Document:

Exhibit 10.1

ASSET PURCHASE AGREEMENT

BETWEEN

SYNEL INDUSTRIES LTD. AND TIME
AMERICA, INC. (Delaware Corporation)

AND

TIME AMERICA, INC. (Nevada
Corporation)

AND

TIME AMERICA, INC. (Arizona
Corporation)

AND

NETEDGE DEVICES, LLC

January 16, 2007

TABLE OF CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
  Section 1.

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  Section
  2.

  	
   

  	
  Basic Transaction

  	
   

  	
  4

  	
   

  
	
  Section
  3.

  	
   

  	
  Sellers’
  Representations, Warranties and Declarations.

  	
   

  	
  5

  	
   

  
	
  Section
  4.

  	
   

  	
  Buyer’s Representations
  and Warranties

  	
   

  	
  8

  	
   

  
	
  Section
  5.

  	
   

  	
  Pre-Closing Covenants

  	
   

  	
  9

  	
   

  
	
  Section
  6.

  	
   

  	
  Conditions to
  Obligation to Close

  	
   

  	
  10

  	
   

  
	
  Section
  7.

  	
   

  	
  At/Post-Closing
  Covenants

  	
   

  	
  11

  	
   

  
	
  Section 8.

  	
   

  	
  Miscellaneous

  	
   

  	
  16

  	
   

  

Exhibits

	
  Exhibit A

  	
   

  	
  —  List of Sellers’ Resellers

  	
   

  
	
  Exhibit
  B

  	
   

  	
  —  Sellers’ Employees to be Hired by Buyer and
  Employment Letters

  	
   

  
	
  Exhibit
  C

  	
   

  	
  —  Form of Sellers’ Hosted Remarketing
  Agreement

  	
   

  
	
  Exhibit
  D

  	
   

  	
  —  Sellers’ Direct and End-User Accounts

  	
   

  
	
  Exhibit
  F

  	
   

  	
  —  TA7000 Inventory and tools to be Purchased
  by Buyer

  	
   

  
	
  Exhibit
  G

  	
   

  	
  —  Sellers’ Financial Statements

  	
   

  
	
  Exhibit
  H

  	
   

  	
  —  None

  	
   

  
	
  Exhibit
  I

  	
   

  	
  —  Top 20 Contracts

  	
   

  
	
  Exhibit
  J

  	
   

  	
  —  Litigation

  	
   

  
	
  Exhibit
  K

  	
   

  	
  —  Form of Buyer’s Employment Letter

  	
   

  
	
  Exhibit
  L

  	
   

  	
  —  TA7000 Know-How in Written and DVD Form

  	
   

  
	
  Exhibit
  M

  	
   

  	
  —  Form of Laurus
  Payoff Letter

  	
   

  
	
  Exhibit N

  	
   

  	
  —  Form of
  Letter to be Sent by Buyer to Sellers’ Customers

  	
   

  
	
  Exhibit O

  	
   

  	
  —  Buyer’s U.S.
  Clients

  	
   

  
	
  Exhibit P

  	
   

  	
  —  Letter
  regarding Ownership of Molds

  	
   

  
	
  Exhibit Q

  	
   

  	
  —  Parts List Pricing

  	
   

  

 

 i

ASSET PURCHASE AGREEMENT

This
ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of
January 16, 2007, by and among Synel
Industries Ltd., an Israeli registered corporation or any of its
subsidiaries (“Synel”), and Time
America, Inc., a Delaware corporation (“Synel
Delaware” and,together with Synel, collectively, the “Buyer”, and Time
America, Inc., a Nevada Corporation
(“T.A. Nevada”), Time America,
Inc., an Arizona Corporation (“T.A.
Arizona”), and NetEdge Devices,
LLC, an Arizona limited liability company (“NetEdge”).  T.A.
Nevada, T.A. Arizona and NetEdge are referred to collectively herein as the “Sellers.” 
Buyer and Sellers are referred to collectively herein as the “Parties.”

This
Agreement contemplates a transaction in which Buyer will purchase certain
assets of Sellers in return for cash and future royalty payments based on Buyer’s
revenue derived from the sale of the TA7000 (defined below) following the
Closing.

Now,
therefore, in consideration of the Sellers premises and promises herein made in
front of the Buyer, and in consideration of the Sellers representations,
warranties, and covenants herein contained which made in front of the Buyer,
the Parties agree as follows.

Section
1.              Definitions.

“Acquired Assets” or “Purchased Assets”
means all of the following assets of Sellers:

(a)           The resellers of Sellers identified on Exhibit A to this Agreement
related to the Purchased Assets, which list includes Sellers’ regular resellers
and NETtime hosting resellers.

(b)           All of Sellers full ownership, title and interest in the intellectual
property rights, including source code, object code, kernel, know-how,
published user documentation and any related technical documentation to the
following software and firmware products of Sellers: GENESIS SQL, GENESIS PRO,
TA100, TA100PRO TA50, TA50XL, TA50 PRO and the TA7000 Product Series (“TA7000”),
HourTrack and the associated firmware for all the data collection devices.

(c)           the NETtime Source Code.

(d)           All of Sellers right, title and interest in and to the mark “Time
America” including its use with respect to the labeling of software and/or
hardware products and the names and trade marks of the Sellers and its U.S.
subsidiary what so ever, the domain name of Time America as well as the web
site itself, and any labeling whatsoever related to the brand “Time America” of
the Sellers and its U.S. subsidiaries and have the right to use either Sellers
or Buyer’s brand name and trademark regarding the TA7000 or any other of
the  Purchased Assets as Buyer would like,
based on its sole discretion.  Sellers
shall also be entitled to a copy of the content of the Time America web site as
it exists as of the Closing.

 1
 

“Assumed Liabilities” means
all liabilities and obligations of Sellers (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), arising out of and/or related to the Acquired Assets as well as
Sellers representations and warranties regarding the Purchased Assets.

“Buyer” has the meaning set
forth in the preface above.

“Sellers” has the meaning set
forth in the preface above.

“Closing” has the meaning set
forth in §2(d) below.

“Closing Date” has the
meaning set forth in §2(d) below.

“Employees” means all the
employees of Sellers listed on Exhibit B to this Agreement.

“Financial Statements” has
the meaning set forth in §3(g) below.

“GAAP” means United States
generally accepted accounting principles as in effect from time to time, consistently
applied.

“Hosting Facilities” means
the existing service commitment provided by Sellers immediately preceding the
Closing to its NETtime clients, as described in Sections 5.1 and 5.2 of Sellers
standard Hosted Remarketing Agreement, the form of which is attached hereto as
Exhibit C.

“Income Tax” means any
federal, state, local, or foreign tax based on or measured by reference to net
income, including any interest, penalty, or addition thereto, whether disputed
or not.

“Income Tax Return” means any
return, declaration, report, claim for refund, or information return or
statement relating to Income Taxes, including any schedule or attachment
thereto.

“Legal Proceedings” means any lawsuit and/or legal
action at any stage of the actual legal process brought against the Sellers by
any third party who seeks a legal remedy.

“Lien” means any mortgage,
pledge, lien, encumbrance, charge, or other security interest other than (a)
mechanics’, materialmen’s, and similar liens, (b) liens for Taxes not yet due and
payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing
of money, (e) any liens existing in favor of Laurus Master Fund Ltd. and/or
Laurus Capital Management or any of its affiliated companies and/or
subsidiaries.

“Material Adverse Effect” or “Material Adverse Change” means any effect or change of
more than 5% regarding the Financial Declarations  and/or Representations and/or Warranties that
made by the Sellers.

 2
 

“Most Recent Financial Statements”
has the meaning set forth in §3(f) below.

“Most Recent Fiscal Month End”
has the meaning set forth in §3(g) below.

“NETtime Source Code” means the limited right to use
a copy of the NETtime source code for NETtime versions 5 and 6, provided such
use shall prohibit any resale by Buyer of the NETtime source code to any third
party and any sale by Buyer of the NETtime products to any direct and end-use
accounts of Sellers listed on Exhibit N hereto. 
In addition, such license shall grant Buyer the right to receive any new
versions of NETtime for a period of 12 months following the Closing.

“Ordinary Course of Business”
means the ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency).

“Party” has the meaning set
forth in the preface above.

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

“Purchase Price” has the
meaning set forth in §2(c) below.

“Resellers’ Activity”
means the revenue arising from the activity of the  resellers identified on Exhibit A for the
calendar year ended December 312006.

“Sellers” has the meaning set
forth in the preface above.

“Software” means all computer
software and last versions thereof, including source code, kernel, object,
executable or binary code, objects, comments, screens, user interfaces, report
formats, templates, menus, buttons and icons and all files, data related to
Sellers’ resellers, materials, manuals files, design notes and other items and
documentation related thereto or associated therewith relating to the following
software products of Sellers:  Genesis
SQL, Genesis Pro, TA100, TA100 PRO, TA50 PRO, TA50XL, and NETtime (Versions 5
and 6).

“Subsidiary” means, with
respect to any Person, any corporation, limited liability company, partnership,
association, or other business entity of which (i) if a corporation, a majority
of the total voting power of shares of stock entitled (without regard to the
occurrence 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 Person or one or more of the other Subsidiaries of that Person or a
combination thereof or (ii) if a limited liability company, partnership,
association, or other business entity (other than a corporation), a majority of
the partnership or other similar ownership interests thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof and for this purpose, a
Person or Persons own a majority ownership interest in such a business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of such business entity’s gains or losses or shall be or control any
managing director or general 

 3
 

partner of such business entity (other than a corporation).  The term “Subsidiary” shall include all
Subsidiaries of such Subsidiary.

“Tax Return” means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.

Section 2.              Basic
Transaction.

(a)           Purchase and Sale of
Assets.  Based on the representations,
warranties, declarations and exhibits made by the Sellers in front of the Buyer
in this Agreement and subject to the terms and conditions of this Agreement,
Buyer agrees to purchase from Sellers, and Sellers agrees to sell, transfer,
convey, and deliver to Buyer, all of the Acquired Assets at the Closing for the
consideration specified below in this §2.

(b)           Purchase Price.  Buyer agrees to pay to Sellers at the Closing
U.S. $2,500,000 in consideration for the Acquired Assets, less the Escrow
Amount (the “Purchase Price”). 
The Purchase Price shall be paid as follows:

(i)            U.S. $2,250,000 (the “Cash Payment”) shall be payable by Buyer to Sellers as
follows:

1.             U.S. $1,724,975.75, of which shall
be paid by wire transfer of immediately available funds to Laurus Master Fund
Ltd. to repay in full all of Sellers’ existing indebtedness owing to Laurus
Master Fund Ltd.(“Laurus Payment”). The parties agreed and approved mutually
that the Buyer will not transfer Laurus Payment wire transfer until Sellers
will provide to Buyer Exhibit M (while all the fill in blanks of the document
have been fulfilled) signed by Laurus Master Fund Ltd. by an authorized person
of Laurus Master Fund Ltd.

2.             U.S. $250,000 (the “Escrow
Amount”) to be paid by wire transfer of immediately available funds to
Wells Fargo Bank, as escrow agent (the “Escrow Agent”), pursuant to
terms set forth in an escrow agreement mutually acceptable to the parties
attached as Exhibit C.  The term of the
escrow shall be for a period of six months, with 50% of the Escrow Amount to be
released three months following the Closing and the remainder six months
following the Closing in accordance with (and upon fulfillment of) the terms
and conditions under the Escrow Agreement.

3.             U.S. $517,524.25 by wire transfer
of immediately available funds to an account designated in writing by Seller.

The
assets described in Section 1(a) of this Agreement shall be transferred to
Synel Delaware and the remaining assets shall be transferred to Synel.

(c)           Inventory Purchasing.  In addition to the Cash Payment, Buyer shall
wire transfer to Sellers immediately available funds in the amount of U.S.
$140,000 for the purchase of the TA7000 inventory listed on Exhibit F to this
Agreement.  In the event Buyer decides to
purchase TA7000 inventory from Sellers in excess of U.S. $140,000 following the
Closing, the purchase price of such inventory in excess of U.S. $140,000 shall
equal 50% of Sellers’ cost.  In 

 4
 

the
event Buyer decides to purchase from Sellers any other inventory unrelated to
the TA7000, Buyer will pay Sellers cost of such inventory.

(d)           The Closing.

(i)            The execution date of this Agreement
shall be January 16, 2007.

(ii)           The Closing of the transactions contemplated by this
Agreement (the “Closing”) shall occur on January
23, 2007 and be effective as of January 16, 2007, subject to the satisfaction
or waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
the Parties may mutually determine (the “Closing Date”).  Notwithstanding anything in this Agreement to
the contrary, if the Closing shall not have occurred by January 26, 2007,
either party may terminate this Agreement by written notice to the other party
without any liability to the other party.

(e)           Deliveries at the
Closing.  At the Closing, (i) Sellers shall
deliver to Buyer the various certificates, instruments, and documents referred
to in §6(a) below; and (ii) Sellers shall execute, acknowledge (if
appropriate), and deliver to Buyer (A) assignments (including intellectual
property transfer documents) and (B) such other instruments of sale, transfer,
conveyance, and assignment as Buyer and its counsel may reasonably request.

Section 3.              Sellers’
Representations, Warranties and Declarations.

Sellers represents, warrants and declares to the Buyer that
the Exhibits and Appendix attached to this Agreement as well as the statements
contained in it are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Agreement).

(a)           Organization of
Sellers.  Sellers are:

(i)            Time
America, Inc. is a corporation duly organized, validly existing, and in good standing
under the laws of the state of Nevada.

(ii)           Time
America, Inc. is a corporation duly organized, validly existing, and in
good standing under the laws of the state of Arizona.

(iii)          NetEdge Devices, LLC is an Arizona limited
liability companyduly organized,
validly existing, and in good standing under the laws of the state of Arizona.

(b)           Authorization of
Transaction.  Sellers have full power and
authority (including full corporate or other entity power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.  Without limiting the generality of the
foregoing, the board of directors of Sellers has duly authorized the execution,
delivery, and performance of this Agreement by Sellers.  This Agreement constitutes the valid and
legally binding obligation of Sellers, enforceable in accordance with its terms
and conditions.

 5
 

(c)           Non-contravention.  To the knowledge of the Sellers, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in §2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Sellers
or any of its Subsidiaries is subject or any provision of the charter or bylaws
of Sellers or any of its Subsidiaries or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Sellers or any of its Subsidiaries is a party or by which
it is bound or to which any of its assets is subject (or result in the
imposition of any Lien upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Lien would not have a Material Adverse
Effect.

