Contracts or group of related Contracts with the same Person in the Ordinary
Course of Business involving aggregate payments to or by Seller of less than
$25,000 during any 12-month period);

 

(vi)        each Contract relating to the license or use of Intellectual
Property, specifying in each case whether the license is to or from Seller,
other than licenses, terms of service agreements and similar Contracts for
“shrinkwrap,” “clickwrap,” or other similar “off-the-shelf” software that is
available on a retail basis;

 

(vii)       each employment or consulting Contract (other than offer letters on
Seller’s standard form) which on its terms provides for annual compensation in
excess of $100,000;

 

(viii)      each Contract with an Authority;

 

(ix)         each Contract involving capital expenditures in excess of $5,000 or
the sale of any capital asset;

 

(x)          each Contract relating to the borrowing of money or to mortgaging,
pledging or otherwise placing an Encumbrance on any of the Purchased Assets or
the Business that will survive the Closing;

 

(xi)         each Contract relating to the lending of money (other than advances
of expenses to employees in the Ordinary Course of Business, and player markers
issued in the Ordinary Course of Business and reflected in the Business’s books
and records) or to taking any mortgage, pledge or otherwise placing an
Encumbrance on any assets of any Person;

 

(xii)        each Contract relating to a partnership, joint venture or joint
development, marketing, sales or similar arrangement;

 

 27 

 

 

(xiii)       each Contract containing exclusivity, noncompetition,
nonsolicitation or other provisions that prohibit, restrict or limit to any
extent Seller’s right to (1) freely engage in any business anywhere in the
world, or (2) solicit or engage the services of any Person;

 

(xiv)      each Contract that grants to any Person the right to occupy any
portion of the Facilities; and

 

(xv)       each Assigned Contract which requires Consent to an assignment of the
Contract or to a sale of all or substantially all of Seller’s or the Business’s
assets or operations.

 

(b)          Except as set forth in Schedule 4.19(b) of the Seller Disclosure
Schedules, (i) each of the Assigned Contracts is valid and binding on Seller
and, to the Knowledge of Seller, each other party thereto, and is in full force
and effect; (ii) no Person has given written notice or alleged in writing to
Seller (or to the Knowledge of Seller, otherwise alleged) that Seller or any
other party to any of the Assigned Contracts is in Breach thereof; (iii) to the
Knowledge of Seller no event has occurred, and no circumstance exists that was
caused by Seller or Parent, and to the Knowledge of Seller no other circumstance
exists, that has resulted or would reasonably be expected to result in a Breach
of any of the Assigned Contracts by Seller or by any other party thereto; and
(iv) no party to any of the Assigned Contracts has in writing terminated or
purported to terminate or requested any material modification or waiver thereof.
There are no Contracts other than the Assigned Contracts and the Leases which
are necessary for the operation or for the continued operation by Buyer of the
Business as currently conducted in the Ordinary Course of Business.

 

4.20       Environmental Matters.

 

Except as set forth on Schedule 4.20 of the Seller Disclosure Schedules:

 

(a)          Regulatory Compliance. Since December 1, 2015, Seller has complied
with and is in material compliance with all Environmental and Safety
Requirements.

 

(b)          Permits. Since December 1, 2015, Seller has complied with and is in
compliance with all Permits that are required to be held by Seller pursuant to
Environmental and Safety Requirements for the occupation of the Facilities and
the operation of the Business (collectively, the “Environmental Permits”) and,
to the extent required prior to the Closing Date, timely and complete
applications have been or will be made for renewal, extension, or reissuance of
all such Environmental Permits, and Seller has not received information which
would lead it to believe that any Environmental Permit may not be renewed,
extended or reissued in due course and as requested without the imposition of
material cost or penalty following the Closing. Schedule 4.20(b) of the Seller
Disclosure Schedules contains a list of all such Environmental Permits.

 

 28 

 

 

(c)          Notices. Seller has not received prior to the Agreement Date any
written notice, claim, complaint, citation, or report regarding any actual or
alleged violation of Environmental and Safety Requirements which have not been
cured, or any Environmental Lien, Environmental Permit, Liabilities or potential
Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations and any request
for information with respect to any investigation or clean-up of Hazardous
Substances, arising under Environmental and Safety Requirements relating to
Seller, the Business or the Purchased Assets, nor is there any Proceeding
pending or, to the Knowledge of Seller, threatened in writing against or
affecting Seller, the Business or the Purchased Assets at law or in equity
before a court or administrative agency relating to a violation of any
Environmental and Safety Requirement.

 

(d)          Facilities. To the Knowledge of Seller, none of the following
exists or has existed at the Facilities: (i) underground storage tanks, (ii)
asbestos or asbestos-containing materials, (iii) materials or equipment
containing polychlorinated biphenyls, or (iv) landfills, surface impoundments,
or disposal areas, except as disclosed in the Phase I environmental report set
forth on Schedule 4.20 of the Seller Disclosure Schedules.

 

(e)          Release of Substances. Solely as it relates to the Business and the
Purchased Assets, Seller has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any Hazardous
Substance, or owned or operated any property or facility (and no such property
or facility is contaminated by any Hazardous Substance) in a manner that has
given rise to or would reasonably be expected to give rise to any Liabilities,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resource damages or attorney fees, pursuant to
any Environmental and Safety Requirement.

 

(f)          Liability for Others. Seller has not, either expressly or by
operation of Law, assumed or undertaken any Liability or corrective or remedial
obligation of any other Person relating to Environmental and Safety
Requirements.

 

(g)          Environmental Liens. To Seller’s Knowledge, no Environmental Lien
has attached to any of the Facilities.

 

(h)          Environmental Reports. Seller has provided to Buyer true and
correct copies of all environmental reports, audits, assessments, and
investigations, and all other material environmental documents prepared since
December 1, 2015 that are in Seller’s or Parent’s possession or control,
relating to the Purchased Assets or the Facilities or any other real property
owned or used by Seller or Seller’s predecessor in connection with the Business.

 

4.21       Suppliers. Schedule 4.21 of the Seller Disclosure Schedules sets
forth a list of the top fifteen (by volume in U.S. dollars) suppliers during the
twelve (12)-month period preceding the Reference Balance Sheet Date that sold
goods or services to Seller in connection with the Business, including the
respective dollar volumes of purchase with each such supplier (each, a “Top
Supplier”) during such twelve-month (12)-month period. As of the Agreement Date,
no Top Supplier has notified Seller or Parent in writing of its intention to
terminate or materially alter (in a manner adverse to Seller) any terms of its
relationship with Seller.

 

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4.22       Sufficiency of Purchased Assets. Except as set forth on Schedule 4.22
of the Seller Disclosure Schedules, other than the Purchased Assets, there are
no assets, properties and rights of Seller or Parent that are used in or are
related to the operation of the Business or that are reasonably required for the
continued operation of the Business by Buyer immediately following the Closing
in substantially the same manner as conducted by Seller during the periods
covered by the Financial Statements and from and after such periods through the
Closing, and the Purchased Assets are being transferred to Buyer free and clear
of all Encumbrances, except for Permitted Encumbrances.

 

4.23       Brokers. Except for Rossoff & Company, LLC, whose fees and expenses
will be paid by Seller and/or Parent, none of Parent, Seller, nor any of their
respective directors, officers, employees, consultants or other agents or
representatives, has retained any broker, finder or financial advisor, or
incurred any Liability for any brokerage fee or commission, finder’s fee or
financial advisory fee, in connection with the transactions contemplated hereby.
In no event will Buyer nor any the Purchased Assets be subject to any Liability
or Encumbrance relating to any brokerage fee or commission, finder’s fee or
financial advisory fee incurred by or on behalf of Seller or Parent in
connection with the transactions contemplated hereby.

 

4.24       No other Representations and Warranties; As-Is, Where-Is.

 

(a)          Except for the representations and warranties contained in this
Agreement and the Ancillary Documents, neither Seller, Parent nor any other
Person has made or makes any other express or implied representation or
warranty, either written or oral, on behalf of Seller or Parent, including any
representation or warranty as to the accuracy or completeness of any information
regarding the Business and the Purchased Assets furnished or made available to
Buyer and its Representatives (including any information, documents or material
made available to Buyer) or any representation or warranty as to projections,
estimates or budgets of future revenues, results of operations, cash flows,
financial condition, profitability or success of the Business.

 

(b)          EXCEPT AS SET FORTH EXPRESSLY IN THIS AGREEMENT, OR ANY ANCILLARY
DOCUMENT SELLER AND PARENT DISCLAIM ANY EXPRESS OR IMPLIED WARRANTY RELATING TO
ANY PURCHASED ASSET (TANGIBLE, INTANGIBLE OR MIXED), INCLUDING IMPLIED
WARRANTIES OF FITNESS, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

 

Article 5

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller and Parent as follows:

 

5.1         Organization; Standing; Corporate Power. Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite limited liability
company power and authority to conduct its business and affairs as currently
being conducted and to own, lease and operate its properties and assets. Buyer
is duly qualified or licensed to do business as a foreign entity in good
standing in each jurisdiction where the nature of its business or the ownership,
leasing or operation of its assets requires such licensing or qualification,
except where the failure to be so qualified or licensed would not reasonably be
expected to have a material adverse effect on Buyer’s ability to consummate the
transactions contemplated by this Agreement and the Ancillary Documents to which
it is or will be a party or to perform its obligations hereunder or thereunder.

 

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5.2         Authority; Approvals. Buyer has all necessary limited liability
company power and authority to execute and deliver this Agreement and the
Ancillary Documents to which Buyer is or will be a party, and to complete the
transactions contemplated by this Agreement. Buyer has taken all action required
by Law, Buyer’s Governing Documents and otherwise to authorize Buyer’s execution
and delivery of this Agreement and the Ancillary Documents to which Buyer is or
will be a party and the performance of Buyer’s obligations hereunder and
thereunder. No other limited liability company proceeding or action on the part
of Buyer is necessary to approve and authorize Buyer’s execution and delivery of
this Agreement or any of the Ancillary Documents to which Buyer is or will be a
party or the performance of its obligations hereunder or thereunder. Buyer has
duly and validly executed and delivered this Agreement, and the Ancillary
Documents to be executed and delivered by Buyer will at the Closing be duly
executed and delivered by Buyer. Assuming the due authorization, execution and
delivery of this Agreement by Parent and Seller, this Agreement constitutes, and
at the Closing each Ancillary Document to be executed and delivered by Buyer,
assuming the due authorization, execution and delivery by Seller and/or Parent,
as applicable, of each such Ancillary Document to which Seller or Parent is or
will be a party, will constitute, the legal and valid binding obligation of
Buyer enforceable against Buyer in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
Laws relating to creditors’ rights generally and to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).

 

5.3         Absence of Conflicts. Neither the execution, delivery nor
performance of this Agreement or any Ancillary Document to which Buyer is or
will be a party, nor the consummation by Buyer of the transactions contemplated
hereby or thereby does or will: (a) conflict with or result in any breach of any
of the provisions of, (b) constitute a default under, (c) result in a violation
of, (d) give any Third Party the right to terminate or to accelerate any
obligation under or (e) require any authorization, consent, approval, exemption
or other action by or notice to or filing with any Authority or any other
Person, except for such authorizations, consents, approvals, exemptions or other
actions by or notices to or filings with any Authority required under applicable
Gaming Laws or Liquor Laws, in each case under (i) the provisions of the
certificate of formation or limited liability company agreement or other
Governing Documents of Buyer, (ii) any indenture, license, mortgage, loan
agreement or other agreement to which Buyer is bound or by which its assets are
affected, or (iii) subject to the authorizations, consents, approvals,
exemptions or other actions by or notices to or filings with any Authority
required under applicable Gaming Laws or Liquor Laws, any Law to which Buyer is
subject, except, in the case of clauses (ii) and (iii) above, as would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Buyer’s ability to consummate the transactions contemplated by
this Agreement and the Ancillary Document to which it is or will be a party or
to perform its obligations hereunder or thereunder.

 

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5.4         Proceedings. As of the Agreement Date, there is no Proceeding
pending or, to the Knowledge of Buyer, threatened in writing, against Buyer or
any of its Affiliates that would, if adversely determined, reasonably be
expected to have a material adverse effect on Buyer’s ability to consummate the
transactions contemplated by this Agreement and the Ancillary Documents to which
it is or will be a party, or to perform its obligations hereunder or thereunder.

