EXHIBIT 10.9


 


 


MEMBERSHIP INTERESTS PURCHASE AGREEMENT


 


By and Between


 


GAMECO HOLDINGS, INC., as Seller,


 


AND


 


JACOBS ENTERTAINMENT, INC., as Buyer,


 


May 16, 2006


 

















 


MEMBERSHIP INTERESTS PURCHASE AGREEMENT


 


THIS MEMBERSHIP INTERESTS PURCHASE AGREEMENT
(this “Agreement”), dated May 16, 2006 (“Agreement Date”), to be effective only
upon the closing of the Refinancing (as hereinafter defined), is entered into
by and between GAMECO HOLDINGS, INC.,
a Delaware corporation (“Seller”), and JACOBS
ENTERTAINMENT, INC., a
Delaware corporation (“Buyer”). 
Capitalized terms not defined in context are defined in Section 12.15.


 


RECITALS


 


A.            Seller is the sole
member of each the following Louisiana limited liability companies: (i) JALOU DIAMOND L.L.C. (“Diamond”); (ii) JALOU MAGIC L.L.C. (“Magic”); and (iii) JALOU OF ST. MARTIN L.L.C. (“Martin”) (Diamond, Magic and
Martin are collectively, the “Truck Stops” and sometimes individually, each a “Truck
Stop”);


 


B.            Diamond operates a
truck stop, convenience store, restaurant, fueling operation and video draw
poker gaming parlor located at 1144 Evangeline Thruway, Broussard, Louisiana
70518;


 


C.            Magic operates a truck
stop, convenience store, restaurant, fueling operation and video draw poker
gaming parlor located at  2334 Highway
109 South, Vinton, Louisiana 70668;


 


D.            Martin operates a
truck stop, convenience store, restaurant, fueling operation and video draw
poker gaming parlor located at 1050 Baker Hughes Drive, Broussard, Louisiana
70518;


 


E.             Seller desires to
sell to Buyer, and Buyer desires to purchase from Seller, upon the terms and
subject to the conditions of this Agreement, all of the membership interests of
each of the Truck Stops (collectively, the “Membership Interests”); and


 


F.             Buyer is anticipating
refinancing its 11 7/8%
Senior Secured Notes due 2009, in the aggregate principal amount, as of the
Agreement Date, of $148,000,000 (the “Refinancing”) and desires to use a
portion of the proceeds thereof to satisfy its obligations under this
Agreement.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements, terms, conditions, covenants, representations and warranties
hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:


 


Article 1.

PURCHASE AND SALE OF MEMBERSHIP INTERESTS


 


1.1.          Purchase and Sale of Membership Interests.  At the Closing and effective as of the
Closing Date, (a) Seller will sell, transfer and assign, free and clear of all
Liens or Claims


 


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whatsoever, all of the
Membership Interests to Buyer or its designee or nominee, and (b) Buyer will
purchase the Membership Interests from Seller and deliver to Seller the
Purchase Price (as defined in Section 1.2).


 


1.2.          Purchase
Price.


 


1.2.1.       The purchase price for the Membership Interests (the “Purchase
Price”) shall be Fourteen Million Three
Hundred Eighty Thousand and no/100 Dollars ($14,380,000.00), to be
allocated as follows:


 


1.2.1.1.                    Four
Million Nine Hundred Twenty Thousand and no/100 Dollars ($4,920,000.00) shall
allocated for the purchase of the Membership Interests of Diamond;


 


1.2.1.2.                    Four
Million Eight Hundred Twenty Thousand and no/100 Dollars ($4,820,000.00) shall
allocated for the purchase of the Membership Interests of Magic; and


 


1.2.1.3.                    Four
Million Six Hundred Forty Thousand and no/100 Dollars ($4,640,000.00) shall
allocated for the purchase of the Membership Interests of Martin.


 


1.2.2.       The Purchase Price shall be paid to the Seller via wire
transfer of immediately available funds on the Closing Date.


 


1.3.          Transfer
Taxes. 
Buyer and Seller shall share equally any and all transfer or similar
Taxes (but excluding all withholding taxes computed on the basis of net income)
– (“Transfer Taxes”) imposed upon either party hereto as a result of the
transactions contemplated hereby.  To the
extent any exemptions from such Transfer Taxes are available, Buyer and Seller
shall cooperate to prepare any certificates or other documents necessary to
claim such exemptions.


 


Article 2.

CLOSING AND DELIVERIES


 


2.1.          General.  The closing of the transactions contemplated
herein (the “Closing”) shall take place promptly following the receipt by the Buyer
of the proceeds of the Refinancing, at the offices of Hahn Loeser & Parks,
LLP, 3300 BP Tower, 200 Public Square, Cleveland, Ohio 44114-2301, or such
other time, date and place as the parties may agree.  The effective time of closing shall be 12:01
a.m. (the “Effective Time”) on the date of the Closing (the “Closing Date”).


 


2.2.          Seller’s
Closing Deliveries.  On the Closing Date,
Seller shall deliver, or caused to be delivered, to Buyer the following items:


 


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2.2.1.       Membership Interests.  An instrument of
assignment, in form and substance reasonably acceptable to the Buyer and Buyer’s
legal counsel, conveying the Membership Interests to Buyer, together with the
certificates of membership interests issued by each of the Truck Stops to the
Seller;


 


2.2.2.       Receipt.  A receipt evidencing receipt by Seller of the
Purchase Price (the “Receipt”);


 


2.2.3.       Limited Liability Company Records.  All of the original limited liability company
records, including company record books, etc., for each of the Truck Stops;


 


2.2.4.       Officer’s Certificate.  A certificate of an
officer of Seller to the effect that the conditions set forth in Sections 8.1
and 8.2 have been satisfied;


 


2.2.5.       Good Standing Certificates.  A good
standing/full force and effect certificate, as applicable, dated not more than
thirty (30) days prior to the Closing Date, for the Seller and each of the
Truck Stops;


 


2.2.6.       Secretary’s Incumbency Certificate.  A certificate of the Secretary for the Seller
certifying (a) the current officers of the Seller and each of the Truck Stops,
(b) a current copy of the Seller’s Certificate of Incorporation and the
Articles of Organization for each of the Truck Stops, (c) a current copy of the
Seller’s By-laws and the Operating Agreement of each of the Truck Stops, and
(d) a copy of the Seller’s resolution authorizing the sale contemplated by this
Agreement; and


 


2.2.7.       Updates to Schedules.  An update to each
of the Schedules attached to this Agreement identifying any changes between the
Agreement Date and the Closing Date.