(d)           Brokers’ Fees.  Sellers has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer could become liable
or obligated.  None of the Subsidiaries
of Sellers has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement.  Notwithstanding, Sellers
has an agreement with Oberon Securities LLC to pay a transaction fee that is
the responsibility of Sellers.  Further
more, it is known, understood and acceptable on the Sellers that the Buyer has
no liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which Buyer could become liable or obligated. 
None of the Subsidiaries of the Buyer has any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. All the above exclude fees that
arise as a result of any of the parties actions which are not stated hereunder
and have not revealed to the other party.

(e)           Title to Tangible
Assets.  Sellers and its Subsidiaries have
good title to, or a valid leasehold interest in, the material tangible assets
they use regularly in the conduct of their Resellers’ Activity.

(f)            Financial Statements.  Attached hereto as Exhibit G are the
following financial statements (collectively the “Financial
Statements”): (i) audited consolidated balance sheets and statements
of income, changes in stockholders’ equity, and cash flow as of and for the
fiscal years ended June 30, 2005 and 2006, and for Sellers and its
Subsidiaries; and (ii) unaudited consolidated balance sheets and statements of
income, changes in stockholders’ equity, and cash flow (the “Most
Recent Financial Statements” as of and for the three months ended
September 30, 2006 (the “Most Recent Fiscal Month End”)
for Sellers and its Subsidiaries.  The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP throughout the periods covered thereby and present fairly
the financial condition of Sellers and its Subsidiaries as of such dates and
the results of operations of Sellers and its Subsidiaries for such periods; provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items.

 6
 

(g)           Events Subsequent to
Most Recent Fiscal Month End.  Since the
Most Recent Fiscal Month End, there has not been any Material Adverse
Change.  Without limiting the generality
of the foregoing, since that date neither Sellers nor any of its Subsidiaries
has engaged in any practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business.

(h)           Legal Compliance and
Lack of Legal Proceedings. To the knowledge of Sellers, each of Sellers and its
Subsidiaries has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof).  There are not any Legal
Proceedings and/or potential Legal Proceedings against the Sellers and its
Subsidiaries.  Attached hereto as Appendix
A is an opinion letter from the legal counsel of the Sellers and its
Subsidiaries.

(i)            Tax Matters.

(i)            Each of Sellers and
its Subsidiaries has filed all Income Tax Returns that it was required to file,
and has paid all Income Taxes shown thereon as owing.

(ii)           Neither Sellers nor
any of its Subsidiaries has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.

(iii)          Neither Sellers nor
any of its Subsidiaries is a party to any Income Tax allocation or sharing
agreement.

(iv)          Neither Sellers nor any
of its Subsidiaries has been a member of an Affiliated Group filing a
consolidated federal Income Tax Return (other than a group the common parent of
which was Sellers).

(j)            Intellectual Property.  Attached hereto as Exhibit H identifies each
patent or registration related to the Acquired Assets that has been issued to
Sellers or any of its Subsidiaries with respect to any of its Software,
identifies each pending patent application or application for registration that
Sellers or any of its Subsidiaries has made with respect to any of its
Software, and identifies each material license, agreement, or other permission
that Sellers or any of its Subsidiaries has granted to any third party with
respect to any of its Software.

(k)           Contracts.  Attached hereto as Exhibit I lists the top 20
written contracts relating to the Resellers’ Activity.  Sellers has delivered to Buyer a correct and
complete copy of the top 20 written contracts listed in Exhibit I.

(l)            Powers of Attorney.  As of the Closing, there are no outstanding
powers of attorney executed on behalf of Sellers or any of its Subsidiaries
relating to the Resellers’ Activity.

(m)          Litigation.  Exhibit J attached hereto sets forth each
instance in which Sellers or any of its Subsidiaries (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party to any action, suit, proceeding, hearing, or 

 7
 

investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would not have a
Material Adverse Effect.

(n)           Sellers represent and
warrant that Sellers have transferred to Buyer under this agreement all the
latest versions of the software related to GENESIS SQL, GENEIS Pro, TA100,
TA100 PRO, TA50 PRO, and TA50XL.

(o)           Sellers represent and
warrant that the inventory attached as Exhibit F related to TA7000, which is
being purchased by the Buyer at the amount of U.S $140,000 at the Closing, is
an inventory capable (i.e. usable) in the hands of Buyer for a production line
of the last version of TA7000.

(p)           On the Closing Date,
Sellers shall have paid each key employee listed on Exhibit B and hired by
Buyer all accrued and unpaid wages, bonuses and related employee benefits.

(q)           Disclaimer of Other
Representations and Warranties.  Except as
expressly set forth in this Agreement, Seller makes no representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed.

Section 4.              Buyer’s Representations and
Warranties.

Buyer represents and warrants to
Sellers that the statements contained in this §4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this §4):

(a)           Organization of Buyer.  Buyer is a corporation (or other entity) duly
organized, validly existing.

(b)           Authorization of
Transaction.  Buyer has full power
and authority (including full corporate or other entity power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder.  This Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions.  The
execution, delivery and performance of this Agreement and all other agreements
contemplated hereby have been duly authorized by Buyer.

(c)           Non-contravention.  To the knowledge of Buyer, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in §2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Buyer is
subject or any provision of its charter, bylaws, or other governing documents
or (ii) conflict with, result in 

 8
 

a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Buyer is a party or by which it is bound or to which any
of its assets are subject.  Buyer does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in §2 above).

(d)           Brokers’ Fees.  Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.

Section 5.              Pre-Closing
Covenants.

The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing:

(a)           General.  Each of the Parties will use its reasonable
best efforts to take all actions and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
Closing conditions set forth in §6 below).

(b)           Notices and Consents.  Sellers shall give (and shall cause each of
its Subsidiaries to give) any notices to third parties, and Sellers shall use
its reasonable best efforts (and shall cause each of its Subsidiaries to use
its reasonable best efforts) to obtain any third party consents, referred to in
§3(c). Each of the Parties will (and Sellers shall cause each of its
Subsidiaries to) give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the matters
referred to in §3(c) and §4(c) above.

(c)           Full Access.  Sellers will permit (and will cause each of
its Subsidiaries to permit) representatives of Buyer (including legal counsel
and accountants) to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of Sellers and its
Subsidiaries, to all premises, properties, personnel, books, records (including
tax records), contracts, and documents of or pertaining to Sellers and each of
its Subsidiaries.  Buyer will treat and
hold as such any Confidential Information it receives from any of Sellers and
its Subsidiaries in the course of the reviews contemplated by this §5(d), will
not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever, will
return to Sellers and its Subsidiaries all tangible embodiments (and all
copies) of the Confidential Information that are in its possession.

(d)           Notice of Developments.

(i)            Seller may elect at
any time to notify Buyer of any development causing a breach of any of its
representations and warranties in §3 above.

 9
 

(ii)           Each Party will give
prompt written notice to the other Party of any material adverse development
causing a breach of any of its own representations and warranties in §3 and §4
above.  No disclosure by any Party
pursuant to this §5(e)(ii), however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation or breach of
warranty.

Section 6.              Conditions
to Obligation to Close.

(a)           Conditions to Buyer’s
Obligation.  Buyer’s obligation to consummate
the transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:

(i)            the representations
and warranties set forth in §3 above shall be true and correct in all material
respects at and as of the Closing Date, except to the extent that such
representations and warranties are qualified by the term “material,” or contain
terms such as “Material Adverse Effect” or “Material Adverse Change,” in which
case such representations and warranties (as so written, including the term “material”
or “Material”) shall be true and correct in all respects at and as of the
Closing Date;

(ii)           Seller shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing, except to the extent that such covenants are
qualified by the term “material,” or contain terms such as “Material Adverse
Effect” or “Material Adverse Change,” in which case Seller shall have performed
and complied with all of such covenants (as so written, including the term “material”
or “Material”) in all respects through the Closing;

(iii)          there shall not be any
injunction, judgment, order, decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by this Agreement;

(iv)          Seller shall have
delivered to Buyer a certificate to the effect that each of the conditions
specified above in §6(a)(i)-(iii) is satisfied in all respects;

(v)           Seller, its
Subsidiaries, and Buyer shall have received all authorizations, consents, and
approvals of governments and governmental agencies referred to in §3(c) and
§4(c) above; and

(vi)          all actions to be
taken by Seller in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Buyer.

Buyer may waive any condition specified in this §6(a) if it executes a
writing so stating at or prior to the Closing.

(b)           Conditions to Seller’s
Obligation.  Seller’s obligation to consummate
the transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:

 10
 

(i)            the representations
and warranties set forth in §4 above shall be true and correct in all material
respects at and as of the Closing Date, except to the extent that such
representations and warranties are qualified by the term “material,” or contain
terms such as “Material Adverse Effect” or “Material Adverse Change,” in which
case such representations and warranties (as so written, including the term “material”
or “Material”) shall be true and correct in all respects at and as of the
Closing Date;

(ii)           Buyer shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing, except to the extent that such covenants are
qualified by the term “material,” or contain terms such as “Material Adverse
Effect” or “Material Adverse Change,” in which case Buyer shall have performed
and complied with all of such covenants (as so written, including the term “material”
or “Material”) in all respects through the Closing;

(iii)          there shall not be any
injunction, judgment, order, decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by this Agreement;

(iv)          Buyer shall have
delivered to Seller a certificate to the effect that each of the conditions
specified above in §6(b)(i)-(iii) is satisfied in all respects;

(v)           Seller, its
Subsidiaries, and Buyer shall have received all authorizations, consents, and
approvals of governments and governmental agencies referred to in §3(c) and
§4(c) above; and

(vi)          all actions to be
taken by Buyer in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Sellers.

Section 7.              At/Post-Closing
Covenants.

In consideration for the foregoing, Sellers and Buyer agree to undertake
the following actions (at/post closing):

7.1.          At
the Closing.

(a)           Sellers will cooperate
with Buyer in connection with Buyer’s hiring of the employees of Sellers set
forth on Exhibit B hereto (the “Hired Employees”).  Seller shall be liable to pay all liabilities
concerning such employees related to the employment period prior to the
Closing.  Buyer shall be obligated to pay
all liabilities concerning such employees related to the employment period
following the Closing.  Any other
employees of Sellers hired by Buyer shall be subject to the mutual agreement of
the Parties.  Buyer agrees to offer
compensation and other benefits to the Hired Employees on terms substantially
equivalent or greater than the benefits offered to such employees as of the
Closing.  Attached to Exhibit B are
copies of signed employment letters from each of the employees listed on such
Exhibit B in the form of Exhibit K.

 11

(b)           Sellers will transfer
to Buyer all existing TA7000 manufacturing tools, molds, racks and tables, all
embedded equipments, as set forth on Exhibit F, and provide Buyer’s production
manager with access to Sellers’ production manager for the TA7000 product line
during normal business hours by email, telephone and in person in Scottsdale,
Arizona for a period of ninety (90) days following the Closing for the purpose
of assisting Buyer with the establishment of a full production line for the
TA7000.

Attached
hereto as Exhibit L is a list of TA7000 know-how. as existing in writing and
DVD form as of the Closing.  Sellers will
transfer and deliver to Buyer all the IP know how and documentation printed,
related to the Acquired Assets.

(c)           For a period of five
years after the Closing, the Sellers and any related party to them and any
third party on behalf of them will not develop and/or manufacture hardware in
the field of time and attendance. 
Notwithstanding the foregoing, nothing in this Agreement shall prohibit
or restrict Sellers’ ability to fulfill open orders existing as of the Closing
Date under Sellers’ agreement with FedEx and to sell Sellers’ existing time
clock inventory as of the Closing for a period of up to six (6) months
following the Closing.  If Buyer elects
to purchase such existing inventory, Sellers agree to sell the same to Buyer at
Sellers’ cost.

(d)           Following the Closing,
Sellers shall be entitled to continue developing interfaces to hardware
devices.

(e)           Seller will transfer
to Buyer all certificates and/or any documentation needed for the transfer of
the domain name of Time America including the Time America web site and its
contents. Seller shall have the right to a copy of the contents of the web site
as far as it is not related to the reseller activity.

(f)            In the event Unitime
Inc. breaches the terms of Section 2(a) of that certain purchase agreement
between Unitime Inc. and Time America, Inc., at the request of Buyer Sellers
agree to initiate legal action to enforce Sellers’ rights under such agreement
in accordance with the terms thereof and shall use U.S. litigation counsel
selected by  Buyer.  Any judgement in favor of Sellers or other
payment to Sellers in connection with such litigation shall be paid to Buyer,
net of Sellers’ costs and expenses of such litigation.

(g)           Sellers will provide a
payoff letter rendered by Laurus Master Fund LLC in form and substance attached
hereto as Exhibit M.

(h)           Sellers will provide a
listing of its inventory relating to its TA7000 existing as of the Closing.

(i)            Sellers will provide a
list of Reseller that are using NETtime Version 5.X and NETtime Version 6.X.

(j)            Sellers will provide a
declaration that there are not any liens of any kind on the Purchased Assets.

 12
 

(k)           Sellers shall provide Thomas S. Bednarik with a DVD copy of all source
code related to the Acquired Assets, which shall not be transferred to Buyer
until such time as the Purchase Price has been paid in accordance with Section
2(a).

7.2.          Post
Closing.

(a)           Sellers will be
obligated to buy clocks from the Buyer as its prime and exclusive vendor of
supply as long as the cost, features, functionality and payment terms are
competitive  with American or European
Manufacturers (excluding FedEx Orders as indicated at Section 7.2(b) below).

(b)           Sellers will buy from
Buyer the TA7700 color display, as currently configured exclusive of RSI
handpunch component), for FedEx orders. 
Buyer agrees to sell for these orders only at a fixed special price of
$2,000 per unit for the period starting at the Closing and ending at May 31,
2008.  The parties acknowledge and agree
that no royalties shall be payable by Buyer with respect to such sales.

(c)           As promptly as
possible following the Closing, Sellers will change after the Closing, but not
later than 90 days following the Closing, the names of the companies of the
Sellers T.A Nevada and T.A Arizona, that it will not include the words: “Time”
and/or “America” (hereinafter the “Words”) and any rephrasing of the
words.  Notwithstanding the foregoing,
Sellers may continue to use the name NETtime.

(d)           Sellers agree to rent
to Buyer a part of Sellers’ premises in the current Sellers facility located in
Scottsdale, Arizona by its size needed. 
Buyer shall pay to Seller a monthly 
amount for such space based on a rate equal to U.S. $22.50 per square
feet for a year.  This rental fee will
include using all the facilities at Sellers premises including: electricity,
air-conditioning, telephone and internet access, computers, programs etc.,
(hereinafter the “rental fee” or the “rental”). 
The first two months of the rental period shall be provided by
Sellers  be free of charge.  The rental period will start at the Closing,
and Buyer will have to give 45 days advance notice to Sellers in order to
terminate the rental period, provided that the end of the rental period
shall  be no longer than May 1,
2007.  During the period contemplated by
this subparagraph (d), each Party agrees to be liable for any and all damages
to a Party’s tangible assets caused by the other Party’s employee.  Buyer agrees to reimburse Sellers for any
assets used by Buyer and not covered by this paragraph during the period set
forth in this subparagraph (d), at Sellers’ cost (i.e., paper, soda, etc.).

