Exhibit
10.1(a)


PURCHASE AGREEMENT


by and among


SHUFFLE MASTER,
INC.,

on the one hand


and


PROGRESSIVE GAMING
INTERNATIONAL CORPORATION


and


PROGRESSIVE GAMES
INC.,

on the other hand


Dated as of
September 26, 2007
















TABLE OF CONTENTS


	
  

  	
   

  	
  Page

  
	
  ARTICLE
  I CERTAIN DEFINITIONS

  	
   

  	
  1

  
	
  1.1              Certain
  Definitions

  	
   

  	
  1

  
	
  1.2              Certain
  Definitions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II PURCHASE AND SALE OF PURCHASED ASSETS

  	
   

  	
  9

  
	
  2.1              Basic
  Transaction

  	
   

  	
  9

  
	
  2.2              Assumption of
  Liabilities

  	
   

  	
  11

  
	
  2.3              Purchase Price

  	
   

  	
  13

  
	
  2.4              Closing
  Transactions

  	
   

  	
  14

  
	
  2.5              Allocation of
  the Purchase Price

  	
   

  	
  15

  
	
  2.6              Nonassignable
  Contracts

  	
   

  	
  15

  
	
  2.7              Contingent
  Purchase Price Payments

  	
   

  	
  16

  
	
  2.8              Distributor
  Contracts

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III CONDITIONS TO CLOSING

  	
   

  	
  19

  
	
  3.1              Conditions to
  Buyer’s Obligation

  	
   

  	
  19

  
	
  3.2              Conditions to
  Seller’s Obligations

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  	
  21

  
	
  4.1              Organization
  and Corporate Power

  	
   

  	
  22

  
	
  4.2              Authorization;
  No Breach

  	
   

  	
  22

  
	
  4.3              Subsidiaries

  	
   

  	
  22

  
	
  4.4              Financial Statements;
  Financial Information

  	
   

  	
  22

  
	
  4.5              Absence of
  Undisclosed Liabilities

  	
   

  	
  23

  
	
  4.6              Insolvency;
  Fairness Opinion

  	
   

  	
  23

  
	
  4.7              Secured
  Creditors

  	
   

  	
  24

  
	
  4.8              No Material
  Adverse Change

  	
   

  	
  24

  
	
  4.9              Absence of
  Certain Developments

  	
   

  	
  24

  
	
  4.10            Purchased Assets
  and Licensed Patents

  	
   

  	
  25

  
	
  4.11            Tax Matters

  	
   

  	
  27

  
	
  4.12            Contracts and
  Commitments

  	
   

  	
  27

  
	
  4.13            Table Games
  Intellectual Property

  	
   

  	
  29

  
	
  4.14            Litigation

  	
   

  	
  31

  
	
  4.15            Brokerage

  	
   

  	
  31

  
	
  4.16            Employees

  	
   

  	
  31

  
	
  4.17            Product
  Warranties and Recalls

  	
   

  	
  31

  
	
  4.18            Insurance

  	
   

  	
  31

  
	
  4.19            Compliance with
  Laws; Permits; Certain Operations

  	
   

  	
  32

  
	
  4.20            Names and
  Locations

  	
   

  	
  32

  
	
  4.21            Customers and
  Suppliers

  	
   

  	
  33

  
	
  4.22            Inventory

  	
   

  	
  33

  
	
  4.23            Product
  Liabilities

  	
   

  	
  33

  
	
  4.24            Capital
  Expenditures

  	
   

  	
  33

  



 



 i
 









 


	
  4.25            Promotions
  Programs

  	
   

  	
  34

  
	
  4.26            Insolvency

  	
   

  	
  34

  
	
  4.27            Affiliated
  Transactions

  	
   

  	
  34

  
	
  4.28            Disclosure

  	
   

  	
  34

  
	
  4.29            Projections

  	
   

  	
  34

  
	
  4.30            Labor

  	
   

  	
  34

  
	
  4.31            Game Replacement

  	
   

  	
  34

  
	
  4.32            Exploitation

  	
   

  	
  34

  
	
  4.33            Full Disclosure

  	
   

  	
  35

  
	
  4.34            September 2007
  Billings

  	
   

  	
  35

  
	
  4.35            TCS

  	
   

  	
  35

  
	
  4.36            Knowledge

  	
   

  	
  35

  
	
  4.37            Allocation of
  Risks

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V COVENANTS OF SELLER

  	
   

  	
  35

  
	
  5.1              Conduct of
  Seller’s Table Games Business Pending the Closing

  	
   

  	
  35

  
	
  5.2              Negative
  Covenants of the Seller

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI REPRESENTATIONS AND WARRANTIES OF BUYER

  	
   

  	
  38

  
	
  6.1              Corporate
  Organization and Power

  	
   

  	
  38

  
	
  6.2              Authorization

  	
   

  	
  38

  
	
  6.3              Governmental
  Authorities and Consents

  	
   

  	
  38

  
	
  6.4              Brokerage

  	
   

  	
  38

  
	
  6.5              Litigation

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII ADDITIONAL AGREEMENTS

  	
   

  	
  38

  
	
  7.1              Survival of
  Representations and Warranties

  	
   

  	
  38

  
	
  7.2              General
  Indemnification

  	
   

  	
  39

  
	
  7.3              Press Release
  and Announcements

  	
   

  	
  42

  
	
  7.4              Expenses

  	
   

  	
  42

  
	
  7.5              Further
  Transfers; Transition Assistance

  	
   

  	
  42

  
	
  7.6              Confidentiality

  	
   

  	
  43

  
	
  7.7              Sales and
  Transfer Taxes

  	
   

  	
  43

  
	
  7.8              Confidentiality
  Agreements

  	
   

  	
  43

  
	
  7.9              Covenant Not to
  Compete, Solicit or Hire

  	
   

  	
  43

  
	
  7.10            Property Expense
  Apportionment

  	
   

  	
  46

  
	
  7.11            [INTENTIONALLY
  OMITTED]

  	
   

  	
  46

  
	
  7.12            Regulatory

  	
   

  	
  46

  
	
  7.13            Gaming Products
  Approval

  	
   

  	
  47

  
	
  7.14            Errors in
  Listing of Purchased Assets

  	
   

  	
  47

  
	
  7.15            License Back

  	
   

  	
  47

  
	
  7.16            Newly Acquired
  Table Games Intellectual Property

  	
   

  	
  47

  
	
  7.17            Conflicts

  	
   

  	
  47

  
	
  7.18            Service
  Transition Period

  	
   

  	
  48

  
	
  7.19            Prior Patent
  Licenses

  	
   

  	
  48

  
	
  7.20            Prior License
  Agreement

  	
   

  	
  48

  



 



 ii
 









 


	
  ARTICLE VIII MISCELLANEOUS

  	
   

  	
  48

  
	
  8.1              Amendment and
  Waiver

  	
   

  	
  48

  
	
  8.2              Notices

  	
   

  	
  48

  
	
  8.3              Assignment

  	
   

  	
  49

  
	
  8.4              Severability

  	
   

  	
  50

  
	
  8.5              Interpretation

  	
   

  	
  50

  
	
  8.6              Entire
  Agreement

  	
   

  	
  50

  
	
  8.7              Counterparts

  	
   

  	
  50

  
	
  8.8              Governing Law

  	
   

  	
  50

  
	
  8.9              No Strict
  Construction

  	
   

  	
  51

  
	
  8.10            Specific
  Performance

  	
   

  	
  51

  
	
  8.11            No Third-Party
  Beneficiaries

  	
   

  	
  51

  
	
  8.12            No Relationship

  	
   

  	
  51

  
	
  8.13            Bulk Transfer
  Laws

  	
   

  	
  51

  
	
  8.14            Schedules

  	
   

  	
  51

  
	
  8.15            Bankruptcy Code
  Section 365(n)

  	
   

  	
  52

  
	
  8.16            Submission to
  Jurisdiction

  	
   

  	
  52

  
	
  8.17            Prior Agreements

  	
   

  	
  52

  



 



 iii















PURCHASE AGREEMENT


THIS PURCHASE AGREEMENT (this “Agreement”) is
made and entered into as of September 26, 2007 (the “Execution Date”),
by and among (i) Progressive Gaming International Corporation (“PGIC”), a
Nevada Corporation, and Progressive Games, Inc. (“PGI”), a Delaware
Corporation, and each of its and their Affiliates and Subsidiaries (all of the
foregoing, jointly and severally, “Seller”), and (iii) Shuffle Master,
Inc. (“SMI”), a Minnesota Corporation, and each of its Affiliates and
Subsidiaries (all of the foregoing, jointly and severally, “Buyer”).


WHEREAS, subject to the terms and conditions set forth
herein, Buyer desires to purchase and/or,
as applicable, license from Seller, and Seller desires to sell and/or license
to Buyer, assets (as set forth herein and on the attached Schedules) used in or
a part of Seller’s Table Games Business (as defined herein).


NOW, THEREFORE, in consideration of the mutual
covenants, agreements and understandings contained herein and intending to be
legally bound, the Parties hereto hereby agree as follows:


ARTICLE I


CERTAIN
DEFINITIONS


1.1           Certain Definitions.  For purposes of this Agreement, the following
terms have the meanings set forth below:


“Affiliate” of any particular Party means any
current or future Person controlling, controlled by or under common control
with such Party.  For purposes of this
definition, “control” (including the terms “controlling,” “controlled
by” and “under common control with”) means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and such “control” will be presumed if any Person owns
50% or more of the voting capital stock, assets or other ownership interests,
directly or indirectly, of any other Person.


“Applicable Rate” means interest at a rate per
annum equal to the prime rate of interest announced from time to time in The
Wall Street Journal plus one percent (1%), calculated on the basis of the
actual number of days elapsed over 365.


“Aquarius and Game Manager” means the systems,
hardware, and components, and underlying 
Intellectual Property, identified or known as ‘Aquarius’ and ‘Game
Manager’.


“Bankruptcy Code” means 11 U.S.C. § 101 et seq.


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


“Confidential Information” means all
information of a confidential or proprietary nature (whether or not
specifically labeled or identified as “confidential”), in any form or medium,
that relates to the business, products, services and/or research and
development of Seller’s Table Games 
Business 













and/or its suppliers,
distributors, customers, independent contractors and/or other business
relations.  Confidential Information
includes, but is not limited to, the following: 
(i) internal business information (including historical and projected
financial information and budgets and information relating to strategic and
staffing plans and practices, business, training, marketing, promotional and
sales plans and practices, cost, rate and pricing structures and accounting and
business methods); (ii) identities of, individual requirements of, specific
contractual arrangements with, and information about, suppliers, distributors,
customers, independent contractors or other business relations and their
confidential information; (iii) trade secrets, source code and methods of
operation relating to the Table Games Business, know-how, compilations of
data and analyses, techniques, systems, formulae, research, records, reports,
manuals, documentation, models, data and data bases relating thereto; and (iv)
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether or
not patentable); provided, however, that Confidential
Information shall not include except to the extent that such information (a) is
in the public domain as of the date hereof, (b) any information that is or
becomes generally available to the public other than as a direct or indirect
result of the disclosure of any of such information by the Party or by any of
said Party’s representatives; (c) any information that was in Buyer’s
possession prior to the time it was first made available to said Party or any
of said Party’s representatives by or on behalf of said Party or any of said
Party’s representatives; (d) any information that becomes available to a Party
on a non confidential basis from a source other than the other Party or any of
the other Party’s representatives.


“Environmental and Safety Requirements” means,
whenever in effect, all federal, state, local and foreign statutes,
regulations, ordinances, codes and other provisions having the force or effect
of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, pollution or protection of the environment, including
all those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation.


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.


“ERISA Affiliate” means any entity that,
together with Seller, is treated as a single employer under Section 414 of the
Code.


“Effective Date” means October 1, 2007


“Equipment” means all machinery, equipment
(including all testing equipment), and related software, as listed in the
Equipment and Fixed Assets Schedule.


“GAAP” means Unites States generally accepted
accounting principles, as in effect from time to time, consistently applied in
accord with Seller’s or Buyer’s (as applicable) policies and procedures.


“Gaming Permits” means gaming, regulatory body,
certifying agency, governmental, or regulatory licenses or approvals, or
similar rights or documents applicable to Seller.


“Gaming Product Approvals” means any
documentation related either solely to the Purchased Table Games or to both
Purchased Table Games and the Excluded Assets issued by a gaming 



 2
 









regulatory body and/or
other approving/testing gaming laboratory (e.g. Gaming Laboratory
International, a/k/a GLI) indicating and/or certifying that a particular item
(gaming device, associated equipment, Table Game, etc) that has been submitted
to such entity for proper approval is either approved or rejected for use in a
particular gaming jurisdiction.


“IM” means the Information Memorandum copy R-98
dated March 2007 and the Preliminary Due Diligence Book, dated April 2007, both
of which were provided to Buyer in connection with the marketing of Seller’s
“Table Games Division.”


“Indebtedness” means the following, whether
known or unknown, fixed or unfixed, contingent or accrued:  (i) any debts, liabilities or obligations for
borrowed money or otherwise, (ii) any debts, liabilities or obligations
evidenced by any note, bond, debenture or other debt security, (iii) any
liabilities or obligations with respect to which Seller is liable, contingently
or otherwise, as obligor or otherwise (including without limitation trade
payables and other current liabilities), (iv) any commitment by which Seller
assures a creditor against loss (including contingent reimbursement obligations
with respect to letters of credit), (v) any debts, liabilities or obligations
guaranteed in any manner by Seller (including guarantees in the form of an
agreement to repurchase or reimburse), (vi) any debts, liabilities or
obligations under capitalized leases with respect to which Seller is liable,
contingently or otherwise, as obligor, guarantor or otherwise or with respect to
which obligations Seller assures a creditor against loss, (vii) any debts,
liabilities or obligations secured by a lien (other than Permitted Liens) on
Seller’s assets (viii) any amounts owed by Seller to any Person under any
non-competition, consulting or deferred compensation arrangements, and (ix) all
other debts, liabilities or obligations of any kind or nature.


“Intellectual Property” means all of the
following in any jurisdiction throughout the world:  (i) patents, patent applications and patent
disclosures; (ii) trademarks, service marks, trade dress, trade names, logos
and slogans (and all translations, adaptations, derivations and combinations of
the foregoing) and Internet domain names, if any, together with all goodwill
associated with each of the foregoing; (iii) copyrights and copyrightable
works; (iv) registrations and applications for any of the foregoing; (v)
trade secrets, confidential information, know-how and inventions; and
(vi) computer software (including but not limited to source code, executable
code, data, databases and documentation).


“Inventory” means all finished goods
inventories, packaging materials and other inventories (including inventories
covered by purchase orders), wherever located, including lease and consignment
inventory and inventory on order for or in transit to or from the Seller, and
all production supplies and other supplies, spare parts, other miscellaneous
supplies and other tangible property of any kind used in or part of Seller’s
Table Games Business.


“Law” means any federal, state, provincial,
administrative, tribunal, local or foreign law, statute, code, ordinance, rule,
regulation or restriction, including without limitation gaming laws and
regulations and RoHS.


“Legal Gaming Venues” means all casinos, gaming
operators or other places where gaming wagering is legal and properly licensed
by Law.


“Licensed Patents”
means the same as the term is defined in the Progressive License.  The Licensed Patents are listed on the Table
Games Intellectual Property Schedule.


“Lien” means any
transfer restriction, mortgage, security interest, deed of trust, option, right
of first refusal, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, 



 3
 









easement,
lien (statutory or other), security interest and any other preference, priority
or preferential arrangement of any kind or nature whatsoever, including any
conditional sale contract or other title retention agreement, the interest of a
lessor under a capital lease and any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing.


“Loss” means any loss, liability, demand,
claim, obligation, action, cause of action, cost, damage, diminution in value,
lost profits, deficiency, Tax, penalty, fine or expense, including without
limitation, interest, penalties, lost profits, reasonable attorneys’ fees
(provided any attorneys’ fees incurred pursuant or related to this Agreement
shall be presumed reasonable and any Party objecting to such attorneys’ fees
shall be required to show, by clear and convincing evidence, that such fees
were, under all circumstances, unreasonable) and reasonable expenses and all
amounts paid in investigation, defense or settlement, (such as expert witness
fees) of any of the foregoing and the enforcement of any rights hereunder)
(provided any such expenses and amounts shall be presumed reasonable and any
Party objecting thereto shall be required to show, by clear and convincing
evidence, that such expenses and amounts were, under all circumstances, unreasonable),
and whether known or unknown, fixed or unfixed, contingent or accrued, but excluding only unforeseeable,
speculative, exemplary and punitive damages; provided, however,
that for purposes of computing the amount of Loss incurred, paid or accrued by
a Person, there shall be deducted an amount equal to the amount of any
insurance proceeds, indemnification payments, contribution payments or
reimbursements that are actually received by such Person or any of such
Person’s Affiliates in connection with such Loss or the circumstances giving
rise thereto.


“Ordinary Course of Business” means the
ordinary course of business, consistent with past practice, including with
regard to nature, frequency and magnitude.


“Parties”  means Seller and Buyer.


“Patent” means the same as the term is defined
in the Progressive License.


“Person” means any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated association,
corporation, limited liability company, entity or governmental entity (whether
federal, state, county, city or otherwise and including any instrumentality,
division, agency or department thereof).


“Progressive License” means the Amended and
Restated License Agreement by and between Buyer and Seller executed
concurrently  herewith.


“Purchased Assets” means the items listed in Section
2.1(a)(i)-(xv).


“Purchased Table Games” means the Table Games,
as listed on the Purchased Table Games Schedule (and including substantially
identical reproductions), but Purchased Table Games shall not mean or include
any Purchased Table Games sold by Seller prior to the Closing Date (the “Sold
Purchased Table Games”).


“Purchased Table Games
Intellectual Property” means all Intellectual Property purchased by Buyer
hereunder.  The Purchased Table Game Intellectual
Property is listed on the Table Games Intellectual Property Schedule.  The Purchased Table Games Intellectual
Property are part of the Purchased Assets.



 4
 









“Purchased Table Games Net Revenue” means
Buyer’s: i) lease or license recurring revenues, for any specified
accounting period, attributable to the lease or license of Purchased Table
Games to Legal Gaming Venues; and ii) service recurring revenues, for any
specified accounting period, attributable to any Sold Purchased Table Games
whose contract is an Assumed Contract, and, in either case, received from Legal
Gaming Venues and determined in accordance with GAAP, less (a) any Taxes paid
by Buyer, charged against Buyer, or required to be withheld from or by Buyer on
account of the placement of a Purchased Table Game; and (b) any actual
royalties, any actual license fees, and any fees, commissions or other amounts
(up to a total of 10% of the annual Purchased Table Games Net Revenue), paid to
an distributor or agent of Seller’s existing as of the Closing Date, which
amounts are based upon the lease or license of a Purchased Table Game; however,
Purchased Table Games Net Revenues shall not mean or include any Purchased
Table Games Service Revenue.


“Purchased Table Games Sales Revenue” means
Buyer’s sale revenues, for any specified accounting period, attributable to the
sale of Purchased Table Games to and received from Legal Gaming Venues and
determined in accordance with GAAP, less: 
(a) any taxes paid by Buyer, charged against Buyer, or required to be
withheld from or by Buyer on account of the sale of a Purchased Table Game; and
(b) any actual royalties, any actual license fees, and any fees, commissions or
other amounts (up to a total of 10% of the annual Purchased Table Games Sales
Revenues) paid to a distributor or agent of Seller’s existing as of the Closing
Date, which amounts are based upon the sale of a Purchased Table Game; but
Purchased Table Games Sales Revenues shall not include any Purchased Table
Games Sales Revenue derived or received from or attributable to a Purchased
Table Game which, as of the Closing Date, is subject to any option to purchase
(a “Pre-Existing Option”); however, Purchased Table Games Sales Revenues shall
not mean or include any Purchased Table Games Service Revenue.


“Purchased Table Games Service Revenue” means
Buyer’s service recurring revenues, for any specified accounting period,
attributable to the servicing of either: i) any Purchased Table Games licensed
or leased to a Legal Gaming Venue, and ii) any Purchased Table Games sold to a
Legal Gaming Venue (other than as a result of a Pre-Existing Option), but, in
all cases, except for any service recurring revenues already included in
Purchased Table Games Net Revenues), and, in each case, determined in
accordance with GAAP.