 


2.3.          Buyer’s
Closing Deliveries.  On the Closing Date,
Buyer shall deliver, or cause to be delivered, to Seller the following items:


 


2.3.1.       Wire Transfer.  The Purchase Price
paid via wire transfer in immediately available funds to an account specified
by Seller prior to the Closing;


 


2.3.2.       Officer’s Certificate.  A certificate of an
officer of Buyer to the effect that the conditions set forth in Sections 9.1
and 9.2 have been satisfied;


 


2.3.3.       Good Standing Certificate.  A good standing
certificate, dated not more than thirty (30) days prior to the Closing Date,
for the Buyer;


 


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2.3.4.       Secretary’s Incumbency Certificate.  A certificate of the Secretary for the Buyer
certifying (a) the current officers of the Buyer, (b) a copy of the Buyer’s
Certificate of Incorporation and By-laws and (c) a copy of the Buyer’s
resolution authorizing the sale contemplated by this Agreement.


 


Article 3.

DUE DILIGENCE


 


3.1.          Due Diligence Period. Beginning on the
Agreement Date and continuing thereafter until the Closing Date (“Due Diligence
Period”), Buyer shall have the right to perform the following due diligence
pursuant to the terms and conditions hereof:


 


3.2.          General Testing and Inspections.  Buyer shall have the right, during the Due
Diligence Period, to conduct such engineering, environmental, general business
and feasibility studies, audits, test, reviews and/or surveys of any or all of
the Truck Stops and their respective assets, liabilities, operations (including
gaming operations and records), financial performance and affairs, as the Buyer
deems necessary, including soil tests, borings, drainage tests and similar
tests on any land or improvements owned or leased by any of the Truck Stops,
and audits and reviews of any of the financial and business records,
operations, documents and instruments of the Seller pertaining to any of the
Truck Stops or their operations.  Such
studies shall be conducted by the Buyer and its agents at the Buyer’s sole cost
and expense.  Subject to reasonable
advance notice, the Seller and each of the Truck Stops agrees to allow Buyer
and its agents access to all assets, records, documents and instruments of the
Truck Stops to conduct such studies and audits, provided such access shall not
unreasonably interfere with the activities of the Seller or any of the Truck
Stops.  Buyer shall, and does hereby,
save, defend, indemnify and hold the Seller and each Truck Stop harmless from
and against all claims, lawsuits, judgments, losses, liabilities or expenses of
any kind or nature which may be asserted against or incurred by the Seller or
any of the Truck Stops as the result of the Buyer’s or its agents’ actions and
activities conducted pursuant to this Section 3.2. The Buyer shall keep
the results of all due diligence activities confidential unless specifically
directed or required to disclose the same under any federal, state or local
law, rule or regulation or upon the order of any court or Governmental Body.  Notwithstanding any other provisions of this
Agreement or any documents contemplated hereby to the contrary, the obligation
of the Buyer to defend, indemnify and hold harmless the Seller and each of the
Truck Stops under this Section 3.2 shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby or the termination of this Agreement.


 


3.3.          Title
Insurance.  Prior to the
Closing, Buyer may cause to have delivered to Buyer a commitment from a title
insurance company reasonably acceptable to Buyer to issue as of the Closing
Date for any real property owned or leased by any of the Truck Stops, in the
customary form prescribed for use in the State of Louisiana, an Owner’s Policy
of Title Insurance (collectively, the “Title Policy”).  Seller shall deliver any information as
reasonably may be required by Buyer’s title insurance company under the
requirements section of the title insurance commitment or otherwise in
connection with the issuance of Buyer’s title insurance policy.  Seller shall provide an affidavit of title or
such other information as Buyer’s title insurance company may reasonably
require in order for the title insurance company to delete the standard


 


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exceptions and to insure over
the “gap” (i.e., the period of time between the effective date of the title
insurance company’s last checkdown of title and the Closing Date) and to cause
the title insurance company to delete all standard exceptions from the final
title insurance policy.


 


3.4.          Financial Statements.  Prior to the Closing Date, Seller has
delivered, or caused to be delivered, to the Buyer an audited Statement of
Income and Balance Sheet for each Truck Stop for the full calendar year ending
on December 31, 2005 (collectively, the “Financial Statements”), in such detail
as may be reasonably requested by the Buyer.


 


Article 4.

SELLER’S REPRESENTATIONS AND WARRANTIES


 


Seller
represents and warrants to Buyer as follows:


 


4.1.          Organization
and Authorization.


 


4.1.1.       Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.


 


4.1.2.       Each of the Truck Stops is a limited liability company duly
organized, validly existing and in full force and effect under the laws of the
State of Louisiana.  None of the Truck
Stops has any subsidiaries.


 


4.2.          Validity
of Agreements. 
Seller has the power and authority to enter into this Agreement and all
other agreements and instruments executed and delivered or to be executed and
delivered under this Agreement (the “Transaction Documents”) to which Seller is
a party.  The execution, delivery and
performance by Seller of this Agreement, the Transaction Documents and the
other documents and certificates contemplated therein have been duly authorized
by all necessary corporate action on the part of Seller.  This Agreement is, and when executed and
delivered at the Closing, the Transaction Documents to which Seller is a party
and all other documents and certificates contemplated therein will be, the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms.


 


4.3.          Non-Contravention.  The execution and delivery by Seller of this
Agreement, the Transaction Documents to which Seller is a party and all other
documents and certificates contemplated therein and the consummation and
performance by Seller of the transactions contemplated by this Agreement and
the Transaction Documents will not (i) violate any provision of the Certificate
of Incorporation or the By-laws of Seller or Articles of Organization or
Operating Agreements of any of the Truck Stops, (ii) violate or result in any
default under, or the acceleration of (whether by the giving of notice or the
passage of time or both), any obligation under any contract, note, bond,
mortgage, indenture, or lease to which Seller or any of the Truck Stops is a
party or by which Seller or any Truck Stop is bound that would, in any such
event, be material, or (iii) violate any constitutional provision, statue,
rule, law, regulation, award, order, ordinance, judgment, decree, citation,
policy, standard, interpretation, writ or injunction of any Governmental Body
(collectively, “Law”).