 

5.5         Licensability of Principals. Neither Buyer nor any of its
Representatives that are mandatorily required to be included in the process of
determining the suitability of Buyer for any Governmental Approval in connection
with the Transaction contemplated by this Agreement, or, to Buyer’s Knowledge,
any holders of Buyer’s membership interests or other equity interests who will
be mandatorily required to be licensed or found suitable in connection with the
Transaction contemplated by this Agreement under applicable Gaming Laws (the
foregoing Persons collectively, the “Licensing Affiliates”) has ever abandoned
or withdrawn (in each case in response to a communication from a Gaming
Authority regarding a likely or impending denial, suspension or revocation) or
has ever been denied, or had revoked, terminated or suspended, or had adversely
and materially modified or limited, any approval, consent, license, permit,
registration, declaration, order, finding of suitability, franchise, waiver,
exemption, variance, or other authorization required under any Gaming Laws or
Liquor Laws. Buyer and each of its Licensed Affiliates which is licensed or
holds any approval, consent, license, permit, registration, declaration, order,
finding of suitability, franchise, waiver, exemption, variance, or other
authorization required under any Gaming Laws or Liquor Laws (collectively, the
“Licensed Parties”) are in good standing in each of the jurisdictions in which
Buyer or such Licensed Affiliates owns or operates gaming facilities. Following
consultation with Buyer’s legal and regulatory advisors, to Buyer’s Knowledge,
there are no facts, which if known to any Gaming Authorities, would (a) be
reasonably likely to result in the delayed issuance of required Governmental
Approvals beyond the Outside Date, or the denial, revocation, limitation or
suspension, of a gaming license or liquor license necessary for the consummation
of this Agreement and the transactions contemplated hereby, (b) result in a
negative outcome to any finding of suitability proceedings currently pending, or
under the suitability proceedings of any of the Licensed Parties necessary for
the consummation of this Agreement and the transactions contemplated hereby that
would materially restrain, prevent or delay the consummation of the Transaction
contemplated by this Agreement, including the imposition of any negative
condition being placed on any finding of suitability that would materially
restrain, prevent or delay the consummation of the Transaction contemplated by
this Agreement, or (c) would otherwise unreasonably delay approval of the
transactions contemplated by this Agreement.

 

5.6         Brokers. Neither Buyer nor any of its managers, officers, employees,
consultants or other agents or representatives has employed any broker, finder
or financial advisor, or incurred any Liability for any brokerage fee or
commission, finder’s fee or financial advisory fee, in connection with the
transactions contemplated hereby. In no event will Parent or Seller be subject
to any Liability relating to any brokerage fee or commission, finder’s fee or
financial advisory fee incurred by or on behalf of Buyer in connection with the
transactions contemplated hereby.

 

5.7         Solvency. Upon consummation of the transactions contemplated hereby,
Buyer will not (a) be insolvent or left with unreasonably small capital,
(b) have incurred debts beyond its ability to pay such debts as they mature or
(c) have Liabilities in excess of the reasonable market value of its assets.

 

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5.8         No Financing Conditions. The Closing is not subject to any financing
conditions.

 

5.9         Acknowledgment of Buyer. Buyer has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of purchasing the Purchased Assets. Buyer confirms that Seller and Parent
have made available to Buyer the opportunity to ask questions of the management
employees of Seller and Parent and to acquire such additional information about
the Business and the Purchased Assets as Buyer has requested and all such
information has been received. Buyer acknowledges and agrees that it has
conducted its own independent investigation, review, and analysis of the
Business and the Purchased Assets, and acknowledges that it has been provided
adequate access to the personnel, properties, assets, premises, books and
records, and other documents and data of Seller and Parent for such purpose.
Buyer further acknowledges and agrees that: (a) in making its decision to enter
into this Agreement and the Ancillary Documents to which Buyer is or will be a
party, and to consummate the transactions contemplated hereby and thereby, Buyer
has relied solely upon its own investigation and analysis and the express
representations and warranties of Seller and Parent set forth in Article 4, and
(b) neither Seller nor Parent nor any other Person has made any representation
or warranty as to Seller, Parent, the Business, the Purchased Assets, the
Assumed Liabilities, this Agreement, the Ancillary Documents or the transactions
contemplated hereby and thereby, except as expressly set forth in Article 4.

 

Article 6

COVENANTS AND AGREEMENTS

 

6.1         Conduct of Business.

 

(a)          Except as expressly provided in or contemplated by this Agreement,
as set forth in Schedule 6.1 of the Seller Disclosure Schedules, or as required
by Law, or to the extent that Buyer otherwise consents in writing (not to be
unreasonably withheld, delayed or conditioned), from the Agreement Date until
the earlier of the Closing or the termination of this Agreement, Seller will,
and Parent will cause Seller to, operate the Business in the Ordinary Course of
Business and in compliance with all applicable Laws and use all commercially
reasonable efforts to (x) preserve intact its business organization and the
Business, (y) keep available the services of its officers, employees and
consultants, and (z) preserve its relationships with customers, suppliers,
licensors, licensees, distributors, Authorities, creditors and others with whom
it has business dealings; provided, however, that no action taken by Seller with
respect to matters specifically addressed by Section 6.1(b) shall be deemed a
breach of this Section 6.1(a) unless such action would constitute a breach of
Section 6.1(b).

 

(b)          In addition, and without limiting the generality of the foregoing,
except as expressly provided in or contemplated by this Agreement, as set forth
in Schedule 6.1 of the Seller Disclosure Schedules, or as required by Law, or to
the extent that Buyer otherwise consents in writing (not to be unreasonably
withheld, delayed or conditioned), from the Agreement Date until the earlier of
the Closing or the termination of this Agreement, Seller will not, and Parent
will cause Seller to not, in connection with the Business:

 

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(i)          sell, lease, sublease, license, transfer, mortgage, pledge or
otherwise dispose of, or create any Encumbrance upon, any material properties or
assets of Seller, other than (1) sales, leases, subleases, licenses, transfers,
mortgages, pledges or other dispositions or Encumbrances of properties or assets
under and in accordance with the terms of existing Contracts or in the Ordinary
Course of Business; (2) dispositions of Inventory and dispositions of surplus or
obsolete properties or assets in the Ordinary Course of Business; and (3)
Permitted Encumbrances;

 

(ii)         except in the Ordinary Course of Business, terminate, cancel,
materially amend, materially extend or waive, release or assign any material
right or claim under any Lease or Contract listed or required to be set forth in
Schedule 4.7(a) of the Seller Disclosure Schedules or Schedule 4.19(a) of the
Seller Disclosure Schedules or enter into, terminate, cancel, materially amend,
materially extend or waive, release or assign any material right or claim under
any Lease or Contract that, if entered into prior to the Agreement Date, would
have to be listed in Schedule 4.7(a) of the Seller Disclosure Schedules or
Schedule 4.19(a) of the Seller Disclosure Schedules;

 

(iii)        make any material change in management personnel of the Business;

 

(iv)        except as required by Law or GAAP, make any change in any method of
accounting or tax practice that would have the effect of increasing the Tax
Liability or reducing any Tax asset of Buyer with respect to the Business or the
Purchased Assets in any post-Closing Tax period;

 

(v)         except in the Ordinary Course of Business, (1) change the hold
percentages of any slot machines, or (2) change the quantity or manner of
utilization of free play, point multipliers, vouchers, comps or other
promotional items;

 

(vi)        issue any vouchers or comps not otherwise constituting Players Club
Liabilities;

 

(vii)       except in the Ordinary Course of Business, add or remove any gaming
tables;

 

(viii)      amend Seller’s Governing Documents in any manner that adversely
affects its ability to perform its obligations and to consummate the
transactions hereunder;

 

(ix)         except as required by Law, amend any Plan;

 

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(x)          grant any raises, bonuses or additional benefits to any Business
Employee except in the Ordinary Course of Business;

 

(xi)         transfer, assign, terminate, cancel, abandon or modify in any
material respect any Permits required to own and operate the Business in all
material respects in the manner in which it is currently conducted, or fail to
use commercially reasonable efforts to maintain any such Permits as currently in
effect;

 

(xii)        except as required by Law, decline or fail to use all commercially
reasonable efforts to maintain all insurance policies as currently in effect (or
comparable replacement policies to the extent available for a similar cost)
other than immaterial variations in such insurance coverage, or to prevent the
lapse of any such policies;

 

(xiii)       make any representation or commitment to, or enter into any formal
or informal understanding with, any employees or independent contractors of
Seller with respect to compensation, benefits, or terms of employment or
engagement to be provided by Buyer or any of Buyer’s Affiliates or than such
terms as may be set forth in this Agreement;

 

(xiv)      transfer to any Person or allow to lapse or go abandoned any Assigned
IP that is used in the Business, enter into any license agreement with any
Person to grant or obtain any rights to any Assigned IP; or commence, discharge
or settle any Proceeding relating to any Assigned IP;

 

(xv)       take any actions or fail to take any actions that would knowingly
cause or result in, or that would reasonably be expected to cause or result in,
any Breach of Seller’s or Parent’s representations and warranties set forth in
this Agreement at any time on or prior to the Closing Date;

 

(xvi)      take any action or enter into any transaction described in Section
4.6 that if taken before the Agreement Date would be required to be disclosed in
Schedule 4.6 of Seller Disclosure Schedules; or

 

(xvii)     commit or agree to take, or authorize the taking, of any of the
foregoing actions.

 

(c)          At least thirty (30) days prior to the Closing Date, Seller shall
prepare and deliver a notice to each of (a) a licensed alcoholic beverage
wholesaler who currently sells liquor to Seller in connection with the Business,
and (b) a licensed alcoholic beverage wholesaler who has sold liquor to Seller
in connection with the Business within the immediately preceding twelve (12)
months. Such notice shall contain the information required by NRS 369.4867.

 

 35 

 

 

(d)          Between the date of this Agreement and the Closing, each of Seller
and Parent, on the one hand, and Buyer, on the other hand, will promptly advise
the other in writing, with reasonable detail, if such party obtains or receives
Knowledge that an event has occurred or failed to occur (either before or after
the Agreement Date) which, individually or in the aggregate with other events,
would reasonably be expected to result in the failure to satisfy a condition to
the Closing or otherwise materially delay the Closing. Notwithstanding the
foregoing, no such notification under this sentence or the preceding sentence
will affect the representations, warranties, covenants or agreements of the
parties (or remedies or Liabilities with respect thereto) or the conditions to
the obligations of the parties under this Agreement, unless expressly waived in
writing at or prior to Closing.

 

(e)          Nothing in this Agreement is intended to give Buyer, directly or
indirectly, any right to control or direct the Business or operations of Seller
prior to Closing.

 

6.2         No Solicitation.

 

(a)          Until the earlier of: (i) the Closing; or (ii) the termination of
this Agreement pursuant to Article 11 (the “Exclusivity Period”), Seller and
Parent will not, and will cause their directors, officers, employees, agents,
representatives and Affiliates not to, directly or indirectly, take any of the
following actions with any Person other than Buyer: (1) solicit, initiate,
entertain, or knowingly encourage or facilitate, any proposals or offers from,
or conduct discussions or engage in negotiations with any Person relating to any
actual or prospective sale, transfer, merger, reorganization or similar
transaction involving the Business, Purchased Assets or membership interests or
other equity interests of Seller (other than sales or other dispositions of
properties or assets in the Ordinary Course of Business) that, if completed,
would preclude, in whole or in part, the transactions contemplated by this
Agreement (an “Alternative Transaction”); (2) provide written, oral, audio,
video or other form of information with respect to Seller or the Business or
Purchased Assets to any Person, other than Buyer (and its directors, officers,
employees, agents, representatives and Affiliates), relating to, or otherwise
cooperate with, facilitate or knowingly encourage any effort with regard to, or
attempt by any such Person to pursue, an Alternative Transaction; or (3) enter
into any direct or indirect, written or oral agreement, or complete any
transaction, with any Person providing for, relating to or constituting an
Alternative Transaction. During the Exclusivity Period, Seller and Parent will
promptly provide Buyer with all reasonable information regarding any Third Party
who submits, attempts to solicit or commences discussions regarding an
Alternative Transaction.

 

(b)          Seller and Parent will use commercially reasonable efforts to cause
all Persons other than Buyer who have been furnished with confidential
information regarding Seller or the Business and assets in connection with the
solicitation of, or discussions regarding, an Alternative Transaction within the
twelve (12) months prior to the Agreement Date promptly to return or destroy
such information to the extent that the applicable confidentiality agreements
allow Seller to require such return or destruction.

 

6.3         Access to Business; Continued Due Diligence; Confidentiality.

 

(a)          Subject to applicable Law, including Gaming Laws, and in such a
manner and method so as not to unreasonably interfere with the operations of the
Business or the Purchased Assets, Seller will, upon reasonable prior notice,
during the period from the Agreement Date and continuing until the earlier of
the Closing or the termination of this Agreement:

 

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(i)          afford to Buyer and its Representatives reasonable access
(including for the purpose of coordinating integration activities and transition
planning), during normal business hours to Seller’s employees, the Facilities
and to all books, Contracts (subject to applicable confidentiality
restrictions), commitments and records (including Business Information, but
excluding income Tax Returns and work papers relating thereto), and provide
copies thereof, at Buyer’s expense, as requested;

 

(ii)         permit Buyer and its Representatives to make such reasonable
inspections and tests of the Facilities as it may reasonably request during
normal business hours; provided that Buyer agrees: (A) to promptly restore the
Facilities after making any such inspection or test to its condition prior to
the making of such inspection or test, (ii) not to perform, prior to the
Closing, any drilling or other invasive testing at the Facilities without
obtaining the prior written consent of Seller, which consent may be withheld for
any reason, (iii) to coordinate such inspections and tests with Seller and
permit Seller’s Representatives to be present during such inspections and tests,
and (iv) to promptly share with Seller the results and/or reports of any such
inspections or tests; provided, however, such inspections and reports shall be
provided without representation or warranty of any kind; and

 

(iii)        cause Seller’s officers to furnish Buyer and its Representatives
with such financial and operating data and other information with respect to the
Business or the Purchased Assets as Buyer may from time to time reasonably
request;

 

provided, however, that (A) nothing in this Agreement, including this
Section 6.3 or Sections 1.1(j) or 6.6, shall require, and neither Seller nor
Parent shall have any obligation to (until the Closing), provide Buyer with any
information in the Players Club Database other than the number of players by zip
code locations, the amount of daily, weekly and monthly play and any other
related demographic information agreed upon by Buyer and Seller, and (B) Seller
may limit such access described in clauses (i), (ii) and (iii) above to the
extent such access (I) could, in the opinion of Seller’s counsel, violate or
give rise to Liability under applicable Laws, including any Gaming Laws, (II)
would require Seller or Parent to waive any attorney-client privilege, or (III)
conflicts with any confidentiality obligations to which either Seller or Parent
is bound.