“Real Property” means any interest in real
property owned or leased by Seller.


“Related Agreements” means: i) the Progressive
License; ii) the Technology License; and (iii) other assignments, instruments,
documents, and agreement contemplated under this Agreement.


“Rights” means (i) all of Seller’s economic rights including any claims, refunds, credits,
causes of action, choses of action, rights of recovery and rights of set-off of
any kind under any of the contracts, licenses, leases and supply, customer,
third-party technology and distribution arrangements, software
agreements, reseller and distribution agreements, development agreements, sales
and purchase agreements and orders, confidentiality agreements, and other
agreements; (ii) all prepayments and prepaid expenses (other than those related
to Excluded Assets or Excluded Liabilities) and cash deposits; (iii) all
claims, refunds, credits, causes of action, choses in action, rights of
recovery and rights of set-off of any kind (other than those that are Excluded
Assets or Excluded Liabilities); and (iv) any reversion rights in favor of
Seller in or arising under any existing contracts relating to any of Seller’s
Table Games Business, any Purchased Table Games, or any Table Games
Intellectual Property whereby, upon termination of any of said contracts, any
rights to any of the foregoing would otherwise revert to Seller, as owner or
licensor (“Reversionary Rights”).



 5
 









“RoHS” means Directive 2002/95/EC of the
European Parliament and of the Council of 27 January 2003, on the restriction
of the use of certain hazardous substances in electrical and electronic
equipment , as amended, and implemented by European Union member states.


“Schedules” means the schedules (dated as of
the Closing Date) delivered concurrently herewith to Buyer and prepared by and
on behalf of the Seller and a part of this Agreement.


“Seller’s Field of Use” means Systems.


“Seller’s Table Games Business”  means the Table Games Business as conducted
by Seller since July 1, 2006, including without limitation, the Purchased Table
Games, but excluding any Excluded Assets.


“Subsidiary” of a particular Party means any
current or future Person which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (irrespective of whether, at the time,
stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
Controlled, directly or indirectly, by that Party or one or more of the other
Subsidiaries of that Party or a combination thereof, or (ii) if a partnership,
limited liability company, association or other business entity, either (A) a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by that Party or one or
more Subsidiaries of that Party or a combination thereof, or (B) such Person is
a general partner, managing member or managing director of such partnership,
limited liability company, association or other entity.


“System” means any computer system that, among
other things, interfaces with one or more gaming devices (which broadly
encompasses any device used for wagering purposes (e.g. slot machines, video
poker machines, race and/or sport betting) and the equipment associated
therewith (e.g. bill validators, ticket printers, credit/debit card readers,
and other methods for receiving and/or paying amounts related to wagering as
well as crediting and/or debting a player’s account but excluding any card
shufflers) including but not limited to Table Games, including but not limited
to Seller’s Casinolink® Enterprise and Casinolink® Jackpot StationTM products
(and those that have historic functionality of such products as they are
further developed) and Seller’s table management products that incorporate or
otherwise utilize radio frequency identification technology, provided, however,
that the term “System” does not include any elements that embody Table Game
game play methods, rules or pay tables in such a computer system (except only
to the extent necessary to make the System work with and as part of a Table
Game) and provided further that the term “System” does not include the systems
historically currently and commonly referred to by Seller as “Aquarius” and
“Game Manager”, as same may be enhanced or further developed by Buyer, but
subject to Seller’s License Back, as provided herein and as further delineated
in the Technology License.


“TCS” means TCS ACES Pty, and each of its
Affiliates and Subsidiaries.


“Table Game” means any table game (live or
otherwise and in any format) and/or electronic methods of playing or simulating
any game, as well as pay tables and methods of play (whether proprietary or in
the public domain) for any game.


“Table Games Business” means:  (i) the business related to the design,
development, manufacture, packaging, marketing, distributing, licensing,
leasing and selling of Table Games; and (ii) the development, sale, licensing,
utilization and exploitation of any related Intellectual Property.



 6
 









“Table Games Field of Use” means the same as
the term is defined in the Progressive License.


“Table Games Intellectual Property” means any
Intellectual Property that is used in or a part of Seller’s Table Games
Business, consisting of the Purchased Table Games Intellectual Property,
together with the Licensed Patents, but excluding any Excluded Assets.


“Tax” or “Taxes” means any federal,
state, local or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property (including general and
special real estate taxes and assessments, special service area charges, tax
increment financing, charges, payments in lieu of taxes and similar charges and
assessments), windfall, profits, environmental, customs, capital stock,
franchise, employees’ income withholding, foreign or domestic withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other
similar tax, governmental fee, governmental assessment or governmental charge
of any kind whatsoever, including any interest, penalties or additions to Tax
or additional amounts with respect to the foregoing.


“Tax Returns” means returns, declarations,
reports, claims for refund, information returns or other documents (including
any related or supporting schedules, statements or information) filed or
required to be filed in connection with the determination, assessment or
collection of Taxes of any party or the administration of any laws, regulations
or administrative requirements relating to any Taxes.


“Technology License” means the Software
Distribution License Agreement by and between Buyer and Seller executed
concurrently herewith.


“Treasury Regulations” means the United States
Treasury Regulations promulgated under the Code, and any reference to any
particular Treasury Regulation section shall be interpreted to include any
final or temporary revision of or successor to that section regardless of how
numbered or classified.


1.2           Certain
Definitions.  Each of the following
terms has the meaning ascribed to such term in the Article or Section set forth
opposite such term:




	
  Term

  	
   

  	
  Article/Section

  
	
  Accounting Firm

  	
   

  	
  2.7(d)

  
	
  Acquirer

  	
   

  	
  7.9(a)

  
	
  Applicable
  Contingent Purchase Price

  	
   

  	
  2.7(d)

  
	
  Assumed
  Contracts

  	
   

  	
  2.1(a)(xiv)

  
	
  Assumed
  Liabilities

  	
   

  	
  2.2(a)

  
	
  Audited
  Financial Statement

  	
   

  	
  4.4(a)

  
	
  Baseline Revenue

  	
   

  	
  2.7(c)

  
	
  Buyer
  Indemnitees

  	
   

  	
  7.2(a)

  
	
  Buyer Indemnitee
  Claim

  	
   

  	
  7.2(a)

  
	
  Cap

  	
   

  	
  7.2(e)

  
	
  Cash Purchase
  Price

  	
   

  	
  2.3(a)

  
	
  Closing

  	
   

  	
  2.4(a)

  
	
  Closing Date

  	
   

  	
  2.4(a)

  
	
  Closing Balance
  Sheet

  	
   

  	
  2.3(b)(i)

  
	
  Contingent
  Payment Period

  	
   

  	
  2.7(a)

  






 



 7
 









 




	
  Contingent Purchase Price
  Payment

  	
   

  	
  2.7(c)

  
	
  Contingent
  Purchase Price Payment Statement

  	
   

  	
  2.7(d)

  
	
  Equitable Manner

  	
   

  	
  7.10

  
	
  Excluded Assets

  	
   

  	
  2.1(c)

  
	
  Excluded
  Jurisdiction

  	
   

  	
  2.7(g)

  
	
  Excluded
  Liabilities

  	
   

  	
  2.2(b)

  
	
  Existing
  Installed Base

  	
   

  	
  2.1(a)(vi)

  
	
  Financial
  Statements

  	
   

  	
  4.4

  
	
  Fundamental Reps

  	
   

  	
  7.1(d)

  
	
  Fixed Assets

  	
   

  	
  2.1(a)(iv)

  
	
  Governmental
  Approvals

  	
   

  	
  2.4(b)(iii)

  
	
  IM Balance Sheet

  	
   

  	
  2.3(a)

  
	
  Indemnitee

  	
   

  	
  7.2(d)

  
	
  Indemnitor

  	
   

  	
  7.2(d)

  
	
  Insiders

  	
   

  	
  4.12(a)(xiii)

  
	
  Insolvent

  	
   

  	
  3.1(g)

  
	
  Inventory

  	
   

  	
  2.1(a)(i)

  
	
  Instruments of
  Conveyance

  	
   

  	
  7.5

  
	
  June Balance
  Sheet

  	
   

  	
  4.4(b)

  
	
  Knowledge

  	
   

  	
  4.36

  
	
  Latest Balance
  Sheet

  	
   

  	
  4.17

  
	
  License Back

  	
   

  	
  7.15

  
	
  Minimum
  Contingent Purchase Price Payments

  	
   

  	
  2.7(b)

  
	
  Notice of
  Objection

  	
   

  	
  2.7(d)

  
	
  Permitted Liens

  	
   

  	
  4.10(a)

  
	
  Pending Orders

  	
   

  	
  4.10(j)

  
	
  Prorated Amounts

  	
   

  	
  7.10

  
	
  Purchase Price

  	
   

  	
  2.3(a)

  
	
  Purchase Price
  Calculation

  	
   

  	
  7.9(f)(iii)

  
	
  Purchased Assets

  	
   

  	
  2.1(a)

  
	
  Restricted
  Persons

  	
   

  	
  7.9(f)

  
	
  Restrictive
  Covenants

  	
   

  	
  7.9(f)

  
	
  Royalty Rate

  	
   

  	
  2.7(c)

  
	
  Seller
  Indemnitees

  	
   

  	
  7.2(b)

  
	
  Seller Indemnity
  Claim

  	
   

  	
  7.2(b)

  
	
  Seller’s
  Non-Compete Agreement

  	
   

  	
  7.9(a)

  
	
  September 2007
  Billings

  	
   

  	
  2.3(a)

  
	
  Set-Off

  	
   

  	
  7.2(c)

  
	
  Table Games
  Books and Records

  	
   

  	
  2.1(a)(xii)

  
	
  Third-Party
  Approvals

  	
   

  	
  3.1(c)

  
	
  Transaction

  	
   

  	
  2.1

  
	
  Transfer

  	
   

  	
  2.7(e)

  
	
  Unaudited June
  2007 Financial Statements

  	
   

  	
  4.4(b)

  
	
   

  	
   

  	
   

  






 



 8
 









ARTICLE II


PURCHASE AND SALE
OF PURCHASED ASSETS


2.1           Basic Transaction.  The transactions contemplated herein and in
the Related Agreements (the “Transaction”) shall generally consist of:
a) Buyer’s purchase of Seller’s Table Games Business, including the Purchased
Assets, except for the Licensed Patents, which, instead of being purchased,
shall be licensed to Buyer pursuant to the Progressive License; and b) Buyer’s
license of the Licensed Patents, pursuant to the Progressive License; all as
follows:


(a)           Purchased
Assets.  On the terms and subject to
the conditions set forth in this Agreement, Buyer shall purchase from Seller,
and Seller shall sell, convey, assign, transfer and deliver to Buyer, as of the
Closing Date, all of Seller’s rights in all assets, properties, rights, titles
and interests of every kind and nature, used in or a part of Seller’s Table
Games Business, whether tangible or intangible, real or personal and wherever
located and by whomever possessed, set forth below in subsection (i) through
(xv) (collectively, the “Purchased Assets”), free and clear of all Liens
as follows:


(i)          all Inventory used in
or a part of Seller’s Table Games Business, in each case as set forth in the Inventory
Schedule;


(ii)         the Purchased Table
Games Intellectual Property, as listed in the Table Games Intellectual
Property Schedule, used in or a part of Seller’s Table Games Business,
together with all income, royalties, damages and payments due or payable as of
the Closing Date or thereafter (including, without limitation, damages and
payments for past or future infringements or misappropriations thereof), the
right to sue and recover for past infringements or misappropriations thereof,
any and all corresponding rights that, now or hereafter, may be secured throughout
the world and all copies and tangible embodiments of any such Purchased Table
Games Intellectual Property;


(iii)        all Rights used in or
a part of Seller’s Table Games Business;


(iv)       all Equipment or other
fixed assets (collectively “Fixed Assets”) used in or a part of Seller’s
Table Games Business, as set forth on the Equipment and Fixed Assets
Schedule;


(v)        each Purchased Table Game and the physical
embodiment of such Purchased Table Game, including all contract, tangible and intangible Rights
relating thereto, and any Reversionary Rights, in all cases, other than any
System;


(vi)       those Purchased Table
Games leased or licensed and installed (the “Existing Installed Base”),
as of the Closing Date, in a Legal Gaming Venue, the majority of which are listed
on the Existing Installed Base Schedule, which includes all of Seller’s
Table Games installed in the State of Washington which existed as of
September 1, 2007; and all revenues derived or due therefrom, as of and
after the Closing Date;


(vii)      the right to receive
and retain mail, and other communications to the extent relating to Seller’s
Table Games Business (other than those that are Excluded Assets or Excluded
Liabilities);



 9
 









(viii)     the right to bill and
receive payment for products shipped or delivered and/or services performed in
the operation of Seller’s Table Games Business but unbilled or unpaid, as of
the Effective Date;


(ix)        the right to bill and
receive payment for any Existing Installed Base, as of the Effective Date;


(x)         all lists, records and
other information pertaining to accounts, and referral sources; all lists,
invoices, records and other information pertaining to suppliers and customers;
Seller’s Table Games Intellectual Property files, attorney correspondence, and
prosecution file histories, provided, however, for same that are related to the
Licensed Patents, Seller may retain originals and provide Buyer with copies;
all drawings, reports, studies, plans, books, ledgers, files and business and
accounting records of every kind (including all financial, business, sales and
marketing plans and information related to Seller’s Table Games Business); all
illustrator files for training manuals, game manuals, how to play cards, math
files, felt designs, pay table signs, product sheets, any marketing materials,
and any other items depicted in illustrator files; in each case that relate to
Seller’s Table Games Business and regardless of whether such items are
evidenced in writing, electronic data, computer software or otherwise;


(xi)        all advertising,
marketing and promotional materials, all archival materials and all other
printed or written materials to the extent relating to Seller’s Table Games
Business;


(xii)       all Gaming Product
Approvals applicable solely to the Purchased Table Games (and not the Excluded
Assets).  (the items in Sections  2.1(a)(ix), 2.1(a)(xi), and 2.1(a)(xii)
are collectively referred to as “Table Games Books and Records”);


(xiii)      Aquarius and Game
Manager and all prior, current and future versions and enhancements thereof;


(xiv)      subject to Section
2.2(a), all Assumed Contracts; and


(xv)       all Pending Orders, as
defined in Section 4.10(j).


(b)           Licensed
Patents.  As part of the Transaction
and as additional consideration for the payment of the Purchase Price, Seller
agrees to enter into the Progressive License and to grant Buyer all of the
rights thereto, as set forth in the Progressive License.


(c)           Excluded
Assets.  Notwithstanding the
foregoing, the following properties, assets and rights which are otherwise a
part of Seller’s Table Games Business (the “Excluded Assets”) are
expressly excluded from the Transaction, and, as such, are not included in the
Purchased Assets:


(i)          any cash, cash
equivalents, or (except as set forth in Section 2.3), any accounts
receivable held by Seller and any accounts receivable;


(ii)         all stock and other
ownership interests in Seller;


(iii)        all Real Property;



 10
 









(iv)       Seller’s corporate
charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers, seals, minute books, stock transfer
books and blank stock certificates and other documents relating solely to the
organization, maintenance and existence of Seller as a corporation;


(v)        claims for and rights
to receive Tax refunds relating to Seller’s Table Games Business with respect
to taxable periods preceding the Effective Date, and Tax returns relating to
Seller’s Table Games Business with respect to taxable periods preceding the
Effective Date, and any notes, worksheets, files or documents relating thereto;


(vi)       Seller’s rights under
or pursuant to this Agreement, the Related Agreements, and the Schedules
attached hereto and thereto;


(vii)      Seller’s ownership of
and rights in and to any System, and the licenses, Intellectual Property,
royalties, agreements, customers, and accounts relating to any System other
than to any of same that also relate to Game Manager and Aquarius ; and


(viii)     all other assets and
properties of Seller specifically listed and/or described on the Excluded
Assets Schedule.


2.2   Assumption of Liabilities.


(a)           Assumed
Liabilities.  Subject to the
conditions set forth in this Agreement, in addition to the Purchase Price and
as additional consideration for the Purchased Assets, as of the Effective Date,
Buyer shall assume only the following Indebtednesses and Losses of Seller to
the extent provided in (i) and (ii) of this Section 2.2(a) therein
(collectively, the “Assumed Liabilities”). For purposes of clarity, no
other Indebtednesses or Losses of Seller shall be expressly, implicitly or by
operation of law assumed by Buyer:


(i)          Seller’s obligations,
after the Effective Date, under any Assumed Contracts, provided that
such obligations relate: x) to the Seller’s Table Games Business, and y) that
such Assumed Contracts were entered into in the Seller’s Ordinary Course of
Business of operating Seller’s Table Games Business, and specifically excluding
any liability or obligation relating to or arising out of such Assumed Contracts
as a result of (A) any breach of such Assumed Contracts occurring on or
prior to the Effective Date, (B) any violation of law, breach of warranty,
tort or infringement occurring on or prior to the Effective Date; (C) any
environmental, health or safety matter where the facts or conditions underlying
such matter occurred or existed on or prior to the Effective Date; and
(D) any related charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand; provided, however, that
notwithstanding the foregoing, any obligation not disclosed in writing in an
Assumed Contract shall not be an Assumed Liability.  All Assumed Contracts are listed on the Assumed
Contracts Schedule.  Merely because
certain rights under an agreement between Seller and a third party are assigned
to Buyer does not make such agreement an Assumed Contract.  In addition, for any Assumed Contract which
utilizes any System (such as, without limitation, CJS) and where any payments
for that System or any servicing or maintenance thereof are included in
Purchased Table Games Net Revenue, then: x) Buyer shall be entitled to retain
all such payments; and y) Seller shall be obligated, at no cost to Buyer or
additional cost to the customer, to provide all servicing and maintenance thereon
for as long as such payments are included in such Purchased Table Games Net
Revenues.  Notwithstanding the foregoing,
Buyer is not assuming any obligations whatsoever with 



 11
 









respect to any
System, and Seller hereby indemnifies all Buyer Indemnitees, pursuant to Section
7.2, from any Losses; and


(ii)         all obligations and
liabilities to the extent based solely on facts or circumstances that arise
after the Effective Date and that relate to the ownership, use and/or operation
of the Purchased Assets and the operation and conduct of Seller’s Tables Games
Business after the Effective Date. As an example, an allegation made
post-closing that any Purchased Asset is infringing a third party’s
Intellectual Property is not an Assumed Liability and shall be fully covered by
Seller’s indemnification to Buyer if the alleged post-closing acts of
infringement are substantially the same as Seller’s pre-closing acts or
omission, with relation to same Purchased Asset.