 


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4.4.          Capitalization.  The Membership Interests represent the only
authorized, issued and outstanding equity interests of each Truck Stop.  The Membership Interests are duly and validly
issued and outstanding and are fully paid and nonassessable.  The Membership Interests have not been issued
in violation of, and are not subject to, and there are no, outstanding options
or other conversion or exchange rights relating to the Membership
Interests.  There are no authorized or
outstanding options under which the Seller or any of the Truck Stops may be
obligated to issue or sell any equity interests of any Truck Stop.  Except as identified on Schedule 4.4,
there are no agreements, commitments, contacts or rights of first refusal
relating to the issuance, sale or transfer of any equity interest of or profit
participation in any of the Truck Stops. 
At the Closing, Buyer shall receive the Membership Interests free and
clear of all Liens and Claims whatsoever. 
As of the Closing, no Truck Stop shall be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
equity interests (including Membership Interests).  Seller has full legal and beneficial
ownership of the Membership Interests. 
The Membership Interests have not been registered under any securities laws
of any Governmental Body


 


4.5.          Title to Truck Stop Property.  As of the Agreement Date, except as
disclosed  on Schedule 4.5, each
Truck Stop has good and valid title to, or a valid and enforceable leasehold
interest in, all of its properties and assets, tangible or intangible, as
reflected in each Truck Stop’s Financial Statements, and the schedules attached
thereto, and the same are free and clear of all Liens and Claims except (a)
Liens to be released at or prior to Closing, (b) such Liens that are disclosed
by the Title Policy (including real property taxes that are a lien but not yet
due and owing) for each Truck Stop and the records of the Secretary of State of
Louisiana and (c) those Liens and Claims identified on Schedule 4.5.


 


4.6.          Tax
Matters.  Except as set
forth on Schedule 4.6, Seller and each Truck Stop, as applicable, has
timely filed or will timely file, in the manner provided by Law, all Tax
Returns for periods prior to and including the Closing Date which are required
to be filed with respect of the income or operations of Seller.  All such Tax Returns are complete and correct
in all material respects and have been prepared in material compliance with all
applicable laws and regulations. Seller has paid or will pay all Taxes owed for
the taxable periods covered by such Tax Returns (whether or not shown thereon)
in the manner provided by Law.  None of
the assets of any Truck Stop is subject to any Liens for any Taxes, and to the
Seller’s actual knowledge there is no basis upon which such a Lien could be
asserted.


 


4.7.          Environmental
Liability.  Except
as set forth on Schedule 4.7 and the documents referred to therein, to
the Seller’s actual knowledge, there has been no release, threatened release,
spill, leak, discharge or emission of any Hazardous Materials to the air,
surface water, groundwater or soil at any of the Truck Stops requiring
corrective action under any applicable Environmental Laws.  To the Seller’s actual knowledge, there has
been no material release, threatened release, spill, leak, discharge or
emission of any Hazardous Materials to the air, surface water, groundwater or
soil at any of the Truck Stops that is a violation of any applicable
Environmental Laws.  “Hazardous Materials”
means any hazardous or toxic substance or waste or any contaminant or pollutant
regulated or otherwise creating liability under any Environmental Laws,
including, without limitation, “hazardous substances” as defined by the
Comprehensive Environmental Response Compensation and Liability Act, as
amended, “toxic substance” as defined by the Toxic Substance Control Act, as
amended, “hazardous wastes” as


 


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defined by the Resource
Conservation and Recovery Act, as amended, “hazardous materials” as defined by
the Hazardous Materials Transportation Act, as amended, thermal discharges,
radioactive substances, PCBs, natural gas, petroleum products or byproducts and
crude oil.  “Environmental Laws” means
all Laws relating to pollution, worker health and worker safety, or the
environment, and all other Laws relating to emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment or otherwise
relating to the generation, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. 
Each of the Truck Stops is and has been in material compliance with all
Environmental Laws, provided any noncompliance has not had and is not likely to
have a Material Adverse Effect on such respective Truck Stop or its operations.  Buyer acknowledges that each of the Truck
Stops contains a fueling operation for the sale and dispersal to the general
public of gas and diesel fuels.  Except
as set forth on Schedule 4.7 and the documents referred to therein, neither
the Seller nor any Truck Stop has received any written notice, report or other
information regarding any actual or alleged violation of Environmental Laws
relating to any Truck Stop.


 


4.8.          Seller Inter-company Loans.  Notwithstanding the contents of the Financial
Statements or any other language to contrary contained in this Agreement, any
loans, notes payable or other debt obligations between the Seller and any of
the Truck Stops or between the Truck Stops and any other subsidiaries of the
Seller (collectively, the “Seller Inter-company Loans”) shall be retired by the
Seller from the proceeds of the Purchase Price and shall not be a part of the
transfer of the Membership Interests at Closing.  In no event shall the Buyer, nor any of its
subsidiaries, including, but not limited to, the Truck Stops following the
Closing, have any liability for any of the Seller Inter-company Loans.


 


4.9.          Consents, etc.  Except as identified on Schedule 4.9
or the matters described in Section 6, any registration, declaration or filing with,
or consent, approval, license, permit or other authorization or order by, any
governmental or regulatory authority, domestic or foreign, that is required in
connection with the valid execution, delivery, acceptance and performance by
the Seller and each of the Truck Stops under this Agreement or the consummation
by the Seller and each of the Truck Stops of any of the transactions
contemplated hereby has been or will be completed, made or obtained on or
before the Closing Date.


 


4.10.        Litigation, etc.  Except as set forth on Schedule 4.10,
to the Seller’s actual knowledge there are no Claims against the Seller or any
of the Truck Stops or any of their assets, or pending or threatened by the
Seller or any of the Truck Stops against any third party, at law or in equity,
or before or by any Governmental Body. 
To the Seller’s actual knowledge, no Truck Stop is subject to any
judgment, order or decree of any court or other Governmental Body (excepting
various licensing necessary for its customary and on-going operations).


 


4.11.        Brokers’
Fees.  No
investment banker, broker, finder or other intermediary has been retained by or
is authorized to act on behalf of Seller who might be entitled to any fee or
commission from Buyer or the Company upon consummation of the transactions
contemplated by this Agreement.


 


4.12.        No Adverse Change.  From the Agreement Date to the Closing Date,
there shall be no adverse change in the operating results, assets, liabilities,
operations, prospects, employee


 


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relations or customer or
supplier relations of any of the Truck Stops which has had or could reasonably
be expected to have a Material Adverse Effect.


 


4.13.        Conduct
Pending Closing. 
From the Agreement Date until the Closing Date, Seller shall: (i) use
commercially reasonable efforts to cause each of the Truck Stops to be operated
and to carry on its respective businesses in the ordinary course consistent
with its past practice; and (ii) not permit or cause the distribution of any
assets from any of the Truck Stops, including, but not limited to, cash and
other current assets, excepting only
those distributions and payments made in the ordinary course of each Truck Stop’s
business.