 

(b)          All requests by Buyer and its Representatives for information and
access hereunder will be coordinated through Parent or Parent’s designee. All
information acquired by Buyer or any of its Representatives under this Agreement
will be subject to the terms and conditions of the Confidentiality Agreement. No
investigation or information provided under this Section 6.3 will affect any
representation or warranty in this Agreement of any party hereto, as qualified
by the Seller Disclosure Schedules with respect to the representations and
warranties in Article 4, or any condition to the obligations of the parties
hereto.

 

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(c)          Concurrently with the Closing, Seller shall provide Buyer with all
information contained in the Player’s Club Database in electronic form and in a
format that is readable by Buyer, and shall have taken all necessary actions,
and received all necessary approvals and permissions, sufficiently in advance of
the Closing to be able to transfer such information to Buyer without violation
of the terms of any privacy policy, participation terms or other obligations of
Seller that might apply to the transfer to Buyer of any information contained in
the Player’s Club Database, and Buyer shall cooperate with Seller and shall
provide Buyer such information and assistance as is reasonably necessary to
effect this Section 6.3(c).

 

(d)          Nothing contained in this Agreement to the contrary shall limit or
deny Buyer’s right and ability to continue its due diligence investigations,
studies and reviews of the Purchased Assets and the Business from and after the
Agreement Date pursuant to the terms and subject to the conditions of this
Agreement.

  

6.4         Reasonable Efforts; Filings; Notification.

 

(a)          Subject to the terms and conditions herein, each party shall
cooperate with each other and use their commercially reasonable efforts to (i)
as promptly as practicable, take, or cause to be taken, all appropriate action,
and do or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement, (ii) obtain from any Authorities any approvals,
consents, licenses, permits, registrations, declarations, concessions, orders,
filings, notices, findings of suitability, franchises, entitlements, waivers,
exemptions, variances, certificates of occupancy and other authorizations
required (A) to be obtained or made by Seller, Buyer or any of their respective
Affiliates, or the respective Representatives of any of the foregoing, in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, (B) under any
applicable Law (including Gaming Laws) (the approvals described in the foregoing
clauses (ii)(A) and (ii)(B) shall be collectively referred to herein as the
“Governmental Approvals”), and (C) to avoid any Proceedings by any Authority
that could adversely impact the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, (iii)
make all necessary filings, and thereafter make any other required submissions
with respect to this Agreement and the transactions contemplated hereby, as
required under any applicable Law (including Gaming Laws, which shall include a
jointly-prepared detailed change-over memorandum and submit it to the Gaming
Authorities with sufficient time to allow their review and approval prior to the
Closing Date, and Liquor Laws (it being agreed that Seller shall promptly, and
in no event longer than three (3) Business Days respond to Buyer with respect to
the change-over memorandum)), (iv) comply with the terms and conditions of all
Governmental Approvals, (v) obtain from any third party any approvals, consents,
and other authorizations (other than the Governmental Approvals) as are
necessary for consummation of the transactions contemplated hereby, and (vi)
subject to Section 6.3, furnishing to each other such information and assistance
as may reasonably be requested in connection with the foregoing; provided,
however, (x) under no condition shall Buyer or its Affiliates be required to
transfer any assets, businesses or interests in connection with the foregoing
and (y) Seller and/or Parent shall be obligated to use commercially reasonable
efforts to obtain the consents contemplated by subclause (v) of this
Section 6.4(a) above but shall only be obligated to pay consideration to obtain
the consents set forth on Schedule 6.4(a)(v) of Seller Disclosure Schedules.
Buyer and its Representatives and Affiliates shall file as soon as is reasonably
practicable and in any event within thirty (30) calendar days following the
Agreement Date, all required initial applications and documents in connection
with obtaining the Gaming Approvals required for the transfer, ownership,
operation and management of the Business and the Purchased Assets, and the
assumption of the Assumed Liabilities by Buyer, and the applicable parties
hereto and their respective Representatives shall, as promptly as practicable
thereafter, file all required initial applications and documents for the purpose
of obtaining all other Governmental Approvals. Buyer and its Representatives
shall act diligently and promptly to pursue such Governmental Approvals in
connection with the making of all filings and submissions required hereby. Buyer
shall promptly provide to Seller evidence of the filing of its application for a
gaming license in connection with the transactions contemplated hereby as
reasonably requested by Seller. Buyer shall use commercially reasonable efforts
to schedule and attend any hearings or meetings with Authorities to obtain the
Governmental Approvals as promptly as possible. To the extent practicable, and
subject to applicable Laws, each party will consult with the other with regard
to the exchange of information relating to Buyer or Seller and Parent, as
applicable, and any of their respective Representatives which appear in any
filing made with, or written materials submitted to, any third party or any
Authority in connection with the transactions contemplated by this Agreement.
Without limiting the foregoing, Buyer and Seller shall notify the other promptly
of the receipt of material comments or requests from Authorities relating to any
Governmental Approvals, and shall supply the other party with copies of all
material correspondence between the notifying party or its or their
Representatives and Authorities with respect to such Governmental Approvals
(with any competitively sensitive information being provided on an external
counsel basis only) where the Buyer reasonably believes that there is a
reasonable likelihood that the Governmental Approval will not be obtained or
that receipt of the Governmental Approval will be materially delayed.
Notwithstanding anything in this Section 6.4(a) to the contrary, in no event
will Seller or Parent be entitled to review (i) confidential information
regarding any individual who is an employee, officer, director, member or
manager of Buyer or Buyer’s Affiliates, or (ii) Buyer’s confidential business
records or strategies or marketing strategies for the Business.

 

(b)          Without limiting Section 6.4(a), each of Buyer and Seller shall use
its commercially reasonable efforts to avoid the entry of, or to have vacated or
terminated, any decree, order, or judgment that would restrain, prevent or delay
the Closing, on or before the Outside Date.

 

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(c)          Buyer shall, subject to any applicable Gaming Laws, be permitted to
have a representative of Buyer present to observe any cash counts, counts of
gaming chips and tokens and any other inventories required by applicable Gaming
Laws to be taken by Seller as a part of the Closing, and any such counts and
inventories shall be memorialized in a listing prepared and signed jointly by
representatives of Buyer and Seller no later than the Closing.

 

(d)          Buyer and Seller shall promptly advise each other upon receiving
any communication from any Authority whose Governmental Approval is required for
consummation of the transactions governed by this Agreement which causes such
party to reasonably believe that there is a reasonable likelihood that such
Governmental Approval from such Authority will not be obtained or that the
receipt of any such Governmental Approval will be materially delayed. Buyer and
Seller shall use their commercially reasonable efforts to take, or cause to be
taken, all actions reasonably necessary to defend any Proceedings challenging
this Agreement or the consummation of the transactions governed by this
Agreement, and to prevent the entry by any Authority of any decree, injunction
or other order challenging this Agreement or the consummation of the
transactions governed by this Agreement, and shall appeal as promptly as
possible any such decree, injunction or other order or seek to have any such
decree, injunction or other order vacated or reversed. From and after the
Agreement Date through the Closing, each party shall promptly notify the other
party(ies) in writing of any pending or, to the Knowledge of Buyer or Seller, as
appropriate, threatened Proceeding by any Authority or any other Person (i)
challenging or seeking damages in connection with the transactions contemplated
by this Agreement, or (ii) seeking to restrain or prohibit the consummation of
the Closing.

 

6.5         Certain Transactions. Prior to the Closing, subject to the terms and
conditions of this Agreement, none of Buyer, Seller or Parent shall take, or
agree to commit to take, (a) any action that would or is reasonably likely to
materially delay the receipt of, or materially impact the ability of a party to
obtain, any Governmental Approval necessary for the consummation of the
transactions contemplated by this Agreement, or (b) any action that would or is
reasonably likely to cause any Authority to commence or re-open a Proceeding
that could reasonably be expected to challenge or prevent the transactions
contemplated by this Agreement or delay the Closing beyond the Outside Date.

 

6.6         Employees.

 

(a)          Prior to the Closing Date, Buyer shall make offers of employment,
effective as of the Closing Date, to those Business Employees who continue to be
employed by Seller immediately prior to such date and are deemed, in the
reasonable judgment of Buyer, necessary to the continued operation of the
Business post-Closing; provided, however, that no less than fifteen (15) days
prior to the Closing the Buyer shall notify the Seller in writing of which
Business Employees to whom the Buyer does not intend to make an offer of
employment. Such offers shall be in a form mutually agreed upon with Seller. The
Business Employees who accept Buyer’s offers of employment shall commence
employment with Buyer effective as of the Closing Date and are herein
collectively referred to as the “Transferred Employees.”

 

 39 

 

 

(b)          Except as otherwise provided in this Section 6.6, Seller or its
Affiliates shall pay, discharge, and be responsible for (i) all salary or wages,
bonuses (including ratable portions of bonuses that would otherwise be paid in
full at year-end), commissions, and other compensation arising out of or
relating to the employment of its employees prior to and through the Closing
Date; provided, that if the Seller accrues bonuses for such Business Employees,
Buyer shall assume such accrued bonuses as an Assumed Liabilities, but such
amounts shall constitute a current liability for purposes of Working Capital,
(ii) any employee benefits arising under the Plans prior to and through the
Closing Date, and (iii) all severance or other Liabilities for any terminated
Business Employees who are not Transferred Employees, whether pursuant to an
agreement between Seller and such employees or otherwise. After the Closing
Date, Buyer shall pay, discharge and be responsible for all salary, wages, and
benefits arising out of or relating to the employment of any Transferred
Employees by Buyer after the Closing Date.

 

(c)          With respect to any employee or employee benefit plan, program or
arrangement maintained by Buyer or its Affiliates (including any severance
plan), for all eligibility, vesting and benefit accrual purposes (other than
benefit accrual under a defined benefit plan), a Transferred Employee’s service
with Seller and its Affiliates prior to Closing shall be treated as service with
Buyer; provided, however, that such service need not be recognized to the extent
that such recognition would result in any duplication of benefits.

 

(d)          In the event that Seller or its Affiliates terminates a sufficient
number of employees (other than transfer of the Transferred Employees to Buyer
hereunder) to effect a “plant closing” or “mass layoff” within the ninety (90)
days prior to or following the Closing Date, Seller and its Affiliates shall
comply with the WARN Act and its regulations. Buyer shall make a sufficient
number of employment offers to ensure that the termination by Seller of the
Business Employees as of the Closing Date will not trigger obligations, if any,
under the WARN Act, and Buyer shall take no action within ninety (90) days
following the Closing Date with respect to the Transferred Employees that would
subject Seller or its Affiliates to the provisions of the WARN Act with respect
to the Transferred Employees.

 

(e)          All Transferred Employees shall cease to participate in and accrue
benefits under all Plans as of the Closing Date and shall commence participation
in certain benefit plans established or maintained by Buyer or its Affiliates.

 

(f)          Seller shall provide continuation coverage required by Section
4980B of the Code and Sections 601 to 608 of ERISA (“COBRA”) to all Business
Employees and former employees of the Business and their covered beneficiaries
who are entitled to COBRA with respect to “qualifying events” (as defined in
Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA) which are
incurred on or prior to the Closing Date. Buyer shall comply with the provisions
of COBRA with respect to any Transferred Employee who becomes covered under any
Group Health Plan maintained by Buyer after the Closing Date.

 

 40 

 

 

(g)          Nothing in this Section 6.6 shall create any third-party
beneficiary right in any Person other than the parties to this Agreement,
including any current or former employee or Transferred Employee, any
participant in any Plan or any dependent or beneficiary thereof, or any right to
continued employment with Seller, Buyer or any of its Affiliates. Nothing in
this Section 6.6 shall constitute an amendment to any Plan or any other plan or
arrangement covering employees or Transferred Employees. Seller, Buyer and their
respective Affiliates shall each cooperate with each other and shall provide
each other such documentation, information and assistance as is reasonably
necessary to effect the provisions of this Section 6.6.