(b)           Liabilities
Not Assumed.  Notwithstanding
anything to the contrary in this Agreement (and other than the Assumed
Liabilities), Buyer shall not assume or in any way become liable for any
Indebtednesses or Losses of any nature whatsoever relating to Seller, Seller’s
Table Games Business, the Purchased Assets, or the Licensed Patents, whether
accrued, absolute, contingent or otherwise, whether known or unknown, whether
due or to become due, whether related to Seller, Seller’s Table Games Business,
the Purchased Assets or the Licensed Patents, and whether disclosed on the
Schedules attached hereto, and regardless of when or by whom asserted,
including without limitation, clauses (i) through (xii) below (collectively
referred to herein as the “Excluded Liabilities”):


(i)          any of Seller’s
liabilities or obligations under this Agreement, any Related Agreement, the
Schedules attached hereto or thereto, and any other agreements entered into by
Seller in connection with the transactions contemplated by this Agreement;


(ii)         except as otherwise expressly set forth in Section
7.7, any of Seller’s liabilities or obligations for Taxes, whether
or not arising out of this Agreement, the Related Agreements, or the schedules
attached hereto or thereto, or the consummation of the Transaction, for any
period in the past, present or future;


(iii)        any of Seller’s
liabilities or obligations for expenses, or fees incident to or arising out of
the negotiation, preparation, approval or authorization of this Agreement or
the consummation (or preparation for the consummation) of the Transaction
(including all attorneys, accountants, investment bankers and brokerage fees);


(iv)       any liability or
obligation under or with respect to any Seller employee benefit plan, program,
policy, arrangement or other employee-related expenses, presently or formerly
maintained or contributed to by Seller or its ERISA Affiliates, or with respect
to which Seller or any such ERISA Affiliate has any liability;


(v)        any liability or
obligation under, relating to, or with respect to any certificate prepared or
provided by any officer of Seller in connection with the Transaction;


(vi)       any liability or
obligation with respect to any products or services that were marketed or sold
prior to the Effective Date, including product liability, warranty claims,
infringement claims and any related claims and litigation arising prior to, on
or after the Effective Date (except (A) any liabilities related to Assumed
Contracts only as and to the extent as set forth and defined in Section
2.2(a)(i); and (B) any liabilities caused solely by acts or omissions of Buyer
after the Effective Date;



 12















(vii)      any liabilities or
obligations relating to the Seller, the Purchased Assets, the Licensed Patents,
or Seller’s Table Games Business (A) arising under any federal, state, local or
foreign Law (including under any Environmental and Safety Requirements) or any
requirement of any governmental authority, or (B) arising by reason of any
breach or alleged breach by Seller of any agreement, contract, lease, license,
commitment, instrument, judgment, order or decree, irrespective of whether such
liability or obligation attaches to Buyer or Seller in the first instance,
except to the extent: i) that the Buyer breaches an Assumed Contract; and ii)
all the facts, events or circumstances underlying such liability or obligation
are created or first solely caused by Buyer’s operation of Seller’s Table Games
Business after the Effective Date;


(viii)     any of Seller’s
liabilities or obligations relating to any legal action, proceeding or claim
arising out of or in connection with Seller’s conduct of Seller’s Table Games Business
or any other conduct, acts or omissions of Seller, Seller’s officers,
directors, employees, consultants, distributors, agents or advisors on or prior
to the Effective Date;


(ix)        any of Seller’s
liabilities or obligations for Indebtedness (other than as provided and limited
in the Assumed Liabilities);


(x)         any liabilities or
obligations in respect of any of the Excluded Assets (including under any
contracts, leases, commitments or understandings related thereto);


(xi)        any of Seller’s
liabilities or obligations which Buyer may become liable for as a result of or
in connection with the failure by Buyer or Seller to comply with any bulk sales
or bulk transfers laws or as a result of any “defacto merger” or “successor-in-interest”
theories of liability;


(xii)       any royalty,
distribution fee, license fee or other obligations to: x) TCS; or y) Harrah’s
relating to or arising under the WSOP brand or any agreements between Seller
and Harrah’s;


(xiii)      any other liabilities
or obligations of Seller not expressly assumed by Buyer pursuant to Section
2.2(a) above.


For purposes of this Section 2.2(b), “Seller”
shall also be deemed to include any predecessors to Seller.


2.3           Purchase Price.


(a)           Purchase
Price.  The aggregate purchase price
(the “Purchase Price”) for the Purchased Assets and the license of the
Licensed Patents shall be equal to: (i) $20,400,000; minus (ii) $409,500
which is equal to one half of the accounts receivable shown on Seller’s
February 28, 2007 balance sheet shown in the IM (the “IM Balance Sheet”);
minus (iii) $235,805, which amount represents 50% of the amount of
Seller’s billings for the Existing Installed Base for the month of September
2007 (the “September 2007 Billings”) (the “Cash Purchase Price”);
plus (iv) the Contingent Purchase Price Payments.  The Case Purchase Price includes all amounts
and other consideration due Seller under that certain Table Game Route Purchase
Agreement, dated as of September 1, 2007, by and between Seller and Buyer and
Seller hereby confirms that no other amounts or consideration are due under
said agreement.  The Cash Purchase Price
shall be confirmed by the parties at least two (2) business days prior to the
Closing Date.



 13
 









(b)           Purchase Price Adjustment.


(i)          Within thirty (30)
days after the Effective Date, Seller shall deliver to Buyer a consolidated
balance sheet of Seller’s Table Games Business, as a stand-alone business and
division of Seller, accurate as of the Effective Date, in final form. (the “Closing
Balance Sheet”).  The Closing Balance
Sheet shall include all known adjustments required in a year-end closing
of the books and shall be prepared in a manner consistent with GAAP.


(ii)         Within sixty (60)
days of the Effective Date, Buyer shall have the right to verify the existence
and value (in accordance with GAAP) of the Inventory and Fixed Assets, as
defined by GAAP transferred to Buyer hereunder.


(iii)        After Buyer’s
verification in Section 2.3(b)(ii), of the existence and value of the Inventory
and Fixed Assets, if the sum of the Inventory and the Fixed Assets are valued
at less than $1,425,000 Seller, in such case, within 10 days of Buyer’s written
notice thereof to Seller, shall pay Buyer the shortfall.  If Seller does not make such payment, Buyer
shall be entitled to Set-Off said amount as 
provided in Section 7.2 hereof.


(iv)       In addition, within
thirty (30) days of Closing, Seller shall pay Buyer $117,903, which amount
represents 25% of the September 2007 Billings.


2.4           Closing Transactions.


(a)           Closing.  Subject to the conditions set forth herein,
the consummation of the Transaction (the “Closing”) shall take place at
the offices of Kirkland & Ellis LLP, 153 East 53rd Street, New York, New York, at 9:30 a.m.,
local time, no later than the second business day following the date on which
all of the conditions to each party’s obligations hereunder have been satisfied
or waived (other than conditions to be satisfied at the Closing itself) , or
such other time and place as the parties may mutually agree (the date on which
the Closing takes place is referred to herein as the “Closing Date”),
but in no event more than five (5) days after the Execution Date.  Notwithstanding the actual Closing Date, the
parties agree that the Effective Date of Closing for tax and accounting
purposes shall be October 1, 2007).


(b)           Payment
and Deliveries.  Subject to the
conditions set forth in this Agreement, at the Closing:


(i)          Buyer shall pay, at
the Closing Date, the Cash Purchase Price by wire transfer of immediately
available funds to an account which has been designated in writing by Seller to
Buyer;


(ii)         Seller shall convey,
free and clear of any Liens, all of the Purchased Assets to Buyer and shall
deliver to Buyer such appropriately executed instruments of sale, transfer,
assignment, conveyance and delivery, bills of sale, assignments and
assumptions, Intellectual Property assignments or other Intellectual Property
conveyance documents, certificates of title, and all other instruments of
conveyance, including those which are reasonably requested to effect transfer to Buyer of good
and marketable title, free and clear of any Liens, to each of the Purchased
Assets, and a valid and marketable license to the Licensed Patents, along with
a non-disturbance agreement from Ableco Finance LLC (“Ableco”), including
documents acceptable for recordation in the United States Patent and Trademark
Office, the United States Copyright Office and any other similar domestic or
foreign 



 14
 









office,
department or agency, it being understood that all of the foregoing shall be
satisfactory in form and substance to Buyer and its counsel; (however, with
respect to any foreign offices, departments or agencies, such deliveries,
subject to Section 7.5, may occur post-Closing.


(iii)        Seller shall deliver
to Buyer (A) a certificate signed by the Chief Executive Officer of Seller,
dated the date of the Closing, stating that each of the conditions specified in
Section 3.1 below have been satisfied as of the Closing; (B) copies of
all Third-Party Approvals and Governmental Approvals; (C) Table Games
Books and Records; (D) certified copies of resolutions of Seller’s board of
directors and stockholders authorizing and approving the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby; and (E) such other documents or instruments as are
required to be delivered at the Closing pursuant to the terms hereof or that
Buyer reasonably requests prior to the Closing Date to effect the transactions
contemplated hereby;


(iv)       Seller shall deliver to
Buyer an affidavit dated as of the Closing Date and in form and substance
required under the Treasury Regulations issued pursuant to Section 1445(b) of
the Code certifying that Seller is not a “foreign person”;


(v)        Buyer shall deliver to
Seller (A) a certificate signed by an authorized signatory of Buyer, dated the
date of the Closing, stating that the conditions specified in subsections (a)
and (b) of Section 3.2 below have been satisfied, and (B) such other
documents or instruments as are required to be delivered at the Closing
pursuant to the terms hereof; and


(vi)       Buyer and Seller shall
execute and deliver each Related Agreement.


2.5           Allocation
of the Purchase Price.  Buyer shall
prepare an allocation of the Purchase Price among the Purchased Assets as soon
as reasonably practicable but, in no event later than January 31, 2008, which
allocation shall be delivered by Buyer to Seller and which shall be binding on
Seller.  For Tax purposes, the Purchase
Price and the Assumed Liabilities shall be allocated among the Purchased Assets
consistent with the fair market values thereof and in accordance with Section
1060 of the Code.  Neither Buyer nor
Seller, nor any of their respective Affiliates, shall take any position in any
income tax return or income tax audit which is inconsistent with the Purchase
Price allocation unless required to do so by applicable Law.  


2.6           Nonassignable
Contracts.  Notwithstanding anything
to the contrary herein, to the extent that the assignment hereunder by Seller
to Buyer of any Assumed Contract is not permitted or is not permitted without
the consent of any other party to such Assumed Contract, this Agreement shall
not be deemed to constitute an assignment of any such Assumed Contract if such
consent is not given or if such assignment otherwise would constitute a breach
of, or cause a loss of contractual benefits under, any such Assumed Contract,
and Buyer shall assume no Indebtedness or Loss under any such Assumed Contract,
unless the Assumed Contract is for the lease of a Purchased Table Game as part
of the Existing Installed Base.  Without
in any way limiting Seller’s obligation to obtain all of the Third Party
Approvals if any such consent is not obtained or if such assignment is not
permitted irrespective of consent and if the Closing shall occur, Seller shall
reasonably cooperate with Buyer following the Closing Date in any reasonable
arrangement designed to provide Buyer with the rights and benefits (and subject
to the obligations) under any such Assumed Contract, including enforcement at
the cost of and for the benefit of Buyer of any and all rights of Seller
against any other party arising out of any breach or cancellation of any such
Assumed Contract by such other party and, if requested by Buyer in writing,
acting as an agent on behalf of Buyer or as Buyer shall otherwise reasonably
require.



 15
 









2.7           Contingent Purchase Price Payments.


(a)           Following
the Closing and as additional consideration for the Purchased Assets and the
license of the Licensed Patents, and subject to the terms and conditions set forth
in this Agreement, including without limitation, in this Section 2.7 and
Sections 7.2 and 7.9(f) hereof, Seller shall be entitled to receive from Buyer
any Contingent Purchase Price Payments (as defined in Section 2.7(c) hereof),
during the twelve-month periods ending December 31 for each year
beginning in the year 2008 and ending in the year 2016 (each such year a “Contingent
Payment Period”).  The amount paid
with respect to any Contingent Payment Period shall be determined in accordance
with this Section 2.7 and shall be paid, subject to this Section
2.7 and Sections 7.2 and 7.9(f) hereof, to Seller within forty-five (45) days
after any such Contingent Purchase Price Payment has been finally determined
pursuant to this Section 2.7; provided that, subject to Section
7.2, twenty-five percent (25%) of any annual Minimum Contingent Purchase Price
Payment (defined below in Section 2.7(b)) that is due for a Contingent
Payment Period shall be paid to Seller and fully credited against any
Contingent Purchase Price Payment for such Contingent Payment Period within
fifteen (15) days after the end of each calendar quarter during the applicable
Contingent Payment Period.


(b)           The
amount of the Contingent Purchase Price Payments shall be determined as set
forth in this Section 2.7(b), and the payment of any Contingent Purchase
Price Payments shall otherwise be subject to Sections 7.2 and 7.9(f)
hereof.  Subject to Buyer’s rights under
Sections 7.2 and 7.9(f) hereof, the Contingent Purchase Price Payments due for
the Contingent Payment Periods of 2008, 2009, 2010 and 2011 shall not be less
than the following minimums (“Minimum Contingent Purchase Price Payments”):




	
  Year(s)

  	
   

  	
  Minimum Contingent Purchase

  Price Payment Per Year

  	
   

  
	
  2008 -2009

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  2010-2011

  	
   

  	
  $

  	
  750,000

  	
   

  






 


(c)                           Subject
to Buyer’s rights under Sections 7.2 and 7.9(f) hereof, the Contingent Purchase
Price Payment due for any Contingent Payment Period shall equal:  (i) the amount by which the Purchased Table
Game Net Revenue during such Contingent Payment Period exceeds four million
eight hundred and twenty-five thousand four hundred and thirty-one dollars
($4,825,431) (the “Baseline Revenue”), multiplied by the Royalty Rate
for such Contingent Payment Period; plus (ii) 10% of any Purchased Table Game
Sales Revenue during such Contingent Payment Period; plus (iii) 10% of the
gross margin of any Purchased Table Games Service Revenue (collectively the “Contingent
Purchase Price Payments”), less, in all cases, any Minimum Contingent Purchase
Price Payment for the applicable Contingent Payment Period.  The “Royalty Rate” shall mean the
following rates for each indicated Contingent Payment Period.



 16
 









 




	
  Year(s)

  	
   

  	
  Royalty Rate

  	
   

  
	
  2008-2009

  	
   

  	
  23.00 

  	
  %

  
	
  2010-2011

  	
   

  	
  19.00 

  	
  %

  
	
  2012-2016

  	
   

  	
  10.75 

  	
  %

  






 


(d)           Within
forty-five (45) calendar days following the last day of each Contingent Payment
Period, and subject to Buyer’s rights under Sections 7.2 and 7.9(f) hereof,
Buyer shall pay to Seller in immediately available funds the amount of the
Contingent Purchase Price Payment (less the Minimum Contingent Purchase Price
Payment for the applicable Contingent Payment Period), as determined by Buyer
and deliver to Seller a statement (the “Contingent Purchase Price Payment
Statement”) that sets forth and calculates the applicable Contingent
Purchase Price Payment for such Contingent Payment Period together with
reasonable backup documentation.  Seller
may dispute the calculation of the Contingent Purchase Price Payment set forth
on a Contingent Purchase Price Payment Statement by delivering a notice of its
objection (a “Notice of Objection”) to Buyer within thirty (30) calendar
days following delivery of the Contingent Purchase Price Payment
Statement.  Any Notice of Objection
delivered pursuant to this Section 2.7(d) shall specify in reasonable
detail the nature and dollar amount of any disagreement so asserted and shall
be delivered only if (and to the extent that) the Seller reasonably and in good
faith determines that the Contingent Purchase Price Payment set forth on the
Contingent Purchase Price Payment Statement has not been determined in
accordance with this Agreement.  During
the thirty (30) days following delivery of a Notice of Objection, the parties
shall seek in good faith to resolve in writing any differences which they may
have with respect to the matters specified in the Notice of Objection.  At the end of the thirty (30) day period
referred to immediately above, the parties shall submit to a mutually
satisfactory independent “big four” accounting firm (the “Accounting Firm”)
for review and resolution of all matters (but only such matters) which were
properly included in the Notice of Objection, and the Accounting Firm shall
review and make a final determination of the Contingent Purchase Price Payment
for the applicable Contingent Payment Period. 
If the parties are unable to mutually agree on the Accounting Firm, the
Seller and Buyer shall select a “big four” Accounting Firm by lot (after
excluding one big four accounting firm selected by each of Buyer and the
Seller).  The parties will cooperate with
the Accounting Firm during the term of its engagement.  The determination of the Contingent Purchase
Price Payment shall become final and binding on the parties on the date the
Accounting Firm delivers its final resolution in writing to the parties.  Within ten (10) calendar days following the
final determination of the Contingent Purchase Price Payment pursuant to this Section
2.7(d), Buyer shall pay to Seller, or Seller shall refund to Buyer, as
applicable, in immediately available funds any amount that may be due with
respect to such Contingent Purchase Price Payment. The fees and expenses of the
Accounting Firm shall be paid equally by Buyer and Seller, and each of Buyer
and Seller shall pay its own respective attorneys and other professional fees
relating to this Section 2.7(d); provided, however, that if Buyer
shall have underpaid Seller by more than the greater of $15,000 or 3% of the
payment in question (other than on account of Buyer’s rights under Sections 7.2
or 7.9(f) hereof), then Buyer shall be responsible for any such out of pocket
accounting fees and expenses of the Accounting Firm actually incurred by
Seller.


(e)           The
right of Seller to receive any Contingent Purchase Price Payment (i) is solely
a contractual right and is not a security for purposes of any federal or state
securities laws (and shall confer upon Seller only the rights of a general
unsecured creditor under applicable state law); (ii) will not 



 17
 









be represented by any form of certificate or instrument; (iii) does not
give Seller any dividend rights, voting rights, liquidation rights, preemptive
rights or other rights common to holders of Buyer’s equity interests; (iv) is
not redeemable; and (v) may not be sold, assigned, pledged, gifted,
conveyed, transferred or otherwise disposed of (a “Transfer”), except by
operation of Law or to the extent permitted under Section 8.3 (and any Transfer
in violation of this Section 2.7(e) shall be null and void), except that
Seller may assign or pledge its rights to receive any Contingent Purchase Price
Payment, in whole or in part, to a Person that agrees in writing, prior to any
such assignment or pledge (and Seller delivers such writing at least 10
business days prior to the effectiveness of any such assignment or pledge),
that such assigned or pledged rights shall be subject to and subordinate to all
of Buyer’s rights, remedies, interest, obligations and liabilities hereunder in
all respects, including without limitation, to all claims, causes of action,
defenses of any kind under this Agreement or any other Related Agreements. In
no event shall the fact that Seller assigned or pledged its rights to receive
any Contingent Purchase Price Payment to such Person in any way affect, reduce,
modify or amend any of the rights granted to Buyer in this Agreement or any
other Related Agreement.


(f)            Buyer
shall price and place the Purchased Table Games in light of competitive and
market conditions and the other factors that Buyer uses to price and place its
similar games to similarly-situated customers, and not with the motive of
minimizing the amount of the Contingent Purchase Price Payments to be paid to
Seller.  For the sake of clarity, neither
Buyer nor any successor to it shall have any obligation, express or implied, to
give any Purchased Table Games any special or extra treatment or consideration
or any treatment or consideration which is different than it gives any other
similar table or electronic game which it owns, is distributing or exploiting,
or has acquired, but in all cases, taking into account competitive and market
conditions and any other relevant factors. 
Subject to the other provisions of this Section 2.7(f), there is no
express or implied promise by Buyer that any Purchased Table Games will get the
same treatment as any other game of Buyer’s. 
Other than the Cash Purchase Price, and the Minimum Contingent Purchase
Price Payments (but subject to Sections 7.2 and 7.9(f)), there are no
promises or guarantees of any revenues, amounts or payments.  Should Seller make any claim asserting that
Buyer has failed in any way to satisfy any obligation or duty to commercialize
any Purchased Table Games, then Seller agrees that it will be required to show,
by clear and convincing evidence, that Buyer failed to adhere to that
obligation or duty, and, to the extent Seller brings any such claim, should
Seller not prevail on any such claim, Seller shall be responsible for all of
Buyer’s legal and other fees and costs incurred by Buyer in any law suit
asserting such claim.