 


Article 5.

BUYER’S REPRESENTATIONS AND WARRANTIES


 


Buyer hereby
represents and warrants to Seller as follows:


 


5.1.          Organization
and Power. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.


 


5.2.          Authorization
and Validity of Agreements.  The execution, delivery
and performance by Buyer of this Agreement, the Transaction Documents and the
other documents and certificates contemplated therein has been duly authorized
by all necessary corporate action on the part of Buyer.  Buyer has the power and authority to enter
into this Agreement, the Transaction Documents and the other documents and
certificates contemplated to be executed herein and to consummate the
transactions contemplated thereby.  This
Agreement and the Transaction Documents and the other documents and
certificates contemplated herein constitute the legal, valid and binding
obligations of Buyer, enforceable against it in accordance with their
respective terms.


 


5.3.          Non-Contravention.  The execution and delivery by Buyer of this
Agreement, the Transaction Documents and the other documents and certificates
contemplated therein and the consummation and performance by Buyer of the
transactions contemplated herein will not (i) violate any provision of the Certificate
of Incorporation or By-laws of Buyer, (ii) violate, or be in conflict with any
provision of, or constitute a default under, or result in the termination of,
or accelerate the performance required by, or cause the acceleration of the
maturity of any liability or other obligation to which Buyer is a party, or
(iii) violate any Law.


 


5.4.          Brokers’
Fees.  No
investment banker, broker, finder or other intermediary has been retained by or
is authorized to act on behalf of Buyer who might be entitled to any fee or
commission from Seller upon consummation of the transactions contemplated by
this Agreement.


 


5.5.          Non-Registration. The Buyer understands
and agrees that the Membership Interests are not registered under the
Securities Act of 1933, as amended (the “Securities Act”), nor the securities
laws of any state, and, accordingly, the Membership Interests may not be
offered, sold, pledged, hypothecated or otherwise transferred or disposed of in
the absence of registration or the availability of an exemption from registration
under the Securities Act and any applicable state securities laws.


 


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5.6.          Devices.  The Buyer acknowledges that all Devices
operated at any of the Truck Stops are owned and operated therein by a third-party,
licensed device owner, to-wit; Southern Trading Corporation, a Louisiana
corporation.  All such Devices are
operated pursuant to Device Placement Agreements between each of the Truck
Stops and Southern Trading Corporation, copies of which have been provided to
the Buyer.


 


5.7.          Licensure.  The Buyer acknowledges that the activities of
the video draw poker gaming parlors and the alcohol, tobacco and lottery sales,
as applicable, conducted at each of the Truck Stops are subject to licensing
and regulation by various federal, state and local Governmental Bodies.  The Buyer further acknowledges that
appropriate notifications to the Louisiana State gaming authorities of the
consummation of the transactions contemplated by this Agreement will be
required promptly following the Closing hereunder.


 


Article 6.

SURVIVAL


 


The
representations and warranties contained in Sections 4.1 through 4.8 and
Sections 5.1 through 5.7, inclusive, shall survive the execution and
delivery of this Agreement and consummation of the transactions provided for in
this Agreement without limitation as to time. 
The representations and warranties contained in Sections 4.9 through 4.14
shall survive the Closing hereunder and shall continue in effect for a period
of one (1) year from and after the Closing Date.


 


Article 7.

MUTUAL COVENANTS AND AGREEMENTS


 


7.1.          Expenses.  Except as otherwise specifically provided in
this Agreement and the Transaction Documents, each party shall bear its own
expenses in connection with and in performance of this Agreement and the
Transaction Documents.  Buyer shall be
solely responsible for all of its costs incurred in its due diligence
activities, including, but not limited to, the costs of any surveys,
environmental site assessment studies, title policies and title commitments and
any and all costs, expenses or fees relating to its financing of the
transactions contemplated in this Agreement.


 


7.2.          Cooperation.  Each party shall cause every Person that is a
shareholder, director, officer or employee of any party hereto or any of the
Truck Stops to use all commercially reasonable efforts to assist in the
satisfaction of such party’s obligations hereunder and in the consummation of
the transactions contemplated herein.


 


Article 8.

CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE


 


The obligation
of Buyer to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions precedent, any one or more of which may be waived by Buyer
in writing:


 


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8.1.          Compliance
with Covenants. 
Seller shall have performed and complied in all material respects with
all covenants, obligations and agreements required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.


 


8.2.          Representation
and Warranties. 
The representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects on the Closing Date as if
made on such date, except for any changes permitted by the terms of this
Agreement.


 


8.3.          Actions
of Seller at Closing.  At the Closing and unless otherwise waived by
Buyer, Seller shall have delivered to Buyer those deliveries set forth in Section
2.2.


 


8.4.          Financing.  Buyer
shall have obtained the financing necessary to consummate the transaction.


 


8.5.          No Material
Adverse Effect.  From
and after the Agreement Date, there shall not have been any event or change in
the Seller or any of the Truck Stops which has had a Material Adverse Effect.


 


8.6.          Financial
Statements.  Excepting only normal recurring changes related to the
usual operations of the Truck Stops, none of the Truck Stops shall have
suffered or incurred a material change in its Financial Statements between
December 31, 2005 and the Closing Date.


 


Article 9.

CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE


 


The obligation
of Seller to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions precedent, any one or more of which may be waived by
Seller in writing:


 


9.1.          Compliance
with Covenants. 
Buyer shall have performed and complied in all material respects with
all covenants, obligations and agreements required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.


 


9.2.          Representation
and Warranties. 
The representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects on the Closing Date as if
made on such date, except for any changes expressly permitted by the terms of
this Agreement.


 


9.3.          Actions
of Buyer at Closing.  At the Closing and unless otherwise waived by
Seller, Buyer shall have delivered to Seller those deliveries set forth in Section
2.3.


 


Article 10.

TERMINATION OF AGREEMENT


 


10.1.        Termination
of Agreement. 
This Agreement may be terminated at any time prior to the Closing Date
only as follows:


 


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10.1.1.     By Mutual Agreement.  If Seller and Buyer
both agree to terminate the Agreement.


 


10.1.2.     By Buyer.  Buyer may terminate this Agreement at anytime
prior to the Closing for any reason or no reason in the sole discretion of the
Buyer.


 


10.1.3.     By Seller.  Seller may terminate this Agreement by giving
written notice to Buyer if Buyer has materially breached any of its covenants contained in this
Agreement or if there is any inaccuracy in any of the representations or
warranties made by Buyer, if Seller has previously notified Buyer in writing of
such breach or inaccuracy and the breach or inaccuracy has continued without
cure for a period of fifteen (15) days after such notice.