 

6.7         Repairs. Prior to the Closing:

 

(a)          Seller shall repair the damaged roof above the kitchen area of the
restaurant located at the Owned Real Property to the reasonable satisfaction of
Buyer or the Purchase Price shall be reduced by $100,000; and

 

(b)          Seller shall install, to the reasonable satisfaction of Buyer, a
fire suppression system that complies with the Laws of the City of Henderson to
facilities maintenance shop adjacent to the northwest single trailer loading
dock or the Purchase Price shall be reduced by $25,000.

 

6.8         Delivery of Financial Statements and Reports; Filings.

 

(a)          After the Agreement Date until the earlier of the Closing or the
termination of this Agreement, promptly as practicable and in any event no later
than thirty (30) days after the end of each month, Seller will deliver to Buyer
true and complete copies of the unaudited balance sheets, the related unaudited
statements of income and statement of cash flows, of the Business, as of the end
of each month and the portion of the fiscal year then ended, which financial
statements shall be prepared on a basis consistent with the Financial
Statements.

 

(b)          After the Agreement Date until the earlier of the Closing or the
termination of this Agreement, Seller shall deliver to Buyer true and correct
copies of all reports, filings and/or notices delivered to the Gaming
Authorities on or before five (5) Business Days after the date of such delivery.

 

Article 7

OTHER COVENANTS AND AGREEMENTS

 

7.1         Public Announcement. The parties agree that the initial press
release(s) to be issued with respect to the execution of this Agreement shall be
in a form mutually agreed to by Buyer and Seller. Thereafter, none of Buyer,
Seller or Parent, nor any of their respective Representatives, will issue any
press release or other public statement or announcement with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
the other party(ies), except as may be required by applicable Law or the rules
of any stock exchange on which their securities (or securities of any of their
Affiliates) are listed (in which case the party required (or whose
Representative is required) to make the release, statement or announcement
shall, to the extent practicable under the circumstances, allow the other
party(ies) reasonable time to comment on such release or announcement in advance
of its issuance (the first party being under no obligation to accept any such
comments)). Notwithstanding the foregoing, the parties acknowledge and agree
that each of the parties and their respective Representatives shall have the
right to provide notice to and make any filings with any Authorities, which are
be required under applicable Laws. The foregoing restriction will not apply from
and after the Closing.

 

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7.2         Confidentiality.

 

(a)          For purposes of this Agreement, the term “Confidential Information”
means (i) all information, books and records of Buyer, including customer,
supplier and prospect information, Intellectual Property, sales, marketing,
employment, financial and accounting information, and quality control and
regulatory information of Buyer, provided by Buyer or any of its Representatives
to Seller, Parent or any of their Representatives in connection with or as a
result of the negotiation, preparation or performance of this Agreement or the
transactions contemplated hereby (collectively, the “Buyer Information”); (ii)
all Assigned IP and all tangible and electronic embodiments of the Assigned IP;
and (iii) all Business Information and other books and records of Seller that
constitute Purchased Assets, excluding in each case any such information that
(A) at any time is or becomes available to the general public without Seller’s
or Parent’s Breach of this Agreement or any obligation or duty of
confidentiality owed to Buyer, (B) in the case of Buyer Information, was
provided to Seller or Parent or any of their Representatives on a
non-confidential basis prior to its disclosure by Buyer to Seller or Parent or
any of their respective Representatives, provided that such information is not
known by Seller, Parent or any of their respective Representatives to be subject
to a confidentiality agreement with or other obligation or duty of
confidentiality to Buyer or another Person, (C) in the case of Buyer
Information, information that subsequently becomes available to Seller, Parent
or any of their respective Representatives on a non-confidential basis from a
source other than Buyer or any of its Representatives, provided that such source
is not known by Seller, Parent or any of their respective Representatives to be
subject to a confidentiality agreement with or other obligation or duty of
confidentiality to Buyer or another Person, (D) in the case of Buyer
Information, is independently developed by Seller, Parent or any of their
respective Representatives without reference to, or use of, any Confidential
Information, or (E) is (1) a Retained Asset, (2) a Retained Liability or (3)
used in connection with the Transition Services Agreement.

 

(b)          Except as required by applicable Law, including the rules or
regulations of a national securities exchange or other exchange on which
Parent’s securities are listed for trading and in its filings with the
Securities and Exchange Commission as is required under applicable federal
securities laws, Seller and Parent will, and will cause their respective
Representatives to, keep confidential and protect, and to not disclose, allow
access to or use in any way (other than (i) as may be necessary to establish or
enforce the rights, or to perform (or cause to be performed) the obligations, of
Seller or Parent, or to defend against any claim by any Buyer Indemnitee, under
this Agreement or any Ancillary Document, (ii) any such information disclosed
pursuant to Section 7.4 for the purpose for which such information was
requested, (iii) any disclosure on a confidential basis to Seller’s or Parent’s
respective Representatives, and (iv) in connection with Tax or other regulatory
filings, Proceedings, and financial reporting requirements), (A) any Buyer
Information during the Exclusivity Period, and (B) from and after the Closing
until the six (6) year anniversary of the Closing Date, any Confidential
Information. Seller and Parent acknowledge and agree that the Buyer Information
is and will continue to be and, from and after the Closing, all other
Confidential Information related to the Business or the Purchased Assets will
be, the exclusive property of Buyer and its Affiliates.

 

 42 

 

 

(c)          The covenants and undertakings contained in this Section 7.2 relate
to matters which may be of a special, unique and extraordinary character and a
violation of any of the terms of this Section 7.2 may cause irreparable injury
to Buyer and its Affiliates, the amount of which may be impossible to estimate
or determine and for which adequate compensation may not be available.
Therefore, Buyer and its Affiliates will be entitled to an injunction,
restraining order or other equitable relief from a court of competent
jurisdiction restraining any violation or threatened violation of any such terms
by Seller, Parent or any of their Representatives.

 

(d)          In the event that Seller, Parent or any of their Representatives,
receives a request to disclose all or any part of the Buyer Information during
the Exclusivity Period, or from and after the Closing, all or any part of the
Confidential Information, in connection with a Proceeding or is otherwise
required by applicable Law, including the rules or regulations of a national
securities exchange or other exchange on which Parent’s securities are listed
for trading and in its filings with the Securities and Exchange Commission as is
required under applicable federal securities laws, Seller or Parent (as
applicable) will, to the extent permitted by Law, (i) notify Buyer as promptly
as practicable under the circumstances of the existence, terms and circumstances
surrounding such request or requirement, and (ii) if disclosure of such
information is required, disclose the minimum required and exercise commercially
reasonable efforts to preserve the confidentiality of such information,
including, if requested by Buyer, by cooperating with Buyer, at Buyer’s sole
cost and expense, to obtain an appropriate protective order or other assurance
that confidential treatment will be accorded such information by any third party
to which disclosure is made. If Seller and Parent comply with the preceding
sentence, Seller and Parent (or such of their respective Representatives who are
required to make such disclosure) may make such disclosure without liability
under this Agreement notwithstanding the absence of a protective order or waiver
of compliance hereunder.

 

(e)          From the Agreement Date and unless and until this Agreement is
terminated pursuant to Article 11, unless Buyer otherwise consents in writing
(such consent not to be unreasonably withheld, delayed or conditioned), Seller
and Parent will not release any Person from the confidentiality provisions of
any agreement to which Seller or Parent is or becomes a party or under which it
is a beneficiary to the extent related to or otherwise affecting the Business or
the Purchased Assets and as part of the Purchased Assets or Assumed Contracts
hereunder will at Closing assign each such agreement to Buyer.

 

7.3         Payment of Retained Liabilities; Preservation of Corporate
Existence. Seller will pay or make adequate provision for the payment in full of
all of the Retained Liabilities, and Parent will cause Seller to comply with the
provisions of this Section 7.3.

 

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7.4         Retention of and Access to Records.

 

(a)          From and after the Closing Date and for a period five (5) years
thereafter, Seller will retain and provide Buyer and its Representatives with
reasonable access to and copies of such portion of the books and records that
constitute Retained Assets as contain information or data reasonably related to
the Purchased Assets or the operation of the Business (excluding income Tax
books or records and communications that are protected by attorney-client
privilege or the work-product privilege), during normal business hours and upon
reasonable written notice, for any reasonable business purposes specified by
Buyer in such notice and prior to destroying any such books and records prior to
the end of such five (5)-year period, Seller will notify Buyer in writing at
least thirty (30) days in advance and then, if requested by Buyer and at Buyer’s
expense, provide copies of such books and records prior to destroying them. From
and after such five (5)-year period, Seller shall have no obligation to keep or
preserve or to notify Buyer of the destruction of any such books or records.

 

(b)          From and after the Closing Date and for a period five (5) years
thereafter, Buyer will retain and provide Seller, Parent and their respective
Representatives with reasonable access to and copies of all books and records
that constitute Purchased Assets and will make employees available on a mutually
convenient basis, during normal business hours and upon reasonable written
notice for any reasonable purpose of Seller or Parent specified by Seller or
Parent, as applicable, in such notice, such as for use in financial reporting,
accounting matters, preparing and filing any Tax Returns, responding to Tax
requests, audits, inquiries or other Proceedings, to investigate, defend or
prosecute any claim or Proceeding, or to comply with the provisions and terms of
this Agreement or any Ancillary Document or respond to claims arising hereunder
or thereunder. For five (5) years following the Closing Date, prior to
destroying any such books and records, Buyer will notify Seller and Parent in
writing at least thirty (30) days prior to such destruction and shall, if
requested by Seller or Parent and at Seller’s or Parent’s expense, provide
copies of such books or records prior to such destruction. From and after such
five (5)-year period, Buyer shall have no obligation to keep or preserve or to
notify Seller or Parent of the destruction of any such books or records.

 

7.5         Cooperation in Litigation. Buyer shall, and shall cause its
Affiliates to, reasonably cooperate with Seller and Parent in the prosecution or
defense of any claim or Proceeding arising from or related to the conduct of the
Business prior to the Closing and involving one or more third parties. Seller
and Parent shall pay the reasonable out-of-pocket expenses incurred by Buyer and
its Affiliates in providing such cooperation (including reasonable legal fees
and disbursements), but shall not be responsible for reimbursing Buyer or its
Affiliates or its and their officers, directors and employees for their time
spent in such cooperation.

 

 44 

 

 

7.6         Use of Name. Buyer agrees that (except as expressly set forth in
this Section 7.7), after the Closing neither Buyer nor its Affiliates shall have
any rights in and to the mark “Nevada Gold” or “Nevada Gold & Casinos” or any
trademarks, trade names, service marks, trade dress, logos, corporate names,
domain names and other source identifiers, emblems, signs or insignia related
thereto or containing or comprising the foregoing, including any mark or term
confusingly similar thereto or derivative thereof (collectively, the “Parent
Marks”), and will not at any time after the Closing market, promote, advertise
or offer for sale any products, goods or services utilizing any of the Parent
Marks or otherwise hold itself out as having any affiliation with either Parent
or Seller or any of their respective Affiliates. Buyer agrees that if any of the
Purchased Assets, including any promotional materials or printed forms, bear any
of the Parent Marks, Buyer shall, prior to distributing, selling or otherwise
making use of such Purchased Assets, either (a) remove, delete or render
illegible the Parent Mark(s) as they may appear on such Purchased Assets or (b)
clearly state that Buyer is not affiliated with “Nevada Gold”, Parent, Seller or
any of their respective Affiliates. Notwithstanding the foregoing, for a period
of ninety (90) days after the Closing Date, Buyer may distribute and display
marketing, promotional and advertising materials including business cards,
stationery, packaging materials, displays, signs, promotional materials and
other similar materials that include one or more of the Parent Marks
(collectively, “Supplies”), provided such Supplies (i) were included within the
Inventory as of the Closing, (ii) are used solely in connection with the
promotion, marketing, advertising and sale of the Business’s products of the
type sold, and in a manner consistent with that used, prior to the Closing, and
(iii) clearly indicate that Buyer and its Affiliates are not affiliated with
Parent, Seller or any of their respective Affiliates and (y) the inclusion of
the Parent Mark(s) in the Supplies shall not be construed as an endorsement of
any of the Business’s products by Parent, Seller or any of their respective
Affiliates. Buyer shall indemnify and hold harmless the Seller Indemnitees
against all Losses asserted against or imposed upon them as a consequence of the
use of the Parent Marks by Buyer and its Affiliates following the Closing.

 

7.7         Further Assurances. Seller, Parent and Buyer agree that, from time
to time, from and after the Closing Date, each of them will execute and deliver
such further documents and instruments of conveyance and transfer or assumption
and take such further actions as may be necessary to carry out the purposes and
intents of this Agreement and give effect to the transactions contemplated by
this Agreement and the Ancillary Documents; provided, however, in no event shall
such additional documents, instruments or actions taken or otherwise requested
hereunder enlarge the obligations or liabilities of any party as set forth in
this Agreement. In addition, Seller will provide Buyer with reasonable physical
and electronic access to its premises and computers and will otherwise provide
Buyer with such assistance as Buyer may reasonably request, in order to collect,
package and otherwise prepare for delivery to Buyer all Purchased Assets that
are in tangible or electronic form.