(g)           In
no event shall Seller receive any revenues of any kind generated from placement
of Purchased Table Games from jurisdictions that require Seller to be licensed
where Seller is not so licensed (“Excluded Jurisdiction”), unless and
until Seller is licensed by the gaming authorities in those jurisdictions and
is in compliance with all applicable gaming regulations so that Buyer may
legally pay Seller such revenue.  All
revenues from the Purchased Table Games received and earned by Buyer from legal
gaming entities in any Excluded Jurisdiction shall be the sole property of
Buyer, and Seller shall have no interest therein unless allowed by Law.  In the event that Seller becomes licensed in
an Excluded Jurisdiction, Buyer shall pay Seller the Contingent Purchase Price
Payments to the extent arising after such license becomes effective.  Additionally, Buyer agrees to pay Seller any
Contingent Purchase Price Payments that would have been paid on revenues
collected in an Excluded Jurisdiction prior to Seller’s becoming licensed in
said jurisdiction if said payments are confirmed in writing by the jurisdiction
as a legal payment.  In no event shall
the fact that Seller may not be legally able to share revenues in an Excluded
Jurisdiction in any way affect, reduce, modify or amend any of the rights
granted to Buyer in this Agreement or in any Related Agreement, nor Buyer’s
ownership of all right, title and interest in and to the Purchased Table Games,
or to any of Buyer’s rights pursuant to the Progressive License, including
without limitation, in any Excluded Jurisdiction.  In the event a jurisdiction becomes 



 18
 









an Excluded Jurisdiction, Buyer will meet and confer with Seller to
find, under applicable gaming Laws, a way to share revenue legally.  In the alternative, under any such
circumstance, the parties shall meet to attempt to agree on a fixed-fee amount
per table (and in some cases, such amount may be a per month payment) to which
Seller would be entitled for Purchased Table Games placed in such Excluded
Jurisdictions, keeping in mind, during such discussions, the percentages for
Purchased Table Games provided herein, but in all events, subject to all
applicable gaming Laws.  The failure to reach
an agreement shall not affect Buyer’s ownership rights in the Purchased Table
Games.  Any such agreement reached must
be legal.


2.8           Distributor
Contracts.  Buyer shall have the
right to negotiate, solicit, correspond with, negotiate with, and enter into
agreements with any Person that is a party to a contract between Seller (or any
of its Affiliates) and such Person relating to the Table Games Business,
regardless of whether such contract is an Assumed Contract.  Upon Buyer’s request (before or after the
Closing Date), Seller shall agree (subject to the counterparty’s agreement) to
(as requested by Buyer) (x) terminate any contract or part of any contract
relating to the Table Games Business, and (y) remit to Buyer any proceeds,
payments, fees, or other consideration paid by such Person under any such
contract.  Seller understands that Buyer’s
actions permitted above may interfere with its contractual relationships, and
Seller expressly consents and agrees to release Buyer and hold Buyer harmless
from and against any Losses that Seller may suffer or incur that may result
from Buyer’s negotiations, solicitations, correspondence, and negotiations with
such Persons.


ARTICLE III


CONDITIONS TO
CLOSING


3.1           Conditions
to Buyer’s Obligation.  The
obligation of Buyer to consummate the Transaction is subject to the
satisfaction of the following conditions as of the Closing:


(a)           Each
of the representations and warranties made by Seller in this Agreement, in any
Related Agreement, and in the certificates described in Sections 2.4(b),
and 7.5  shall be true and correct
as of the Closing Date;


(b)           Seller
shall have delivered to Buyer: i) a signed acknowledgement from U.S. Bank,
National Association, releasing all Liens relating to the Purchased Assets and
all Liens relating to the Table Games Field of Use in the Licensed Patents, all
as set forth in the form of Exhibit A attached hereto; ii) a signed waiver and
release from Ableco, releasing all Liens relating to the Purchased Assets,
together with a non-disturbance agreement with respect to the Licensed Patents,
all as set forth in the form of Exhibit B attached hereto; iii) any and all
appropriate documentation to be filed with the U.S. Patent and Trademark Office
and the U.S. Copyright Office, reflecting the release of Liens on the Purchased
Assets contemplated by this Agreement; iv) duly authorized UCC-3 amendment
statements evidencing release of all Liens relating to the Purchased Assets in
all jurisdictions identified by the Buyer; and v) any other document, waiver,
acknowledgement, certificate, financing statement and/or release reasonably
requested by Buyer to evidence the release of any Liens on the Purchased
Assets, and the release, but only to the extent relating to the Table Games
Field of Use, of any Liens on the Licensed Patents;


(c)           Seller
shall have received or obtained all third party and approvals that are
necessary for the consummation of the Transaction or that are required in order
to prevent a breach of or 



 19
 









default under, a termination or modification of, or acceleration of the
terms of any Assumed Contract, (collectively, the “Third-Party
Approvals”), in each case on terms reasonably satisfactory to Buyer;


(d)           Buyer
and Seller each shall have received or obtained all Board and, if applicable,
stockholder approvals that are necessary for the consummation of the
Transaction and Buyer’s operation of Seller’s 
Table Games Business following the Closing, in each case on terms
satisfactory to Buyer;


(e)           Since June 30, 2007,
there shall have been no material adverse change or development in the financial
condition, operating results, assets, operations, business prospects, value,
employee relations or customer or supplier relations of Seller’s Table Games
Business taken as a whole;


(f)            No
suit, action or other proceeding, or injunction, order, decree or judgment
relating thereto, shall be threatened or pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
the transactions contemplated hereby, or that could have a material adverse
effect on the business, financial condition, operating results, assets,
operations or business prospects of Seller’s Table Games Business taken as a
whole or adversely affect the right of Buyer or its Affiliates to own, operate,
control or license (as applicable) all or any portion of the Purchased Assets,
Seller’s Table Games Business, or the Licensed Patents, no investigation that
could result in any such suit, action or proceeding shall be pending or
threatened, and Seller shall not have received any offer to license any Table
Game Intellectual Property that could be deemed to give notice of any such
suit, action or proceeding;


(g)           Seller
has neither filed for bankruptcy protection nor is “insolvent” as that term is
defined in the Bankruptcy Code (“Insolvent”).


(h)           Seller
shall have delivered to Buyer non-foreign Person affidavits as of the
Closing Date and in form and substance required under the Treasury Regulations
issued pursuant to Section 1445 of the Code so that Buyer is exempt from
withholding any portion of the Purchase Price thereunder;


(i)            Seller
shall have delivered to Buyer duly authorized and executed originals of this
Agreement and of each Related Agreement;


(j)            Seller
shall have delivered to Buyer legal opinions, dated the Closing Date, of both
in-house and outside counsel to Seller, each in form and substance reasonably
acceptable to Buyer, and on which Buyer and any lenders of Buyer shall be
entitled to rely;


(k)           Seller
shall have delivered to Buyer the Table Games Business Books and Records;


(l)            Seller
shall have received an opinion, and confirmed receipt of same to Buyer, in form
and substance typical for transactions of the type contemplated by this
Agreement, from Roth Capital Partners LLC, which is experienced in transactions
of the type contemplated by this Agreement, stating that the Purchase Price is
fair and reasonable in all respects to Seller, its shareholders, its creditors,
and other stakeholders;


(m)          Seller
shall have delivered to Buyer consents and agreements from all third party
manufacturers and suppliers that supply any proprietary parts, components, or
other deliverables to Seller  



 20
 









necessary for Buyer to conduct Seller’s Table Games Business in the
manner conducted immediately prior to the Closing after the Closing;


(n)           [Intentionally
Omitted];


(o)           Seller
shall have, prior to the Closing Date, performed and complied in all material
respects with any of its covenants and agreements required to be performed by
it pursuant to the Agreement and the Related Agreements;


(p)           Seller
executing the vendor letters attached hereto as the Vendor Schedule to each of
Seller’s vendors; and


(q)           Seller
shall have performed and complied in all material aspects with all of its
covenants and agreements required to be performed by it pursuant to this
Agreement and the Related Agreements prior to the Closing Date.


All proceedings to be taken by Seller in connection
with the consummation of the Transaction and all certificates, instruments and
other documents required to effect the Transaction reasonably requested by
Buyer shall be reasonably satisfactory in form and substance to Buyer.  Any conditions specified in this Section
3.1 may be waived only in writing by Buyer and specifying in reasonable
detail the provision being waived.


3.2           Conditions
to Seller’s Obligations.  The
obligation of Seller to consummate the Transaction is subject to the
satisfaction of the following conditions as of the Closing:


(a)           The
representations and warranties made by Buyer in this Agreement and in any
certificate delivered by Buyer pursuant hereto shall be true and correct as of
the date hereof;


(b)           Except
for any pending or threatened suit, action or other proceeding directly or
indirectly initiated by Seller (or any of 
its Affiliates), no suit, action or other proceeding, or injunction,
order, decree or judgment relating thereto, shall be threatened or pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with the Transaction, and no investigation that could result in
any such suit, action or proceeding shall be pending or threatened; and


(c)           Buyer
shall have delivered to Seller duly authorized and executed originals of this
Agreement and of each Related Agreement


Any condition specified in this Section 3.2
may be waived only in writing by Seller and specifying in reasonable detail the
provision being waived.


ARTICLE IV


REPRESENTATIONS AND
WARRANTIES OF SELLER


Seller represents and warrants to Buyer, as of the
Closing Date, each of the following (it being understood that
each representation and warranty contained in this Article IV is subject to the
exceptions, limitations and disclosures (collectively “Exceptions”) which are
expressly referenced in a 



 21
 









particular
subsection hereof and which Seller expressly sets forth on the applicable
Schedule in reasonable detail (e.g., game, date, customer, territory and
limitation), such that Buyer is able to reasonably understand the scope and
nature of the Exceptions:


4.1           Organization
and Corporate Power.  PGIC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada.  PGI is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.  Seller,
with respect to Seller’s Table Games Business, has obtained and currently
maintains all qualifications to do business as a foreign corporation in all
other jurisdictions in which the character of Seller’s properties or the nature
of Seller’s activities require it to be so qualified.  Seller has all requisite power and authority
and all authorizations, licenses and permits necessary to own and operate
Seller’s Table Games Business and to conduct Seller’s Table Games Business as
now conducted and as presently proposed to be conducted.


4.2           Authorization;
No Breach.  The execution, delivery
and performance of this Agreement and the Related Agreements to be executed and
delivered by Seller and the consummation of the Transaction have been duly and
validly authorized by all requisite corporate action on the part of Seller, and
no other corporate proceedings on the part of Seller are necessary to authorize
the execution, delivery or performance of this Agreement or the Related
Agreements.  This Agreement and the
Related Agreements to be executed and delivered by Seller constitute valid and
binding obligations of Seller, enforceable in accordance with their respective
terms, subject to (i) Laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of Law governing specific
performance, injunctive relief and other equitable remedies.  Except as disclosed, as required herein, on
the attached Restrictions Schedule, the execution, delivery and
performance of this Agreement and the Related Agreements to be executed and
delivered by Seller and the consummation of the Transaction does not and shall
not (i) conflict with or result in any breach of any of the provisions of,
(ii) constitute a default under, (iii) result in a violation of,
(iv) give any third party the right to terminate or to accelerate any
obligation under, (v) result in the creation of any Lien upon any of the
Purchased Assets or Seller’s Table Games Intellectual Property, or
(vi) require any authorization, consent, approval, exemption or other
action by or notice to or filing with any court or other governmental or
regulatory body or authority, under the provisions of Seller’s certificate of
incorporation or bylaws or any indenture, mortgage, lease, loan agreement,
license, contract, understanding, commitment or other agreement or instrument
to which Seller is bound or affected, or any Law to which Seller is subject.  Without limiting the generality of the
foregoing, except for this Agreement, and as may be provided in any of the
Related Agreements, there are no binding agreements, options, commitments or
rights entered into or granted by Seller with, of or to any Person to purchase
or otherwise acquire Seller’s Table Games Business or any of the Purchased
Assets or the Licensed Patents or any interests therein.  Further, specifically, without limitation, no
approval of this Agreement, any Related Agreement, or this Transaction is
required by PGIC’s shareholders.


4.3           Subsidiaries.  Each of Seller’s existing and past Affiliates
and Subsidiaries that is or has been engaged in the conduct of Seller’s Table
Games Business is disclosed, as required herein, on the Subsidiaries Schedule.


4.4           Financial
Statements; Financial Information. 
The  following shall be referenced collectively as the “Financial
Statements”:


(a)           the
audited balance sheet of the Seller as of December 31 2004, December 31, 2005
and December 31, 2006 and the related statements of income and cash flows (or
the equivalent) for the fiscal years (or partial year) then ended (the “Audited
Financial Statement”);



 22
 









(b)           the
unaudited balance sheet of the Seller for the six months ending as of June 30,
2007, (“June Balance Sheet”) and the related statements of income and
cash flows (or the equivalent), if any, for said period (the “Unaudited June
2007 Financial Statements”); and


(c)           the
unaudited balance sheet of the Seller relating to Seller’s Tables Games
Business on a stand-alone basis as of September 30, 2007 (the “Closing
Balance Sheet”), and the related statements of income and cash flows (or
the equivalent), if any, for the nine-month period then ended.


(d)           The
Financial Statements are or will be accurate and complete in all material
respects and fairly present the financial condition of Seller’s Table Games
Business as of the respective dates thereof and the operating results of Seller’s
Table Games Business for the periods covered thereby and has been prepared in
accordance with GAAP consistently applied subject in the case of the unaudited
Financial Statement to the absence of footnote disclosures and changes
resulting from normal year-end adjustments for recurring accruals (none
of which would, alone or in the aggregate, be materially adverse to the
financial condition, or operating results, of Seller’s Table Games Business
taken as a whole).


(e)           Since
the beginning of PGIC’s 2006 fiscal year, the Purchased Assets and the Licensed
Patents, collectively, have represented no more than approximately: i) 25.8% of
PGIC’s assets; ii) 16.7% of PGIC’s revenues; and iii) -14.5% of PGIC’s
pre-tax, net operating income.


4.5           Absence
of Undisclosed Liabilities.  Except
as disclosed, as required herein, on Liabilities Schedule, Seller has
and will have no obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due and
regardless of when or by whom asserted) with respect to Seller’s Table Games
Business at or as of the Closing Date or arising out of transactions entered
into at or prior to the Closing Date, or any action or inaction at or prior to
the Closing Date, or any state of facts existing at or prior to the Closing
Date, including Taxes with respect to or based upon periods, transactions or
events occurring on or before the Closing Date, except: i) obligations under
contracts or commitments disclosed, as required herein, on the attached Contracts
Schedule or under contracts and commitments entered into in the Ordinary
Course of Business which, because of the dollar thresholds set forth in Section
4.12 below, are not required pursuant to Section 4.12 below to be
disclosed on the attached Contracts Schedule (but not liabilities for
breaches of any such contracts or commitments occurring on or prior to the
Closing Date), and (ii) liabilities and obligations which have arisen after the
date of the Closing Balance Sheet in the Ordinary Course of Business (none of
which is a liability for breach of contract, tort, infringement, claim, lawsuit
or warranty), and none of which Buyer is assuming.


4.6           Insolvency; Fairness Opinion.


(a)           PGIC
is not Insolvent and has not been Insolvent at any time since June 1, 2006; and


(b)           Seller
has received, prior to the Closing Date, an independent opinion, in form and
substance typical for transactions of the type contemplated by this Agreement
from Roth Capital Partners, LLC, which is experienced in transactions of the
type contemplated by this Agreement, stating that, based on its own analysis of
Seller’s historical and projected revenues from the Seller’s Table Games
Business, that the Purchase Price is fair and reasonable in all respects to
Seller, its shareholders, its creditors and its other stakeholders.



 23
 









4.7           Secured
Creditors.  .Except as disclosed, as
required herein, on the attached Secured Creditors Schedule, no other
Person has any rights to assert any Lien in the Purchased Assets or the
Licensed Patents, and all of said Liens, as of the Closing Date, shall be
released or discharged.


4.8           No
Material Adverse Change.  Except as
disclosed, as required herein, on the Material Adverse Change Schedule,
since June 1, 2006, there has been no material adverse change or development in
the business, condition (financial or otherwise), value, operating results,
employee relations, customer relations, supplier relations, assets, operations
or business prospects of Seller’s Table Games Business taken as a whole.  Since June 1, 2006, Seller has conducted
Seller’s Table Games Business only in the Ordinary Course of Business.


4.9           Absence
of Certain Developments.  Except as
disclosed, as required herein, on the attached Developments Schedule,
since June 1, 2006, Seller has not with respect to Seller’s Table Games
Business or the Purchased Assets:


(a)           mortgaged,
pledged or subjected to any Lien, any of the Purchased Assets, or the Licensed
Patents, other than the Permitted Liens;


(b)           made
any final sale, fully paid lease, one-off sale or similar transaction in which
a Table Game has been provided to any Person for a term greater than one year
without any contractual obligation on such Person to pay a recurring fair
market lease consideration;


(c)           discharged
or satisfied any material lien or paid any material obligation or liability
related to Seller’s Table Games Business (other than in the Ordinary Course of
Business);


(d)           sold,
leased, assigned, licensed or transferred any of its tangible assets (including
the Purchased Assets), used in Seller’s Table Games Business except in the
Ordinary Course of Business, or canceled without fair consideration any debts
or claims owing to or held by it arising out of its operation of Seller’s Table
Games Business;


(e)           sold,
assigned, licensed, sublicensed, transferred or Liened any Seller’s Table Games
Intellectual Property or other intangible assets, disclosed any Confidential
Information to any Person other than its employees (and other than Buyer and
Buyer’s representatives, agents, attorneys and accountants), or abandoned or
permitted to lapse any Seller’s Table Games Intellectual Property;


(f)            incurred
any Indebtedness with respect to Seller’s Table Games Business or incurred or
become subject to any material liability with respect to Seller’s Table Games
Business, except current liabilities incurred in the Ordinary Course of
Business and liabilities under contracts entered into in the Ordinary Course of
Business;


(g)           made
any loans or advances to, investments in, or guarantees for the benefit of, any
Person in connection with Seller’s Table Games Business, other than in the Ordinary
Course of Business;


(h)           suffered
any extraordinary losses or waived any rights of material value with respect to
Seller’s Table Games Business, whether or not in the Ordinary Course of
Business;


(i)            suffered
any damage, destruction or casualty loss to any of the Purchased Assets or the
Licensed Patents in excess of $25,000, whether or not covered by insurance;



 24
 









(j)            except
for any Pending Orders, made any capital expenditures commitments with respect
to Seller’s Table Games Business that aggregate in excess of $50,000;


(k)           made
any change in any method of accounting or accounting policies with respect to
Seller’s Table Games Business, other than those required by GAAP which have
been disclosed in writing to Buyer;


(l)            other
than in the Ordinary Course of Business, engaged in any promotional sales,
discount or price reduction or other activity with respect to Seller’s Table
Games Business that has or would reasonably be expected to have the effect of
accelerating to pre-Closing periods sales that otherwise would be
expected to occur in post-Closing periods;


(m)          instituted
or permitted any material change in the conduct of Seller’s Table Games
Business, or any change in its method of purchase, sale, lease, management,
marketing, promotion or operation;


(n)           entered
into, amended or terminated any material contract or any government license
or permit or taken any other action or entered into any other transaction other
than in the Ordinary Course of Business;


(o)           declared,
set aside or made any payment or distribution of cash or other property
(including so-called “tax distributions”) to any of its equityholders with
respect to such equity interests or otherwise, or purchased, redeemed or
otherwise acquired any of its equity securities (including any warrants,
options or other rights to acquire its equity);


(p)           incurred
intercompany charges or conducted its cash management customs and practices
other than in the Ordinary Course of Business (including, without limitation,
with respect to maintenance of working capital balances and inventory levels,
collection of accounts receivable and payment of accounts payable);


(q)           entered
into any other material transaction, whether or not in the Ordinary Course of
Business, or materially changed any business practice;


(r)            made
or entered into any agreement relating to any refund or rebate or provided any
credit to a customer relating to Seller’s Table Games Business, any Purchased
Assets, or the Licensed Patents;


(s)           except
as disclosed on the Developments Schedule, sold, leased, assigned,
Liened or transferred (whether in or out of the Ordinary Course of Business),
any Purchased Asset or Licensed Patent; or


(t)            committed
to do any of the foregoing.