 


10.2.        Effect
of Termination. 
In the event of a termination (prior to the consummation of the Closing)
by either party, this Agreement shall thereafter be null and void and of no
further force or effect and each party shall be solely responsible for any and
all costs or expenses it has incurred hereunder.


 


Article 11.

INDEMNIFICATION


 


11.1.        Seller’s
Agreement to Indemnify.


 


11.1.1.     Buyer Claims.  Subject to the
terms and conditions of this Article 11, Seller shall indemnify, defend
and hold harmless Buyer or any of its officers, directors, shareholders,
employees or agents (“Buyer Indemnitees”) from and against any and all Claims,
causes of actions, losses, damages, deficiencies, Taxes, liabilities,
obligations, reimbursements, costs and expenses of any kind or nature,
penalties, fines, expenses (including reasonable attorneys’ and experts’ fees
and expenses) and all amounts paid in investigation, defense or settlement of
any of the foregoing (collectively, “Losses”) suffered or incurred by any of
them arising from, relating to or otherwise in respect of (a) any inaccuracy in
any representations or warranties contained in Article 4 of this
Agreement, (b) any breach or non-fulfillment by Seller of any of its covenants
contained in this Agreement, the Transaction Documents or any agreement
delivered pursuant to this Agreement, or (c) any Losses arising from or related
to the Seller’s operation of the Truck Stops prior to the Closing Date
(collectively, “Buyer Claims”).


 


11.1.2.     Cap.  No Buyer Claims shall be asserted pursuant to
Section 11.1.1 until the aggregate Losses suffered or incurred by Buyer
are equal to or greater than $100,000 (the “Threshold Amount”), in which event
the Buyer Claims may be asserted only to the extent of the Losses in


 


11

















 


excess of such amount, excluding individual
Losses that are less than the Threshold Amount. 
With respect to Buyer Claims asserted pursuant to Section 11.1.1,
no indemnification shall be made in excess of the Purchase Price (the “Cap”).


 


11.2.        Buyer’s
Agreement to Indemnify.


 


11.2.1.     Seller’s Claims.  Subject to the
terms and conditions of this Article 11, Buyer agrees to indemnify,
defend and hold harmless Seller and any of its officers, directors,
shareholders, employees or agents (“Seller Indemnitees”) from and against all
Losses suffered or incurred by any of them arising from, relating to or
otherwise in respect of (i) any inaccuracy in any representations or warranties
contained in Article 5 of this Agreement, (ii) any breach or
non-fulfillment by Buyer of any of its covenants contained in this Agreement,
the Transaction Documents or any agreement delivered pursuant to this Agreement
or (iii) any Losses arising from or related to the Buyer’s operation of the
Truck Stops on or after the Closing Date (collectively, “Seller Claims”).


 


11.2.2.     Cap.  No Seller Claims shall be asserted pursuant
to Section 11.2.1 until the aggregate Losses suffered or incurred by
Seller are equal to or greater than the Threshold Amount, in which event the
Seller Claims may be asserted to the full extent of the Losses suffered or
incurred by Seller, excluding individual Losses that are less than the
Threshold Amount.  Additionally, with
respect to Seller Claims asserted pursuant to Section 11.2.1, no
indemnification shall be made in excess of the Cap.


 


11.3.        Procedures
for Resolution and Payment of Third-Party Claims for Indemnification.


 


11.3.1.     Notice and Control.  Except as otherwise
provided herein, in the event any third party asserts a Claim with respect to
any matter as to which the indemnities in this Agreement relate, the party or
parties against whom the Claim is asserted (whether singular or plural, the “Indemnitee”)
shall give prompt written notice to the other party or parties (whether
singular or plural, the “Indemnitor”) in reasonable detail so that the
Indemnitor is or will be able to reasonably understand the basis of the Claim;
provided that the failure of the Indemnitee to provide such notice shall not
relieve the Indemnitor of its obligations hereunder except to the extent the
Indemnitor is materially prejudiced thereby. Thereafter, the Indemnitor shall
have the right at its election to take over the defense or settlement of the
third party Claim at its own expense by giving prompt notice to the Indemnitee.  If the Indemnitor does not give such notice
and does not proceed diligently so to defend the third party Claim within 30
days


 


12

















 


after receipt of the notice of the third
party Claim, the Indemnitor shall be bound by any defense or settlement that
the Indemnitee may make as to those Claims and shall reimburse the Indemnitee
for its Losses related to the defense or settlement of the third party Claim.  Subject to Indemnitor retaining control of
the Claim or settlement thereof, the Indemnitee shall, at its option and
expense, have the right to participate in the defense of any such Claims
defended by the Indemnitor (except that Indemnitor shall not be responsible for
the fees and expenses of counsel to Indemnitee unless agreed to in writing).
The parties shall cooperate in defending against any asserted third party
Claims.


 


11.3.2.     Claim Resolution.  Anything in this Section
11.3 to the contrary notwithstanding, (a) if there is a reasonable
probability that a third party Claim may materially and adversely affect the
Indemnitee other than as a result of money damages or other money payments, the
Indemnitee shall have the right, at its own cost and expense, to defend,
compromise or settle such Claim; provided,
however, that if such Claim is settled without the Indemnitor’s
consent (which consent shall not be unreasonably withheld or delayed), the
Indemnitee shall be deemed to have waived all rights hereunder against the
Indemnitor for money damages arising out of such Claim, and (b) the Indemnitor
shall not, without the written consent of the Indemnitee, settle or compromise
any Claim or consent to the entry of any judgment (i) which does not include as
an unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnitee a release from all liability in respect to such Claim or (ii) if
such settlement, compromise or consent involves the imposition of equitable
remedies or the imposition of any obligations on such Indemnitee other than
financial obligations for which such Indemnitee will be fully indemnified
hereunder.


 


11.4.        Remedies
Exclusive; No Other Remedies.  The remedies contained in this Article 11
shall be the parties’ sole and exclusive remedies for any post-Closing Claims
made in connection with this Agreement. 
Each party hereto hereby waives and releases, and covenants not to seek
or assert, any other Claims or remedies in the event that the Closing occurs.


 


11.5.        Limitation
of Damages. 
In no event shall any party to this Agreement be liable to any other
party for consequential, punitive or other similar damages.


 


Article 12.