(e)           Sellers agree to
provide Buyer with the Hosting Facilities for a period of six months after the
Closing at a cost of U.S. $2,000 per month. 
After six months such cost shall be subject to renegotiation by the
Parties, provided, however, Sellers shall be under no obligation to continue to
provide such services.  Upon the
expiration of such six month period, Sellers shall transfer to Buyer all
employee data relating to the resellers listed on Exhibit A.  During such six-month period Sellers shall
provide administrative access as reasonably required by  Buyer for the purpose of providing billing
NETtime reseller clients.

 13
 

(f)            Sellers agree to
provide the following support and training services following the Closing:

(i)            At Buyer’s request,
Sellers shall make an employee knowledgeable with the TA7000 product available
to Buyer in Arizona for a period of two weeks for the purpose of providing
knowledge transfer and training to Buyer’s employee with respect to the Java
program for the TA7000 product.

(ii)           For a period of three
months following the Closing, Sellers shall provide support for the TA7000
products.  Such support may be provided
by telephone, email or in-person in Seller’s offices in Scottsdale, Arizona.

(iii)          For a period equal to
the earlier of 12 months following the Closing or such time Buyer has altered
the source code of NETtime, Sellers shall provide 2nd tier support for the
NETtime  products including new releases
and documentation of the software as provided from time to time by Sellers.  Such 2nd tier support may be provided by
telephone, email or in-person in Seller’s offices in Scottsdale, Arizona.  Such 2nd tier support shall consist of
providing releases through Sellers normal release process and shall be provided
by Sellers employees to Buyer employees and shall not include end-users of
Buyer..

(iv)          Sellers agree to
provide Buyer’s personnel with initial training in order to educate Buyer with
respect to the NETtime product.  Such
training shall be conducted at Sellers’ Scottsdale, Arizona offices for a
period of two weeks.

(v)           For a period of three
months following the Closing, Sellers shall provide employee to employee 2nd tier support for the NETtime products.  Such 2nd tier support may be provided by telephone and
email.

(g)           The Buyer will pay a
payment of quarterly royalties to Sellers for the first four (4) years after
the Closing (hereinafter the “Royalties Period”) equal to 5% of the
revenue (exclusive of returns, and FedEx revenue) derived from the sale by
Buyer of the TA7000 in the U.S., excluding sales to Buyer’s U.S. clients.  Attached as Exhibit O to this Agreement is a
list of Buyer’s U.S. clients.

(h)           For a period of 12
months following the Closing, the Parties agree not to solicit or hire any
employee of the other party without such Party’s prior written consent.  An employee terminated by a Party shall not
be subject to this nonsolicitation provision.

(i)            Following the Closing,
(1) Sellers agree not to sell its time and attendance products to the reseller
accounts listed on Exhibit A to this Agreement, and (2) Buyer agrees not to sell
any of its time and attendance products to any direct or end user accounts of
Sellers listed on Exhibit D to this Agreement as long as Sellers will sell to
direct accounts only products of the Buyer, subject to the exception set forth
in subparagraph (j) immediately below. 
Each Party agrees that the other Party shall have the right to enforce
its rights under this subparagraph (i) in a New York court of law having
jurisdiction over such matters.  Buyer
further acknowledges and agrees that for a period of 90 days following the
Closing, Sellers shall have the right to contact such resellers listed on
Exhibit A for the sole purpose of collecting any accounts receivable owing to
Sellers as of the Closing.

 14
 

(j)            Following the
Closing,  Sellers agree to purchase Buyer’s
products for sale to Sellers direct accounts, provided the cost, features,
functionality and payment terms are competitive with American or European
manufacturers.  For purposes of this
Agreement, a product will be deemed competitive with respect to cost if the
difference between the cost of such two clocks is five percent (5%) or
less.  In the event Sellers purchase
products from Chinese manufacturers as a result of Buyer not being competitive
in terms of cost, features, functionality and payment terms, Buyer’s only
remedy is the ability to sell its time and attendance hardware products to the
direct and end-user accounts of Sellers listed on Exhibit D.   Buyer acknowledges that certain of Sellers’
partners purchase clocks directly from applicable manufacturers and agrees that
such purchases shall not be a breach of this Agreement.  Buyer further acknowledges that Sellers’
obligation under this subparagraph (j) to purchase clocks from Buyer shall not
arise until the earlier of sixty (60) days following the Closing or such time
as Sellers have completed the integration of such clocks with Sellers’
software.  If, upon the expiration of
such sixty (60) day period, Buyer has not finished such integration, Sellers
may request the extension of such period for an additional thirty (30) day
period and such request shall be granted. 
Such request may be repeated each successive thirty (30) day period
until such time as Buyer has finished such integration.

(k)           Sellers will receive a
5% discount off of the reseller price list for the resellers in the U.S for the
TA7000 series products.

(l)            Sellers will transfer
to Buyer, and will instruct Laurus Master Funds Ltd.  to transfer to Buyer, all receivables related
to the Acquired Assets arising after the Closing, that have been received in
Sellers bank account and/or offices after the Closing Date and are derived from
Buyer’s activity arising after  the
Closing (hereinafter “Buyer’s receivables”).  The Buyer’s receivables will be transferred
to the Buyer from the Sellers no later than once-per-week hours from the time
it has been received at the Sellers bank account and/or Sellers offices.

(m)          Sellers shall be
entitled to change the name of Sellers company to “NETtime Solutions” and Buyer
shall have no right whatsoever to use the NETtime name.

(n)           Sellers’ liability to
Buyer for any Damages arising out of Sellers’ breach of any of its
representations, warranties, covenants or other obligations set forth in this
Agreement will be as follows:

(i)            In case Sellers sell,
or cause any third party acting on behalf of Sellers to sell (any kind of
sale), any of the Purchased Assets to any third party after the signing of this
Assets Purchase Agreement, Buyer shall be entitled to seek Damages from
Sellers, to be determined by a U.S. court with jurisdiction over such
matters.  Such Damages shall be unlimited
in the amount.

(ii)           In case Sellers sell,
or cause any third party acting on behalf of Sellers to sell, any of the
Purchased Assets related to time and attendance to the Resellers listed in
Exhibit A and or to the Buyer clients listed in Exhibit O, Buyer shall be
entitled to seek Damages from the Sellers, to be determined by a U.S. court
with jurisdiction over such matters. Buyer and Sellers hereby acknowledge and
agree that their respective partners and resellers set forth in Exhibits A and
D may from time to time compete for the same end user

 15
 

business.  Such
event shall not constitute a breach by either party of any term of this
Agreement.

(iii)     In case any of any breach of Sellers representations, warranties or
covenants relating to its good title ownership of the following assets:
intellectual property rights regarding original software (sources) programs,
kernel, of the following Sellers products: 
GENESIS SQL, GENESIS PRO, TA100, TA100PRO, TA50, TA50XL, TA50 PRO and
the TA7000 Product Series (“TA7000”) and the associated firm ware for
all the data collection devices.  Buyer
shall be entitled to seek Damages from Sellers, to be determined by a U.S.
court with jurisdiction over such matters. 
Such Damages shall not exceed U.S. $1,000,000.

(o)           In case of any breach of
Sellers representations, warranties or covenants relating to any other
restrictions and/or any liens apart the exciting in favor of Laurus Master Fund
Ltd. on the Acquired Activity and/or the Purchased Assets, Buyer shall be
entitled to seek Damages from Sellers, to be determined by a U.S. court with
jurisdiction over such matters.  Such
Damages shall not exceed U.S. $1,000,000.

(p)           Under no circumstances
shall Sellers aggregate liability for matters set forth in Section (n)(iii) and
(o) exceed U.S. $1,000,000 in the aggregate. 
Buyer further agrees that it shall not make any claims against the
escrow under the Escrow Agreement until such claim amounts exceed U.S. $2,700.

(q)           Following the Closing,
Buyer covenants and agrees that it cannot, directly or indirectly, resell the
source code for NETtime versions 5 and 6 to any third party whatsoever.  Buyer shall cease using the NETtime name not
later than 90 days following the Closing.

(r)            Following the Closing, at Buyer’s
written direction Sellers shall delete all copies of the source code and
written documentation relating to the Software described in Section 1(b).

(s)           Sellers shall pay to Buyer U.S.
$7,500 to an account designated in writing by Buyer.

  (t)            Attached hereto as Exhibit Q is Buyer’s price
listing relating to the prices Buyer agrees to sell such parts to Sellers
solely for Sellers’ FedEx’s order relating to 355 TA7700 clocks.  Such prices to Sellers shall be 35% above the
prices set forth in such price list.

Section 8.              Miscellaneous.

(a)           Survival of
Representations and Warranties.  All
of the representations and warranties of the Parties contained in this
Agreement its Exhibits and Appendixes shall survive the Closing hereunder.

(b)           Press Releases and
Public Announcements.  No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement

 16
 

prior
to the Closing; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure).

(c)           No Third-Party
Beneficiaries.  This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.

(d)           Entire Agreement.  This Agreement its Exhibits and
Appendixes  (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they relate in any way to
the subject matter hereof.

(e)           Succession and
Assignment.  This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. 
No Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other Party provided, however, that Buyer may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates and (ii) designate one
or more of its Affiliates to perform its obligations hereunder (in any or all
of which cases Buyer nonetheless shall remain responsible for the performance
of all of its obligations hereunder).

(f)            Counterparts.  This Agreement may be executed in one or more
counterparts (including by means of facsimile), each of which shall be deemed
an original but all of which together will constitute one and the same
instrument.

(g)           Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

(h)           Notices.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) when delivered
personally to the recipient, (ii) 1 business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) 1
business day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) 4 business days after being mailed to the recipient by
certified or registered mail, return receipt requested and postage prepaid, and
addressed to the intended recipient as set forth below:

If to Sellers:

Time
America, Inc.

8840
East Chaparral Road, Suite 100

Scottsdale,
Arizona 85250

Attention:  Thomas Klitzke, CFO

Facsimile:  (480) 296-0444

 17
 

Copy to:

Squire,
Sanders & Dempsey L.L.P.

Two
Renaissance Square

40
North Central Avenue, Suite 2700

Phoenix,
Arizona 85004

Attention:  Gregory R. Hall, Esq.

Facsimile:  (602) 253-8129

If to Buyer:

Synel
Industries Ltd.

2
Hamada Street (P.O. Box 142)

Yoqnean,
              
Israel

Attention: 
Tamir Shabat, CFO

Facsimile:  +972(4)9593761

Copy to:

Erez Buganim, Law Offices

Toyota Towers (Tower A)

65 Yagal Alon Street

Tel-Aviv 67443, Israel

Attention: 
Erez Buganim

Facsimile:  +972(3)5622224

Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.

(i)            Governing Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving
effect to any choice or conflict of law provision or rule (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.  Each party agrees to submit to the
jurisdiction and venue of the New York courts with respect to any matters
arising out of this Agreement.

(j)            Amendments and Waivers.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Sellers.

(k)           Severability.  Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.

(l)            Expenses.  Each Buyer, Sellers, and Sellers Subsidiary
will bear his, her, or its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.

 18
 

(m)          Incorporation of
Exhibits and Schedules.  The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 19

IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.

	
   

  	
  SYNEL INDUSTRIES LTD. AND TIME
  AMERICA, INC. (Delaware Corporation)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  TIME AMERICA, INC. (Nevada Corporation)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  TIME AMERICA, INC. (Arizona Corporation)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  NETEDGE DEVICES, LLC (Arizona limited liability company)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit 10.1

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (including the
exhibits and schedules attached hereto, this “Agreement”) is made and entered
into this 9th day of February, 2007 by and between MANDEKIC
COMPANIES, LLC, a Nevada limited liability company (“Purchaser”) and SPEAKEASY
GAMING OF LAS VEGAS, INC., a Nevada corporation (“Seller”).

RECITALS

A.            Seller
is the sole owner of improved real property located at 3227 Civic Center Drive,
in the City of North Las Vegas, County of Clark, State of Nevada, consisting of
approximately 5.5 acres, identified by Clark County Assessor’s Parcel Numbers
139-11-803-002, 139-11-815-001 and 139-11-815-003 and more particularly
described in Exhibit “A” attached hereto and incorporated herein (the “Real
Property”) upon which Seller operates a hotel, casino,restaurant, bar and related businesses
commonly known as the Ramada Inn Speedway Hotel and Casino (collectively, the “Business”,
also referred to herein as the “Hotel”).

B.            Seller desires to sell to Purchaser and Purchaser desires
to purchase from Seller all of Seller’s right, title and interest in and to the
Real Property, the improvements thereon, and the tangible and intangible assets
of Seller used in the ownership and operation of the Seller’s Business.

NOW, THEREFORE, in consideration
of the mutual promises hereinafter set forth, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

1.                                       Definitions.

(a)           Terms.  For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:

“AAI Rules” means the Rules published by the United
States Environmental Protection Agency for All Appropriate Inquiry Standards
and the requirements of ASTME1527-05.

“Accounts Receivable” means all accounts
receivable (including receivables for food, beverages, telephone and casino
credit), notes receivable and indebtedness for borrowed money or overdue
accounts receivable, in each case, due and owing by any third party, but not
including the Tray Ledger.

“Agreement” has the meaning ascribed to it in the
introductory paragraph.

“Americans With Disabilities Act” means 42 USC §
12101, et seq. and all laws or regulations from time to time applicable to the
Business governing use, access and accommodations.

“Assignment Agreement” has the meaning ascribed to it
in Section 11(a)(iii).

“Assumed Liabilities” has the meaning ascribed to it
in Section 7(a).

  
  

“Benefit Plans” has the meaning ascribed to it in
Section 8(q).

“Books and Records” has the meaning ascribed to it in
Section 3(a)(xi).

“Business” has the meaning ascribed to it in Recital
A.

“Business Day” means any day other than a Saturday,
Sunday, or other day on which commercial banks are authorized or required to
close under the laws of the State of Nevada.

“Casino” means that portion of the Business consisting
of licensed gaming.

“Closing” shall mean the closing of the purchase and
sale of the Purchased Assets in accordance with Section 13(a).

“Closing Date” shall mean the date of Closing provided
for in Section 10.

“Closing Statement” shall mean the statement prepared
by the parties in accordance with Section 13(e).

“Contracts” means all contracts, agreements and
obligations currently in force relating to the Purchased Assets, including,
without limitation, all sale, management, construction, insurance, commission,
architectural, engineering, operating, employment, service, supply and
maintenance agreements.