4.10         Purchased Assets and Licensed
Patents.


(a)           Seller
owns good and marketable title to all of the Purchased Assets, free and clear
of all Liens; and, as to all of the Licensed Patents, Seller owns good and
marketable title to all of the Licensed Patents, free and clear of all Liens,
except for (i) Liens disclosed, as required herein, on the attached Secured
Creditors Schedule and (ii) other imperfections of title, restrictions
or encumbrances, if 



 25
 









any, which imperfections, restrictions or encumbrances do not,
individually or in the aggregate, materially impair the continued use and
operation of any of the Licensed Patents to which they relate and do not affect
the merchantability of the title to any of the Licensed Patents to which they
relate (items (i) and (ii) above are collectively referred to herein as the “Permitted
Liens” and are disclosed on the Secured Creditors Schedule).  On the Closing Date, upon consummation of the
Transaction, Buyer will acquire good and marketable title to all of the
Purchased Assets, free and clear of all Liens. 
On the Closing Date, upon consummation of the Transaction, neither
Seller nor any creditor of Seller will have any right to take any action which
could diminish, disturb, or interfere with Buyer’s rights under the Progressive
License, including, Buyer’s continued use of the Licensed Patents in accordance
with the Progressive License, other than the rights of Ableco to exercise
rights and remedies under Article 9 of the Uniform Commercial Code with respect
to the Progressive License or the Licensed Patents; provided that, if Ableco
exercises such rights and remedies, it shall enter into a license agreement, as
set forth in the non-disturbance agreement executed by Ableco in favor of
Buyer.


(b)           the
Purchased Assets are all of the assets, whether tangible or intangible, real or
personal, that are used in, a part of, or necessary for the conduct of Seller’s
Table Games Business as currently conducted by Seller and, to the Knowledge of
Seller, as currently contemplated to be conducted by Buyer.


(c)           The
Inventory, Equipment and Fixed Assets (whether owned or leased) included in the
Purchased Assets are, except for ordinary wear and tear, in good condition and
repair and are usable in the Ordinary Course of Business, and all such assets
have been installed and maintained in accordance with all applicable Laws.


(d)           The
Purchased Table Games are all of the Purchased Table Games used in, or a part
of, or necessary for the conduct of Seller’s Table Games Business as currently
conducted by Seller and, to the Knowledge of Seller, as currently contemplated
to be conducted by Buyer.


(e)           The
Table Games Intellectual Property are all of the Table Games Intellectual
Property used in, or a part of, or necessary for the conduct of Seller’s Table
Games Business as currently conducted by Seller and, to the Knowledge of
Seller, as currently contemplated to be conducted by Buyer.


(f)            Each
of the Purchased Table Games listed in the Existing Installed Base Schedule is:
i) to the best of Seller’s Knowledge, installed, as of the Closing Date, in the
location listed next to it on the Existing Installed Base Schedule; ii)
revenue-generating; iii) included in the September 2007 Billings; and iv) not
subject to a notice of removal or about which Seller has any Knowledge about a
removal.


(g)           The
Existing Installed Base Schedule lists all Purchased Table Games which, as of
the Closing Date, are revenue-generating to Seller.


(h)           As
of the Closing Date, there are no Purchased Table Games on a “free trial.”


(i)            In
addition, the Baseline Revenue accurately and fully contains the Purchased
Table Games Net Revenue received from the Existing Installed Base for the
12-month period form July 1, 2006 through June 30, 2007, and there are no Taxes
included in the Baseline Revenue.


(j)            All
pending orders, as of the Closing Date, for any Purchased Table Games (the “Pending
Orders”) are disclosed, as required herein, on the Pending Orders
Schedule, and have each been 



 26
 









incurred in Seller’s Ordinary Course of Business.  None of the Pending Orders involves a sale or
lifetime license of any Purchased Table Games.


(k)           The
Sold Purchased Table Games are listed on the Sold Purchased Table Games
Schedule.


4.11         Tax
Matters.  Except as disclosed, as
required herein, on the attached Tax Schedule:  (a) Seller has timely filed all federal,
state, local and foreign income, information and other Tax returns which are
required to be filed under applicable legal requirements with respect to Seller’s
Table Games Business; (b) all such returns are true, complete and accurate in
all material respects; (c) all
material Taxes, assessments and other governmental charges imposed upon Seller
with respect to Seller’s Table Games Business, or upon any of the assets,
income or franchises of Seller relating to Seller’s Table Games Business, have
been timely paid; and (d) there are no material actual or to the Seller’s
Knowledge, proposed material Tax deficiencies, assessments or adjustments with
respect to Seller’s Table Games Business or any assets or operations of Seller
with respect to Seller’s Table Games Business. 
The attached Tax Schedule contains a list of states, territories
and jurisdictions (whether foreign or domestic) in which Seller is required to
file Tax Returns with respect to Seller’s Table Games Business.


4.12         Contracts and Commitments.


(a)           Except as disclosed,
as required herein, on the attached Contracts Schedule, Seller is not,
with respect to Seller’s Table Games Business, a party to any oral or written:


(i)          contract with any
labor union or any bonus, pension, profit sharing, retirement or any other form
of deferred compensation plan or any stock purchase, stock option or similar
plan or practice, whether formal or informal, or any severance agreement or
arrangement;


(ii)         management agreement,
contract for the employment of any officer, partner, individual employee or
other person on a full-time, part-time or consulting basis or
providing for the payment of any cash or other compensation or benefits upon
the sale of Seller’s Table Games Business or prohibiting competition or the
disclosure of trade secrets or confidential information;


(iii)        agreement or
indenture relating to Indebtedness or to mortgaging, pledging or otherwise
placing a lien on any of Seller’s assets or letter of credit arrangements;


(iv)       agreements with respect
to the lending or investing of funds;


(v)        nondisclosure or
confidentiality agreements with respect to the Table Games Business;


(vi)       lease or agreement
under which Seller is lessee of or holds or operates any property, real or
personal, owned by any other party for which the annual rental exceeds $25,000;


(vii)      lease or agreement
under which Seller is lessor of or permits any third party to hold or operate
any property, real or personal, owned or controlled by Seller;


(viii)     broker, distributor,
vendor, customer or maintenance agreements;



 27















(ix)        other contract or
group of related contracts with the same party continuing over a period of more
than six months from the date or dates thereof, not terminable by Seller upon
30 days’ or less notice without penalty or involving more than $25,000;


(x)         contract which
prohibits Seller from freely engaging in Seller’s Table Games Business anywhere
in the world;


(xi)        contract relating to
the marketing, sale, distribution, reproduction, advertising or promotion of
its products;


(xii)       franchise or agency
agreements;


(xiii)      agreement with any
officer, director, employee, shareholder, or Affiliate of Seller or any
individual related by marriage or adoption to any such individual or any entity
in which any such Person owns any beneficial interest (collectively, the “Insiders”);


(xiv)      warranty agreement with
respect to products sold or indemnity agreement with any supplier to Seller’s
Table Games Business under which Seller is obligated to indemnify such supplier
against product warranty or infringement or similar claims;


(xv)       agreements relating to
ownership of or investments in any business or enterprise, including
investments in joint ventures and minority equity investments;


(xvi)      power of attorney
executed by or on behalf of Seller;


(xvii)     agreements and licenses
(including all inbound licenses) to which Seller is a party with respect to any
Seller’s Table Games Intellectual Property;


(xviii)    agreements or group of
related agreements pursuant to which Seller has derived revenue or other
consideration in excess of $5,000 in the aggregate for all such agreements (and
without regard to profits, costs, or other deductions) between June 1, 2006 and
the Closing Date; or


(xix)      other agreement
material to Seller’s Table Games Business, whether or not entered into in the
Ordinary Course of Business.


(b)           Except
as disclosed, as required herein, on the attached Contracts Schedule,
(i) no contract or commitment required to be disclosed on the Contracts
Schedule has been breached in any material respect or cancelled by the other
party thereto, (ii) Seller has performed all obligations under the
contracts required to be disclosed on the Contracts Schedule required to
be performed by Seller and there is no material breach of or default under any
lease, contract, commitment or other agreement to which Seller is a party with
respect to Seller’s Table Games Business or any event which, upon giving of
notice or lapse of time or both, would constitute such a breach or default,
(iii) Seller has no present expectation or intention of not fully
performing any obligation pursuant to any contract required to be disclosed on
the Contracts Schedule, and (iv) each contract required to be disclosed
on the Contracts Schedule is, to the best of Seller’s Knowledge, legal,
valid, binding, enforceable and in full force and effect, and will continue as
such following the consummation of the transactions contemplated hereby
(subject to bankruptcy, moratorium and similar laws and subject to the
application of specific performance and other equitable principles).



 28
 









(c)           Buyer
has heretofore been supplied with a true and correct copy of all written
contracts (and a true and correct written description of all oral contracts)
which are disclosed on the attached Contracts Schedule, together with
all amendments, exhibits, attachments, waivers or other changes thereto.


(d)           There
are no contracts, licenses, or other agreements of any kind other than those
disclosed, as required herein, on the Contracts Schedule that are used
in or a part of Seller’s Table Games Business.


4.13         Table Games Intellectual Property.


(a)           The
Table Games Intellectual Property Schedule attached hereto sets forth a
complete and correct list of all of the Intellectual Property that are owned by
Seller and used in or a part of Seller’s Table Games Business, as follows:


(i)          issued or registered
Table Games Intellectual Property;


(ii)         applications to
register Table Games Intellectual Property;


(iii)        material unregistered
trademarks, service marks, and copyrights owned by Seller;


(iv)       all other Table Game
Intellectual Property used in or a part of Seller’s Table Games Business; and


(v)        any Intellectual
Property necessary for Seller’s Table Games Business.


(b)           Except
as disclosed, as required herein, on the Table Games Intellectual Property
Schedule:


(i)          Seller owns and
possesses all right, title and interest in and to all of the Table Games
Intellectual Property ;


(ii)         The Table Games
Intellectual Property is not subject to any Liens, and further, is not subject
to any restrictions or limitations regarding use or disclosure other than as
disclosed, as required herein, on the Table Games Intellectual Property
Schedule except that the Licensed Patents are subject only to the Permitted
Liens.


(iii)        Seller has not
infringed, misappropriated or otherwise conflicted with, any Intellectual
Property of a third party in Seller’s operation or commercialization of its
Table Games Business, and Buyer’s operation of Seller’s Table Games Business
and its commercialization of the Purchased Table Games in a manner consistent
with Seller’s use of the Table Games Intellectual Product will not infringe,
misappropriate or otherwise conflict with, any Intellectual Property of any
third party, and, to the best of Seller’s Knowledge, there are no facts that
indicate a likelihood of any of the foregoing; and Seller has not received any
notices regarding any of the foregoing (including, without limitation, any
demands or offers to license any Intellectual Property from any third party);


(iv)       Seller has taken all
necessary and desirable reasonable actions to maintain and protect all of the
Table Games Intellectual Property and will continue to maintain and 



 29
 









protect all of
same (except to the extent transferred to Buyer hereunder) so as not to
materially adversely affect the validity or enforceability thereof;


(v)        To the best of Seller’s
Knowledge, no third party has infringed, misappropriated or otherwise
conflicted with any of the Table Games Intellectual Property, and to the best
of Seller’s Knowledge, there are no facts that indicate a likelihood of any of
the foregoing;


(vi)       Immediately subsequent
to the Closing, the Table Games Intellectual Property, will be owned by Buyer
or licensed to Buyer on terms and conditions identical to those under which
Seller owned or used same immediately prior to the Closing, and the Licensed
Patents will be available for Buyer’s use according to the terms of the
Progressive License.


(vii)      To the best of Seller’s
Knowledge, Each of the claims in each of the Purchased Table Games Intellectual
Property is valid and enforceable in each jurisdiction in which any Purchased
Table Game Intellectual Property is issued or registered, and, to the best of
Seller’s Knowledge, will be valid and enforceable in any jurisdiction where any
such Purchased Table Games Intellectual Property is filed, but not yet issued
or registered; and none of the Table Games Intellectual Property, to the best
of Seller’s Knowledge, has been misused, no claim by any third party contesting
the validity, enforceability, use or ownership of any of same has been made, is
currently outstanding or is threatened, and there are no grounds for the same;


(viii)     Each of the claims in
each of the Licensed Patents, to the best of Seller’s Knowledge, are valid and
enforceable in each jurisdiction in which any Licensed Patent is issued or
registered and, to the best of Seller’s Knowledge, will be valid and
enforceable in any jurisdiction where any such Licensed Patent is filed as an
application but is not yet issued;


(ix)        No loss or expiration
of any of the Table Games Intellectual Property is threatened, pending or
reasonably foreseeable, except for patents expiring at the end of their
statutory terms (and not as a result of any act or omission by the Seller,
including, without limitation, a failure by Seller to pay any required
maintenance fees);


(x)         Seller has not agreed
to indemnify any third party for or against any interference, infringement,
misappropriation or other conflict with respect to any Table Games Intellectual
Property;


(xi)        Seller is not aware of
any Intellectual Property owned or used by any competitor or third party which
reasonably could be expected to supersede or make obsolete any product or
process of Seller’s Table Games Business or to limit Seller’s Table Games
Business.  To the extent that any Table
Games Intellectual Property (other than that which is licensed to Seller
pursuant to written license agreements disclosed, as required herein, on the
Table Games Intellectual Property Schedule) has been developed or
created by any Person other than Seller, Seller has a written agreement with
such Person with respect thereto and Seller has obtained ownership of (and is
the exclusive owner of) or has obtained transferable license rights to all such
Intellectual Property by operation of law or by valid written assignment of any
such rights;


(xii)       Seller has not
disclosed any of its trade secrets or other Confidential Information to any
third party other than pursuant to a written, and to Seller’s Knowledge, valid
and binding confidentiality agreement; and



 30
 









(xiii)      All Table Games
Intellectual Property owned by a third party and licensed to Seller for Seller’s
Table Games Business is listed on the Table Games Intellectual Property
Schedule.


4.14         Litigation.  Except as disclosed, as required herein, on
the attached Litigation Schedule, (a) there are no (and, during the five
years preceding the Closing Date, there have not been any) actions, suits,
proceedings, orders or investigations pending or, to the best of Seller’s
Knowledge, threatened against or affecting Seller’s Table Games Business, the
Purchased Assets, or any of the Table Games Intellectual Property, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and (b) to the best of Seller’s Knowledge, there is no reasonable
basis for any of the foregoing.    Seller
is not subject to or bound by any outstanding orders, judgments or decrees of
any court or governmental entity with respect to Seller’s Table Games Business,
the Purchased Assets, or any of the Table Games Intellectual Property.  Neither Seller nor any of its Affiliates has
received any opinion or memorandum or advice from legal counsel to the effect
that Seller is exposed, from a legal standpoint, to any material liabilities
affecting Seller’s Table Games Business, the Purchased Assets or any of said
Table Games Intellectual Property and none of any of the aforementioned
litigation would have any material adverse effect on any of Seller’s Table Game
Business, the Purchased Assets, or said Table Game Intellectual Property.


4.15         Brokerage.  Except for arrangements for which Seller
shall be solely responsible, as listed on the Brokerage Schedule there
are no claims for brokerage commissions, finders’ fees or similar compensation
in connection with the Transaction, based on any arrangement or agreement made
by or on behalf of Seller.


4.16         Employees.  To the Knowledge of Seller,
there is no employee that is reasonably necessary for the ongoing operation of
Seller’s Table Games Business by Buyer. 
There are no claims, actions, proceedings or investigations pending or
threatened against Seller with respect to or by any employee or former employee
of Seller’s Table Games Business and, to the best of Seller’s knowledge, there
are no claims, actions, proceedings or investigations pending or threatened
against any employees of Seller’s Table Games Business.  Seller has not experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes.  Seller has not engaged in any
unfair labor practices.  Seller has no
Knowledge of any organizational effort presently made or threatened by or on
behalf of any labor union with respect to employees of Seller’s Table Games
Business.


4.17         Product Warranties and
Recalls.  Seller has made
no express or implied warranties or guarantees with respect to the products
marketed and/or sold or services rendered by it, other than those standard
terms and conditions described, as required herein, on the attached Product
Warranties Schedule.  Each product
sold or delivered and each service rendered by Seller has been in conformity in
all material respects with all applicable contractual commitments and all express
and implied warranties, and Seller has no material liability or obligation for
replacement or repair thereof or other damages in connection therewith, subject
only to the reserve for product and service warranty claims set forth on the
Latest Balance Sheet and to be set forth on the Closing Balance Sheet.  Except as disclosed, as required herein, on
the attached Product Recalls Schedule, there have been no product
recalls, withdrawals or seizures with respect to any products marketed or sold
by Seller with respect to Seller’s Table Games Business.


4.18         Insurance.  Seller has in place policies
of insurance in amounts and scope of coverage as disclosed, as required herein,
on the Insurance Schedule.  Each
such policy is in full force and effect and all premiums are currently paid in
accordance with the terms of such policy or accrued.  Seller has not 



 31
 









received any notice that any
policy will be cancelled or will not be renewed nor has Seller received any
written notice that cancellation or non-renewal is threatened nor any
written notice that any material modification of the terms of policy of
insurance will be or is threatened to be required as a condition of
renewal.  The insurance coverage for
Seller’s Table Games Business is customary for well-insured businesses of
similar size engaged in similar lines of business.


4.19         Compliance
with Laws; Permits; Certain Operations. 
Except as disclosed, as required herein, on the attached Compliance
Schedule:


(a)           Seller
has complied and is in compliance in all material respects with all applicable
Laws (including gaming and Environmental and Safety Requirements) of foreign,
federal, state, tribunal and local governments and all agencies and commissions
thereof (including without limitation, any so-called independent gaming
regulatory agencies) relating to the operation of Seller’s Table Games Business
and no notices have been received by and, to the Knowledge of Seller, no claims
have been filed against Seller alleging a violation of any such Laws;


(b)           Seller
has, with respect to Seller’s Table Games Business, complied with all
applicable Laws (including, without limitation, the Americans with Disabilities
Act) relating to the employment of labor, including provisions thereof relating
to wages, hours, equal opportunity, non discrimination, collective bargaining
and the payment of social security and other taxes;


(c)          
Seller holds all material permits, licenses, certificates, accreditations,
approvals or other authorizations of foreign, federal, state, tribunal and
local governmental agencies required for the conduct of Seller’s Table Games
Business (including without limitation, pursuant to Environmental and Safety
Requirements and ROHS), and the attached Compliance Schedule sets forth
a list of all of such Gaming Compliance Schedule sets forth all Gaming Product
Approvals.  Seller is in compliance in
all material respects with all terms and conditions of any such required
permits, licenses, accreditations and authorizations and all such permits,
licenses and authorizations may be relied upon by Buyer for lawful operation of
Seller’s Table Games Business on and after the Closing without transfer,
reissuance or other governmental action;


(d)           Seller
has not received any notice, report or information regarding any actual or alleged
violation of, or any liability or potential liability arising under any gaming
Law or any Environmental and Safety Requirements that relate to Seller’s Table
Games Business, the Purchased Assets, or the Licensed Patents;


(e)           Seller
has not treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled, manufactured or released any substance, including
without limitation any petroleum or hazardous substance, or owned or operated
any property or facility (and none of the Real Property is contaminated by any
such substance) so as to give rise to liabilities or obligations pursuant to
any Environmental and Safety Requirements and ROHS; and


(f)            No
officer, director, employee, consultant, advisor or agent of Seller has been or
is authorized to make or receive, and Seller does not know of any of its
officers, directors, employees, consultants, advisors or agents making or
receiving, any bribe, kickback payment or other illegal payment at any time
with respect to Seller’s Table Games Business.


4.20         Names
and Locations.  Except as disclosed,
as required herein, on the attached Names and Locations Schedule, (i)
during the five-year period prior to the execution and delivery of this 



 32
 









Agreement, Seller has not
used any name or names under which it has invoiced account debtors, maintained
records concerning its assets or otherwise conducted business with respect to
Seller’s Table Games Business, other than the exact name under which it has
executed this Agreement, and (ii) all of the Purchased Assets are located at
the Seller’s address shown in Section 8.2.


4.21         Customers and Suppliers.  The Customers and Suppliers Schedule
attached hereto sets forth (a) a list of all of Seller’s customers for Seller’s
Table Games Business during the twelve (12) month period preceding the Closing
Date and (b) a list of Seller’s top ten suppliers (by volume of purchases from
such suppliers), for Seller’s Table Games Business, for the fiscal years ended
December 31, 2005 and December 31, 2006 and for the six-month period ended June 30, 2007.  Seller has not received any oral or written
notice from any such customer to the effect that, and Seller does not have
any Knowledge that, any such customer will stop, decrease the rate of, or
change the terms (whether related to payment, price or otherwise) with respect
to, buying products from Seller (whether as a result of the consummation of the
transactions contemplated hereby or otherwise). 
Seller has not received any oral or written notice from any supplier to
the effect that, and Seller has no knowledge that, such supplier will stop,
decrease the rate of, or change the terms (whether related to payment, price or
otherwise) with respect to, supplying materials, products or services to Seller
(whether as a result of the consummation of the transactions contemplated
hereby or otherwise).  There are no
suppliers of products or services to Seller that are material to Seller’s Table
Games Business with respect to which practical alternative sources of supply
are not generally available on comparable terms and conditions in the
marketplace.