MISCELLANEOUS


 


12.1.        Reformation
and Severability. 
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future Laws effective during the term hereof, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in terms to such
illegal, invalid or unenforceable


 


13

















 


provision as may be possible
and be legal, valid and enforceable consistent with the intentions of the
parties hereto, and the legality, validity and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby.  Likewise, each representation, warranty and
covenant contained herein shall have independent significance and, if any party
hereto has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which such party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.


 


12.2.        Further
Assurances. 
All parties agree and obligate themselves, and their respective
officers, directors, shareholders, members, managers, employees and agents, to
promptly execute any additional documents and instruments and take any other
actions necessary and proper for the complete and expeditious implementation
and satisfaction of the provisions and intent of this Agreement.  In addition, the Seller agrees that during and
subsequent to the sale transaction, it shall have a continuing duty to supply
such reasonable information and documentation and to perform such acts as may
be required by any federal, state or local authority or the Liquor and Gaming
Laws of the State of Louisiana, including, but not limited to, making its books
and records available to the Buyer or its designee on an as-needed, reasonable
basis after the Closing; provided, however,
in no event whatsoever shall the Seller be required to pay or be responsible
for the payment of any monies in connection therewith.


 


12.3.        Liquor and Gaming Laws of the State of Louisiana.  Each of the parties agree that this Agreement
is and shall be subject to the Liquor and Gaming Laws of the State of Louisiana
and to the oversight of the Louisiana State Police and the Gaming Control Board
of the State of Louisiana.


 


12.4.        Notices.  Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to be properly
given when personally delivered (by hand or by courier), when sent by certified
or registered mail, postage prepaid and return receipt requested, when sent by
facsimile transmission, or when delivered by overnight or similar delivery
services, fees prepaid, to the party entitled to receive such notice at the
address (or facsimile number) set forth below or at such other address (or
facsimile number) as such party shall provide in a written notice to the others
in accordance with the terms of this Section 12.4.  Except as otherwise specifically provided in
this Agreement, notice shall be deemed to be received by the party to whom such
notice was sent, in the case of notice given by personal delivery, on the date
of delivery, in the case of notice given by certified mail (or by such
comparable method), three (3) business days after mailing, in the case of
notice by overnight delivery service, on the date of delivery to such overnight
delivery service, and, in the case of notice by facsimile transmission, on the
date of actual transmission.


 


	
  If to Seller, to

  	
   

  	
  Gameco Holdings, Inc.

  
	
   

  	
   

  	
  1231 Main Avenue

  
	
   

  	
   

  	
  Cleveland, Ohio 44113

  
	
   

  	
   

  	
  Facsimile:  (216) 861-6315

  
	
   

  	
   

  	
  Attention:  Michael A. Brachna

  



 


14

















 


	
  With a copy to:

  	
   

  	
  Stanley R. Gorom III,
  Esq.

  
	
   

  	
   

  	
  Hahn Loeser &
  Parks, LLP

  
	
   

  	
   

  	
  3300 BP Tower

  
	
   

  	
   

  	
  200 Public Square

  
	
   

  	
   

  	
  Cleveland, OH  44114

  
	
   

  	
   

  	
  Facsimile: (216)
  274-2460

  
	
   

  	
   

  	
   

  
	
  If to Buyer, to:

  	
   

  	
  Jacobs Entertainment,
  Inc.

  
	
   

  	
   

  	
  240 Main Street

  
	
   

  	
   

  	
  Black Hawk, Colorado
  80422

  
	
   

  	
   

  	
  Facsimile:  (303) 582-0239

  
	
   

  	
   

  	
  Attention:  Stephen R. Roark

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Samuel E. Wing, Esq.

  
	
   

  	
   

  	
  Jones & Keller

  
	
   

  	
   

  	
  1625 Broadway, Suite
  1600

  
	
   

  	
   

  	
  Denver, Colorado 80202

  
	
   

  	
   

  	
  Facsimile: (303)
  573-0769

  
	
   

  	
   

  	
   

  
	
  And to:

  	
   

  	
   

  	
  Robert A. Weible, Esq.

  
	
   

  	
   

  	
  Baker & Hostetler,
  LLP

  
	
   

  	
   

  	
  3200 National City
  Center

  
	
   

  	
   

  	
  1900 East Ninth Street

  
	
   

  	
   

  	
  Cleveland, Ohio 44114

  
	
   

  	
   

  	
  Facsimile: (216)
  696-0740

  
				



 


12.5.        Headings
and Interpretations.  The headings of Articles and Sections
contained in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of this
Agreement.


 


12.6.        Waiver.  The failure of any party to insist, in any
one or more instances, upon performance of any of the terms, covenants or
conditions of this Agreement shall not be construed as a waiver or a
relinquishment of any right or Claim granted or arising hereunder or of the
future performance of any such term, covenant or condition, and such failure
shall in no way effect the validity of this Agreement or the rights and
obligations of the parties hereto. Additionally, no waiver of any breach of
this Agreement shall be a waiver of any subsequent breach.  No waiver shall be effective unless made in
writing and signed by the party granting such waiver.


 


12.7.        Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which when taken together shall constitute one and the same instrument.


 


12.8.        Governing
Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Louisiana, without regard to principles of conflict of laws, and the
parties expressly agree that venue, for all purposes hereunder, shall rest
exclusively with the state and federal courts of the State of Louisiana.


 


15

















 


12.9.        Assignability
and Binding Effect.  This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors and
permitted assigns. This Agreement together with the Transaction Documents and
the rights and obligations hereunder may not be assigned by either party
without the express written consent of the other.


 


12.10.      Amendments.  This Agreement may not be modified, amended
or supplemented except by an agreement in writing signed by each of the parties
hereto.


 


12.11.      Third
Parties.  Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any Person other than the parties hereto and their successors or
permitted assigns, any rights or remedies under or by reason of this Agreement.


 


12.12.      Entire
Agreement. 
This Agreement and the Transaction Documents together with the schedules
and exhibits hereto and thereto, shall constitute the entire agreement between
the parties hereto with respect to the transactions contemplated hereby and
shall supersede all prior negotiations, letters of intent, understandings and
agreements. A disclosure of any information in a schedule attached hereto, or
delivery pursuant to the terms hereof, shall be considered a disclosure of such
information in any other schedules in which the same information may otherwise
be required to be included in accordance with the terms of this Agreement.