“Deed” has the meaning ascribed to it in Section
11(a)(i).

“Defect Notice” has the meaning ascribed to it in
Section 5(b).

“Defects” has the meaning ascribed to it in Section
5(b).

“Deposit” has the meaning ascribed to it in Section
2(b).

“DOV” has the meaning ascribed to it in Section
11(a)(iv).

“Earnest Money” has the meaning ascribed to it in
Section 2(b).

“Effective Date” means the date on which both Seller
and Purchaser have executed this Agreement.

“Electronic Books and Records” has the meaning
ascribed to it in Section 3(d).

“ERISA” has the meaning ascribed to it in Section
8(q).

 2
 

  
  

“Excluded Assets” has the meaning ascribed to it in
Section 3(b).

“Excluded Liabilities” has the meaning ascribed to it
in Section 7(b).

“Extension Fee” has the meaning ascribed to it in
Section 13(b).

“Extension Period” has the meaning ascribed to it in
Section 13(b).

“Federal Tax Law” means the Federal Foreign Investment
in Real Property Tax Act of 1980 and the 1986 Tax Reform Act, as amended.

“FF&E” has the meaning ascribed to it in Section
3(a)(iii).

“FIRPTA” means the Affidavit which is signed at
Closing as it is stated to be a Closing Document.

“Financial Information” has the meaning ascribed to it
in Section 8(j).

“Gaming Approvals” means all regulatory
registrations, findings of suitability, licenses, consents, approvals, waivers
and authorizations that are necessary for Seller to sell and Purchaser or
Gaming Operator, as applicable, to acquire the Gaming Assets, and for Purchaser
or Gaming Operator, as applicable, to conduct nonrestricted gaming operations
at the Casino.

“Gaming Assets” means all
Gaming Equipment and Gaming Contracts.

“Gaming Assignment” has the
meaning ascribed to it in Section 25(d).

“Gaming Bill of Sale”
has the meaning ascribed to it in Section 25(d).

“Gaming Contracts” means all
Contracts that Purchaser agrees to assume pursuant to Section 7(a) herein
specifically relating to, or specifically used in connection with, the
operation of the Casino.

“Gaming Equipment” means any
and all gaming devices (as defined in NRS 463.0155), gaming device parts
inventory and other related gaming equipment and supplies used in connection
with the operation of a casino, including, without limitation, slot machines,
gaming tables, cards, dice, chips, tokens, player tracking systems, cashless
wagering systems (as defined in NRS 463.014), mobile gaming systems (as defined
in NGC Regulation 14.010(11)) and associated equipment (as defined in NRS
463.0136), which are now located at the Casino as of the date of this Agreement
and used or usable exclusively in the present or future operation of all or any
portion of the Casino, or ordered for future use at the Casino as of the
Closing.

“Gaming Liabilities” means
the Assumed Liabilities specifically relating to the operation of the Casino.

 3
 

  
  

“Gaming Operator” means an
entity or person designated by Purchaser in its sole discretion to operate the
Casino following the Closing upon its obtaining all necessary Gaming Approvals.

“Gaming Taxes” means the
quarterly fee for a gaming license for a restricted operation (NRS 463.373), the
annual excise tax on slot machines (NRS 463.385), and any and all other license
fees or taxes imposed on the operation of the Gaming Assets by any governmental
agency having jurisdiction over the Purchased Assets.

“Governmental Authorities” shall mean any governmental
or quasi-governmental body or agency having jurisdiction over the Purchased
Assets and/or Seller, including, without limitation, the State of Nevada, City
of North Las Vegas and Clark County, Nevada.

“Governmental Regulation” shall mean any laws,
ordinances, rules, requirements, resolutions, policy statements and regulations
(including, without limitation, those relating to land use, subdivision,
zoning, environmental, toxic or hazardous waste, occupational health and
safety, water, earthquake hazard reduction, and building and fire codes) of the
Governmental Authorities bearing on the construction, alteration,
rehabilitation, maintenance, use, operation or sale of the Purchased Assets.

“Hazardous Substances” means any substance: (i) the
presence of which requires investigation, remediation or disclosure under any
present federal, state or local statute, regulation, ordinance, order, action,
policy or common law; (ii) the presence of which causes or threatens to cause a
nuisance or other harm upon the Property or to adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons on or about the
Real Property; and/or (iii) including, without limitation, waste, pollutants,
oil or other hazardous substances, including, without limitation, petroleum or
petroleum products, radioactive, flammable or explosive substances, asbestos or
asbestos-containing materials, polychlorinated biphenyls and all materials and
wastes which are or become classified as “hazardous substances”, “hazardous
materials” and/or “toxic substances” under any applicable law, as the same may
be amended from time to time, including, but not limited to, the Resource
Conservation and Recovery Act, (RCRA) (42 U.S.C. § 6901, et seq.), the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
(42 U.S.C. § 9601, et seq.), the Toxic Substances Control Act (15 U.S.C. §
2601, et seq.), the Clean Water Act (33 U. S. C. § 1251, et. seq.), and the
Clean Air Act (42 U. S. C. § 7401, et. seq.).

“House Funds” means all of Seller’s cash and cash
equivalents located at the Hotel, including, without limitation, cash,
negotiable instruments, and other cash equivalents located in cages, drop
boxes, slot machines and other gaming devices, cash on hand for the property
manager’s petty cash fund and cashiers’ banks, coins and slot hoppers,
carousels, slot vault and poker bank, and the funds in any bank accounts
maintained by Seller.

“Hotel” has the meaning ascribed to it in Recital A.

 4
 

  
  

“Improvements” has the meaning ascribed to it in
Section 3(a)(ii).

“Indemnifying Party” has the meaning ascribed to it in
Section 23(d).

“Indemnitee” has the meaning ascribed to it in Section
23(d).

“Intangible Property” has the meaning ascribed to it
in Section 3(a)(x).

“Key Persons” has the meaning ascribed to it in
Section 8(n).

“Leases” means all leases or other agreements
permitting the use or occupancy of space on, under, over or about the Real
Property, including all amendments and exhibits thereto and assignments thereof.

“Losses” has the meaning
ascribed to it in Section 23(a).

“Markers” means, as it
relates to Seller, any credit instrument as defined in NRS 463.0147.

“Monetary Encumbrances” has
the meaning ascribed to it in Section 5(d).

“Nevada Gaming Authorities”
means the Nevada Gaming Control Board, the Nevada Gaming Commission and the
City of North Las Vegas.

“Non-Monetary Defect” has
the meaning ascribed to it in Section 5(b).

“Notice Period” has
the meaning ascribed to it in Section 5(b).

“NRS” means the Nevada
Revised Statutes.

“Operating Supplies” has the
meaning ascribed to it in Section 3(a)(iv).

“Permits” has the meaning ascribed to it in Section
8(n).

“Permitted Exceptions” has the meaning ascribed to it
in Section 5(a).

“Person” means an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, limited liability company, limited liability
partnership, governmental authority, or other entity of whatever nature.

“Personal Property” has the meaning ascribed to it in
Recital 3(2)(viii).

“Project Capital Expenditures” has the meaning
ascribed to it in Section 14(h).

 5
 

  
  

“Purchased Assets” has the meaning ascribed to it in
Section 3(a).

“Purchase Price” has the meaning ascribed to it in
Section 4.

“Purchaser” has the meaning ascribed to it in the
introductory paragraph.

“Purchaser’s Closing Deliveries” has the meaning
ascribed to it in Section 11(b).

“Ramada Agreements” shall mean the License Agreement
dated as of September 4, 1998, as amended as of March 22, 1999, and as further
amended as of January 27, 2005, by and between Ramada Franchise Systems, Inc.,
Speakeasy Gaming of Las Vegas, Inc., and MTR Gaming Group, Inc., and the
ancillary agreements executed in connection therewith, relating to a license to
operate a Ramada® System Unit located at 3227 Civic Center Drive, Las Vegas, NV
89030, designated as Unit # 5692-85312.

“Real Property” has the meaning ascribed to it in
Recital A.

“Recognized Environmental Condition” shall mean the
presence or likely presence of any Hazardous Substance on the Real Property
under conditions that indicate an existing release, a past release or a
material threat of release of any Hazardous Substance into structures on the
Real Property or into the ground, groundwater, or surface water of the Real
Property.

“Seller” has the meaning ascribed to it in the
introductory paragraph.

“Seller’s Affiliates” has the meaning ascribed to it
in Section 9(b).

“Seller’s Closing Deliveries” has the meaning ascribed
to it in Section 11(a).

“Seller’s Deposits” means any deposits for rooms
and/or services furnished relating to the pre-closing period, including, but
not limited to, all security and other deposits, advance or pre-paid rents or
other amounts and key money or deposits (including any interest thereon) and
all money stored on deposit at the Hotel belonging to, and stored in an account
for a person.

“Seller’s Employees” has the meaning ascribed to it in
Section 8(p).

“Serta Expenditure” has the meaning ascribed to it in
Section 14(h).

“Survey” has the meaning ascribed to it in Section 5.

“Taxes” means any and all taxes, charges, fees,
levies, tariffs, duties, liabilities, impositions or other assessments of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any tax authority
or other Governmental Authorities, including income, gross receipts, profits,
gaming, 

 6
 

  
  

excise, real or personal property, environmental,
sales, use, value-added, ad valorem, withholding, social security, retirement,
employment, unemployment, workers’ compensation, occupation, service, license,
net worth, capital stock, payroll, franchise, gains, stamp, transfer taxes, and
shall include any Liability for the taxes of any other Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), or as a transferee or successor, by contract, or otherwise.

“Title Insurance Company” shall mean Nevada Title
Company, 2500 N. Buffalo, Suite 150, Las Vegas, Nevada  89128 (Attention:  Troy Lochhead) or such other nationally
recognized title insurance company that may be designated by the Purchaser.

“Title Report” has the meaning ascribed to it in
Section 5(a).

“Title Policy” has the meaning ascribed to it in
Section 12(a)(iii).

“Tray Ledger” means any accounts receivable of
registered guests who have not checked out and who are occupying rooms at the
Hotel on the evening of the Closing Date.

“WARN” means the Worker Adjustment and Retraining
Notification Act of 1988 and analogous state and local law.

(b)           Interpretation.  Whenever required by the context of this
Agreement, the singular shall include the plural and the masculine shall
include the feminine and vice versa.

2.             Deposit.

(a)           Deposit.  Contemporaneously with the execution by
Purchaser of this Agreement, Purchaser will deliver to the Title Insurance
Company the amount of Six Hundred Fifty Thousand Dollars ($650,000) to be held
by the Title Insurance Company as a deposit (the “Earnest Money”, and together
with any interest earned thereon, and together with any Extension Fees, the “Deposit”).  Upon Closing, the Deposit shall be applicable
to the Purchase Price.  Upon termination
of this Agreement, the Deposit shall be payable pursuant to Section 15.  All interest earned on the Deposit shall
inure to the benefit of the party entitled to the Deposit.  The Title Insurance Company shall hold the
Deposit in an interest-bearing account in a federally insured commercial bank,
money market account, overnight repurchase agreements, or other similar investments, so long as the funds are
available on one (1) business day’s notice.

(b)           Disputes.  If
there is a dispute between the parties concerning the Seller’s or Purchaser’s
right to receive the Deposit, the Title Insurance Company shall continue to
hold the Deposit in an interest-bearing account, in accordance with the terms
of this Section 2, until the dispute is resolved by the Seller and the
Purchaser or until otherwise directed by a court of competent jurisdiction.  In the alternative, the Title Insurance
Company may interplead the Deposit with any Court having jurisdiction over the
parties and located in the State of Nevada. 
In the event of the exercise by Title Insurance Company of its
obligations or rights hereunder, both 

 7
 

  
  

Seller and Purchaser, each
on its respective behalf, covenant and agree to indemnify and hold the Title
Insurance Company harmless from and against any Losses, claims, damage or costs
(including counsel and filing fees) incurred under this Agreement except to the
extent caused by the gross negligence or willful misconduct of Title Insurance
Company.

3.             Purchased
Assets and Excluded Assets.

(a)           Purchased
Assets.  On the terms and subject to
the conditions contained in this Agreement, Purchaser agrees to purchase and
accept from Seller, and Seller agrees to sell, assign, transfer, convey and
deliver to Purchaser at Closing, all of Seller’s right, title and interest in
and to the following assets free and clear of all liens and security interests
(the “Purchased Assets”):

(i)            The
Real Property, including, but not limited to, all right, title and
interest of Seller in and to any easements, hereditaments covenants and other
rights appurtenant to such land; and all right, title and interest of Seller in
and to any land lying in the bed of any existing dedicated street, road, avenue
or alley, open or closed, in front of or adjoining such land;

(ii)           All improvements owned by Seller and located on the
Real Property including, but not limited to, buildings containing 130 guest
rooms (of which 95 are presently in use), an approximately 15,600 square foot
casino, and all other improvements situated on the Real Property including all
existing parking spaces (collectively, the “Improvements”);

(iii)          Furniture, furnishings, fixtures, televisions,
kitchen and other equipment and non-consumable items located in the Hotel or
used in the operation of the Business (collectively, “FF&E”);

(iv)          An
assortment of operating inventories and supplies consisting of housekeeping and
laundry sup­plies, food and beverage stock, paper and accounting supplies and
similar consumable items (collectively, the “Operat­ing Supplies”);

(v)           All
of Seller’s right, title and interest in and to all advance reservations,
bookings for use of banquet facilities, the restaurant and any meeting rooms,
and other deposits;

(vi)          Any
telephone numbers, facsimile numbers, email addresses, websites or other
communication assets used primarily in connection with Seller’s Business;

(vii)         All
computer hardware, software and accessories;

(viii)        The
Gaming Assets (the Gaming Assets, together with items (iii) through (vii)
collectively, the “Personal Property”);

(ix)           Any
Contracts and Leases which Purchaser agrees to assume pursuant to Section 7(a);

 8
 

  
  

(x)            All
intangible personal property owned by Seller and used primarily or exclusively
in connection with the operation of the Seller’s Business, including without
limitation all rights to the name “Speedway Hotel and Casino”, and all other
plans, specifications, drawings, engineering reports, surveys, player and
customer lists, vendor lists, records and information and all patents,
inventions, trade secrets, and licenses owned by Seller with respect to the
foregoing (collectively, the “Intangible Property”);

(xi)           Subject
to Section 3(d), below, all books, records, ledgers, files, information, data
and other written materials to the extent related to the ownership or operation
of the Seller’s Business, including, without limitation, books and records
relating to Taxes which are payable in connection with the ownership or
operation of the Seller’s Business, including, without limitation, accounting
and tax records and information pertaining to events occurring in connection
with Seller’s ownership or operation of the Seller’s Business on or prior to
the Closing Date (collectively, the “Books and Records”);

(xii)          The
Tray Ledger;

(xiii)         The
House Funds;

(xiv)        The
Accounts Receivable;

(xv)         The
Seller’s Deposits; and

(xvi)        The
Markers.