4.22         Inventory.  Except as disclosed, as required herein, on
the attached Inventory Exceptions Schedule, all of Seller’s inventory
relating to Seller’s Table Games Business consists of a quantity and quality
usable and salable in the Ordinary Course of Business consistent with past
practice, is not obsolete, expired, defective or damaged, and is merchantable
and fit for its intended use, subject only to the reserves for inventory write-downs
or unmarketable, obsolete, defective or damaged inventory reflected in the
Closing Balance Sheet, both as determined in accordance with GAAP consistently
applied, and has been manufactured in conformity with all applicable laws and
regulations.


4.23         Product
Liabilities.  Except as disclosed, as
required herein, on the attached Product Liability Schedule, Seller has
not had or has any liability (and, to the best of Seller’s Knowledge, there is
no reasonable basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against it giving
rise to any liability) arising out of any injury to individuals or property as
a result of the ownership, possession or use of any products manufactured, sold
or delivered by Seller or with respect to any services rendered by Seller
relating to Seller’s Table Games Business.


4.24         Capital
Expenditures.  The Capital
Expenditures Schedule attached hereto sets forth, as used in or part of
Seller’s Table Games Business, in reasonable detail (i) Seller’s capital
expenditure estimate (in both dollar amounts and classifications of
expenditures) on a quarterly basis for the period from January 1, 2007 to
August 31, 2007, (ii) the actual capital expenditures made by Seller (in
both dollar amounts and classifications of expenditures) during the above
period, and (iii) the actual capital expenditures made by Seller (in both
dollar amounts and classifications of expenditures) prior to the Closing Date
during the current fiscal year.  To the
best of Seller’s Knowledge, the capital expenditures made for the current
fiscal year as set forth on the Capital Expenditures Schedule, is
intended to be reasonably sufficient for Seller to carry on its business as
presently conducted and as proposed in the business plan made available to
Buyer by Seller.



 33
 









4.25         Promotions
Programs.  Except as disclosed, as
required herein, on the attached Promotions Schedule, Seller has not
initiated any promotion or discount, rebate, price reduction or similar programs
relating to Seller’s Table Games Business during Seller’s fiscal year ending
December 31, 2006, and no such programs relating to Seller’s Table Games
Business are currently in effect.


4.26         Insolvency.  No Seller is or is likely to
become “insolvent”, nor, immediately prior to the Closing Date, was “insolvent”,
as that term is defined in the Bankruptcy Code.


4.27         Affiliated
Transactions.  Except  as disclosed,
as required herein, on the Affiliated Transactions Schedule, no Insider
is a party to any agreement, contract, commitment or transaction with Seller or
has any interest in any property, real or personal or mixed, tangible or
intangible, used in or pertaining to the Table Games Business.


4.28         Disclosure.  Neither this Agreement, nor in any Related Agreement,
nor any of the Schedules attached hereto or thereto or to be delivered in
connection herewith contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.  Despite any input from Buyer, each Schedule
attached hereto, and each schedule or exhibit attached to any Related
Agreement, was prepared solely by Seller, and Seller is fully and solely
responsible for the content of each.


4.29         Projections.  The  projections by Seller as
contained in the IM were prepared in good faith, and to the best of Seller’s
Knowledge, Seller knows of no reason why any of said projections are materially
inaccurate.


4.30         Labor.  There  are no WARN Act or similar
notification or approval required by Seller in connection with this
Transaction.


4.31         Game
Replacement.  Except  as disclosed,
as required herein, on the Game Replacement Schedule, there are (i) no game
replacement or substitution obligations or requirements of Seller with respect
to any Purchased Table Games for any Assumed Contract; and (ii) there are no
options to purchase in favor of any third parties with respect to any Purchased
Table Games under any Assumed Contract. 
As to any pre-existing obligations for Seller to install a replacement
Table Game, pursuant to any agreement for a Sold Purchased Table Games: i)
Buyer will make available to Seller at Buyer’s cost plus 30%, a replacement
Table Game; ii) Seller will deal directly with the applicable customer; iii)
Buyer will install, at Seller’s request and on Seller’s behalf, and at Buyer’s
cost plus 30%, such replacement Table Game; iv) Buyer will not assume any
liabilities under any agreements related to any Sold Purchased Table Games
except as expressly listed on the Assumed Contracts Schedule; v) Seller will
pay Buyer all amounts due Buyer under this Section 4.31 within 15 days of Buyer’s
invoice to Seller; vi) Seller is fully responsible, at Seller’s sole expense,
for any software upgrades and/or customizations, other than under an Assumed
Contract; vii) Seller is fully responsible, at Seller’s sole expense, for any
regulatory submissions; and vi) Seller hereby indemnifies, pursuant to Section
7.2, Buyer Indemnitees, for any Losses on account of any breach of any of
Seller’s obligations under this Section 4.31.


4.32         Exploitation.  (a) Except as disclosed, as required herein,
on the Exploitation Schedule, Buyer shall have the full and unfettered
worldwide right to sell, lease, license, sublicense market and exploit all
rights to any of Seller’s Table Games Business, each Purchased Table Game and
any Table Games Intellectual Property, without any limitation, restriction or
obligation to any other Person; and ii) no third Person owns any rights in or
to any Purchased Table Game or Table Games Intellectual Property.  



 34
 









(b) All of the Patents
listed on Schedule 4.32(b) have, prior to the Closing Date, already been
exclusively licensed to IGT.  (c) All
of the Patents listed on Schedule 4.32(c) are subject to a purchase option.


4.33         Full
Disclosure.  To  the Knowledge
of Seller, except as disclosed, as required herein, on the Schedules hereto,
Seller is not aware of any facts or circumstances, or allegations which if
true, would be reasonably likely to constitute or result in a breach of any of
the foregoing representations and warranties.


4.34         September
2007 Billings.  Seller  has fully and
accurately invoiced and billed all customers for any Existing Installed Base in
Seller’s Ordinary Course of Business, and without any reductions, credits or
refunds; and in no event will the amount of the September 2007 Billings, as
disclosed, as required herein, on the September 2007 Billings Schedule, be less
than it was for August 2007, or less than the Baseline Revenue.


4.35         TCS.  The  Settlement Agreement and
Release dated September 4, 2007, and attached to this Agreement as the TCS
Schedule is the complete and entire agreement between Seller and TCS
relating to the Purchased Table Games, is in full force and effect, has not
been amended or modified, and is not subject to any demand, rescission,
cancellation or termination claims.


4.36         Knowledge.  As  used herein, the term “Knowledge”
means the actual state of knowing a thing or fact or that knowing that can or
should be reasonably imputed, including the reasonable use of due diligence,
inquiry and or investigation or thing or fact which, after any actual or
reasonable due diligence, inquiry, and/or investigation should be known.


4.37         Allocation
of Risks.  The  representations,
warranties, covenants and agreements made herein, together with the
indemnification provisions in this Agreement, are intended among other things
to allocate the economic cost and the risks inherent in the Transaction and
accordingly, a party shall be entitled to the indemnifications or other
remedies provided in this Agreement by reason of any breach of any such
representation, warranty, covenant or agreement by another party
notwithstanding whether any employee, representative or agent of the party
seeking to enforce such indemnification or any remedy knew or had reason to
know of such breach, and such knowledge or reason to know of such breach shall
not be a defense to any indemnification, or other claims, remedies, or defenses.


ARTICLE V


COVENANTS OF
SELLER


5.1           Conduct of Seller’s Table Games
Business Pending the Closing.


(a)           Prior
to the Closing Date, subject to any obligations except as required by
applicable Law, as otherwise expressly contemplated by this Agreement, or with the
prior written consent of Buyer, Seller shall:


(i)          conduct Seller’s
Table Games Business and maintain the Purchased Assets and the Licensed Patents
in the Ordinary Course of Business and repair and continue normal maintenance,
normal wear and tear excepted;



 35
 









(ii)         use its commercially
reasonable efforts to (A) preserve the present business operations,
organization and goodwill of Seller’s Table Games Business, and (B) preserve
the present relationships with customers, suppliers and others having business relationships
with the business of Seller’s Table Games Business;


(iii)        only collect notes
and accounts receivable in the Ordinary Course of Business;


(iv)       maintain its books,
accounts and records, pay expenses and payables, bill customers, collect
receivables, purchase inventory, maintain the insurance policies it currently
has in place and otherwise conduct its business in each case in the Ordinary
Course of Business, unless otherwise specified in this Agreement; and


(v)        (a) comply in all
material respects with all legal requirements and material contracts to its
operations and business, (b) maintain all existing licenses and permits
applicable to its operations and business (if any) and (c) to pay all
applicable Taxes (including all income Tax installments) as such Taxes become
due and payable.


(vi)       cooperate with Buyer
and use its reasonable efforts to make all registrations, filings and
applications, to give all notices and to obtain all consents necessary for the
consummation of the transactions contemplated by this Agreement and the Related
Agreements;


(vii)      promptly inform Buyer
in writing of the occurrence or non-occurrence of any event known to the Seller
which would cause the condition set forth in Section 3.1(a) hereof not to be
satisfied or the breach of any covenant hereunder by the Seller (which
disclosure shall in no way be deemed to amend or supplement any exhibit or
schedule hereto or to prevent or cure any misrepresentation, breach of warranty
or breach of covenant hereunder); and


5.2           Negative Covenants of the Seller.


(a)           Prior
to the Closing Date, except as required by applicable Law, as otherwise
expressly contemplated by this Agreement or the Related Agreements, or with the
prior written consent of Buyer, Seller shall not:


(i)          amend, modify or
terminate any material contract of or related to Seller’s Table Games Business;


(ii)         terminate any Assumed
Contract, permit any Assumed Contract or fail to use commercially reasonable
efforts to oppose any action by a third party to terminate any Assumed
Contract;


(iii)        sell, use, dispose
of, convey or transfer, by bailment, consignment, warehousing, similar
arrangement or otherwise, any Inventory, wherever located, other than in the
Ordinary Course of Business;


(iv)       send out any invoice or
bill for goods sold, services rendered, lease payments due, or any other
amounts becoming due in whole or in part on or after September 1, 2007 arising
out of operation of Seller’s Table Games Business;



 36
 









(v)        except as expressly
contemplated by this Agreement or the Related Agreements, knowingly take or
omit to take any action which, individually or in the aggregate, could be
reasonably anticipated to have a material adverse effect upon Seller’s Table
Games Business, financial condition, operating results, employee relations,
customer relations, assets, operations, rights or business prospects of the
Seller;


(vi)       knowingly take any
action or omit to take any action that would require disclosure pursuant to
Section 5.1(a)(vii) if each representation and warranty contained herein were
remade as of the time of such action or omission;


(vii)      make any loan or enter
into any transaction with or distribute any other assets or property to any of
its officers, directors, shareholders, Affiliates or other insiders, except for
base salary and commissions paid to officers and employees in the Ordinary
Course of Business;


(viii)     relating to Seller’s
Table Games Business, incur any Indebtedness, institute any material change in
the conduct of the business or any change in its method of purchase, sale,
lease, management, marketing, operation or accounting (including with respect
to accounts receivable and inventory;


(ix)        relating to Seller’s
Table Games Business, sell, lease or otherwise dispose of any interest in any
of the Seller’s material tangible or intangible assets, or permit any of the
Seller’s material assets, property or equity securities to be subjected to any
Lien;


(x)         cause or permit the
Seller to merge or consolidate with any other Person;


(xi)        make or change any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Tax Return, change any entity classification election,
ether into any closing agreement, settle any Tax claim or assessment, surrender
any right to claim a refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment, or take any other
similar action, or omit to take any action relating to the filing of any Tax
Return or the payment of any Tax;


(xii)       pay an amount to any
third party with respect to any liability (excluding any costs and expenses
incurred or which may be incurred in connection with this Agreement and the
transactions contemplated hereby) other than in the Ordinary Course of
Business;


(xiii)      take any action for
its winding up, liquidation, dissolution or reorganization or for the
appointment of a receiver, administrator or administrative receiver, trustee or
similar officer of all or any of its assets or revenues;


(xiv)      take any actions in
violation of or which would reasonably be except to breach, Section 4.9
thereof;


(xv)       commit to do any of the
foregoing; or


(xvi)      agree to do anything
prohibited by this Section 5.2.



 37















ARTICLE VI


REPRESENTATIONS
AND WARRANTIES OF BUYER


As an inducement to Seller to enter into this
Agreement, Buyer hereby represents and warrants to Seller as follows:


6.1           Corporate
Organization and Power.  SMI is a
corporation duly formed and validly existing under the laws of the State of
Minnesota, with full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder.


6.2           Authorization.  The execution, delivery and performance of
this Agreement and the Related Agreements to be executed and delivered by Buyer
and the consummation of the Transaction have been duly and validly authorized
by all requisite corporate action on the part of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to authorize the execution,
delivery or performance of this Agreement or the Related Agreements.  This Agreement and the Related Agreements
contemplated hereby to be executed and delivered by Buyer constitute a valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their respective terms.


6.3           Governmental
Authorities and Consents.  Buyer is
not required to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of this Agreement
or the consummation of the Transaction and no consent, approval or
authorization of any governmental or regulatory authority is required to be
obtained by Buyer in connection with the execution and delivery of this
Agreement or the consummation of the Transaction.


6.4           Brokerage.  Except for arrangements for which Buyer shall
be solely responsible, there are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement made by or on behalf of
Buyer.


6.5           Litigation.  There are no actions, suits, proceedings,
orders or investigations pending or, to the best of Buyer’s knowledge,
threatened against or affecting Buyer at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would adversely
affect Buyer’s ability to perform under this Agreement or the consummation of
the Transaction.


ARTICLE VII


ADDITIONAL
AGREEMENTS


7.1           Survival
of Representations and Warranties. 
The representations and warranties in this Agreement and the Schedules
attached hereto shall survive the Closing as follows:


(a)           the
representations and warranties in Section 4.11 (Tax Matters) shall
terminate when the applicable statutes of limitations with respect to the
liabilities in question expire (giving effect to any extensions or waivers
thereof);



 38
 









(b)           the
representations and warranties in Section 4.5 (Absence of Undisclosed
Liabilities), Section 4.9 (Absence of Certain Development), all
sections of Section 4.13 (Table Games Intellectual Property) (except for
Sections 4.13(b)(i), 4.13(b)(ii), 4.13(b)(vii) and 4.13(b)(viii)),
Section 4.19(e) (Compliance with Laws; Permits; Certain Operations); and
Section 4.32 (Exploitation) shall terminate on December 31, 2013;


(c)           the
representations and warranties in Section 4.13(b)(vii), 4.13(b)(viii)
(Intellectual Property Validity and Enforceability) shall terminate on December
31, 2016;


(d)           the
representations and warranties in Section 4.1 (Authorization), Section
4.2 (Authorization; No Breach), Section 4.10(a) (Purchased Assets
and Licensed Patents), Sections 4.13(b)(i) and 4.13(b)(ii)
(Intellectual Property Ownership and Non-Infringement); Section 4.36
(Knowledge), and Section 4.37 (Allocation of Risks) shall not terminate
(the representations and warranties referred to in Sections 7.1(a), 7.1(b)
, 7.1(c) and 7.1(d) are referred to herein as the “Fundamental
Reps”);


(e)          
the representations and warranties in Sections 4.4 (Financial
Statements), 4.14 (Litigation), 4.25 (Promotions Programs), 4.26
(Insolvency), 4.28 (Disclosure), 4.29 (Projections), 4.31
(Game Replacement), 4.33 (Full Disclosure), and 4.35 (TCS) shall
terminate on December 31, 2011.


(f)            all
other representations and warranties in this Agreement,  shall terminate on December 31, 2009.


provided  that any representation or warranty in respect
of which indemnity may be sought under Section 7.2, and the
indemnity with respect thereto, shall survive the time at which it would
otherwise terminate pursuant to this Section 7.1 if notice of the
inaccuracy or breach or potential inaccuracy or breach thereof giving rise to
such right or alleged right of indemnity shall have been given to the Party
against whom such indemnity may be sought prior to such time.  The representations and warranties in this
Agreement and the Schedules attached hereto shall survive for the periods set
forth in this Section 7.1 and shall in no event be affected by any
investigation, inquiry or examination made for or on behalf of Buyer or Seller,
or the Knowledge of any of Buyer’s or Seller’s officers, directors,
shareholders, employees or agents or the acceptance by Buyer or Seller of any
certificate or opinion hereunder.  Seller
makes no representations or warranties other than set forth in this Agreement
and the Schedules attached hereto and in any Related Agreement and the Exhibits
and Schedules therein.  Buyer makes no
representations or warranties other than set forth in this Agreement.


7.2           General Indemnification.


(a)           Indemnification
for Benefit of Buyer.  Seller shall
fully indemnify Buyer  and Buyer’s
officers, directors, heirs, employees, agents, representatives, successors and
assigns, and each of its and their respective officers, directors, heirs,
employees, agents, representatives, successors and assigns (collectively, “Buyer
Indemnitees”), and save and hold each of the Buyer Indemnitees
harmless against and pay on behalf of or reimburse such Buyer Indemnitees
as and when incurred for any Losses (including, without limitation, Seller’s
payment, when otherwise due by any Buyer Indemnitee, of any of Buyer Indemnitee’s
attorney’s fees or legal costs) which any such Buyer Indemnitee may suffer,
sustain, have alleged against, or become subject to, as a result of, in
connection with, relating or incidental to by virtue of, arising out of, or
from (i) any breach of any representation or warranty of Seller in or under
this Agreement, in any Related Agreement or in any of the Schedules attached
hereto or thereto, or in any of the certificates or other instruments or
documents furnished to Buyer by Seller pursuant to this Agreement, (ii) any
nonfulfillment or breach of any covenant, obligation, or agreement by Seller
under or 



 39
 









in this Agreement, any
Related Agreement, or any of the Schedules attached hereto or thereto, (iii)
any liability or obligation of Seller or any Loss related thereto arising from
any Excluded Liability,, and (iv) any of the matters set forth on the Indemnification
Schedule attached hereto  (the items in (i) through (iv) are
individually and collectively referred to herein as a “Buyer Indemnitee
Claim”).


(b)           Indemnification
for Benefit of Seller.  Buyer shall
fully indemnify Seller and Seller’s officers, directors, heirs, employees,
agents, representatives, successors and assigns, and each of its and their
respective officers, directors, heirs, employees, agents, representatives,
successors and assigns (collectively “Seller Indemnitees”) and hold them
harmless against any Losses which any Seller Indemnitee may suffer, sustain,
have alleged against, or become subject to, as the result of, in connection
with, relating or incidental to, by virtue of, arising out of, or from (i) any
breach of any representation or warranty of Buyer in or under this Agreement,
any Related Agreement, or any of the Schedules attached hereto or thereto, or
in any of the certificates or other instruments or documents furnished to
Seller by Buyer pursuant to this Agreement, or (ii) any nonfulfillment or
breach of any covenant, obligation or agreement by Buyer under or in this
Agreement, any Related Agreement, or any of the Schedules attached hereto or
thereto (the items in (i) and (ii) are individually and collectively referred
to herein as a “Seller Indemnitee Claim”).