 


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


 


12.14.      Certain
Assistance in Income Tax Preparation and Audits and Other Matters.


 


12.14.1.   Tax Preparation.


 


12.14.1.1.                Buyer
and Seller shall furnish, at no cost to the other, such data as the other party
may reasonably require to prepare


 


16

















 


Tax
Returns.  If additional data is required
by Seller or Buyer for preparation of Tax Returns or tax examinations, such
additional information (including reproduction of Tax Returns, tax assessments,
and records) shall be furnished, at no cost and within a reasonable time after
requested in writing.


 


12.14.1.2.                Buyer
and Seller shall retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all Tax Returns, supporting
work schedules, and other records or information which may be relevant to such
Tax Returns for all tax periods or portions thereof ending prior to the Closing
Date.  Copies of all such Tax Returns shall
be promptly provided to any party upon request of the same.


 


12.14.2.                   Tax Audits; Other Reviews.  Buyer and Seller shall provide reasonable
assistance to each other with any tax audits or other administrative or
judicial proceedings involving any of the Truck Stops at no cost to the other.
Neither party shall, without the prior written consent of the other, unless
required by law, initiate any contact or voluntarily enter into any agreement
with, or volunteer any information to, the taxing authorities with regard to
Tax Returns or declarations of the other party.


 


12.15.      Additional
Definitions. 
The following definitions shall apply:


 


12.15.1.                   Claim means any actual, threatened or
potential claim (whether oral or written), demand, litigation, action, suit,
investigation, proceeding, hearing, complaint, assessment or judgment,
administrative or judicial, at law or in equity.


 


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


 


12.15.3.                   EBITDA shall mean for any one (1)
calendar month period the sum of: (i) net income, plus (ii) interest expenses,
plus (iii) the aggregate amount of federal, state and local taxes on or
measured by income (whether or not payable during that period), and plus (iv)
depreciation and amortization, all as shall be computed by the Buyer’s
accountants which computation shall be made strictly in accordance with GAAP,
consistently applied.


 


12.15.4.                   Entity means a corporation, association,
partnership, limited liability company, limited liability partnership, trust or
any other entity or organization.


 


17

















 


12.15.5.                   Gaming Assets shall mean any assets located
within the continental United States, in any form, that relate to  the operation or ownership of casinos,
race-tracks, truck stops or other operations whose primary purpose is lawfully
providing games of chance (including pari-mutuel waging) for play by the
general public; provided, however,
Gaming Assets shall not include a Passive Gaming Investment.


 


12.15.6.                   Governmental Body means any federal, state,
county, parish, local or foreign governmental authority, quasi-governmental
authority or any regulatory, administrative or other agency, department,
commission, tribunal, board, bureau, instrumentality, any political or other
subdivision, or any body thereof, or any federal, state, county, local or
foreign court or arbitrator.


 


12.15.7.                   Lien means any mortgage, pledge,
security interest, encumbrance, covenant, condition, restriction, easement,
claim, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse, or any filing or agreement to
file a financing statement as debtor under the Uniform Commercial Code or any
similar statute.


 


12.15.8.                   Liquor and Gaming Laws of the
State of Louisiana
shall mean the laws promulgated in the Louisiana Revised Statutes Title 27:301
et seq., and Title 26:1 et seq. and the Louisiana Administrative Code
provisions interpreting the same.


 


12.15.9.                   Material Adverse Effect means any matter or matters
which would, alone or in the aggregate, have a material adverse effect on  (i) the financial condition, operating
results, assets, liabilities, operations, condition (financial or otherwise),
business or prospects of any of the Truck Stops or the Seller, (ii) any
material violation by the Seller or any of the Truck Stops of the Liquor and
Gaming Laws of the State of Louisiana, (iii) the revocation or suspension, for
any period of time, of any liquor or gaming license issued by the State of
Louisiana to any of the Truck Stops.


 


12.15.10.                 Passive Gaming Investment shall mean any passive investment
in the voting equity of an Entity, even if such Entity may own Gaming
Assets.  Notwithstanding the foregoing,
an investment shall not be considered passive if either Richard E. Jacobs or
Jeffrey P. Jacobs, whether jointly or individually: (i) has the power, whether
by voting rights, contract or otherwise, to elect or appoint a majority of a
given Entity’s Board of Directors; or (ii) otherwise participates (excluding
the act of voting their equity interests) in the management of an Entity.


 


18

















 


12.15.11.                 Person means an individual,
corporation, Governmental Body, association, partnership, limited liability
company, limited liability partnership, trust, or any other entity or
organization.


 


12.15.12.                 Tax means the domestic federal,
state, and local income, payroll, withholding, excise, social security, sales,
use, ad valorum, real and personal property, occupancy, business, capital
stock, franchise, transfer, employment and unemployment, and any other tax,
fee, duty, assessment or governmental charge of any kind whatsoever (including,
without limitation, all interest, penalties and estimated taxes).


 


12.15.13.                 Tax Return means returns, reports, claims
for refund, information returns or other documents (including, without
limitation, any related or supporting schedules, statements or information)
filed or required to be filed.


 


12.15.14.                 Truck Stop means a truck stop located
within the State of Louisiana at which Devices are or may be legally operated.


 


12.16.      Incorporation.   Any and all Schedules or other documents
referred to herein or attached hereto are incorporated herein as if fully
rewritten in this Agreement.


 


Article 13.GAMING RIGHTS OPTION


 


13.1.        Grant of Option.   As additional consideration for the Buyer’s
purchase of the Membership Interests hereunder, to be effective at the Closing
hereunder and contingent upon the same, Seller, Jeffrey P. Jacobs and Richard
E. Jacobs (collectively, the “Optionors”) do hereby grant to Buyer the right,
but not the obligation, to acquire any and all interests any of the Optionors
may own, whether now owned or hereafter acquired and whether held jointly or
severally, in any Truck Stops or in any Entity that owns any Truck Stops (the “Option”)
during the Option Term (as hereinafter defined).  The parties acknowledge that this Agreement
is intended to and does grant multiple Options, one for each Truck Stop covered
by the Option during the Option Term and that the exercise of the Option with
respect to any one Truck Stop shall not preclude the exercise of the Option at
a later time with respect to any other Truck Stops that are or may become
subject to the Option.  Notwithstanding
the foregoing, no Passive Gaming Investment held by any Optionor at any time
shall be subject to the Option or the covenants described in Section 13.4
below.


 


13.2.        Option Term.  The
Option shall commence as of the Closing Date and shall expire immediately upon
the tenth (10th) yearly anniversary of the same (“Option Term”).  The Option shall be exercised by delivering
written notice (“Option Notice”) of the Buyer’s intent to exercise the Option
pursuant to the Notice provisions of Section 12.4 above, and identifying the
specific Truck Stop(s) to be purchased.