(b)           Excluded
Assets.  Notwithstanding any other
provision hereof to the contrary, the Purchased Assets purchased by Purchaser
pursuant to this Agreement shall not include any of the following property or
assets owned by Seller (the “Excluded Assets”):

(i)            Any
insurance policies relating to the Seller’s Business and rights thereunder;

(ii)           Causes
of action, claims (other than warranty claims relating to any of the Personal
Property, which warranty claims shall be included in the Personal Property
transferred to Purchaser hereunder) and litigation with respect to matters
arising prior to the Closing;

(iii)          All
rights of indemnification, claims and causes of action which relate to the
operation of the Seller’s Business prior to the Closing, including, without
limitation, those arising by operation of law or in equity or otherwise, but
excluding warranty claims with respect to the Personal Property or product
liability claims against the suppliers or manufacturers thereof;

(iv)          Any
Contracts or Leases not listed on Schedule 7(a) attached hereto and made
a part hereof or which Purchaser does not agree to assume pursuant to Section
7(a);

 9
 

  
  

(v)           Receivables
and revenues earned and accrued for the period of time prior to the Closing
Date; and

(vi)          The
use of the “Ramada” name, reservation system, or any computer programs or
equipment that belongs to or is used by Seller pursuant to a license or other
agreement with Ramada Franchise Systems, Inc. or its affiliates.

(c)           Conveyance.  Seller agrees that it will, at any time and
from time-to-time after the Closing Date, upon request and at the expense of
the Purchaser, do, execute, acknowledge or deliver, all such further acts, deeds, assignments, conveyances and
assurances as may reasonably be required for the better conveying,
transferring, assigning, assuring and confirming the Purchased Assets to
Purchaser.

(d)           Electronic
Books and Records.  Certain books and
records, including the following, are maintained in electronic form on the
computer system of Seller and its parent corporation, MTR Gaming Group, Inc., a
Delaware corporation:  (i) general
ledger, (ii) disbursement journals and (iii) payroll records maintained in
connection with the processing of payroll through ADP, Inc. (collectively, the “Electronic
Books and Records”).  Purchaser
acknowledges that, notwithstanding anything in this Agreement to the contrary,
Seller may retain the originals of such Electronic Books and Records; provided
however, that Seller agrees at the Closing and subsequent thereto Seller shall,
at no charge to the Purchaser, (y) immediately upon reasonable request by
Purchaser provide Purchaser with a hard copy of the Electronic Books and
Records certified by Seller to be true, accurate and complete to the best of
the Seller’s knowledge and belief and (z) immediately upon request by the
Nevada Gaming Authorities make available the originals of the Electronic Books
and Records to the Nevada Gaming Authorities. 
Purchaser agrees that, upon the reasonable requests of Seller made from
time to time, Purchaser shall immediately provide Seller, at no charge to
Seller, with copies of the Books and Records requested by the Purchaser that
pertain to periods prior to the Closing Date.

4.             Purchase
Price and Terms of Payment.  The
purchase price shall be Eighteen Million One Hundred Seventy Five Thousand
Dollars ($18,175,000) (the “Purchase Price”) payable at Closing in immediately
available funds, adjusted as provided for prorations and costs associated with
the Closing as set forth herein.

5.             Title.

(a)           Title Report. 
Purchaser has received the First Amendment to the Title Report for Order
Number 06-10-0152-DTL, dated January 22, 2007 issued by the Title Insurance
Company (the “Title Report”) on or before the Effective Date as evidence of the
status of Seller’s title to the Purchased Assets.  The exceptions listed on Exhibit “B” attached
hereto and made a part hereof shall be deemed to have been approved by
Purchaser as of the Effective Date and constitute the “Permitted Exceptions”
and shall include any rights, interests or claims shown on the ALTA/ACSM land
title survey, certified on January 2, 2007 and prepared by Heritage
Surveying.  Notwithstanding anything in
Exhibit B to the contrary, real estate taxes shall be 

 10
 

  
  

prorated at Closing in accordance with
Section 14 hereof.

(b)           Defects Arising After the Effective Date.  The Title Report shall be updated not later
than five (5) business days prior to the Closing by Seller.  If the updated Title Report shows exceptions
to title not shown by the original Title Report which render Seller’s title to
the Property unmarketable and uninsurable or which materially affect Purchaser’s
intended use of the Purchased Assets (“Non-Monetary Defect”), or, if the
Property should become subject to a Monetary Encumbrance (together with any
Non-Monetary Defect, “Defects”), Purchaser may object to such Defects by
delivering to Seller an itemized written notice of Purchaser’s objection to
such Defects (“Defect Notice”) within five (5) business days after the date of
delivery to Purchaser of the updated Title Report or, if earlier, the Closing
Date (the “Notice Period”).  Purchaser’s
failure to deliver a Defect Notice during the Notice Period shall be deemed a
waiver of Purchaser’s right to object to such Defects, and Purchaser shall then
accept such title as is described in the Title Report, as updated, without
reserving any claim against Seller for Defects.

(c)           Seller’s Cure of Non-Monetary Defects.  If Purchaser provides a Defect Notice to
Seller during the Notice Period, Seller shall have five (5) business days after
receipt of the Defect Notice within which to give written notice to Purchaser
as to whether Seller elects to cure any Non-Monetary Defects.  Failure to notify Purchaser in writing within
such period of Seller’s election shall be deemed Seller’s election not to cure
any such Non-Monetary Defects.  If Seller
elects, in its sole discretion, to cure any Non-Monetary Defects, Seller shall
have thirty (30) days after receipt of the Defect Notice to cure any such
Non-Monetary Defects which it elected to cure, and the Closing Date shall, if
necessary, be extended accordingly. 
Purchaser shall have five (5) business days following either receipt of
Seller’s notice electing not to cure any Non-Monetary Defect or the date on
which Seller is deemed to have elected not to cure any Non-Monetary Defect in
which to elect either to (i) waive its objection to any Non-Monetary Defect
that Seller does not or is deemed not to elect to cure; or (ii) terminate this
Agreement upon written notice to Seller and the Title Company.  Seller shall be obligated to cure Monetary
Encumbrances in accordance with Section 5(d).

(d)           Monetary Encumbrances.  Seller shall be under no obligation to remove
Non-Monetary Defects, and any failure or refusal of Seller to do so shall not
be a default of Seller hereunder.  Seller
shall be obligated to pay all obligations secured by liens encumbering the
Property (other than any non-delinquent Taxes and assessments and any
encumbrances created or suffered by Purchaser) which are unpaid and liquidated
at the Closing (“Monetary Encumbrances”) in the manner provided below.  For purposes of the prior sentence, a
Monetary Encumbrance is “liquidated” only if it is fixed either by agreement of
Seller and the Person asserting the Encumbrance or by operation of Law.  In order to cure a Monetary Encumbrance and,
if Seller desires to attempt to cure any other Defects, Seller shall have the
option to extend the Closing Date for a period of thirty (30) days, by giving
written notice of such extension election to Purchaser and Title Insurance
Company on or prior to the Closing Date. 
Seller may cure Monetary Encumbrances by any of the following methods:
(i) payment and release of such Monetary Encumbrance of record; (ii)
posting a bond which causes such Monetary Encumbrance to cease to be a Lien on
the Property; (iii) providing indemnification to the Title Insurance 

 11
 

  
  

Company against adverse final adjudication of
any Monetary Encumbrance and having the Title Insurance Company provide a Title
Policy which deletes such Monetary Encumbrance as an exception to title; or
(iv) an adjustment to the Purchase Price providing Purchaser with a credit for
the amount of such Monetary Encumbrance.

6.             Due Diligence.

[Intentionally
Deleted]

7.             Assumed Liabilities and Excluded
Liabilities.

(a)           Assumed
Liabilities.  Subject to the terms
and conditions set forth in this Agreement, from and after the Closing,
Purchaser shall assume and agree to discharge and perform when due only the
future obligations, commitments and liabilities under those Contracts and
Leases listed on Schedule 7(a) attached hereto which Seller agrees to
assign to Purchaser and Purchaser agrees to assume, but only to the extent the
same relate to performance on or after the Closing Date (“Assumed Liabilities”);
provided, however, that Purchaser shall not be required to assume any Contract
or Lease (i) entered into by Seller after the date of this Agreement without
Purchaser’s prior written consent, or (ii) that is not listed on Schedule
7(a).  The Ramada Agreements shall be listed
on Schedule 7(a).

(b)           Excluded
Liabilities.  Notwithstanding any
provision hereof to the contrary, Purchaser shall not assume nor otherwise be
responsible for any of the liabilities and obligations of Seller other than the
Assumed Liabilities (the “Excluded Liabilities”), which Excluded Liabilities
shall remain the responsibility and obligation of Seller, and shall not be
assumed by Purchaser.  Without limiting
the generality of the foregoing, Excluded Liabilities shall include:

(i)            Any
liabilities for legal, accounting, audit and investment banking fees, and any
other fees or expenses incurred by Seller in connection with the negotiation
and preparation of this Agreement and the sale of the Purchased Assets to
Purchaser;

(ii)           Any
liabilities of Seller for Taxes, but subject to the prorations and adjustments
set forth herein;

(iii)          Any
liabilities relating to Excluded Assets;

(iv)          Any
liabilities relating to pending litigation;

(v)           All
of Seller’s indebtedness or accounts payable which arose prior to the date of
Closing; and

(vi)          Except as expressly provided in this Agreement, (i) any
liabilities, including, without limitation, back pay or fringe benefits of
Seller’s Employees or any obligation under the Benefit Plans, fines, penalties,
attorney’s fees and costs or other liabilities, including, without limitation,
WARN liabilities, relating to the Seller’s Employees (as defined below), (ii) 

 12
 

  
  

any dispute with any labor
organizations, or (iii) any dispute or cost liability relating thereto, with
any past or present employee of Seller arising on or prior to the Closing Date.

(c)           Ramada
Agreements.  Purchaser shall seek to
assume the Ramada Agreements and shall pay all application and initiation fees
and other costs in connection with such assumption.  Purchaser acknowledges under the Ramada
Agreements, Ramada Franchise Systems, Inc. must consent to the assumption by
Purchaser of the Ramada Agreements.  In
the event that Purchaser is unable to assume the Ramada Agreements for any
reason, Purchaser’s liability as to the Ramada Agreements shall be limited to
One Hundred Thousand Dollars ($100,000).

8.             Representations
and Warranties of Seller.

Seller represents and warrants to Purchaser that, to
the best of Seller’s knowledge and belief, the following shall be true and
complete in all material respects:

(a)           Seller is duly organized and validly existing under the
laws of its state of incorporation and has all requisite power and authority to
carry on its business as now being conducted. 
Seller is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary.

(b)           Seller
has a good, valid and marketable fee interest in the Real Property.  Seller has not received written notice of,
nor does Seller have any knowledge of, any proceedings pending (and, to the
knowledge of Seller, overtly contemplated or threatened) or otherwise relating
to the Real Property or the interests of Seller therein, which would be
reasonably likely to interfere with use, ownership, improvement, development
and/or operation.  As of the date hereof,
there are no Contracts or Leases or other obligations outstanding for the sale,
exchange, material encumbrance or transfer of the Real Property other than this
Agreement.  To the best of Seller’s
knowledge and belief, there are no environmental conditions, including, but not
limited to hazardous waste affecting the Real Property or threatened
enforcement or investigative action by a Governmental Authority involving a
Recognized Environmental Condition with respect to the Real Property that would
prevent or hinder redevelopment of the Real Property or require remediation
under any Governmental Regulation.

 (c)     Seller is a “United States person” within
the meaning of Sections 1445(f)(3) and 7701(a)(3) of the Internal Revenue Code
of 1986, as amended.

(d)           No attachment, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization, or other
proceedings are pending or threatened against Seller.

(e)           Seller has the legal power, right and authority to enter
into this Agreement and the instruments referenced herein and to consummate the
transactions contemplated hereby.

 13

(f)            All requisite action (corporate, partnership or
otherwise) has been taken by Seller in connection with entering into this
Agreement, the instruments referenced herein and the consummation of the
transactions contemplated hereby.

(g)           This Agreement and all documents required hereby to be
executed by Seller are and shall be valid, legal, binding obligations of, and
enforceable against, Seller in accordance with their terms, subject only to
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws,
or equitable principles affecting or limiting the rights of contracting parties
generally.

(h)           The execution and delivery of this Agreement by Seller
does not, and the consummation by Seller of the transactions to which it is a
party that are contemplated by this Agreement will not, (i) conflict with,
or result in any violation or breach of, any provision of the articles of
incorporation, bylaws or other organizational documents of Seller,
(ii) result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) or require an approval under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or
obligation to which Seller is a party or by which Seller or any of the
Purchased Assets may be bound.

(i)            No approval of or
from any court, arbitrator or governmental, administrative or regulatory
authority, agency, commission, body or instrumentality, domestic or foreign,
other than the Gaming Authorities (each, a “Governmental Authorities”) other
than Gaming Approvals is required by or with respect to Seller in connection
with the execution and delivery of this Agreement by Seller or the consummation
by Seller of the transactions to which it is a party that are contemplated
hereby.

(j)            The
audited financial statements as of December 31, 2002 and for the year ending
December 31, 2002; the audited financial statements as of December 31, 2003 and
for the year ending December 31, 2003; the audited financial statements as of
December 31, 2004 and for the year ending December 31, 2004; the audited
financial statements as of December 31, 2005 and for the year ending December
31, 2005; and the unaudited income statement for the twelve months ending
September 30, 2006, attached hereto and made a part hereof as Exhibit “C”,
contain a true and complete copy of the audited or unaudited financial reports
relating to the Hotel for such time periods (collectively, the “Financial
Information”).  The Financial Information
was prepared in accordance with generally accepted accounting principles in
effect at the time of such preparation applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes to such financial
statements) and fairly presented in all material respects the consolidated
financial position of the Hotel as of such date subject, in the case of
unaudited statements, to normal year-end adjustments and the absence of
footnotes.

(k)           Except
as set forth in the Financial Information and the information set forth on Schedule
8(k), Seller has no liabilities.

 14
 

(l)            Each Contract and Lease is valid and binding upon
Seller (and, to Seller’s knowledge, on all other parties thereto), in
accordance with its terms and is in full force and effect.  There is no
breach or violation of or default by Seller, or to the best of Seller’s
knowledge, by the other parties thereto, under any of the Contracts or Leases,
whether or not such breach, violation or default has been waived.

(m)          There
is no proceeding against Seller, pending before any Governmental Authorities,
or as to which Seller has received any written notice of assertion or, to the
knowledge of Seller any proceeding threatened, relating to the Purchased
Assets.