(c)           Manner
of Payment; Set-Off.  Any
indemnification of the Buyer Indemnitees or Seller Indemnitees pursuant to this
Section 7.2 shall be effected by wire transfer of immediately available
funds from Seller or Buyer, as the case may be, to an account designated by
Buyer or Seller, as the case may be, within 10 days after the determination
thereof.  Any such indemnification
payments shall include interest at the Applicable Rate from the date any such
Loss is suffered or sustained to the date of payment.  Buyer shall be entitled to (but shall not be
required to) set-off the amount of any Buyer Indemnitee Claim (or as
applicable, Buyer’s good faith valuation of same) against any amount due or
otherwise payable to Seller under this Agreement or any Related Agreement (“Set-Off”),
in accordance with the following priority, and without prior demand: (i) first,
by setting off against any Contingent Purchase Price Payments otherwise due and
payable to Seller pursuant to Section 2.7 hereof as specified therein;
and (ii) second, by setting off against any other amounts otherwise due and
payable by Buyer to Seller.  Buyer’s
exercise of its rights of Set-Off under this Agreement shall not limit or restrict,
subject to the Cap (as defined in Section 7.2(e) below),  Buyer’s other legal or equitable rights
or  remedies under any other provision of
this Agreement, any Related Agreement, or otherwise by operation of Law. All
indemnification payments under this Section 7.2 shall be deemed
adjustments to the Purchase Price set forth in Section 2.3(a)
above.  Prior to any Set-Off, Buyer shall
provide 15 days written notice to Seller. 
The receipt of any such notice of Set-Off shall not be a waiver of
Seller’s right to dispute same, but Seller shall not have the right to prevent
or enjoin any Set-Off.


(d)           Defense
of Claims.  Any Party making a claim
for indemnification under this Section 7.2 (an “Indemnitee”) shall
notify the indemnifying Party (an “Indemnitor”) of the claim in writing
and, if by a third party, promptly after receiving written notice of any
action, lawsuit, proceeding, investigation or other claim against it; and, in
all events, describing the claim, the amount thereof (if known and quantifiable),
and the basis thereof; provided  that the failure to so notify an
Indemnitor shall not relieve the Indemnitor of its obligations hereunder except
to the extent that (and only to the extent that) such failure shall have caused
the damages for which the Indemnitor is obligated to be greater than such
damages would have been had the Indemnitee given the Indemnitor prompt notice
hereunder.  Any Indemnitor shall defend
such action, lawsuit, proceeding, investigation or other claim giving rise to
an Indemnitee’s claim for indemnification at such Indemnitor’s expense, and
(subject to the limitations set forth below) shall assume the defense thereof
by appointing an AV rated counsel experienced in the subject matter of such
claim reasonably acceptable to the Indemnitee (and in connection therewith, if
the 



 40
 









action, lawsuit, proceeding,
investigation or other claim involves Intellectual Property issues, then the
parties shall select, unless they are both unavailable, one of: Greg Whitehair,
now of Gibson Dunn and Crutcher LLP, or Barry Irwin now of Kirkland & Ellis
LLP) to be the lead counsel in connection with such defense; provided  further
that,  as a prior condition to the
Indemnitor assuming control of such defense, the Indemnitor must:  (x) verify to the Indemnitee in writing that
such Indemnitor shall be fully responsible (with no reservation of any rights)
for all Losses relating to such claim for indemnification and that it is and
will provide full indemnification (whether or not otherwise required hereunder)
to the Indemnitee with respect to such action, lawsuit, proceeding,
investigation or other claim giving rise to such claim for indemnification
hereunder and (y) confirm that it agrees that it unconditionally guarantees the
payment and performance of any liability or obligation which may arise with
respect to such action, lawsuit, proceeding or investigation; and provided
further, that:


(i)          the Indemnitee shall
be entitled to participate in the defense of such claim and to employ counsel
of its choice for such purpose; provided  that, as long as the
Indemnitor is defending, at its sole cost, and paying all legal fees and
litigation costs and expenses of the Indemnitee, the fees and expenses of such
separate counsel shall be borne by the Indemnitee (other than any fees and
expenses of such separate counsel that are incurred prior to the date the
Indemnitor assumes, as requested in this Section 7.2, control of such
defense which, notwithstanding the foregoing, shall be borne by the
Indemnitor); but further, if Indemnitor is in breach of any provision in this
Agreement, then, notwithstanding any other provisions contained in this
Agreement, the Indemnitee shall have the right to control the defense and
settlement of such claim, with counsel of its own choosing, and all at
Indemnitor’s sole expense;


(ii)         the Indemnitor shall
not be entitled to assume control of such defense and shall, as incurred by the
Indemnitee, pay the legal fees and litigation expenses of counsel retained by
the Indemnitee if (A) the claim for indemnification relates to or arises
in connection with any criminal proceeding, action, indictment, allegation or
investigation; (B) the Indemnitee reasonably believes an adverse
determination with respect to the action, lawsuit, investigation, proceeding or
other claim giving rise to such claim for indemnification would be detrimental
to or injure the Indemnitee’s reputation,  
future business prospects, or any regulatory licenses, Gaming Permits,
or Gaming Product Approvals; (C) the claim seeks an injunction or
equitable relief against the Indemnitee; (D) upon petition by the Indemnitee,
the appropriate court rules that the Indemnitor failed or is failing to
vigorously prosecute or defend such claim; or (E) the Indemnitee reasonably
believes that the Loss relating to such claim for indemnification could exceed
the maximum amount that such Indemnitee could then be entitled to recover under
the applicable provisions of Section 7.2; and


(iii)        if the Indemnitor
shall control the defense of any such claim, the Indemnitor shall obtain the
prior written consent of the Indemnitee before entering into any settlement of
a claim or ceasing to defend such claim if, pursuant to or as a result of such
settlement or cessation: (v) there is any risk or jeopardy to any Gaming Permit
or Gaming Product Approval held by the Indemnitee; (w) injunctive or other
equitable relief will be imposed against the Indemnitee; (x) such settlement
does not expressly, finally and unconditionally release the Indemnitee from all
liabilities and obligations with respect to such claim, without any prejudice
to the Indemnitee; (y) such settlement involves the Indemnitee relinquishing,
limiting, or reducing any of its rights under this Agreement or any Related
Agreement; or (z) any settlement adversely affects the economic value of any of
Seller’s Table Games Business, the Purchased Assets, the Licensed Patents or
any other part of or Intellectual Property owned by Buyer.



 41
 









(e)           With
respect to any Buyer Losses, Seller’s maximum indemnification obligation under
this Section 7.2 (the “Cap”) shall be $7.5 million; provided
however that any attorneys’ fees, court costs, or other litigation expenses
related to any Buyer Indemnittee Claim shall be excluded from and not part of
any Cap; and further, provided, however, there shall be no maximum
indemnification Cap or limit on any Buyer Indemnittee Claims related to any
Losses related to actual fraud by Seller or any rescission claims of this
Agreement by Buyer or any breach of the representations and warranties in Sections
4.1, 4.2 and 4.13(b)(i); and furthermore, the maximum Cap
with respect to any Losses relating to any claim of breach of any of the
Fundamental Reps, except for those in Sections 4.1, 4.2 and 4.13(b)(i),
shall be the aggregate and total Purchase Price.  Buyer’s indemnification, Set-Off and other
rights and remedies set forth in this Agreement and in any Related Agreement or
otherwise by Operation of Law shall be Buyer’s sole rights and remedies for any
Buyer’s Losses.


(f)            With
respect to any Seller Losses, Seller’s indemnification rights set forth in this
Agreement shall be Seller’s sole right and remedy, and the maximum
indemnification obligations of Buyer for any of Seller’s Losses shall be $1.0
million, excluding attorneys fees, court costs or other litigation expenses
related to any Seller Indemnitee Claim, except there shall be no maximum amount
of Losses for any breach by Buyer of Section 6.2, nor shall there be any
maximum amount on any Contingent Purchase Price Payments which Seller may otherwise
by entitled to under Section 2.7 hereof, but in no event shall any
liability or obligation of Buyer under this Agreement or any Related Agreement
include any lost profits of Seller, or any unforeseeable, speculative, non
sequential, exemplary or punitive damages of Seller.  In no event shall Seller have any right to
rescind either this Agreement or the Progressive License.


7.3           Press
Release and Announcements.  Subject
to any applicable Laws, each of Buyer and Seller shall issue its own press
release regarding the Transaction.


7.4           Expenses.  Except as otherwise expressly provided in Section
7.5 below, each Party hereto shall pay all of its own costs and expenses
(including attorneys’, accountants’ and investment bankers’ fees and other out-of-pocket
expenses) in connection with the negotiation and execution of this Agreement,
the performance of its obligations hereunder and the consummation of the
Transaction.  Without limiting the
foregoing, each Party shall pay its own expenses incurred in connection with
its efforts to satisfy the conditions to the other Party’s obligation to
consummate the Transactions.


7.5           Further
Transfers; Transition Assistance. 
Both prior to and after Closing, Seller shall execute and deliver such
further instruments of conveyance and transfer and take such additional action
(including without limitation, all documents described or required under
Section 2.4(b) as Buyer may reasonably request to effect, consummate, confirm
or evidence the transfer, as contemplated by this Agreement, to Buyer of the
Purchased Assets, the license of and security interest in the Licensed Patents,
the assumption by Buyer of the Assumed Liabilities and the conduct by Buyer of
Seller’s Table Games Business (including with respect to obtaining and maintaining
all Gaming Permits, Gaming Product Approvals, authorizations, accreditations
and consents necessary or desirable in connection therewith), and Seller shall
execute such documents as may be necessary to assist Buyer in preserving or
perfecting its rights (including ownership) in the Purchased Assets, its
license of the Licensed Patents, and its ability to conduct Seller’s Table
Games Business (collectively “Instruments of Conveyance”).  Seller hereby designates Buyer as Seller’s
attorney in fact and law for the purposes of executing any Instruments of
Conveyance not timely executed by Seller.  
Following the Closing, Seller and Buyer agree to cooperate with each
other and to provide each other with all information and documentation
reasonably necessary to permit the preparation and filing of all federal,
state, local and other Tax Returns with respect to Seller’s Table Games
Business; provided  that each Party shall reimburse the other
Party for such other party’s 



 42
 









reasonable out-of-pocket
expenses in connection therewith.  Seller
agrees that subsequent to the Closing, it shall refer all customer inquiries
with respect to the Table Games Business to Buyer.


7.6           Confidentiality.  After the Closing, Seller shall maintain as
confidential and shall not use or disclose (except as required by Law, court
process or by obligation pursuant to any listing agreement with any securities
exchange or automated inter-dealer quotation system, or as authorized in
writing by Buyer) any Confidential Information. 
In the event Seller is required by Law to disclose any Confidential
Information, Seller shall promptly notify Buyer in writing, which notification
shall include the nature of the legal requirement and the extent of the
required disclosure, and shall cooperate with Buyer to preserve the
confidentiality of such information consistent with applicable Law.  Notwithstanding the foregoing, Seller may
permit access to Confidential Information to those of its employees, lenders,
prospective lenders, prospective investors, agents or authorized
representatives having a need to know and party to a confidentiality agreement
with Seller which covers such information.


7.7           Sales
and Transfer Taxes.  Seller, on the
one hand, and Buyer, on the other hand, shall each pay fifty percent (50%) of
all sales, use, excise, value-added, goods and services, transfer,
recording, documentary, registration, conveyancing and similar Taxes that may
be imposed on the sale and transfer of the Purchased Assets (including any
stamp, duty or other Tax chargeable in respect of any instrument transferring
property and any recording fees or expenses payable in connection with the sale
and transfer of the Table Games Intellectual Property), together with any and
all penalties, interest and additions to Tax with respect thereto.  Buyer and Seller shall cooperate in timely
making all filings, returns, reports and forms as may be required to comply
with the provisions of applicable law in connection with the payment of any such
Taxes described in the immediately preceding sentence.  Buyer and Seller shall cooperate in providing
each other with appropriate resale exemption certification and other similar
Tax and fee documentation.


7.8           Confidentiality
Agreements.  Seller shall use
commercially reasonable efforts to obtain the return or destruction as promptly
as possible of all Confidential Information regarding Seller’s Table Game
Business delivered to prospective buyers, will not release any prospective
buyers from their obligations under any such confidentiality agreements, and,
within 60 days of the Closing will provide Buyer with a certificate describing
the status of the return or destruction of all Confidential Information
provided to such prospective buyers.


7.9           Covenant Not to Compete, Solicit
or Hire.


(a)           Seller
hereby acknowledges that it is familiar with Seller’s Table Games Business, its
trade secrets and other Confidential Information.  Seller acknowledges and agrees that, except
as it relates to Seller’s providing of Systems, Buyer would be irreparably damaged
if Seller, or any acquirer of Seller or of Seller’s business (an “Acquirer”),
were to engage in the Table Games Business or to  provide services to or  otherwise participate in the business of any
Person competing with the Table Games Business, or to itself compete with Buyer
in the Table Game Business and, in any such event, that any such competition by
Seller, or any Acquirer would result in a significant loss of goodwill by Buyer
in respect of Seller’s Table Games Business being acquired by Buyer.  Seller further acknowledges and agrees that
the covenants and agreements, and Seller’s and any Acquirer’s present and
future adherence thereto, all as set forth in this Section 7.9
were, are, and continue to be a material inducement to Buyer to enter into this
Agreement and to perform its obligations hereunder, and that Buyer would not
obtain the benefit of the bargain set forth in this Agreement as specifically
negotiated by the parties hereto if Seller or any Acquirer breached the
provisions of this Section 7.9. 
Therefore, in further consideration of the amounts to be paid hereunder
in connection with the Transaction and the goodwill of Seller’s Table 



 43
 









Games Business sold and licensed in connection therewith, Seller agrees
that for a period of seven (7) years following the Closing Date, Seller shall not,
and shall cause any of such Person’s Affiliates not to, directly or indirectly,
either for itself, himself or herself or through any other Person, engage in,
participate in, or permit such Person’s name to be used by any enterprise
engaging in the types of activities performed by or otherwise compete in or
with the Table Games Business and/or any related designing, licensing, leasing,
developing, manufacturing, packaging, marketing, distributing or selling of
those services and products that constitute the Table Games Business, anywhere
in the world (the “Seller’s Non-Compete Agreement”) (it being understood
and agreed that nothing herein will prevent Seller, subject to any applicable
terms and conditions of this Agreement or any Related Agreement, from engaging
in System sales and licenses, except as set forth below). Notwithstanding the
foregoing, only with respect to any third party Acquirer, Seller’s Non-Compete
Agreement shall last: (x) respecting any felt or progressive Table Games, for a
period equal to the greater of four (4) years from the Closing Date or three
(3) years of the date of closing of any such acquisition of Seller, but in
neither event longer than six (6) years following the Closing Date and (y)
respecting any electronic Table Game, there shall be no covenant not to
compete; further provided that, such third party Acquirer can continue its
existing bona fide Table Game Business in the same form, scope and manner as
existed six (6) months prior to the date of closing of any acquisition of
Seller, provided that at the time of any such acquisition and thereafter, such
Acquirer does not and is not infringing any of the Table Games Intellectual
Property or any of Buyer’s other Intellectual Property and does not challenge
(and is not challenging) the enforceability of any of the Table Games
Intellectual Property or Buyer’s other Intellectual Property.  For purposes of this Agreement, the term “participate”
includes any direct or indirect interest in any enterprise, whether as a
stockholder, member, partner, joint venturer, franchisor, franchisee,
executive, consultant or otherwise (other than by ownership of less than ten
percent (10%) of the stock of a publicly held corporation) or rendering any direct
or indirect service or assistance to any Person.  Seller agrees that the Seller’s Non-Compete
Agreement is reasonably designed to protect Buyer’s substantial investment and
is reasonable with respect to its duration, geographical area and scope.  If any provision of this Section 7.9(a)
violates any Law, Seller shall not be liable for any Loss suffered by Buyer,
except to the extent that any such Loss is caused by the conduct of Seller.


(b)           Notwithstanding
anything contained herein to the contrary and in addition to and as separate
limitations, restrictions and obligations on Seller and any Acquirer as those
contained in Section 7.9(a), neither Seller nor any Acquirer: (x) shall,
until the expiration of all patents within the Table Games Intellectual Property,
and regardless of whether or not any Table Games Intellectual Property or any
such Table Game is invalid, expired, not in effect or not available for
protection in a particular country, develop, (whether internally or
externally), lease, license, sell, market, exploit, manufacture, use, or
otherwise exploit any Table Game that embodies or practices any game play
methods or game play rules that are the same or substantially similar to any
game play methods or game play rules of any Purchased Table Games; (y) for the
longer of the life of all of the Table Games Intellectual Property or all of
Buyer’s other Intellectual Property, develop (whether internally or
externally), lease, license, sell, market, exploit, manufacture, use, or
otherwise exploit any Table Game that infringes upon any of Buyer’s other
Intellectual Property or any of the Table Games Intellectual Property; or (z)
for a period of 10 years from the Closing Date, challenge any of Buyer’s
Intellectual Property or any of the Table Games Intellectual Property.


(c)           For
so long as Seller has continuing obligations under Section 7.9(a)
above, Seller shall not directly, or indirectly through another Person, (i)
induce or attempt to induce any employee of Seller’s Table Games Business to
leave the employ of Buyer, or in any way interfere with the relationship
between Buyer and any such employee, (ii) hire any person who was an employee
of Buyer in respect of Seller’s Table Games Business at any time during the six-month
period immediately 



 44
 









prior to the date on which such hiring would take place (it being
conclusively presumed by the parties so as to avoid disputes under this Section
7.9(c) that any such hiring within such six-month period is in
violation of clause (i) above), or (iii) call on, solicit or service any
customer, supplier, licensee, licensor or other business relation of Seller’s
Table Games Business in order to induce or attempt to induce such Person to
cease doing or decrease their business with Buyer in respect of Seller’s Table
Games Business, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and Buyer in respect of
Seller’s Table Games Business (including making any negative statements or
communications about Buyer).


(d)           Without
limiting the foregoing, Seller and any Acquirer, covenant and agree that for
ten (10) years from the Closing Date, Seller and such Acquirer shall not,
without Buyer’s prior written consent, grant any license or covenant not to
sue, or sell, license or lease any copy of the System for use in connection
with any Purchased Table Game or any Table Game owned or offered by Buyer, in
each case to the extent any such Table Game is covered by any Intellectual
Property of Buyer.


(e)           If,
at the time of enforcement of any of the provisions of this Section 7.9,
a court determines that the restrictions stated herein are unreasonable under
the circumstances then existing, then the parties hereto agree that the maximum
period, scope or geographical area reasonable under the circumstances shall be
substituted for the stated period, scope or area.  The Parties further agree that such court
shall be allowed to revise the restrictions contained herein to cover the
maximum period, scope or geographical area permitted by law.


(f)            If
Seller or any Acquirer (the “Restricted Persons”): w) breaches; x)
threatens to commit a breach of; y) challenges or contests, in any way, either
directly or indirectly; or z) assists any Person who is so challenging or
contesting, any of the provisions of this Section 7.9 (the “Restrictive
Covenants”), Buyer shall have the following rights and remedies, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to Buyer at law or in equity:


(i)          The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to Buyer and that
money damages would not provide an adequate remedy to Buyer; and


(ii)         The right and remedy
to require the Restricted Persons to account for and pay over to Buyer any
profits, monies, accruals, increments or other benefits derived or received by
the Restricted Persons as the result of any transactions constituting a breach
of the Restrictive Covenants; and


(iii)        Buyer’s continuing
obligation to make any current or future Contingent Purchase Price Payments or
any current or future Minimum Contingent Purchase Price Payments (for purposes
of this Section 7.9(f)(iii), collectively, “Payments”) shall
immediately be suspended pending the arbitration described below; provided,
however, prior to Buyer withholding any Payment on account of this Section
7.9(f)(iii), Buyer shall provide 15 days’ written notice thereof to
Seller.  The receipt of any such notice
shall not be a waiver of Seller’s right to dispute same, but Seller shall not
have the right to prevent or enjoin Buyer from withholding any such
Payment.  In the event that Buyer
believes that a breach of any Restrictive Covenant has occurred, then Seller
shall have the right to seek expedited arbitration, pursuant to the applicable
terms and condition of Article VIII hereof, as to whether or not any
Restricted Person has so breached any Restrictive Covenants, and Buyer agrees
to fully cooperate 



 45
 









with Seller in
seeking such expedited arbitration.  In
the event that an arbitrator rules that no Restrictive Covenant has been
breached by a Restricted Person, then Buyer shall immediately recommence making
any Payments, including any withheld or past due Payments, along with the
Applicable Rate.  In the event that an
arbitrator rules that a Restricted Person has violated any Restrictive
Covenant, then any obligation to pay any suspended, current or future Payment
shall be forgiven, discharged and released; provided, however, that Seller
shall, one time only, have the right to cease performing any acts or omissions
which violate any Restrictive Covenant and, in such event, Buyer shall
recommence making the Payments, less Buyer’s Losses resulting from the
Restricted Person’s breach of the Restrictive Covenant.  If there is any second violation of any Restrictive
Covenant, as determined by an arbitrator, then under no conditions shall any
suspended, current, or future Payment be recommenced, and Buyer’s obligations
with respect to making any further Payments shall be forever forgiven,
discharged and released.