 

Article 8

TAX MATTERS

 

8.1         Cooperation. Without duplication of their obligations under
Section 7.4, Buyer and Seller agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information relating to
the Business or any of the Purchased Assets (including access to books and
records) as is reasonably necessary for the filing of all Tax Returns, the
making of any election related to Taxes, the preparation for or defense of any
audit by any Taxing Authority and the prosecution or defense of any claim, suit
or Proceeding relating to any Tax Return relating to the Business or any of the
Purchased Assets. Without duplication (but in expansion) of their obligations
under Section 7.4, Buyer and Seller will retain all books and records with
respect to Taxes pertaining to the Business and the Purchased Assets until the
expiration of all relevant statutes of limitation (and, to the extent notified
by Buyer and Seller, any extensions thereof).

 

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8.2         Real and Personal Property Taxes. Real and personal property Taxes
and assessments, both general and special, imposed on or relating to the
Purchased Assets for any Taxable Period that begins prior to the end of the
gaming day on the Closing Date and ends on or after the end of the gaming day on
the Closing Date (a “Straddle Period”) will be prorated between Seller and Buyer
on a per diem basis, with the Taxes allocated to the portion of the Straddle
Period ending before the end of the gaming day on the Closing Date to be borne
by Seller and the Taxes allocated to the portion of the Straddle Period that
begins on the end of the gaming day on the Closing Date to be borne by Buyer.
Proration of Taxes that are undetermined as of the Closing Date (i) will be
based on the most recently available Tax rate and valuation, giving effect to
applicable exemptions, recently-voted millage, change in valuation and similar
items, whether or not officially certified to the appropriate Taxing Authority
as of the Closing Date and (ii) will use a 365-day year. When the actual amounts
become known, such prorations will be recalculated by Buyer and Seller, and
Buyer or Seller, as the case may be, will promptly (but not later than five (5)
Business Days after notice of payment due) make any additional payment or refund
so that the correct prorated amount is paid by Buyer and Seller. On or before
the Closing, Seller will pay all delinquent property Taxes or delinquent special
assessments not contested by Seller in good faith, which contested Taxes or
assessments will remain Seller’s obligation.

 

8.3         Conveyance Taxes. Notwithstanding anything to the contrary in this
Agreement, Seller shall pay, and be responsible for any sales Tax, use Tax,
conveyance fee Tax, transfer Tax, documentary stamp Tax, value added Tax or
similar Taxes and related fees (collectively, “Conveyance Taxes”) imposed on the
sale or transfer of the Purchased Assets, including the Owned Real Property,
pursuant to this Agreement or the entering into of this Agreement. The Seller
will prepare and timely file (with the reasonable cooperation of the Buyer) all
Tax Returns with respect to such Conveyance Tax, subject to the Buyer’s right to
review for no less than fifteen (15) Business Days prior to the due date
thereof.

 

8.4         Other Taxes. Seller will prepare and timely file all Tax Returns
required to be filed on or after the Closing Date with respect to Taxes that
relate to the Business or the Purchased Assets that are due on or prior to the
effective time of Closing, subject to Buyer’s right to review for no less than
five (5) Business Days prior to the due date and filing thereof. Any such Tax
Returns shall be consistent with prior Tax Returns and applicable Law.

 

Article 9

CONDITIONS TO CLOSING

 

9.1         Conditions to Buyer’s and Seller’s Obligations. The respective
obligation of each of Buyer, Parent and Seller to complete the Closing is
subject to the satisfaction or waiver (to the extent permitted by Law) of the
following conditions:

 

(a)          No Governmental Orders. No Authority of competent jurisdiction
shall have initiated any action seeking, or shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
resolution, judgment or injunction or statute, rule or regulation (in each case,
whether temporary, preliminary or permanent) to prevent or prohibit the
consummation of any of the transactions contemplated by this Agreement or to
make it illegal for either party hereto to perform its obligations hereunder.

 

 46 

 

 

(b)          No Proceedings. No Proceeding shall have been instituted, and be
pending against Buyer, Parent or Seller or their respective Affiliates by any
unaffiliated Third Party (other than an Authority), which (i) challenges or
otherwise seeks to prevent, or would reasonably be expected to materially delay,
any of the transactions contemplated by this Agreement, (ii) would reasonably be
expected to result in a material Liability for Buyer, Seller or any of their
respective Affiliates, (iii) would reasonably be expected to adversely effect in
any material respect the ability of Buyer, Parent or Seller or any of their
respective Affiliates, as applicable, to perform their obligations under this
Agreement, to consummate any of the transactions contemplated hereby or to
operate any of their respective businesses in the State of Nevada, or (iv) would
reasonably be expected to subject Buyer, Parent or Seller or any of their
respective Affiliates or their respective officers or directors to material
Liability in relation to any of the transactions contemplated by this Agreement;
provided, however, in the event a Proceeding contemplated by this Section 9.1(b)
has been instituted and/or is pending and Buyer does not want to waive the
condition contemplated by this Section 9.1(b) but Seller informs Buyer in
writing of its desire to waive the condition contemplated by this Section
9.1(b), to the extent such waiver is permitted by Law, Seller may waive such
obligation provided that Seller and Parent sign an undertaking, in form and
substance satisfactory to Buyer, to jointly and severally indemnify, defend,
save and hold harmless Buyer Indemnitees from and against any and all Losses,
incurred or sustained by, or imposed upon any Buyer Indemnities resulting from,
arising out of, or otherwise incurred in connection with such Proceeding,
including all fees and expenses, which shall be advanced to Buyer and paid by
Seller and/or Parent when and as such fees and expenses are incurred (such
Proceeding being referred to herein as a “Seller Waived Proceeding”).

 

(c)          Gaming Approvals. All Gaming Approvals set forth on Schedule 9.1(c)
of the Seller Disclosure Schedules shall have been obtained and shall be in full
force and effect.

 

9.2         Conditions to Buyer’s Obligations. The obligation of Buyer to
complete the Closing is subject to the satisfaction or waiver (in the sole
discretion of Buyer) of each of the following conditions:

 

(a)          each of the representations and warranties of Seller and/or Parent
contained in this Agreement that are qualified by materiality will be true and
correct in all respects and each of the representations and warranties of Seller
and/or Parent that are not so qualified will be true and correct in all material
respects, in each case, as if such representations or warranties were made on
and as of the Agreement Date and as of the Closing Date (except to the extent
such representations and warranties speak as of a specific date or as of the
Agreement Date, in which case such representations and warranties will be so
true and correct or so true and correct in all material respects, as the case
may be, as of such specific date or as of the Agreement Date, respectively);

 

 47 

 

 

(b)          Seller and Parent will have performed, satisfied and complied in
all material respects with all covenants and agreements required to be performed
by them at or prior to the Closing by this Agreement;

 

(c)          since the Agreement Date, there has been no change, event or
condition of any character (whether or not covered by insurance) that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect;

 

(d)          receipt of the Title Commitment and evidence reasonably
satisfactory to Buyer that the issuer thereof is unconditionally prepared to
issue a policy of title insurance as set forth in the Title Commitment;

 

(e)          Buyer will have received all of the certificates, Required Consents
(or, to the extent that any Required Consent identified in Schedule 3.2(f) of
the Seller Disclosure Schedules (other than the Consent identified as item 1
therein) shall not have been obtained on or prior to the Closing, Seller shall
retain and continue to hold the Contract to which such Required Consent related
and ensure that Buyer receives the full benefits of the provisions of such
Contract for the duration of its term in accordance with Section 1.5), approvals
and other documents specified in Section 3.2; and

 

(f)          EBITDA for the twelve 12 calendar month period ending April 30,
2018 shall have been at least $1,716,000 as reflected in Seller’s internal
unaudited financial statements.

 

9.3         Conditions to Seller’s and Parent’s Obligation. The obligation of
Seller and Parent to complete the transactions contemplated by this Agreement is
subject to the satisfaction or waiver (in the sole discretion of Seller and
Parent) of each of the following conditions:

 

(a)          each of the representations and warranties of Buyer contained in
this Agreement that are qualified by materiality will be true and correct in all
respects and each of the representations and warranties of Buyer that are not so
qualified will be true and correct in all material respects, in each case, as if
such representations or warranties were made on and as of the Agreement Date and
as of the Closing Date (except to the extent such representations and warranties
speak as of a specific date or as of the Agreement Date, in which case such
representations and warranties will be so true and correct or so true and
correct in all material respects, as the case may be, as of such specific date
or as of the Agreement Date, respectively);

 

(b)          Buyer will have performed, satisfied and complied in all material
respects with all covenants and agreements required to be performed by it at or
prior to the Closing by this Agreement; and

 

(c)          Seller and Parent will have received from Buyer all of the
certificates and other documents specified in Section 3.3.

 

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Article 10

SURVIVAL AND INDEMNIFICATION

 

10.1       Survival. All representations, warranties, covenants, and other
agreements contained in this Agreement shall survive the Closing as follows:

 

(a)          all covenants and other agreements will survive the Closing
indefinitely (unless such covenant expires earlier by its terms);

 

(b)          all Standard Representations shall survive the Closing for period
ending on the date eighteen (18) months following the Closing (the “General
Survival Period”);

 

(c)          the representations and warranties set forth in Section 4.20
(Environmental Matters) shall survive the Closing for a period ending on the
date three (3) years following the Closing; and

 

(d)          all Fundamental Representations and the representations and
warranties set forth in Section 4.12 (Tax Matters) shall survive the Closing for
a period ending on the date six (6) years following the Closing;

 

provided that in the case of clauses (a) through (d) above, if a written Notice
of Claim giving rise to a right or potential right of indemnity for breach of
any representation, warranty, covenant or agreement shall have been properly
given in accordance with Section 12.6 to the party against whom such indemnity
may be sought with reasonable specificity prior to the applicable survival date
relating to such representation, warranty, covenant or agreement, then such
representation, warranty, covenant or agreement will survive solely with respect
to the specific claim described in such Notice of Claim (and not in any other
respect until such claim is resolved).

 

10.2       Indemnification by Seller and Parent.

 

(a)          Seller and Parent shall, jointly and severally, indemnify, defend,
save and hold harmless from and against, and pay on behalf of and reimburse as
and when incurred by Buyer and each of its Affiliates and the and the respective
Affiliates, Subsidiaries, employees, agents, representatives, successors and
assigns directors, officers and employees of the foregoing Persons
(collectively, the “Buyer Indemnitees”) from and against any and all Losses
incurred or sustained by, or imposed upon, any Buyer Indemnitees resulting from,
arising out of, in connection with, or otherwise relating to:

 

(i)          any inaccuracy in or breach of any representation or warranty by
Parent or Seller contained in this Agreement (or in any other Ancillary
Documents) as if made on and as of the Closing Date;

 

(ii)         any breach of any covenant or other agreement by Seller or Parent
contained in this Agreement or in any other Ancillary Documents;

 

(iii)        any Retained Liabilities;

 

(iv)        a Seller Waived Proceeding;

 

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(v)         except for Assumed Liabilities, any and all Liabilities related to
the Purchased Assets or the operation of the Business arising on or prior to the
Closing Date and related to Seller’s operation of the Business; and

 

(b)          Notwithstanding any other provision to the contrary, for purposes
of this Section 10.2, the representations and warranties contained in this
Agreement, any Seller Disclosure Schedule, any Exhibit, or any other Ancillary
Document shall be deemed to have been made without any qualifications as to
materiality and, accordingly, all references herein and therein to “material,”
“in all material respects”, “Material Adverse Effect” and similar qualifications
as to materiality shall be deemed to be deleted therefrom (except for Section
4.6(i), the definition of “Permitted Encumbrances” and where any such provision
requires disclosure of lists of items of a material nature or above a specified
threshold).

 

(c)          Seller and Parent shall not be liable for any Loss or Losses
pursuant to Section 10.2(a)(i) (“Buyer Warranty Losses”) unless and until the
aggregate amount of all Buyer Warranty Losses incurred by Buyer Indemnitees
exceeds $100,000, whereupon all amounts shall be recoverable, including the
first $100,000 of such Losses, subject to the aggregate liability limitations
set forth below. Seller and Parent’s aggregate liability for Buyer Warranty
Losses shall be limited to:

 

(i)          ten percent (10%) of the Purchase Price, as established pursuant to
Sections 2.1 and 2.4 and without reference to Section 10.10 (the “Adjusted
Purchase Price”), for any inaccuracies in or breaches of any representations or
warranties of Parent or Seller that are not Fundamental Representations or set
forth in Section 4.12 (Tax Matters) or Section 4.20 (Environmental Matters), and
are not any claims for any inaccuracy in or breach of any representations or
warranties of Seller or Parent based on fraud or intentional misrepresentation
on the part of Seller or Parent; and

 

(ii)         one hundred percent (100%) of the Adjusted Purchase Price for any
inaccuracies in or breaches of any representations or warranties of Parent or
Seller that are Fundamental Representations or set forth in Section 4.12 (Tax
Matters) or Section 4.20 (Environmental Matters), or for any claims for any
inaccuracies in or breaches of any representations or warranties of Parent or
Seller based on fraud or intentional misrepresentation on the part of Seller or
Parent.