(n)           Each
of its directors, officers, stockholders, Persons performing management
functions similar to officers (collectively, “Key Persons”) hold all approvals
of all Governmental Authorities (including all Gaming Approvals) necessary to
conduct the business and operations conducted at the Business, including, but
not limited to Seller’s grandfathered non-conforming unrestricted gaming
license, and to ensure that the present structure, use, operation and
maintenance of the Business is authorized by, and in compliance with,
Governmental Regulations, including, but not limited to, true and correct
legible copies of any or all certificates of occupancy (or the equivalent), any
or all permits, licenses and other authorizations and entitlements issued with
respect to the Business and Real Property, and each portion of space in the
Business and Real Property occupied by hotel guests (collectively, the “Permits”),
each of which is in full force and effect and no event has occurred which may
cause, or upon the giving of notice or passage of time or both, would cause,
revocation, non-renewal, modification, suspension, limitation or termination of
any Permit that currently is in effect. 
Seller and, to the knowledge of Seller, Key Persons, are in compliance
with the terms of the Permits.  The
Business is not being conducted in violation of any law of any Governmental
Authorities.  Seller has not received a
notice of any investigation or review by any Governmental Authorities with
respect to the Purchased Assets that is pending, and, to the knowledge of
Seller, no investigation or review is threatened, nor has any Governmental
Authority indicated any intention to conduct the same.  Seller has not received any written claim,
demand, notice, complaint, order from any Governmental Authority in the past
three (3) years relating to any violation or possible violation of any Gaming
Laws which did or would be reasonably likely to result in fines or penalties of
Fifty Thousand Dollars ($50,000) or more. 
To Seller’s knowledge, there are no facts, which if known to the Gaming
Authorities, would be reasonably likely to result in the revocation, limitation
or suspension of a Permit under the Gaming Laws.

(o)           Schedule
8(o) hereof is a true and complete listing of the Gaming Assets located at
the Hotel as of the Effective Date.

(p)           Schedule
8(p) hereof sets forth as of the Effective Date, the names and job titles
(or positions held) of each of the employees of the Business (the “Seller’s
Employees”) and the current annual base salary (or hourly rate) and most recent
bonus paid to each of Seller’s Employees. 
Seller is not a party to any collective bargaining agreement applicable
to employees at the Hotel and to the knowledge of Seller there are no
activities or proceedings of any labor 

 15
 

union to organize any non-unionized employees at the Hotel.  There are no unfair labor practice charges,
complaints or petitions for elections pending against Seller before the
National Labor Relations Board, or any similar labor relations governmental
bodies, or, of which Seller has received notice.  There is no strike, slowdown, work stoppage
or lockout, or, to the knowledge of Seller, threat thereof, by or with respect
to any employees that work at the Hotel.

(q)           Schedule
8(q) hereof sets forth an accurate and complete list of all (i) “employee
welfare benefit plans,” within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder (“ERISA”) and (ii) material bonus, stock option, stock
purchase, restricted stock, incentive, fringe benefit, profit-sharing, pension
or retirement, deferred compensation, medical, life insurance, disability,
accident, salary continuation, severance, accrued leave, vacation, sick pay,
sick leave, supplemental retirement and unemployment benefit plans, programs,
arrangements, commitments and/or practices (whether or not insured) for Seller’s
Employees (all of the foregoing plans, programs, arrangements, commitments,
practices and Contracts referred to in (i) and (ii) above are referred to, the “Benefit
Plans”).  True and complete copies of
each of the Benefit Plans (or a summary thereof) have been made available by
Seller to Purchaser.  Seller does not
maintain “employee pension benefit plans,” within the meaning of Section 3(2)
of ERISA or a 401(k) Plan.

(r)            All
material tax returns required to be filed with respect to the Real Property and
the Business for all periods through and including the Closing Date have been
duly and timely filed with the appropriate Governmental Authorities in all
jurisdictions in which such tax returns are required to be filed, and such tax
returns are true, correct and complete in all material respects.  All Taxes shown as due on such tax returns
have been timely paid.  All material
Taxes required to be withheld and paid with respect to (a) Seller’s
Business; or (b) any amounts owed by Seller to any employee, creditor,
independent contractor or other third party have been duly and timely withheld
and paid.  To the knowledge of Seller,
there are no pending or threatened audits or investigations with respect to
Taxes relating to the Real Property or Seller’s Business.

(s)           To
Seller’s knowledge, no Hazardous Substances have been stored on the Real
Property and Seller is not subject to any pending or, to Seller’s knowledge,
threatened enforcement or investigatory action by any Governmental Authorities
regarding Hazardous Substances with respect to the Real Property.

(t)            To
Seller’s knowledge, there are no material environmental conditions pertaining
to the Real Property which are not reflected in (i) that certain Phase I
Environmental Report of Kleinfelder, Inc., dated April 22, 1998, as
supplemented by that certain letter from Kleinfelder, Inc., to Robert Gach,
dated August 13, 1998, and (ii) that certain Phase I Environmental Site
Assessment of Unocal Property 6484 of PHR Environmental Consultants, Inc.,
dated October, 1997, (iii) that certain Phase I Environmental Site Assessment
of Broadbent & Associates, Inc., dated October 1991 and (iv) that certain
Site Investigation Report of Harding Lawson Associates, dated April 25, 1988.

 16
 

(u)           There are no billboard Leases
encumbering the Real Property.

9.                                       “As
Is” Sale.

(a)           Purchaser expressly acknowledges and
agrees to accept the Purchased Assets on an “as-is-where-is and with all faults”
basis, except as otherwise provided in this Agreement.

(b)           This Agreement, as written, contains
all the terms of the agreement entered into between the parties as of the date
hereof, and Purchaser acknowledges that neither Seller nor any person
controlling, controlled by or under common control with Seller (collectively, “Seller’s
Affiliates”), nor any of their agents or representatives, has made any
representations or warranties or held out any inducements to Purchaser, and
Seller hereby specifically disclaims any representation or warranty, oral or
written, past, present or future, other than those specifically set forth in this
Agreement.  Without limiting the
generality of the foregoing, neither Seller nor any of Seller’s Affiliates, nor
any of Seller’s agent or representatives has or is willing to make any
representations or warranties, express or implied, other than as may be
expressly set forth herein, as to: (i) the current or future real estate tax
liability, assessment or valuation of the Real Property; (ii) the potential
qualification of the Real Property for any and all benefits conferred by any
laws whether for subsidies, special real estate tax treatment, insurance,
mortgages (except to the extent granted to an affiliate of Seller) or any other
benefits, whether similar or dissimilar to those enumerated; (iii) the current
or future use of the Real Property; (iv) the status of the market in which the
Real Property is located; or (v) the actual or projected income or operating
expenses of the Business.

(c)           Purchaser acknowledges that Seller
has afforded and will afford Purchaser the opportunity for full and complete investigations,
examinations and inspections of the Purchased Assets and all pertinent
information. Purchaser acknowledges and agrees that the information delivered
or made available to Purchaser and Purchaser’s representatives by Seller or
Seller’s Affiliates, or any of their agents or representatives may have been
prepared by third parties and may not be the work product of Seller and/or any
of Seller’s Affiliates.

(d)           Purchaser or anyone claiming by,
through or under Purchaser, hereby fully and irrevocably releases Seller and
Seller’s Affiliates, and their agents and representatives, from any and all
claims that it may now have or hereafter acquire against Seller or Seller’s
Affiliates, or their agents or representatives of any cost, loss, liability,
damage, expense, action or cause of action, whether foreseen or unforeseen,
arising from or related to any construction defects, errors, or omissions on or
in the Real Property, except to the extent created by Seller or Seller’s
Affiliates and except for claims against Seller based upon any obligations and
liabilities of Seller expressly provided in this Agreement.

10.           Representations
and Warranties of Purchaser.

Purchaser hereby represents and warrants to Seller as
follows:

 17
 

(a)           No
attachment, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization, or other such proceedings are pending
or, to the best of its knowledge, threatened against Purchaser or its
principals.

(b)           Purchaser
has the legal power, right and authority to enter into this Agreement and the
instruments referenced herein and to consummate the transactions contemplated
hereby.

(c)           All
requisite action (corporate, partnership or otherwise) has been taken by
Purchaser in connection with entering into this Agreement, the instruments
referenced herein and the consummation of the transactions contemplated hereby,
and no consent of officer, director, shareholder.

(d)           This
Agreement and all documents required hereby to be executed by Purchaser are and
shall be valid, legal, binding obligations of, and enforceable against,
Purchaser in accordance with their terms, subject only to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws, or
equitable principles affecting or limiting the rights of contracting parties
generally.

(e)           Neither
the execution and delivery of this Agreement and the documents referenced
herein nor the consummation of the transactions contemplated herein nor
compliance with the terms of this Agreement and the documents referenced herein
conflict or result in the material breach of any terms, conditions or
provisions of, or constitute a default under, any bond, note or other evidence
of indebtedness or any contract, indenture, mortgage, deed of trust, loan,  lease or other agreements or instruments to
which Purchaser is a party or by which Purchaser may be bound.

(f)            Purchaser
represents that Purchaser it knows of no reason why it would be denied any
license or permit required for the consummation of the transactions contemplated
by this Agreement.

 11.          Closing
Deliveries.

(a)           Seller’s
Closing Deliveries.  On or before the
Closing Date, Seller shall execute, acknowledge and deliver (as appropriate) to
the Title Insurance Company the following (“Seller’s Closing Deliveries”):

(i)            A
grant, bargain and sale deed in proper form for recording, conveying the Real
Property and Improvements to Purchaser, free and clear of all liens, leases
encumbrances, covenants, conditions and other matters affecting title, except
for the Permitted Exceptions (the “Deed”);

(ii)           A
bill of sale conveying to Purchaser the Personal Property and the Intangible
Property;

 18
 

(iii)          An
assignment and assumption agreement to transfer the Contracts and Leases
assumed by Purchaser pursuant to Section 7(a) (the “Assignment Agreement”);

(iv)          A
State of Nevada declaration of value form (“DOV”) setting forth the allocation
of the Purchase Price;

(v)           A
FIRPTA;

(vi)          An
owner’s affidavit, in the customary form, with respect to the absence of claims
which would give rise to mechanics’ liens and the absence of parties in
possession of the Real Property other than Seller pursuant to the terms of
Leases, or such other assurances as shall be reasonably required to enable
Purchaser to obtain the Title Policy; and

(vii)         All
such other instruments or documents as may be reasonably required by Purchaser
or the Title Insurance Company in order to consummate the transactions
contemplated hereby.

(b)           Purchaser’s
Closing Deliveries.  On or before the
Closing Date, Purchaser shall execute, acknowledge and deliver (as appropriate)
to the Title Insurance Company the following (“Purchaser’s Closing Deliveries”):

(i)            The
balance of the Purchase Price;

(ii)           The
Assignment Agreement;

(iii)                                   The DOV; and

(iv)          All
such other instruments or documents as may be reasonably required by Purchaser
or the Title Insurance Company in order to consummate the transactions
contemplated hereby.

(c)           Post
Closing Deliveries.  The Title
Insurance Company shall deliver to Purchaser a conformed copy of the Deed and
DOV, the original FIRPTA and each of the other documents and instruments
delivered to the Title Insurance Company by Seller promptly following the
Closing.

12.           Conditions
Precedent.

(a)           Conditions
Precedent to Purchaser’s Obligations. 
The obligation of Purchaser to purchase the Purchased Assets shall be
subject to the following conditions (all or any of which may be waived, in
whole or in part, by Purchaser):

(i)            The
representations and warranties made by Seller in Section 8, except those
representations and warranties which are expressly limited to facts and
circumstances as of 

 19
 

the Effective Date, shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of such date, and Seller
shall have executed and delivered to Purchaser a certificate dated as of the
Closing Date to the foregoing effect;

(ii)           Seller
shall have performed all covenants and obligations required by this Agreement
to be performed or complied with by Seller on or before the Closing Date;

(iii)          On
the Closing Date, (i) Seller’s title to the Real Property shall be marketable
and free-and-clear of all liens, mortgages, deeds of trust, encumbrances,
easements, leases, conditions and other matters affecting title other than the
Permitted Exceptions and other than as permitted under Section 5, and (ii) the
Title Insurance Company shall have committed unconditionally to issue to
Purchaser, or its designee, at standard rates, an ALTA owner’s title insurance
policy covering the Real Property, including such endorsements as Purchaser may
reasonably require, in an amount equal to the Purchase Price, insuring
Purchaser’s title to the Real Property except for the Permitted Exceptions (“Title
Policy”);

(iv)          Seller
shall have terminated the employment of all employees and provided all notices
required under WARN with respect to such termination;

(v)           Purchaser or Gaming
Operator (pursuant to Section 25) shall have received all necessary Gaming
Approvals;

(vi)          Seller
shall have operated and maintained the Business and the Purchased Assets in the
ordinary course of business until the Closing. 
The quantity and condition of the Personal Property on the Closing Date
shall, in all material respects, be the same as on the Effective Date,
reasonable wear and tear excepted; and

(vii)         Seller
shall have delivered to the Title Insurance Company all of Seller’s Closing
Deliveries.

(b)           Conditions
to Seller’s Obligations.  The
obligation of Seller to sell the Purchased Assets shall be subject to the
following conditions (all or any of which may be waived, in whole or in part,
by Seller):

(i)            Purchaser
shall have performed all covenants and obligations required by this Agreement
to be performed or complied with by Purchaser on or before the Closing Date;

(ii)           The Purchaser shall have received all
necessary approvals from the Nevada Gaming Authorities;

(iii)          MTR Gaming Group, Inc. shall have obtained a release from
Ramada Franchise Systems, Inc. of its guaranty of Seller’s obligations under
the License Agreement between Seller and Ramada Franchise Systems, Inc.; and

 20
 

(iv)          Purchaser shall have delivered to the Title Insurance
Company all of Purchaser’s Closing Deliveries.

13.           Closing.

(a)           Closing Date.  Closing shall take place on the earlier of
(i) three hundred sixty five (365) days after the Effective Date or (ii) thirty
(30) business days after the receipt by the parties of all Gaming Approvals
(the “Closing Date”).  Closing shall take
place at the office of the Title Insurance Company or at such other location as
Purchaser and Seller shall designate jointly. 
The delivery to the Title Insurance Company of Seller’s Closing
Deliveries and Purchaser’s Closing Deliveries shall be deemed to be a good and
sufficient tender of performance of the terms hereof.  Upon receipt of all Closing documents and the
Purchase Price, the Title Insurance Company shall be authorized to proceed to
record the documents evidencing this transaction.