(g)           Nothing
in this Agreement shall prevent or prohibit Buyer from:  (i) selling, leasing or licensing products
that have functionality that is similar to, identical to, or overlap with
functionality in any of the Excluded Assets; or (ii) selling, leasing, or
licensing products which are the same as, substantially similar to, or compete
with any Purchased Table Game.  For
purpose of clarity the foregoing does not permit Buyer to use the Licensed
Patents outside of the Field of Use.


(h)           Nothing
contained in this Section 7.9 shall constitute or imply a license, at
any time, to Seller or any Acquirer for any of the Table Games Intellectual
Property.


(i)            The
restrictions and limitations contained in this Section 7.9 are separate
from and shall in no way reduce or modify, or be reduced or modified by any
provisions in the Progressive License.


7.10         Property
Expense Apportionment.  As needed and
except as otherwise set forth in this Agreement, the following items (the “Prorated
Amounts”) relating to the Purchased Assets shall be apportioned in an
Equitable Manner as of the Closing Date so that the income and expense items
with respect to the period up to and including the Closing Date, without regard
to when the same are payable, shall be for Seller’s account and the income and
expense items with respect to the period after the Closing Date shall be for
Buyer’s account:  Personal property
taxes, if any, on the basis of the fiscal year for which assessed.  If the Closing Date shall occur before the
tax rate or assessment is fixed for any fiscal year, the apportionment of such
taxes at the Closing shall be based upon a reasonable estimate mutually agreed
upon by Buyer and Seller; provided  that Buyer and Seller shall
recalculate and reprorate said taxes and make the necessary cash adjustments
promptly upon the issuance, and on the basis, of the actual tax bills received
for any such fiscal year.


For purposes of this Section
7.10, the term “Equitable Manner” shall mean that Seller shall be
allocated such items based on a fraction, the numerator of which is the number
of days in the applicable taxable or fiscal period prior to the Closing Date
and the denominator of which is the total number of days in such taxable
period, and Buyer shall be allocated the remainder.


7.11         [INTENTIONALLY OMITTED].


7.12         Regulatory.  Due  to the highly regulated
nature of Buyer’s and Seller’s business, both prior to and after execution of
this Agreement, each Party shall have the right to perform such due diligence
on the other as may be required by any gaming regulators in those jurisdictions
where either Party possesses any licenses, or such due diligence as either
Party believes it is required to conduct. 
Both 



 46
 









prior to and on an on
ongoing basis, each Party shall fully and reasonably cooperate with the other
related to such due diligence. 
Notwithstanding any of the provisions contained in this Agreement to the
contrary, either Party shall have the right to immediately terminate any
ongoing relationship (including without limitation this Agreement) with the
other if such other Party takes any action or fails to take any action that
jeopardizes any of the other Party’s Gaming Permits, licenses or approvals, or
in the event that such Party’s relationship with the other in any way
jeopardizes or puts at risk any of such Party’s Gaming Permits, licenses or
approvals, but any such termination shall not, in any way, alter, reduce,
modify or amend any of the rights granted to either Party in this Agreement or
in any Related Agreement, nor Buyer’s ownership of all right, title and
interest in and to the Purchased Assets, or to any of Buyer’s rights pursuant
to the Progressive License.


7.13         Gaming
Products Approval.   For  any Gaming
Product Approvals applicable to both the Purchased Table Games and an Excluded
Asset, Seller shall use commercially reasonable effort to transfer such Gaming
Products Approval to the maximum extent possible, including by segregating or
partially assigning such Gaming Products Approval to the extent allowable by
the applicable gaming, certifying agency, governmental, regulatory or lab authority.


7.14         Errors
in Listing of Purchased Assets.  To  the extent
there is any item inadvertently missing from a Schedule listing any Purchased
Asset that results in a breach of Seller’s representation and warranty in Section
4.10(a), Seller shall promptly, but in no event more than within two (2)
business days, notify Buyer of such missing item, and thereafter transfer such
missing item to Buyer upon Buyer’s request. 
In such event, Buyer shall nonetheless maintain all of its rights and
remedies contained in this Agreement.


7.15         License
Back.  Effective  upon the
Effective Date, Buyer grants to Seller, limited to the Seller’s Field of
Use,  a fully paid-up, royalty-free,
non-transferable (except to any Acquirer), non-assignable and
non-sub-licensable (except to Legal Gaming Venues) world-wide and non-exclusive
license to develop, make, have made, use, sell, distribute, offer for sale,
lease, import, export or otherwise dispose of Systems that practice any
Purchased Table Game Intellectual Property (the “License Back”).  The License Back shall continue through and
until the expiration of all of the Purchased Table Games Intellectual Property.


7.16         Newly
Acquired Table Games Intellectual Property. 
Should, for a period of ten (10) years after the Closing Date, Seller
becomes the owner, by operation of law or by contract, of any Table Games
Intellectual Property, Buyer shall have, for at least 10 business days, a first
right of refusal thereon, and Seller shall not sell or license such Table Games
Intellectual Property to any third party Person without first offering same to
Buyer; and if Buyer declines same, Seller shall not sell or license such Table
Games Intellectual Property to any third party Person on terms more favorable
to such Person without Seller again offering same to Buyer for at least 10
business days.  In no event, during the
non-compete period in Section 7.9 shall Seller or any Acquirer exploit
such Table Games Intellectual Property. 
Nothing contained in this Section 7.16 shall be deemed a waiver
or modification of any of Seller’s or any Acquirer’s limitations, restrictions
or obligations contained in Section 7.9 hereof.


7.17         Conflicts.  Seller  hereby agrees to consider,
reasonably and in good faith, waiving any conflicts of interest for attorneys
Bob Purcell and Chad Miller to represent Buyer respecting any Purchased Table
Games Intellectual Property, except with regard to any claims against Seller.



 47















7.18         Service Transition Period.  For a period of thirty (30) days from the
Effective Date, in North America and any other location where Seller has
service personnel, when Seller receives a service call from a customer, then
Seller, at Buyer’s option, shall:


(a)           Send a Seller technician to service
the subject Table Game, for which Buyer shall compensate Seller’s technician at
its Ordinary Course of Business standard hourly rate; and


(b)           Notify Buyer’s service personnel of
the service call and allow a Buyer technician to accompany a Seller technician
on the service call.


7.19         Prior Patent Licenses.  As of the Closing Date, PGIC’s license to
U.S. Patents 5,393,067, 5,472,194, 5,417,430, and 5,544,892 and any other
Patents in their families, as provided in that certain Non-Exclusive License
Agreement dated December 28, 1999, is hereby terminated.  PGIC represents and warrants that, prior to
the Closing Date, and except to Legal Gaming Venues in its Ordinary Course of
Business, it has not sub-licensed, transferred or assigned any of its rights to
the Patents listed in this Section 7.19 to any other Person.


7.20         Prior License Agreement.  As of the Closing Date, PGIC’s licenses to
the Intellectual Property comprising the game “Bahama Bonus” and to the game “Bahama
Bonus,” as provided in that certain Exclusive License Agreement dated December
28, 1999, is hereby terminated.  PGIC
represents and warrants that, prior to the Closing Date, and except to Legal
Gaming Venues in its Ordinary Course of Business, it has not sub-licensed,
transferred or assigned any of its rights relating to the Intellectual Property
of the game described in this Section 7.20 to any other Person.


ARTICLE
VIII


MISCELLANEOUS


8.1           Amendment and Waiver.  This Agreement may be amended, and any
provision of this Agreement may be waived; provided  that (i) any
such amendment or waiver shall be binding upon Seller only if set forth in a
writing executed by Seller and referring specifically to the provision alleged
to have been amended or waived, and (ii) any such amendment or waiver shall be
binding upon Buyer only if set forth in a writing executed by Buyer and
referring specifically to the provision alleged to have been amended or
waived.  No course of dealing between or
among the parties shall be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any party under or by
reason of this Agreement and a waiver of any provision by any party on one
occasion shall not be deemed to be a waiver of the same or any other breach on
a future occasion.


8.2           Notices.  All notices, demands and other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (i) when
personally delivered, sent by telecopy (with hard copy to follow) or sent by
reputable overnight express courier (charges prepaid), or (ii) three days
following mailing by certified or registered mail, postage prepaid and return
receipt requested.  Unless another address
is specified in writing, notices, demands and communications to Seller and
Buyer shall be sent to the addresses indicated below:



 48
 









Notices to Seller:


PGIC


920
Pilot Road


Las
Vegas, NV 89119


Telecopy
No. (702) 263-1681


Attn:
Rob Ziems, Executive Vice President and General Counsel


Email: rob.ziems@pgicorp.net


with
a copy to:


(which shall not
constitute notice to Seller)


Cooley
Godward Kronish LLP


4401
Eastgate Mall


San
Diego, CA 92121


Telecopy
No. (858) 550-6420


Attn:  Steven M. Przesmicki, Esq.


Email: przes@cooley.com


Notices to Buyer:


Shuffle
Master, Inc.


1106
Palms Airport Drive


Las
Vegas, NV 89119


Telecopy
No. (702) 270-5326


Attn:
Jerry Smith, Senior Vice President and General Counsel


Email: jsmith@shufflemaster.com


with
a copy to:


(which shall not constitute
notice to Buyer):


Kirkland &
Ellis LLP


200
East Randolph


Chicago,
Illinois 60601


Telecopy
No. (312) 861-2200


Attn:       Barry
Irwin, Esq.


Email: birwin@kirkland.com


8.3           Assignment.


(a)           This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors, acquirers, permitted assigns, and
Affiliates, except that neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned or delegated by either Party without
the prior written consent of the other Party, except to a Person who acquires
control of the assigning Party, but provided such Person’s rights are subject
to the non-assigning Party’s rights hereunder and further, that such Person shall
be obligated under the provisions of Section 7.9(a) hereof.



 49
 









(b)           In addition, notwithstanding the
foregoing, either Party may assign in whole or in part its rights and
obligations pursuant to this Agreement (including the right to purchase the
Purchased Assets and the obligation to assume the Assumed Liabilities) to one
or more of its Affiliates, and such Party may, in its sole discretion, direct
the other Party to convey the Purchased Assets, in whole or in part, to one or
more of its Affiliates.  Either Party may
assign this Agreement and its rights and obligations hereunder in connection
with a merger or consolidation involving such Party or in connection with a
sale of stock (or other ownership interests) or assets of such Party or other
disposition of all or any portion of the Seller’s Table Games Business.  Either Party may assign any or all of its
rights pursuant to this Agreement, including its rights to indemnification, to
any of its lender(s) as collateral security, subject, in each case, to Buyer’s
rights hereunder and in any Related Agreement.


8.4           Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held to be
prohibited by or invalid, illegal or unenforceable under applicable law in any
respect by a court of competent jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, illegality or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. 
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible.


8.5           Interpretation.  The headings and captions used in this Agreement
and the table of contents to this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.  Any capitalized terms used in
any Schedule or Exhibit attached hereto and not otherwise defined therein shall
have the meanings set forth in this Agreement. 
The use of the word “including” herein shall mean “including without
limitation.”  The Parties hereto intend
that each representation, warranty and covenant contained herein shall have
independent significance.  If any Party
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 such Party is in breach of the first representation,
warranty or covenant.  The fact that
certain language was in draft of this Agreement but is not in the final version
of this Agreement shall not be given any interpretative meaning.


8.6           Entire Agreement.  This Agreement, the Related Agreements, and
the other agreements and documents referred to herein contain the entire
agreement and understanding between the Parties hereto with respect to the
subject matter hereof and, except as otherwise provided herein, supersede all
prior agreements and understandings, whether written or oral, relating to such
subject matter in any way.  No Party has
entered into this Agreement based on or as a result of any promise,
understanding, agreement, representation or warranty of the other Party, unless
any of same are expressly stated, in writing, in this Agreement as an
agreement, representation or warranty of said other Party.


8.7           Counterparts.  This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the Parties and
delivered to the other Party.


8.8           Governing Law.  THE LAW OF THE STATE OF NEW YORK SHALL GOVERN
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND 



 50
 









ENFORCEABILITY OF THIS AGREEMENT AND THE SCHEDULES
ATTACHED HERETO, AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS
AGREEMENT, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES
OR PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.  IT SHALL BE A
MATERIAL BREACH OF THIS AGREEMENT IF EITHER SELLER OR BUYER CHALLENGES, OBJECTS
TO, OR VIOLATES ANY PROVISION IN THIS SECTION 8.8.


8.9           No Strict Construction.  Notwithstanding the fact that this Agreement
has been drafted and prepared by one of the Parties, Buyer and Seller confirm
that each of it and its counsel have reviewed, negotiated and adopted this
Agreement as the joint agreement and understanding of the Parties, and the
language used in this Agreement shall be deemed to be the language chosen by
the Parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any Person.


8.10         Specific Performance.  Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. 
Accordingly, notwithstanding the provisions of Section 8.16 hereof, each
of the Parties agrees that the other Party shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 8.8 above), in addition to any other remedy to
which they may be entitled, at law or in equity.


8.11         No Third-Party Beneficiaries.  This Agreement is for the sole benefit of the
Parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give any Person, other than the Parties
hereto and such permitted assigns, any legal or equitable rights hereunder.


8.12         No Relationship.  This Agreement does not constitute and shall
not be construed as constituting a partnership, joint venture or fiduciary
relationship between Seller and Buyer. 
Neither Party shall have any right to obligate or bind the other Party
in any manner whatsoever, and nothing herein contained shall give or is
intended to give any rights of any kind to any third Persons.


8.13         Bulk Transfer Laws.  Buyer hereby waives compliance by Seller with
the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Purchased Assets.  Seller agree to indemnify Buyer against all
Losses which Buyer may suffer due to the failure to so comply or to provide
notice required by any such law.


8.14         Schedules.  All Schedules attached hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein.  However, nothing
in any Schedule shall be adequate to disclose an exception to a representation
or warranty made in this Agreement unless such Schedule identifies the
exception with particularity and describes the relevant facts in reasonable
detail.  Without limiting the generality
of the foregoing, the mere listing (or inclusion of a copy) of a document or
other item shall not be adequate to disclose an exception to a representation
or warranty made in this Agreement, unless the representation or warranty has
to do with the existence of the document or other item itself.  No exceptions to any representations or
warranties disclosed on one Schedule shall constitute an exception (i) to a
representation or warranty unless such representation or warranty calls for
exceptions 



 51
 









set forth on the Schedules, or (ii) to any other
representations or warranties made in this Agreement unless such exception is
disclosed as provided herein on each such other applicable Schedule.


8.15         Bankruptcy Code Section 365(n).  The license for the Licensed Patents referred
to herein shall be deemed a license of “intellectual property’ and the
agreement shall be deemed an “executory contract” for purposes of the United
States Code, Title 11, Section 365(n). 
In the event of the bankruptcy of a Party and a subsequent rejection or
disclaimer of this Agreement by a bankruptcy trustee or by a Party as a
debtor-in-possession, or in the event of a similar action under applicable law,
the other Party may elect to retain its license right under this Agreement,
subject to and in accordance with the provisions of the United States Code,
Title 11, Section 365(n) or other applicable law.


8.16         Submission to Jurisdiction.  Subject to the provisions of Section 8.10
hereof, each of the parties submits to the exclusive jurisdiction of binding
arbitration under the American Arbitration Association and the courts located
in the borough of Manhattan in the State of New York for any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding shall be heard and determined,
initially in such a binding arbitration proceeding, and, as required, with any
judgment to be filed with and enforced by any appropriate court in the borough
of Manhattan in the State of New York. 
Subject to the provisions of Section 8.10 hereof and except for the
purposes of enforcing and arbitration award, and the order of a New York court
determines that it does not have the power to enforce such an arbitration
award, a Party shall not bring any action or proceeding arising out of or
relating to this Agreement in any other forum. 
Nothing in this Section 8.16, however, shall affect the right of
any Party to serve legal process in any other manner permitted by law or at
equity. Each Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or at equity. 
It shall be a material breach of this Agreement if either Seller or
Buyer challenges, objects to or violates any provision of this Section 8.16.


8.17         Prior Agreements.  In the event of any conflict between the
terms and conditions of this Agreement, on the one hand, and the terms and
conditions of the Settlement Agreement, including all exhibits to said
Settlement Agreement, dated as of December 20, 1999, between SMI, PGIC and
Mikohn Gaming Corporation, on the other hand, then the terms and conditions of
this Agreement shall control and apply. 
The Parties further agree that this Agreement shall also serve as a
release of any past claims, now known or unknown, between the Parties, other
than as created or as exist in or under either this Agreement or any Related
Agreement.


*     *    
*     *     *



 52
















IN WITNESS WHEREOF, the parties hereto have caused
this Purchase Agreement to be duly executed as of the date and year first
written above.


	
  

  	
  PROGRESSIVE
  GAMING INTERNATIONAL CORPORATION (“PGIC”) and on behalf of its Affiliates and
  Subsidiaries (“Seller”)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B.
  Ziems

  	
   

  
	
   

  	
  Printed Name:

  	
  Robert B. Ziems

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President, General Counsel and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PROGRESSIVE
  GAMES, INC. (“PGI”) and on behalf of its Affiliates and Subsidiaries
  (“Seller”)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B.
  Ziems

  	
   

  
	
   

  	
  Printed Name:

  	
  Robert B. Ziems

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President, General Counsel and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SHUFFLE MASTER,
  INC. (“SMI”) and on behalf of its Affiliates and Subsidiaries (“Buyer”)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Smith

  	
   

  
	
   

  	
  Printed Name:

  	
  Jerry Smith

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President and General Counsel and an authorized signatory

  
						



 













Schedules and Attachments


Affiliated
Transactions Schedule (4.27)


Assumed Contracts
Schedule ((2.2)(a)(i))


Brokerage Schedule
(4.15)


Capital
Expenditures Schedule (4.24)


Compliance
Schedule (4.19)


Contracts Schedule
(4.12)


Customers and
Suppliers Schedule (4.21)


Developments
Schedule (4.9)


Equipment and
Fixed Assets Schedule (2.1(a)(iv))


Excluded Assets
Schedule (2.1(a)(iv))


Existing Installed
Base Schedule (2.1(a)(vi))


Exploitation
Schedule (4.32)


Game Replacement
Schedule (4.31)


Indemnification
Schedule (7.2)


Insurance Schedule
(4.18)


Inventory Schedule
(2.1(a)(ii))


Inventory
Exceptions Schedule (4.22)


Liabilities
Schedule (4.5)


Litigation
Schedule (4.14)


Material Adverse
Change Schedule (4.8)


Names and
Locations Schedule (4.20)


Pending Orders
Schedule (4.10(j))


Product Liability
Schedule (4.23)


Product Recalls
and Product Warranties Schedule (4.17)


Promotions
Schedule (4.25)


Purchased Table
Games Schedule (4.10(d))


Restrictions
Schedule (4.2)


Secured Creditors
Schedule (4.7)


September 2007
Billings Schedule (4.34)


Sold Purchased
Table Games Schedule (4.10(k))


Subsidiaries
Schedule (4.3)


Table Games
Intellectual Property Schedule (4.10(e)) and (4.13)


Table Games Intellectual
Property Schedule (4.13(e))


Table Games
Intellectual Property Schedule - title to be Corrected Post Closing(4.13(c))


Tax Schedule
(4.11)


TCS Schedule
(4.35)


Vendor Schedule (3.1(p))