 

(d)          Seller and Parent shall have no Liability pursuant to Section
10.2(a) for any Losses to the extent a reserve with respect to such Losses is
included in or taken into account in the calculation or determination of Working
Capital.

 

(e)          Notwithstanding any other provision of this Agreement, Seller’s and
Parent’s obligations under Section 10.2(a)(i) in respect of any inaccuracy in or
breach of any representations or warranties of Parent or Seller set forth in
Section 4.20 (Environmental Matters) related to a Remedial Action shall not
exceed an amount that would be considered commercially reasonable under accepted
industry standards (or as otherwise required by the relevant Authority).

 

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10.3       Indemnification by Buyer.

 

(a)          If the Closing shall occur, subject to the other terms and
conditions of this Article 10, Buyer shall indemnify, defend, save and hold
harmless from and against, and pay on behalf of and reimburse as and when
incurred by Buyer and each of its Affiliates and the and the respective
Affiliates, Subsidiaries, employees, agents, representatives, successors and
assigns directors, officers and employees of the foregoing Persons
(collectively, the “Seller Indemnitees”) from and against any and all Losses
incurred or sustained by, or imposed upon, any Seller Indemnitees resulting
from, arising out of, in connection with, or otherwise relating to:

 

(i)          any inaccuracy in or breach of any representation or warranty by
Buyer contained in this Agreement (or in any other Ancillary Documents) as if
made on and as of the Closing Date;

 

(ii)         any breach of any covenant or other agreement by Buyer contained in
this Agreement or in any Ancillary Document;

 

(iii)        except for the Retained Liabilities, any and all Liabilities
related to Buyer’s operation of the Business on and after the Closing Date; and

 

(iv)        any Assumed Liability.

 

10.4       Time and Other Limitations.

 

(a)          Seller and Parent shall have liability under Section 10.2(a)(i)
with respect to any inaccuracy in or breach of any representation or warranty of
Parent or Seller only if Buyer Indemnitee notifies Seller and Parent of such
claim (specifying the factual basis of the claim in reasonable detail) on or
before the expiration date of the applicable survival period set forth in
Section 10.1 that relates to the alleged breached representation or warranty in
question.

 

(b)          Buyer shall have liability under Section 10.3(a)(i) with respect to
a breach of any representation or warranty of Buyer only if the Seller
Indemnitee notifies Buyer of a claim (specifying the factual basis of the claim
in reasonable detail) on or before the expiration date of the applicable
survival period set forth in Section 10.1 that relates to the alleged breached
representation or warranty in question.

 

(c)          The amount of any Loss subject to indemnification pursuant to this
Agreement shall, before giving effect to the other limitations on
indemnification set forth in this Article 10, be calculated net of any insurance
proceeds or other amounts under indemnification, contribution or similar
agreements actually received by the Indemnitee on account of such Loss. The
existence of a claim by an Indemnitor for monies from an insurer or other party
shall not, however, delay any payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by an Indemnitor.
Rather, the Indemnitor shall make timely payment of the full amount of Losses
determined to be due and owing by it, and if the Indemnitee later actually
recovers insurance or other proceeds in respect of such Losses, then it shall
promptly reimburse the Indemnitor to the extent necessary to avoid double
recovery of the same Losses.

 

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10.5       Indemnification Procedures for Third-Party Claims.

 

(a)          In the event that an Indemnitee receives notice of the assertion of
any claim or the commencement of any Proceeding by a Third Party in respect of
which indemnity may be sought under the provisions of this Article 10 (a
“Third-Party Claim”), the Indemnitee shall promptly, and in any event within
five (5) Business Days following such Indemnitee’s receipt of such notice,
notify the Indemnitor in writing (“Notice of Claim”) of such Third-Party Claim.
Failure or delay in notifying the Indemnitor will not relieve the Indemnitor of
any liability it may have to the Indemnitee, except and only to the extent that
such failure or delay causes actual harm to the Indemnitor with respect to such
Third-Party Claim.

 

(b)          Subject to the further provisions of this Section 10.5, the
Indemnitor shall be entitled to assume and control the defense, investigation,
management and settlement of any such Third-Party Claim and any litigation
resulting therefrom with counsel of its choice (which counsel shall be
reasonably satisfactory to the Indemnitee) and at its sole cost and expense (a
“Third-Party Defense”) if it gives notice of its intention to do so to the
Indemnitor within ten (10) days from the date on which the Indemnitor received
the Notice of Claim. Any Indemnitee shall have the right to employ separate
counsel in any such Third-Party Defense and to participate therein (but not
control), but the fees and expenses of such counsel shall not be at the expense
of the Indemnitor unless (A) the Indemnitor shall have failed, within the time
after having been notified by the Indemnitee of the existence of the Third-Party
Claim as provided in the first sentence of this Section 10.5(b), to assume the
defense of such Third-Party Claim, or (B) in the reasonable opinion of counsel
(provided in writing to the Indemnitor) under applicable standards of
professional conduct, a conflict on any significant issue exists between the
Indemnitee and the Indemnitor in respect of the Third-Party Claim that would
make such separate representation advisable.

 

(c)          Unless the Indemnitee otherwise agrees, the Indemnitor will not be
entitled to assume or maintain the Third-Party Defense if:

 

(i)          the Third-Party Claim relates to any criminal Proceeding,
indictment, allegation or investigation;

 

(ii)         the Third-Party Claim relates to or arises in connection with any
Proceeding to modify or revoke any Permit or approval of any Gaming Authority
related to the Business or the Purchased Assets;

 

(iii)        the Indemnitor has failed or is failing to vigorously prosecute or
defend such Third-Party Claim; or

 

(iv)        the Indemnitor fails to provide reasonable assurance to the
Indemnitee of its financial capacity to prosecute the Third-Party Defense and
provide indemnification in accordance with the provisions of this Agreement.

 

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(d)          At the election of the Indemnitee, the Indemnitee and the
Indemnitor shall have joint control over the Third-Party Defense if the
Third-Party Claim seeks, in addition to or in lieu of monetary damages, any
injunctive or other equitable relief (except where non-monetary relief is merely
incidental to a primary claim or claims for monetary damages).

 

(e)          The Indemnitor will not consent to the entry of any judgment or
enter into any settlement, except with the written consent of the Indemnitee
(not to be unreasonably withheld, conditioned or delayed); provided, that the
consent of the Indemnitee shall not be required if all of the following
conditions are met: (i) the terms of the judgment or proposed settlement include
as an unconditional term thereof the giving to the Indemnitees by the Third
Party of a release of the Indemnitees from all liability in respect of such
Third-Party Claim, (ii) there is no finding or admission (A) of any violation of
Law by the Indemnitees (or any Affiliate thereof), or (B) that has or would be
reasonably expected to have a material adverse effect on any other pending
Proceeding or claims of a similar nature against the Indemnitees (or any
Affiliate thereof) relating to the same occurrence or series of events that gave
rise to such Third-Party Claim(s), and (iii) the sole form of relief is monetary
damages which are paid in full by the Indemnitor. The Indemnitor shall conduct
the defense of the Third-Party Claim actively and diligently, and the Indemnitee
will provide reasonable cooperation in the defense of the Third-Party Claim. So
long as the Indemnitor is reasonably conducting the Third-Party Defense in good
faith, the Indemnitee will not consent to the entry of any judgment or enter
into any settlement with respect to the Third-Party Claim without the prior
written consent of the Indemnitor (not to be unreasonably withheld or delayed).
Notwithstanding the foregoing, the Indemnitee shall have the right to pay or
settle any such Third-Party Claim; provided, that in such event it shall waive
any right to indemnity therefor by the Indemnitor for such claim unless the
Indemnitor shall have consented to such payment or settlement (such consent not
to be unreasonably withheld or delayed).

 

(f)          In the event that (i) an Indemnitee gives Notice of Claim to the
Indemnitor and the Indemnitor fails or elects not to assume a Third-Party
Defense which the Indemnitor had the right to assume under this Section 10.5, or
(ii) the Indemnitor is not entitled to assume or maintain the Third-Party
Defense pursuant to Section 10.5(c), the Indemnitee shall have the right, with
counsel of its choice, to defend, conduct and control the Third-Party Defense by
giving written notice of its intention to do so to the Indemnitor and the
Indemnitor shall promptly reimburse the Indemnitee therefor in accordance with
(and to the extent provided for in) Section 10.2 or 10.3, as appropriate. In
each such case, the Indemnitee shall conduct the Third-Party Defense actively
and diligently, and the Indemnitor will provide reasonable cooperation in the
Third-Party Defense. In each such case, the Indemnitee will keep the Indemnitor
reasonably informed of the progress of the Third-Party Defense, and the
Indemnitee shall have the right to consent to the entry of any judgment or enter
into any settlement with respect to the Third-Party Claim on such terms as it
may deem appropriate; provided, however, that the Indemnitor will have no
indemnification obligations with respect to any settlement made or entry of any
judgment consented to by the Indemnitee without the prior written consent of the
Indemnitor (not to be unreasonably withheld or delayed). If the Indemnitor does
not elect to assume a Third-Party Defense which it has the right to assume
hereunder, the Indemnitee shall have no obligation to do so.

 

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(g)          Each party to this Agreement shall use its commercially reasonable
efforts to cooperate and to cause its employees to cooperate with and assist the
Indemnitee or the Indemnitor, as the case may be, in connection with any
Third-Party Defense, including attending conferences, discovery proceedings,
hearings, trials and appeals and furnishing records, information and testimony,
as may reasonably be requested.

 

10.6       Indemnification Procedures for Non-Third-Party Claims. In the event
of a claim by an Indemnitee on account of a Loss that does not involve a
Third-Party Claim being asserted against the Indemnitee (a “Direct Claim”), the
Indemnitee shall send a Notice of Claim of a Direct Claim to the Indemnitor
reasonably promptly, but in any event not later than five (5) Business Days
after the Indemnitee becomes aware of such Direct Claim. The failure to give
such prompt written notice shall not, however, relieve the Indemnitor of its
indemnification obligations, except and only to the extent that the Indemnitor
forfeits rights or defenses by reason of such failure. Such Notice of Claim by
the Indemnitee shall describe the Direct Claim in reasonable detail, shall
include copies of all written evidence thereof and shall indicate the estimated
amount, if reasonably practicable, of the Loss that has been or may be sustained
by the Indemnitee. The Indemnitor shall have thirty (30) days after its receipt
of such Notice of Claim to respond in writing to such Direct Claim. The
Indemnitee shall allow the Indemnitor and its Representatives to investigate the
matter or circumstance alleged to give rise to the Direct Claim, and whether and
to what extent any amount is payable in respect of the Direct Claim and the
Indemnitee shall assist the Indemnitor’s investigation by giving such
information and assistance (including access to the Indemnitee’s premises and
Representatives and the right to examine and copy any accounts, documents or
records) as the Indemnitor or any of its Representatives may reasonably request.
If the Indemnitor does not so respond within such thirty (30)-day period, the
Indemnitor shall be deemed to have rejected such claim, in which case the
Indemnitee shall be free to pursue such remedies as may be available to the
Indemnitee on the terms and subject to the provisions of this Agreement.

 

10.7       Effect of Investigation. An Indemnitee’s right to indemnification,
payment, reimbursement or other remedies based upon any representation,
warranty, covenant or agreement of the Indemnitor will not be affected by any
investigation (including any environmental investigation or assessment)
conducted, any knowledge acquired at any time (whether obtained prior to or
after the Closing Date), or any waiver by the Indemnitee of any condition, with
respect to the accuracy or inaccuracy of any representation or warranty of, or
compliance with, such representation, warranty, covenant or agreement. Such
representations, warranties, covenants, and agreements shall not be affected or
deemed waived by reason of the fact that the Indemnitee knew or should have
known that any representation or warranty might be inaccurate or that the
Indemnitor failed to comply with any agreement or covenant. The representations
and warranties and indemnification rights associated therewith are meant to
allocate risk among the parties, and, therefore, any investigation by such party
shall be for its own protection only and shall not affect or impair any right or
remedy hereunder.

 

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10.8       Satisfaction of Seller’s and Parent’s Indemnification Obligations.
Any amounts owed by Seller and Parent to the Buyer or any of the other Buyer
Indemnitees from and after the Closing pursuant to Section 10.2, shall be made
(i) first from the Escrow Account, to the extent the Escrow Account has not been
exhausted or released, and Seller, Parent and Buyer shall cause the Escrow Agent
to pay to the applicable Buyer Indemnitee(s) an amount equal to an aggregate
amount equal to the lesser of (x) the amount of Losses to which such Buyer
Indemnitee(s) is entitled to be indemnified and (y) the then remaining balance
of the Escrow Account, and (ii) second, if the amount of Losses to which such
Buyer Indemnitee(s) is entitled to be indemnified exceeds the amount satisfied
in accordance with clause (i) above, directly by Seller and/or Parent.