(b)           Gaming
Approval Extensions.  If on or before
the Closing Date specified in Section 13(a)(i) Purchaser shall not have
received the Gaming Approvals, Purchaser may, providing that Purchaser has been
acting with commercially reasonable diligence in seeking to obtain Gaming
Approvals and has not been denied the Gaming Approvals, extend the Closing Date
for a period of thirty (30) days (the “Extension Period”) by delivering written
notice of the same to Seller and Title Insurance Company at least three hundred
and fifty five (355) days after the Effective Date and depositing an additional
Fifty Thousand Dollars ($50,000) into Escrow (the “Extension Fee”) which
Extension Fee shall become part of the Deposit. 
If prior to the expiration of the Extension Period Purchaser has not yet
received Gaming Approvals (but has not been denied the Gaming Approvals), and
Purchaser has continued to act with commercially reasonable diligence in
seeking to obtain Gaming Approvals, Purchaser has the option to continue to
extend the Closing Date for six (6) successive additional thirty (30) day
periods by delivering written notice of the each  extension to Seller and Title Insurance
Company at least five (5) days prior to the expiration of the prior Extension
Period and depositing an additional Fifty Thousand Dollars ($50,000) into
Escrow with each such notice which additional Extension Fees shall also become
part of the Deposit.

(c)           Non-Gaming
Closing.  If on or before the Closing
Date specified in Section 13(a)(i) Purchaser shall not have received the Gaming
Approvals or if on or before the expiration of the Extension Period(s)
specified in Section 13(b) Purchaser shall not have received the Gaming
Approvals, Purchaser, in its sole and absolute discretion, may proceed to
Closing no later than such Closing Date or on the expiration of such Extension
Period(s), and notwithstanding anything herein to the contrary, the following
provisions shall apply:

(i)            Seller shall surrender its gaming
licenses and close all gaming operations conducted at the Hotel;

(ii)           Subject to the receipt of any Gaming
Approvals required by the Gaming 

 21
 

Laws, Seller shall retain the Gaming Assets and use or
dispose of them as Seller determines, in Seller’s sole discretion (which shall
be deemed to be Excluded Assets hereunder without any reduction in the Purchase
Price);

(iii)          Seller shall retain the House Funds
used in the gaming operations conducted at the Hotel and the Markers (which
shall be deemed to be Excluded Assets hereunder and the amounts of such items
shall not be added or subtracted from the Purchase Price);

(iv)          Seller
shall retain all liabilities with respect to any gaming chips and tokens of the
Hotel in circulation (which liabilities shall be deemed to be Excluded
Liabilities hereunder without adjustment to the Purchase Price); and

(v)           Seller and Purchaser agree to
cooperate with each other in order to effectuate the provisions of this Section
13(b), including, without limitation, Purchaser providing Seller with the right
to use a portion of the Hotel in which to redeem gaming chips and tokens.

(d)           Closing
Costs.  The Closing costs shall be
paid as follows:

	
  

  	
  (i)

  	
  Seller shall pay:

  
	
   

  	
   

  	
  a.

  	
   

  	
  One-half (1⁄2) of the escrow fees;

  
	
   

  	
   

  	
  b.

  	
   

  	
  Real Property transfer taxes;

  
	
   

  	
   

  	
  c.

  	
   

  	
  The cost of the premium for the CLTA portion of the
  Title Policy; and

  
	
   

  	
   

  	
  d.

  	
   

  	
  The cost of any other obligations of Seller
  hereunder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Purchaser shall pay:

  
	
   

  	
   

  	
  a.

  	
   

  	
  One-half (1⁄2) of the escrow fees;

  
	
   

  	
   

  	
  b.

  	
   

  	
  Cost of recording the Deed;

  
	
   

  	
   

  	
  c.

  	
   

  	
  Any additional premium charged for the Title Policy
  in excess of 13(d)(i)(c) above;

  
	
   

  	
   

  	
  d.

  	
   

  	
  Any Survey costs; and

  
	
   

  	
   

  	
  e.

  	
   

  	
  The cost of any other obligations of Purchaser
  hereunder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  

(e)           Other
Costs.  All other costs and expenses
attendant to settlement, including Title Insurance Company charges, shall be
shared equally by the parties. 
Notwithstanding the foregoing, each party shall pay its own attorneys
fees.  If clear title cannot be tendered
by Seller at Closing then Seller shall pay all Title Insurance Company charges.

14.           Prorations;
Withholding; Adjustments.

(a)           Unless
otherwise provided herein or otherwise agreed to by the parties, all items,
including, but not limited to the following, shall be pro-rated, allocated or
adjusted as of 11:59 p.m. on the Closing Date.

 22
 

(i)                                     Real
estate, sales, use, and personal property taxes with respect to the Business;

(ii)                                  Water
and sewer service charges and charges for electricity, telephone and all other
public utilities;

(iii)                               Room rental income from
hotel guests for the night of the Closing Date (to be divided equally between
Seller and Purchaser);

(iv)                              Revenues
from hotel guests other than room rental income (to be allocated one hundred
percent (100%) to Seller; and

(v)                                 Income
and expenses accrued pursuant to the Contracts and Leases.

The parties shall
prepare a closing statement reflecting the prorations set forth above (the “Closing
Statement”).  If the Closing Statement
reflects a net amount due and owing to Seller, Purchaser shall pay such net
amount to Seller on the Closing Date. 
If, in contrast, the Closing Statement reflects a net amount due and
owing to Purchaser, Seller shall pay such amount to Purchaser on the Closing
Date.  In the event Seller and Purchaser
agree that additional items shall be pro-rated, allocated or adjusted, any such
items shall be prorated, adjusted or allocated consistent with this Section
14(a).  In the event that the parties do
not agree on all of the items with respect to the Closing Statement, the
parties shall include nondisputed items on the Closing Statement.  The items reflected on the Closing Statement
shall be subject to adjustment subsequent to the Closing Date; provided,
however, that no claim for an adjustment may be made more than one (1) year
following the Closing Date.

(b)           Taxes Withheld;
Deficiency Determinations for Gaming Taxes. 
In order to comply with NRS 360.525 (relating to taxes administered by
the Nevada Department of Taxation), NRS 612.695 (relating to unemployment
taxes), NRS 244.335 (relating to county license taxes) and NRS 244.3352
(relating to county room taxes), such amounts as Seller and Purchaser
reasonably estimate are necessary to comply with the provisions of the above
mentioned and similar statutes providing for the payment of taxes will be
withheld by the Title Insurance Company and will be payable to Seller after
Closing at such time as Seller furnishes Purchaser and the Title Insurance
Company receipts or certificates provided for in such statutes, or if not so
provided for, such evidence as Purchaser may reasonably require to assure
Purchaser that the applicable obligations have been paid.  If Seller does not produce such receipts or
certificates within the time period provided for in such statutes or if any
lien or claim therefore is asserted against Purchaser, the Title Insurance
Company shall pay such withheld sums to the appropriate Governmental
Authorities or other applicable taxing authority.  Seller shall remain responsible for payment
of any fees or taxes due pursuant to any subsequent deficiency determination
made pursuant to Chapter 463 of the NRS which encompass any period of time
before the Closing, and shall hold Purchaser harmless therefrom.

(c)           Seller’s Credits.  Prior to the Closing Date, Purchaser and
Seller shall mutually 

 23
 

agree on a
procedure for counting and determining the value of the following for which
Seller shall receive a credit at Closing:

(i)            The
Tray Ledger;

(ii)           The
House Funds;

(iii)          The
Operating Supplies;

(iv)          All
Accounts Receivable;

(v)           Seller’s
Deposits; and

(vi)          The
Markers.

(d)           Adjustment
for Progressive Liabilities.  Seller
shall, on the Closing Statement, credit Purchaser for an amount equal to the
amounts shown as of the Closing Date on the meters of:

(i)                                     The
Hotel’s in-house progressive slot machines;

(ii)                                  The
Hotel’s table games with an in-house progressive jackpot feature as of the
Closing Date; and

(iii)                               The Hotel’s other games
with an in-house progressive feature.

(e)           Room
Reservations.  Purchaser will honor
the terms and rates of all pre-Closing Date room reservations (in accordance
with their terms) at the Hotel made in the ordinary course of business by
guests or customers, including advance reservation cash deposit, for rooms or
services confirmed by Seller for dates after the Closing Date.  Purchaser shall receive a credit for such
deposit at Closing.  Purchaser recognizes
that such reservations may include discounts or other benefits, including,
without limitation, benefits under frequent player or casino awards programs,
group discounts, other discounts or requirements that food, beverage or other
benefits be delivered by Purchaser to the guest(s) holding such
reservations.  Purchaser will honor all
room allocation agreements and banquet facility and service agreements which
have been granted to groups, persons or other customers for periods after the
Closing Date at the rates and terms provided in such agreements provided that
such agreements were made in the ordinary course of business.  Purchaser agrees that Seller cannot make and
has made no representation or warranty that any party holding a reservation or
agreement for rooms, facilities or services will utilize such reservation or
honor such agreement.  Purchaser, by the
execution hereof, assumes the risk of non-utilization of reservations and
non-performance of such agreements from and after the Closing Date.

(f)            Guests’
Safe Deposit Boxes.  Purchaser shall
be responsible for all guest safety 

 24
 

deposit boxes from and after the Closing Date.

(g)           Guests’
Vehicles and Baggage.  Prior to the
Closing Date, Seller and Purchaser shall take inventory of: (i) all baggage,
suitcases, luggage, valises and trunks of hotel guests checked or left in the
care of Seller; (ii) all luggage or other property of guests retained by Seller
as security for unpaid accounts receivable; (iii) the contents of the baggage
storage room and (iv) all motor vehicles that were checked and placed in the
care of Seller at the Hotel; provided, however, that no such baggage,
suitcases, luggage, valises or trunks shall be opened.  Except for the property referred to in (ii)
above, which shall be removed from the Real Property by Seller within ten (10)
days after the Closing Date, all such baggage and other items shall be marked
or sealed in a manner to be agreed upon by the parties and listed in an
inventory prepared and signed jointly by said representatives of Seller and
Purchaser as of the Closing Date.  Said
baggage and other items shall be stored as Purchaser shall choose, and
Purchaser shall be responsible for claims with respect thereto.

(h)           Project
Capital Expenditures.  Purchaser
covenants and agrees to reimburse Seller for fifty percent (50%) of all Project
Capital Expenditures (as defined below) incurred by Seller with respect to the
Business, provided that (i) Purchaser consent in writing, in advance, to each
such Project Capital Expenditure (such consent to include Purchaser’s approval
of the work to be done and/or items to be purchased, the budget and the
contractor with respect thereto), (ii) Purchaser’s obligations under this
Section 14(h) shall be payable only upon, and simultaneously with, the Closing
of the transactions contemplated by this Agreement and (iii) notwithstanding
anything to the contrary in this Agreement, Purchaser’s consent with respect to
any Project Capital Expenditures shall be required and obtained, for the
purposes of this Section 14(h), only to the extent permitted or not prohibited
by law. “Project Capital Expenditures” shall mean (i) the purchase of one
hundred seventy two (172) queen size Serta mattresses and six (6) king size
Serta mattresses for a cost of approximately Fifty Seven Thousand Four Hundred
Eighteen Dollars ($57,418.00) plus shipping (the Serta Expenditure”) and (ii)
all other expenditures for new equipment, fixtures and other capital
improvements (excluding maintenance expenses) with respect to the Business of
Seller.  Purchaser’s execution of this
Agreement shall be deemed to be consent to reimbursement of fifty percent (50%)
of the Serta Expenditure.

15.           Termination
and Remedies.

(a)           Termination.  This Agreement may be terminated and the
transactions contemplated hereby abandoned:

(i)            By
mutual written consent of Seller and Purchaser;

(ii)           By either Seller or Purchaser if not
in default of its obligations hereunder and any Governmental Authorities shall
have issued an order, decree or ruling or taken any other action (other than
the denial of Gaming Approvals by the Nevada Gaming Authorities) restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;

 25
 

(iii)          By Seller if there shall have been any
material breach of a representation, warranty, covenant or obligation of the
Purchaser and, if such breach is curable such default shall not have been
remedied within ten (10) days after receipt of notice in writing from Seller
specifying such breach and requesting that it be remedied;

(iv)          By Purchaser if there shall have been
any material breach of a representation, warranty, covenant or obligation of
the Seller and, if such breach is curable such default shall not have been
remedied within ten (10) days after receipt of notice in writing from Purchaser
specifying such breach and requesting that it be remedied;

(v)           by either Seller or Purchaser if the
Nevada Gaming Commission has not approved the transaction on or before the time
for the Closing Date set forth in Article 13(a) if Purchaser has opted not to
exercise any of its extension options as set forth in Section 13(b) herein or,
if Purchaser has exercised its right to one or more extensions pursuant to
Section 13(b), at the expiration of the last extension period elected by the
Purchaser;

(vi)          If it is not in default under this
Agreement, by either Seller or Purchaser if Purchaser has obtained all
necessary Gaming Approvals but the Closing has not occurred by the later of (a)
thirty (30) business days following the receipt by Purchaser of all necessary
Gaming Approvals or (b) three hundred sixty five (365) days following the
Effective Date; or

(vii)         By
Purchaser, pursuant to Sections 5, 16(a) or 16(b).

provided,
however, that nothing contained in this Section 15(a) shall relieve or limit
the liability of either party to this Agreement for any fraudulent or willful
breach of this Agreement.  The denial of
Gaming Approvals by the Nevada Gaming Authorities shall not constitute grounds
to terminate this Agreement pursuant to Section 15(a)(ii).  The denial of Gaming Approvals by the Nevada
Gaming Authorities shall, however, constitute grounds to terminate this
Agreement pursuant to Section 15(a)(v).

(b)           Effect of
Termination.

(i)            Except as otherwise
expressly provided in this Agreement, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Closing is
consummated.  Any cancellation charges of
the Title Insurance Company shall be paid by the party who breached this
Agreement, and, if no party breached this Agreement, then each of Seller
and Purchaser shall pay one-half of such cancellation charges.

 26

  
  

(ii)           Upon
the termination of this Agreement pursuant to Sections 15(a)(iii) and 15(a)(v),
the Deposit shall be paid to Seller. 
Upon termination of this Agreement pursuant to Sections 15(a)(i),
15(a)(ii), 15(a)(iv), 15(a)(vi) or 15(a)(vii), the Deposit shall be paid to
Purchaser without the need of any further instruction from Seller.