 


13.3.        Purchase Price and Closing.  The
purchase price for any Truck Stops purchased pursuant to the exercise of the
Option (“Option Purchase Price”) shall be equal to a


 


19

















 


multiple of one (1) plus the
multiple of EBITDA used to determine the purchase price when originally purchased
by the Owners; provided, however, in no event
shall the Option Purchase Price exceed seven (7) times each such Truck Stop’s
trailing twelve (12) month EBITDA for the twelve (12) full calendar months
immediately preceding such Truck Stop’s respective closing under the Option.  A higher Option Purchase Price may be charged
by the Owner to the Buyer only if it is supported by a fairness opinion issued
by an independent third-party mutually acceptable to both the Buyer and the
Owners.  (For example, if an Owner
originally paid a multiple of five (5) times a given Truck Stop’s EBITDA, then
the Option Purchase Price shall be equal to six (6) times that Truck Stop’s
trailing (12) month EBITDA as of the time of the sale under the Option.) The closing
of any purchase under the Option shall take place at the Buyer’s principal
place of business and shall occur not later then ninety (90) days following the
applicable Optionor’s receipt of the Option Notice.  The Option Purchase Price shall be paid in
cash, or immediately available funds, at such closing.  The parties shall execute a separate purchase
agreement in form and substance substantially similar to this Agreement for the
purchase of any Truck Stops following the exercise of the Option, with such
additions or modifications as shall be necessary to convey the particular Truck
Stops that are the subject of the Option.


 


13.4.        Additional Covenants.


 


13.4.1.     In addition to the foregoing and not in lieu thereof, as
additional consideration for the Buyer’s purchase of the Membership Interests
hereunder, each of the Optionors covenants and agrees that commencing on and
after the Closing Date and continuing throughout the Option Term, each Optionor
will hold any ownership interests in any Gaming Assets either through the Buyer
or a wholly-owned subsidiary of the Buyer; excluding,
only, any Gaming Assets owned by an Optionor on the Closing Date,


 


13.4.2.     Notwithstanding the foregoing Section 13.4.1 and as an
exception thereto, any Optionor may purchase ownership interests in or the
assets of Truck Stops, whether or not such ownership interests or assets are
held in the Buyer or a wholly-owned subsidiary thereof, provided, however, each Optionor, as
applicable, agrees that such ownership interests or assets after acquisition of
the same shall be Truck Stops for all purposes hereunder and shall be subject
to the rights of the Buyer under the Option. 
Each Optionor, as applicable, agrees to execute such additional
documents as may be necessary to comply with the terms and conditions of this
Section 13.4.2.


 


13.5.        Right of Sale.  Nothing contained in this Article 13,
including but not limited to the grant of the Option, is intended to, nor shall
it be construed as, restricting any Optionor’s right to sell any Gaming Assets,
including Truck Stops, to a third party prior to the Buyer’s exercise of the
Option with respect to those particular Truck Stops.


 


13.6.        Acknowledgment of Consideration.  Jeffrey
P. Jacobs and Richard E. Jacobs, individually, acknowledge and agree that the
payment of the Purchase Price under this


 


20

















 


Agreement by Buyer to Seller
has separate direct and indirect economic benefit to each of them and is
sufficient consideration for their covenants and agreements under this Article 13.


 


13.7.        Termination of Option.  The Owners, Seller and Buyer agree that
effective as of the Closing Date, the Option, together with all other
agreements, representations and warranties, described in Article 2: GAMING
RIGHTS OPTION, as set forth in that certain Membership Interests Purchase
Agreement, dated March 22, 2005, by and between the Buyer, Seller and Owners
herein, are herewith terminated, rescinded and shall be of no further force or
effect.


 


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


 


 


	
   

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
  JACOBS ENTERTAINMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stephen R. Roark

  
	
   

  	
   

  	
  Stephen R. Roark, Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GAMECO HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stan W. Guidroz

  
	
   

  	
   

  	
  Stan W. Guidroz, Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE FOLLOWING APPEAR SOLELY FOR THE

  PURPOSES OF AGREEING TO THE TERMS AND

  CONDITONS OF ARTICLE 13

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Richard E. Jacobs

  
	
   

  	
   

  	
  Richard E. Jacobs

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Jeffrey P. Jacobs

  
	
   

  	
   

  	
  Jeffrey P. Jacobs

  



 


21

















 


LIST OF SCHEDULES


 


Schedule 4.4          Capitalization


 


Schedule 4.5          Liens,
Claims and Title Exceptions


 


Schedule 4.6          Tax
Matters


 


Schedule 4.7          Environmental
Matters


 


Schedule 4.9          Consents


 


Schedule 4.10        Litigation


 


22

















 


Schedule
4.4


 


Capitalization


 


None.


 


23

















 


Schedule
4.5


 


[Liens,
Claims and Title Exceptions]


 


1.             DIAMOND:


 


a.             Those exceptions to
title disclosed in the Owner’s Title Policy, issued by Lawyers Title Insurance
Corporation, Policy No. [    ], dated [       ], together with the endorsement, dated
as of the Closing.


 


b.             That certain Device
Placement Agreement, dated                                             ,
by and between Jalou Diamond, L.L.C. and Southern Trading Corporation.


 


c.             That certain Lease
Agreement by and between RFP, Inc. and Jalou Diamond, L.L.C., as Lessee.


 


2.             MAGIC:


 


a.             Those exceptions to
title disclosed in the Owner’s Title Policy, issued by Lawyers Title Insurance
Corporation, Policy No. [    ], dated [       ], together with the endorsement, dated
as of the Closing.


 


b.             That certain Device
Placement Agreement, dated                                          ,
by and between Jalou Magic, L.L.C. and Southern Trading Corporation.


 


3.             MARTIN:


 


a.             Those exceptions to
title disclosed in the Owner’s Title Policy, issued by Lawyers Title Insurance
Corporation, Policy No. [    ], dated
[       ], together with the endorsement,
dated as of the Closing.


 


b.             That certain Device
Placement Agreement, dated                                      ,
by and between Jalou of St. Martin, L.L.C. and Southern Trading Corporation.


 


24

















 


Schedule
4.6


 


Tax
Matters


 


[None]


 


25

















 


Schedule
4.7


 


Environmental
Matters


 


 


None.


 


26

















 


Schedule
4.9


Consents


 


1.             The transfers
contemplated by this Agreement will require notification by the Buyer to the
Louisiana State Police within ten (10) days of their completion.


 


27

















 


Schedule
4.10


 


Litigation


 


None.


 


28