 

10.9       Subrogation. In the event that an Indemnitor is obligated to
indemnify an Indemnitee pursuant to this Article 10, the Indemnitor will, upon
payment of such indemnity, be subrogated to all rights of the Indemnitee with
respect to claims to which such indemnification relates.

 

10.10     Exclusive Remedy. Other than (a) for claims based on fraud,
intentional misrepresentation or willful misconduct for which rescission of this
Agreement is sought as the remedy, or (b) any rights of any Person to seek or
obtain equitable remedies (including specific performance, injunctive and
similar relief) pursuant to Section 7.2 or 12.10, any claim or cause of action
(whether such claim sounds in tort, contract or otherwise and including
statutory rights and remedies) based upon, relating to or arising out of this
Agreement or the transactions contemplated hereby, including any breach of any
representation, warranty, covenant, agreement or obligation set forth herein or
otherwise relating to the subject matter of this Agreement, or otherwise in
respect of the status, operations, condition or ownership of the Business, the
Purchased Assets or Assumed Liabilities on or prior to the Closing Date
(including claims under Environmental and Safety Requirements and other Laws
giving rights to compensation, contribution or indemnification against Seller
Indemnitees and any claims alleging fraudulent misrepresentation) must be
brought by the parties hereto in accordance with the provisions and applicable
limitations of this Article 10, which shall constitute the sole and exclusive
remedy of the parties hereto, their Affiliates, successors and assigns, all
other Buyer Indemnitees and Seller Indemnitees, and all Persons who may claim
any rights through Buyer, Seller and/or Parent, for any such claim or cause of
action.

 

10.11     Purchase Price Adjustment. Any indemnification amounts paid pursuant
to this Article 10, to the extent permitted by applicable Law, shall be treated
for all Tax purposes as an adjustment to the Purchase Price.

 

Article 11

TERMINATION

 

11.1       Right to Terminate. Notwithstanding anything to the contrary set
forth in this Agreement, this Agreement may be terminated and the transactions
contemplated herein abandoned at any time prior to the Closing:

 

(a)          by mutual consent of Buyer, on the one hand, and Seller and Parent,
on the other hand;

 

 55 

 

 

(b)          by Buyer, on the one hand, or Seller or Parent, on the other hand,
if the Closing has not occurred by March 31, 2019 (the “Outside Date”);

 

(c)          by Buyer, on the one hand, or Seller and Parent, on the other hand,
if an Authority issues a final nonappealable Order restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement; provided, however, that the right to terminate this Agreement
pursuant to this clause shall not be available to any party(ies) whose failure
to fulfill any obligation under this Agreement has been the cause of, or
materially contributed to, such Order;

 

(d)          by Buyer if Seller or Parent has breached or failed to perform any
of their representations, warranties, covenants or agreements contained herein
which (i) would result in a failure of a condition set forth in Section 9.2(a)
or 9.2(b) to be satisfied, and (ii) is not cured in all material respect within
thirty (30) days after Buyer has notified Seller and Parent of its intention to
terminate this Agreement pursuant to this clause; provided, that Buyer shall not
have the right to terminate this Agreement pursuant this clause if Buyer is then
in material breach of any representation, warranty, covenant or agreement of
Buyer set forth in this Agreement;

 

(e)          by Seller or Parent if Buyer has breached or failed to perform any
of its representations, warranties, covenants or agreements contained herein,
which (i) would result in a failure of a condition set forth in Section 9.3(a)
or 9.3(b) to be satisfied, and (ii) is not cured within thirty (30) days after
Seller or Parent has notified Buyer of its intention to terminate this Agreement
pursuant to this clause; provided, that Seller and Parent shall not have the
right to terminate this Agreement pursuant this clause if either Seller or
Parent is then in material breach of any representation, warranty, covenant or
agreement of Seller or Parent, as applicable, set forth in this Agreement; or

 

(f)          by Buyer if there has been an event, change, occurrence or
circumstance since the Agreement Date that has had or could reasonably be
expected to have a Material Adverse Effect.

 

11.2       Effect of Termination. Upon termination of this Agreement pursuant to
Section 11.1, this Agreement shall immediately become null void and there shall
be no further Liability on the part of Buyer or Seller or Parent, or their
respective Representatives, other than the obligations contained in the second
sentence of Section 6.3(b), the obligations contained in Section 7.2 to the
extent related to Buyer Information, this Section 11.2, and Article 12, which
will survive any termination of this Agreement; provided, however, that nothing
contained in this Section 11.2 shall relieve or limit the Liability of any party
for any breach of any covenant or agreement contained herein or for any
fraudulent or willful breach of any representation or warranty contained herein.

 

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Article 12

MISCELLANEOUS PROVISIONS

 

12.1       Interpretation and Usage.

 

(a)          Unless there is a clear contrary intention: (i) a reference made to
an article, section, appendix, addendum, exhibit or schedule means a reference
to an article, section, appendix, annex, addendum, exhibit or schedule of or to
this Agreement; (ii) the singular includes the plural and vice versa;
(iii) reference to any agreement, document or instrument means that agreement,
document or instrument, including all appendices, annexes, addenda, exhibits,
schedules thereto, as amended or modified and in effect from time to time in
accordance with the terms thereof; (iv) reference to any Law means that Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated
thereunder, and reference to any section or other provision of any Law means
that section or provision from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment of
that section or provision; (v) “hereunder,” “hereof,” “hereto,” and words of
similar import will be deemed references to this Agreement as a whole and not to
any particular article, section or other provision of this Agreement;
(vi) “including” (and with correlative meaning “include”) means including
without limiting the generality of any description preceding such term;
(vii) “or” is used in the inclusive sense of “and/or”; (viii) “it” or “its” in
reference to a Person will be deemed to include individual natural Persons;
(ix)  references to a “party” or “parties” means Buyer, Seller or Parent, or all
of them as the context requires; and (x) the terms “writing,” “written” and
words of similar import will be deemed to include communications and documents
in e-mail, fax or any other similar electronic or documentary form (except that
notices given under this Agreement must comply with the requirements of
Section 12.6).

 

(b)          The Seller Disclosure Schedules are divided into sections which
correspond to the sections of this Agreement. The disclosure of an item in any
schedule of the Seller Disclosure Schedules shall be deemed to qualify both
(i) the representations and warranties, if any, contained in the section or
subsection of this Agreement to which it corresponds in number to such schedule
and (ii) any other representation and warranty of Seller or Parent in this
Agreement to the extent that it is readily apparent on its face from a reading
of such disclosure item that it would also qualify or apply to such other
representation and warranty. Neither the specification (directly or indirectly
by reference to a defined term in this Agreement) of any dollar amount in the
representations and warranties set forth in Article 4, nor the inclusion of any
items in any schedule of the Seller Disclosure Schedules shall be deemed to
constitute an admission by the parties, or otherwise imply or create any
presumption, that any such amount or such items so included are material for the
purposes of this Agreement, or constitute an admission by the parties that such
item meets any or all of the criteria set forth in this Agreement for inclusion
in such schedule of the Seller Disclosure Schedules or any other schedule of the
Seller Disclosure Schedules. The Seller Disclosure Schedules and the disclosures
and information contained therein shall not be deemed to broaden in any way the
scope or effect of any of the representations or warranties of Seller or Parent
under this Agreement. The information provided in the Seller Disclosure
Schedules is being provided solely for the purpose of making disclosures to
Buyer under this Agreement. In disclosing this information, neither Seller nor
Parent waive, and expressly reserve any and all rights under, any
attorney-client privilege associated with such information or any protection
afforded by the work-product doctrine with respect to any of the matters
disclosed or discussed herein. Nothing disclosed in any schedule of the Seller
Disclosure Schedules constitutes an admission of Liability of either Seller or
Parent or is an admission against the interest of either Seller or Parent, in
each case with respect to any Third Party.

 

 57 

 

 

(c)          All accounting terms used in this Agreement will be interpreted and
all accounting determinations will be made in accordance with GAAP.

 

(d)          The table of contents and the headings of the sections and
subsections of this Agreement are inserted for convenience of the parties only
and will not constitute a part hereof.

 

(e)          The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event of an ambiguity or question of intent
or interpretation arises, this Agreement will be construed as if drafted jointly
by the parties, and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

 

12.2       Amendment and Modification. Subject to applicable Law, this Agreement
may be amended or modified from time to time with respect to any of the terms
contained herein, except that all amendments and modifications must be set forth
in a writing duly executed by Buyer, Seller and Parent.

 

12.3       Waiver of Compliance; Consents. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be expressly waived
in writing by the party entitled to compliance, but any waiver or failure to
insist upon strict compliance with the obligation, covenant, agreement or
condition will not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. No single or partial exercise of a right or remedy
will preclude any other or further exercise thereof or of any other right or
remedy hereunder. Whenever this Agreement requires or permits the Consent by or
on behalf of a party, the Consent must be given in writing in the same manner as
for waivers of compliance.

 

12.4       No Third-Party Beneficiaries. Except as provided in Article 10,
nothing in this Agreement will entitle any Person (other than a party hereto and
its respective successors and assigns permitted hereby) to any claim, cause of
action, remedy or right of any kind.

 

12.5       Expenses. Except as otherwise expressly provided in this Agreement,
each of the parties hereto will bear its own costs, fees and expenses in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including fees, commissions and expenses payable to
brokers, finders, investment bankers, consultants, exchange or transfer agents,
attorneys, accountants and other professionals, whether or not the transactions
contemplated herein are consummated.

 

 58 

 

 

12.6       Notices. All notices, requests, demands and other communications
required or permitted hereunder must be made in writing and will be deemed to
have been duly given and effective: (a) on the date of delivery, if delivered
personally; (b) on the earlier of the fourth (4th) day after mailing or the date
of the return receipt acknowledgment, if mailed, postage prepaid, by certified
or registered mail, return receipt requested; (c) on the date of transmission,
if sent by facsimile or electronic mail with confirmation of successful delivery
if sent during normal business hours of the recipient, and on the next Business
Day if sent after normal business hours of the recipient; or (d) on the date of
delivery if sent by a recognized overnight courier, in each case, to the party
to whom it is given, at such party’s address, facsimile number or email address
specified below.

 

If to Seller or Parent, to: Nevada Gold & Casinos, Inc.   133 E. Warm Springs
Road, Suite 102   Las Vegas, Nevada 89119   Attn: Michael Shaunnessy and Ernest
East   Fax: 702-685-1265   Email: mshaunnessy@nevadagold.com;  
erniee7@gmail.com     with a copy to: Hughes Hubbard & Reed LLP   One Battery
Park Plaza   New York, New York 10004   Attn:  James Modlin   Fax:  212-299-6817
  Email:  james.modlin@hugheshubbard.com

 

or to such other person or address as Seller or Parent may furnish to the other
parties in writing in accordance with this Section 12.6. Seller hereby
designates Parent as its agent for receipt of notices hereunder unless and until
notice of a successor designee is given in accordance herewith.

 

If to Buyer, to:

Truckee Gaming, LLC

Attention: Thomas M. Benninger and Ferenc Szony

PO Box 160

Verdi, NV 89439

Email: tmb@glcllc.com

ferenc@truckeegaming.com

    with a copy to:

David A. Garcia, Esq.

Holland & Hart LLP

5441 Kietzke Lane, Suite 200

Reno, NV 89511

Email: dgarcia@hollandhart.com

 

or to such other person or address as Buyer may furnish to the other parties in
writing in accordance with this Section 12.6.

 

 59 

 

 

12.7       Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned (whether voluntarily,
involuntarily, by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other parties, except that Buyer may
assign this Agreement, in whole or in any part and from time to time, to any
Subsidiary or other Affiliate of Buyer that agrees (without limitation or
release of Buyer’s Liabilities hereunder) to be bound by and responsible for
Buyer’s Liabilities hereunder, provided Buyer remains bound by all of the terms
and subject to all of the conditions of this Agreement. Any assignment or
purported assignment in violation of this Section 12.7 will be void and of no
force or effect.

 

12.8       Governing Law and Venue.

 

(a)          This Agreement and, except as otherwise expressly stated therein,
the Ancillary Documents, and the legal relations among the parties hereto will
be governed by and construed in accordance with the internal substantive laws of
the State of Delaware (without regard to the laws of conflict that might
otherwise apply) as to all matters, including matters of validity, construction,
effect, performance and remedies.

 

(b)          All actions, suits and proceedings arising out of or relating to
this Agreement, the interpretation and enforcement of the provisions of this
Agreement and of the Ancillary Documents, and the transactions contemplated
hereby or thereby, shall be heard and determined exclusively in the courts of
the State of Nevada and the Federal courts of the United States of America
located in the State of Nevada, and appropriate appellate courts therefrom, and
each of the parties hereto hereby irrevocably submits to the exclusive
jurisdiction of such courts in any such action suit or proceeding Each party
hereby waives, and agrees not to assert, as a defense in any such action, suit
or proceeding that it is not subject to such jurisdiction or that such action,
suit or proceeding may not be brought or is not maintainable in said courts or
that this Agreement or any Ancillary Document may not be enforced in or by said
courts or that its properties or assets are exempt or immune from execution,
that such action, suit or proceeding is brought in an inconvenient forum, or
that the venue of such action, suit or proceeding is improper. Service of
process in any such action, suit or proceeding may be served on any party
anywhere in the world, whether within or without the State of Nevada, as
provided in Section 12.6.

 

12.9       Counterparts. This Agreement and each of the Ancillary Documents may
be executed in one or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.
This Agreement and each of the Ancillary Documents will become effective when
one or more counterparts of this Agreement or such Ancillary Document, as
applicable, have been signed by each of the parties and delivered to the other
parties. This Agreement and the Ancillary Documents may be executed and
delivered by facsimile or pdf transmission and a facsimile or pdf transmission
will constitute an original for all purposes, except as may be otherwise
required by law. At the request of any party, the parties will confirm a
facsimile or pdf transmission by signing a duplicate original document.

 

 60 

 

 

12.10     Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or the Ancillary
Documents are not performed in accordance with their specific terms or otherwise
are breached. Therefore, each party (a) hereby waives, in any action for
specific performance, the defense of adequacy of a remedy at law and any
requirement for the posting of any bond or other security in connection with any
such remedy; and (b) agrees that the other parties will be entitled to specific
performance of the terms of this Agreement and the Ancillary Documents in any
Proceeding initiated to enforce the terms hereof, including the issuance of an
Order or Orders to prevent or restrain any actual or threatened breach of this
Agreement or the Ancillary Documents, in each case without any requirement to
post any bond or provide other security. The remedy of specific performance will
be in addition to any other remedy or remedies to which the other parties may be
entitled at law or in equity.

 

12.11     Entire Agreement. This Agreement, including the appendices, addenda,
annexes, exhibits and schedules hereto, including the Seller Disclosure
Schedules, the Confidentiality Agreement, and the Ancillary Documents embody the
entire agreement and understanding of the parties in respect of the subject
matter contained herein and supersede all prior agreements, letters of intent
and the understandings between the parties with respect to the subject matter of
this Agreement, other than the Confidentiality Agreement. The Confidentiality
Agreement will terminate at the Closing and cease to be of any further force or
effect in accordance with its terms, but will survive any termination of this
Agreement pursuant to Section 11. No discussions regarding, or exchange of
drafts or comments in connection with this Agreement or the transactions
contemplated herein will constitute an agreement among the parties hereto or
modify the terms of this Agreement. Any agreement among the parties will exist
only when the parties have fully executed and delivered this Agreement or any
amendments hereto adopted as provided herein.

 

12.12     Severability. If any term or other provision of this Agreement or any
of the Ancillary Documents is held to be invalid, illegal or incapable of being
enforced by any rule of Law or public policy, all other terms and provisions of
this Agreement will nevertheless remain in full force and effect so long as the
economics or legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon determination that
any term or other provision hereof is invalid, illegal or incapable of being
enforced, the parties hereto will negotiate in good faith to modify this
Agreement or such Ancillary Document, as applicable, so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.

 

12.13     Waiver of Jury Trial. THE PARTIES WAIVE ANY RIGHT THEY MAY HAVE TO A
JURY TRIAL OF ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE ANCILLARY DOCUMENTS, OR THE MAKING, PERFORMANCE OR
INTERPRETATION THEREOF, INCLUDING FRAUDULENT INDUCEMENT THEREOF.

 

 61 

 

 

12.14     Guaranty. Parent acknowledges that through its ownership of Seller, it
will benefit from the sale by Seller of the Purchased Assets and that Buyer
would not enter into this Agreement but for the guaranty granted by Parent
pursuant to this Section 12.14. Therefore, in consideration of Buyer entering
into this Agreement and undertaking its obligations hereunder, including
agreeing to pay to Seller the Purchase Price on the terms and subject to the
conditions set forth herein, which consideration is hereby acknowledged, Parent
hereby absolutely, unconditionally and irrevocably guarantees to Buyer the full
and timely performance by Seller of each of its obligations, covenants and
undertakings under this Agreement and each Ancillary Document to which Seller is
a party, including all of Seller’s obligations under Article 10 in accordance
with the provisions of such Article and subject to any applicable limitations on
Seller’s obligations set forth in such Article. Parent further agrees to pay to
Buyer all damages, reasonable costs and expenses it may incur and be entitled to
reimbursement or indemnification for hereunder as a result of the
non-performance of Parent of its obligations under this Section 12.14.

 

[Remainder of page intentionally left blank. Signature page follows.]

 

 62 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement
to be duly executed as of the Agreement Date.

 

BUYER:   SELLER:       TRUCKEE GAMING, LLC   NEVADA GOLD & CASINOS LV, LLC      
    By:          By:                  Name:     Name:             Title:    
Title:                   PARENT:               NEVADA GOLD & CASINOS, INC.      
          By:                   Name:                   Title:  

 

[Signature page to Asset Purchase Agreement]

 

 

 

 

EXHIBIT A

 

(Estimated Purchase Price)

 

Fourteen Million Six Hundred Thousand Dollars ($14,600,000), plus or minus (as
applicable) (i) the Acquired Cash Adjustment, and (ii) the Working Capital
Adjustment (such amount, as adjusted the “Purchase Price”)

 

Base Price  $14,600,000.00         Plus (Minus)      Acquired Cash Adjustment: 
$__________  Working Capital Adjustment:  $__________         Estimated Purchase
Price:  $__________ 

 

[Exhibit A to Asset Purchase Agreement]

 

 

 

 

EXHIBIT B

 

(Escrow Agreement)

 

Attached.

 

[Exhibit B to Asset Purchase Agreement]

 

 

 

 

EXHIBIT C

 

(Bill of Sale and Assignment and Assumption Agreement)

 

Attached.

 

[Exhibit C to Asset Purchase Agreement]

 

 

 

 

EXHIBIT D

 

(Transition Services Agreement)

 

Attached.

 

[Exhibit D to Asset Purchase Agreement]

 

 

 

 

EXHIBIT E

 

(Deed)

 

Attached.

 

[Exhibit E to Asset Purchase Agreement]

 

 

 

 

EXHIBIT F

 

(Example Acquired Cash Calculation)

 

      2018     CLUB FORTUNE  March  10101  Cash - Slot/Cage Inventory   955,119 
10111  Cash - Table Inventory Clearing   56,101  10121  Cash - Hopper Inventory
Token   -  10131  Cash - Token Contra   -  10141  Cash - Chip Contra   (198,100)
10199  Petty Cash   -  10151  Cash - TITO Ticket Contra   -  10161  Cash - Hotel
Front Desk   -  10162  Cash - Hotel F&B   -  10102  Cash - VGM Cash In Machines 
 -  10110  F&B Cash Inventory   -  10103  Cash Inventory Over/Short   -  10155 
Cash - ATM   164,500  10156  Cash - ATM II   40,000  10104  Cash - Vault/Safe
Inventory   -  10112  Cash - Chips in Cage Inventory   125,489  10157  Cash -
PSJ   -  10142  Chip Float   16,510  10105  Cash - Poker Podium   -  10158  Slot
Drop   509,871  10231  Petty Cash   -  10232  WF-Operating   -  10237  Reserve 
 -  10238  WF-Payroll   -  10243  Bank Account - Forty-three   -  10244  Bank
Account - Forty-four   -  10245  Bank Account - Forty-five   -  10246  Bank
Account - Forty-six   -  10247  MOOB-Reserve   -  10248  Bank Account - MOOB
Payroll   -  10249  CFC Werstern Money CLRG   -  10250  CFC Cash Advance CLRG 
 -  10233  Progressive   -  10234  PSJ   -     Restricted Cash   -  10301 
Marketable Securities   -  10350  Escrow Account   -     Total Cash   1,684,446 
          26010  Unredeemed Chip Liability   (16,510)    Total Transaction Cash 
 1,667,936     Minimum Cash Balance   1,600,000     Acquired Cash Adjustment 
 67,936 

 

[Exhibit F to Asset Purchase Agreement]

 

 

 

 

EXHIBIT G

 

(Example EBITDA Calculation)

 

         Consolidated  (US$)  LTM March 2018                 Calculation of
EBITDA      A     Net Income  $372,960                     Plus:      B  96110 
Interest Expense - Third Party  $-  C  89001  Depreciation   1,274,578  D 
89002  Amortization of Intangible Assets (1)   153,810  E  97200  State Income
Tax   -  F  97300  Local Income Tax   -  (A+B+C+D+E+F) = G     Subtotal 
$1,801,347               H  95700  (Gain)/Loss on Sale of Assets  $8,133  I 
95500  Write Down/Impairment of Asset      (H+I) = J     Total Extraordinary
Expenses  $8,133               (G+J) = K     EBITDA  $1,809,481 

 

[Exhibit G to Asset Purchase Agreement]

 

 

 

 

EXHIBIT H

 

(Example Working Capital Calculation)

 

(US$)  March 31, 2018   Adjustments   Total   Notes                     Plus: 
                    Accounts Receivable:                   10401  AR - ATM 
$110,245   $(110,245)  $-   To be excluded if retained / cleared by Seller
10411  AR - Employees   (156)   156    -   To be excluded if retained / cleared
by Seller 10431  AR - Trade   2,000    (2,000)   -   To be excluded if retained
/ cleared by Seller 10441  AR - NSF, CMS Collections   464    (464)   -   To be
excluded if retained / cleared by Seller 10451  AR - Credit Cards   7,230  
 (7,230)   -   To be excluded if retained / cleared by Seller Total Accounts
Receivable  $119,783   $(119,783)  $-                            Inventory: 
                 10701  Inventory - Gift Shop  $33,500        $33,500     10711 
Inventory - Uniforms   -        -     10721  Inventory - Food   34,000       
 34,000     10731  Inventory - Liquor   22,000         22,000     Total
Inventory  $89,500   $-   $89,500                            Prepaid Expenses:
                 10801  Prepaid Expense  $90,987        $90,987     10805 
Prepaid Taxes and Insurance   256,896   $(256,896)   -   To be excluded if
retained / cleared by Seller 10802  Prepaid Deposit   -        -     10803 
Prepaid Dues, Memberships, Sub   -        -     10804  Prepaid Licenses & Fees 
 79,663    (72,559)   7,104   All county, state, and gaming licensing fees
removed Total Prepaid Expenses  $427,546   $(329,455)  $98,091                 
       Total Current Assets  $636,828   $(449,238)  $187,591                    
       Minus:                      Accounts Payable:                   20001 
Accounts Payable - Trade  $(108,983)  $108,983   $-   To be excluded if retained
/ cleared by Seller 20005  Accrued Registered Invoices   -        -     20010 
A/P - Manual Accrual   (9,318)   9,318    -   To be excluded if retained /
cleared by Seller 20012  A/P - CC Accrual   (21,307)   21,307    -   To be
excluded if retained / cleared by Seller Total Accounts Payable  $(139,608) 
$139,608   $-                            Accrued Liabilities:                  
22001  Accrued Payroll  $(145,044)  $145,044   $-   To be excluded if retained
by Seller 22002  Accrued Bonus   -        -     22003  Accrued Vacation 
 (30,901)        (30,901)    22005  Accrued FICA Withheld   (13,305)   13,305  
 -   To be excluded if retained / cleared by Seller 22006  Accrued FICA Employer
Share   -    -    -   To be excluded if retained / cleared by Seller 22007 
Accrued Fed Unemployment Tax   (693)   693    -   To be excluded if retained /
cleared by Seller 22009  Accrued Unemployment Tax   (3,802)   3,802    -   To be
excluded if retained / cleared by Seller 22010  Accrued - 401k Withholding   -  
 -    -   To be excluded if retained / cleared by Seller 22016  Accrued - Health
& Life Ins.   -    -    -   To be excluded if retained / cleared by Seller
23001  Accrued State Sales Tax   (8,917)   8,917    -   To be excluded if
retained / cleared by Seller 23002  Accrued Use Tax   (3,529)   3,529    -   To
be excluded if retained / cleared by Seller 23003  W-2G Withholding   -    -  
 -   To be excluded if retained / cleared by Seller 23007  Accrued Tax-
Excise\MBT   (16,124)   16,124    -   To be excluded if retained / cleared by
Seller 23501  Accrued Gaming Tax   (72,899)   72,899    -   To be excluded if
retained / cleared by Seller Total Accrued Liabilities  $(295,214)  $264,313  
$(30,901)                           Player Club & Progressive Liabilities:      
            25010  Accrued Progressive/PSJ Liability  $(59,171)       $(59,171) 
  25510  Accrued Slot Club Points   (224,876)        (224,876)    23100  Jackpot
Liability   (5,198)        (5,198)    Total Player Club & Progressive
Liabilities  $(284,047)  $-   $(284,047)                           Other
Liabilities:                   26010  Unredeemed Chip Liability   (16,510) 
 16,510    -   To be excluded if included in Acquired Cash Total Other
Liabilities  $(16,510)  $16,510   $-                         Total Current
Liabilities  $(735,379)  $420,431   $(314,948)                        Working
Capital Adjustment  $(98,551)  $(28,807)  $(127,358)   

 

[Exhibit H to Asset Purchase Agreement]