(c)           Remedies.  Seller
shall retain the Deposit as liquidated damages as its sole and exclusive remedy
in the event that either all conditions precedent to Purchaser’s obligation to
close purchase the Purchased Assets have been satisfied and the Purchaser
defaults on purchasing the Purchased Assets on the Closing Date as required by
this Agreement.  Seller shall also retain
the Deposit as its sole and exclusive remedy in the event that Purchaser fails
to obtain all necessary Gaming Approvals within the time allowed herein and
either Seller or Purchaser terminates the Agreement pursuant to Section
15(a)(v).  The parties hereby agree and
acknowledge that Seller’s damages as a result thereof would be extremely
difficult or impossible to determine but that the Deposit represents the
parties’ best good faith estimate thereof. 
The parties agree that the retention of the Deposit by Seller pursuant
to this Agreement is in no way intended as a penalty or forfeiture.  Upon
the termination by Seller of this Agreement and the retention by the Seller of
the Deposit, the parties shall be released from any further obligations to each
other under this Agreement.  In the event
all conditions precedent to Seller’s obligation to Close have been satisfied
and the Seller defaults on selling the Purchased Assets on the Closing Date as
required by this Agreement, Purchaser shall be entitled to all remedies
available to it at law or in equity, including, without limitation, a decree of
specific performance.  The foregoing
termination rights and any and all other rights and remedies given to Purchaser
in this Agreement are distinct, separate and cumulative; and no one such right
or remedy, whether or not exercised, shall be deemed to be to the exclusion of
others herein granted or given by law or in equity.

16.           Condemnation
or Damage by Fire or Other Casualty.

(a)           Condemnation.  If prior to the Closing, more than ten
percent (10%) of the acreage of the Real Property is taken by condemnation, eminent domain or
similar governmental action (or is the subject of a pending, threatened or
contemplated taking which has not been consummated) or if the access thereto is
materially reduced or restricted, the Seller shall immediately upon becoming
aware of it notify Purchaser of such fact. 
In such event, Purchaser shall have the option, in its sole and absolute
discretion, to (i) terminate this Agreement upon written notice to the Seller
given not later than thirty (30) days after receipt of the Seller’s notice, or
(ii) purchase all of the Purchased Assets pursuant to this Agreement without
modification of the terms of this Agreement. 
If Purchaser timely and properly elects to terminate this Agreement
pursuant to its option to terminate as set forth above, the parties shall be
released from further obligations under this Agreement and the Deposit shall be
returned to Purchaser.  If Purchaser
elects to purchase all of the Purchased Assets despite the condemnation at
Closing the Seller shall assign and turn over to the Purchaser, and Purchaser
shall be entitled to receive and keep, all awards for the taking which accrued
to the Seller, and the parties shall proceed to the Closing pursuant to the
terms hereof without modification of the terms of this Agreement and without
any reduction in the Purchase Price.

 27
 

  
  

(b)           Unrepaired Damage.  At the time of Closing, and as a condition
precedent to the obligation of the Purchaser to purchase the Purchased Assets
pursuant to this Agreement, there shall be no unrepaired damage by fire or
other casualty to any portion of the Purchased Assets, the estimated cost of
repair of which is more than One Hundred Thousand Dollars ($100,000.00). If (i)
any portion of the Purchased Assets is damaged by fire or casualty after the
date of this Agreement  that is not
repaired and restored substantially to its condition as of the date of this
Agreement prior to Closing, and (ii) the estimated cost of repairs is One Hundred
Thousand Dollars ($100,000.00) or less, the Purchaser shall be required to
purchase the Purchased Assets in accordance with the terms of this Agreement
and, at Closing, the Seller shall assign to the Purchaser all insurance claims
and proceeds with respect thereto and shall pay or credit to the Purchaser the
amount of any deductible or uninsured loss with respect to such casualty.  If such casualty is not insured, Seller shall
restore the Purchased Assets and may extend the Closing Date for up to sixty
(60) days until such restoration is complete. 
If the Seller cannot complete the restoration within such period,
Purchaser may terminate this Agreement, Purchaser and Seller shall be released
from further obligation hereunder and the Deposit shall be returned to
Purchaser.  If the estimated cost of
repairing such damage is more than One Hundred Thousand Dollars ($100,000.00)
and such damage is insured, the Purchaser may, at its sole option: (i) postpone
the Closing until such time as the Seller shall have repaired all such damage;
(ii) elect to proceed with the Closing, in which case at Closing the Seller
shall assign to the Purchaser all insurance claims and proceeds with respect to
such damage and shall pay or credit to the Purchaser the amount of any
deductible with respect to such casualty; or (iii) terminate this Agreement, in
which event neither party shall have any further liability to the other and the
Deposit shall be returned to Purchaser. 
If the estimated cost of repairing the damage to the Purchased Assets
exceeds One Hundred Thousand Dollars ($100,000.00) and the damage is not
covered by the Seller’s insurance, then either the Seller or Purchaser may
terminate this Agreement, in which event neither party shall have any further
liability hereunder and the Deposit shall be returned to Purchaser. In the
event that insurance proceeds have been paid to the holder of a deed of trust
on the Real Property prior to the Closing Date, the Purchase Price shall be
reduced by the amount of such insurance proceeds paid to such mortgagee and an
appropriate adjustment made to the amount the Seller is to receive. If a
casualty to any part of the Purchased Assets has occurred and Purchaser is
required or elects to complete the purchase of the Purchased Assets, the Seller
shall cooperate with the Purchaser in prosecuting all insurance claims assigned
to the Purchaser at Closing.

17.           Brokers
& Investment Bankers.

(a)           Seller’s Representation and
Indemnification.  Seller
represents and warrants to Purchaser, that it has not been represented by any
broker or investment banker in connection with this Agreement or the
transactions contemplated by this Agreement other than Lazard Freres & Co.,
LLC and CIBC World Markets Corp. Seller will indemnify and hold Purchaser
harmless from any claim by any broker, agent or finder purporting to have acted
on behalf of Seller.

(b)           Purchaser’s
Representation and Indemnification. 
Purchaser represents and warrants to Seller that it has not been
represented by any broker in connection with this 

 28
 

  
  

Agreement
or the transactions contemplated by this Agreement. Purchaser will indemnify
and hold Seller harmless from any claim by any broker, agent or finder
purporting to have acted on behalf of Purchaser.

18.           Foreign
Person.

Seller is not a “foreign person”
for purposes of FIRPTA.  At the Closing,
Seller will deliver to Purchaser a certificate so stating, in a form complying
with the Federal Tax Law.  If Seller is a
“foreign person” or if Seller fails to deliver the required certificate at the
Closing, then in either such event the Purchase Price will be adjusted to the
extent required to comply with the withholding provisions of the Federal Tax
Law; and although the amount withheld will still be paid at the Closing by
Purchaser, it will be retained by the Title Insurance Company for delivery to
the Internal Revenue Service, together with the appropriate Federal Tax Law
forwarding forms (and with copies being provided both to Seller and to
Purchaser).

19.           Entire
Agreement.

No change or modification of
this Agreement shall be valid unless in writing and signed by the parties
hereto.  No waiver of any of the
provisions of this Agreement shall be valid unless in writing and signed by the
party against whom it is sought to be enforced. 
This Agreement contains the entire agreement between the parties
relating to the purchase and sale of the Purchased Assets, all prior
negotiations between the parties are merged in this Agreement and there are no
promises, agree­ments, conditions, undertakings, warranties or representations,
oral or written, express or implied, between them other than as set forth in
this Agreement.

20.           Assignment;  Benefits and Burdens.

Purchaser and Seller may assign their respective
rights and obligations under this Agreement prior to the Closing Date with the
prior written consent of the other party, not to be unreasonably conditioned,
delayed or withheld.  Notwithstanding the
foregoing, Purchaser shall have the right to assign this Agreement to a wholly
owned subsidiary without the consent of the Seller.  All terms of this Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
legal representatives, successors and assigns.

21.           Governing Law;
Prevailing Party Attorney Fees.

This Agreement concerns property located in the State
of Nevada, and shall be construed and enforced in accordance with the laws of
the State of Nevada.  Notwithstanding any
provision in this Agreement to the contrary, in the event of a dispute with
respect to the subject matter of this Agreement, the prevailing Party in any
proceeding, including arbitration commenced to resolve such disputes, shall be
entitled to an award of its reasonable attorney fees and court or arbitration
costs incurred in resolving or settling the dispute, in addition to any and all
other damages or relief which the court or arbitrator may deem proper.

 29
 

  
  

22.           Notices.

All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or via facsimile if a copy is also deposited
in the United States mail, properly addressed and postage prepaid, or delivered
by Federal Express or other recognized overnight delivery service, (i) if to
Purchaser, Mandekic Companies, LLC, 1035 Via Sanguinella Street, Henderson,
Nevada  89011 Attention: Ted Mandekic,
with a copy to Jenica Yurcic, Esquire, Schreck Brignone, 300 S. Fourth Street,
Suite 1200, Las Vegas, Nevada  89101;
(ii) if to Seller, MTR Gaming Group, Inc., Route 2 South, P.O. Box 356,
Chester, West Virginia  26034, Attention:
Edson R. Arneault, with a copy to Robert L. Ruben, Esquire, Ruben &
Aronson, LLP., 4800 Montgomery Lane Suite 150, Bethesda, MD 20814; or (iii) at
such other address as may be given by either party to the other party by notice
in writing pursuant to provisions of this Section 22.

23.           Indemnification.

(a)           Indemnification
by Purchaser.  Subject to the limits
set forth in this Section 23, Purchaser agrees to indemnify, defend and hold
Seller and its officers, directors and agents, harmless from and in respect of
any and all losses, damages, liability, costs and expenses (including, without
limitation, reasonable expenses of investigation and defense fees and
disbursements of counsel and other professionals) (collectively, “Losses”),
arising directly or indirectly out of or directly or indirectly due to (i) any
inaccuracy of any representation or the breach of any warranty, covenant,
undertaking, assumption of liabilities (including, without limitation,
contractual obligations) or other agreement of Purchaser contained in this
Agreement, or (ii) any property damage or personal injuries occurring at the
Hotel prior to the Closing.

(b)           Indemnification
by Seller.  Subject to the limits set
forth in this Section 23, Seller agrees to indemnify, defend and hold Purchaser
harmless from and in respect of any and all Losses, including reasonable
attorney’s fees, arising directly or indirectly out of or directly or
indirectly due to (i) any inaccuracy of any representation or the breach of any
warranty, covenant, undertaking or other agreement of Seller contained in this
Agreement, or (ii) any property damage or personal injuries occurring at the
Hotel prior to the Closing.  Seller shall
also indemnify Purchaser, and hold Purchaser harmless against, all claims,
losses, damages and expenses (including reasonable attorneys fees) attributable
to violations by Seller of applicable environmental laws and regulations during
the period of Seller’s ownership of its Real Property.

(c)           Survival
of Representations, Warranties and Covenants; Limitations on Indemnity.  The representations and warranties of the
Parties contained in this Agreement or in any instrument delivered pursuant to
this Agreement will survive the Closing Date and will remain in full force and
effect thereafter for a period of twelve (12) months; provided, however, that
such representations or warranties shall survive (if at all) beyond such period
with respect to any inaccuracy therein or breach thereof, notice of which shall
have been duly given within such time period in accordance with this Section
23(c).  Notwithstanding anything to the
contrary 

 30
 

  
  

contained
herein, Purchaser shall not be entitled to recover Losses from Seller nor shall
Seller be entitled to recover Losses from Purchaser unless and until the total
of all claims for Losses with respect to any inaccuracy or breach of any such
representations or warranties or breach of any covenants, undertakings or other
agreements, whether such claims are brought under this Section 23(c) or
otherwise, exceeds One Hundred Fifty Thousand Dollars ($150,000) in the
aggregate.  If the total amount of such
Losses exceeds One Hundred Fifty Thousand Dollars ($150,000), then the Party
entitled to recover hereunder shall be entitled to recover the full amount of such
losses and not merely the portion of such damages exceeding One Hundred Fifty
Thousand Dollars ($150,000); provided, however, that the aggregate amount of
Losses that may be recovered by Purchaser from Seller shall not exceed five
percent (5%) of the Purchase Price.

(d)           Notice
and Opportunity to Defend.  If an
event occurs which a Party asserts is an indemnifiable event pursuant to
Sections 23(a) or (b), the party seeking indemnification (the “Indemnitee”)
shall promptly notify the other party obligated to provide indemnification (the
“Indemnifying Party”).  If such event
involves (a) any claim or (b) the commencement of any action or proceeding by a
third Person, the Indemnitee will give such Indemnifying Party prompt written
notice of such claim or the commencement of such action or proceeding;
provided, however, that the Indemnitee’s failure to provide prompt notice as
provided herein will relieve the Indemnifying Party of its obligations
hereunder only to the extent that such failure prejudices the Indemnifying
Party hereunder.  If any such action is
brought against any Indemnitee and it notifies the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
therein and, to the extent that it wishes, to assume the defense thereof, with
counsel reasonably satisfactory to the Indemnitee.  Notwithstanding anything to the contrary in
this Agreement, after notice from the Indemnifying Party to the Indemnitee of
such election to so assume the defense thereof, the Indemnifying Party shall
not be liable to the Indemnitee for any legal expenses of other counsel or any
other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof, and the Indemnitee agrees to cooperate fully with the Indemnifying
Party and its counsel in the defense against any such asserted liability. The
Indemnitee shall have the right to participate at its own expense in the
defense of such asserted liability.  In
no event shall an Indemnifying Party be liable for any settlement effected by
the Indemnitee without the consent of the Indemnifying Party, which will not be
unreasonably withheld.  In no event shall
an Indemnifying Party effect any settlement without the consent of the Indemnitee,
which will not be unreasonably withheld.

(e)           Mitigation
of Loss.  Each Indemnitee is
obligated to use reasonable efforts to mitigate to the fullest extent
practicable the amount of any Losses for which it is entitled to seek
indemnification hereunder.

(f)            Subrogation.  Upon making any payment of Losses of the
Indemnitee, the Indemnifying Party will, to the extent of such payment, be
subrogated to all rights of the Indemnitee against any third party in respect
of the Losses to which the payment relates; provided, however, that until the
Indemnitee recovers full payment of its Losses, any and all claims of the
Indemnifying Party against any such third party on account of such payment are
hereby made expressly subordinated and subjected in right of payment of the
Indemnitee’s rights 

 31
 

  
  

against
such third party.  Without limiting the
generality of any other provision hereof, each such Indemnitee and Indemnifying
Party will duly execute upon request all instruments reasonably necessary to
evidence and perfect the above described subrogation and subordination rights.

24.           Allocation of the
Purchase Price.

Not more than ten (10) days
subsequent to the Effective Date, Purchaser shall deliver to Seller a draft of
its proposed allocation of the Purchase Price to the Purchased Assets.  Seller and Purchaser shall thereafter
negotiate in good faith to agree on the final allocation.  Within five (5) days after receipt of such
document, Seller shall, in writing, either agree or state its objections.  Seller and Purchaser shall negotiate in good
faith to attempt to resolve any objections. 
If Seller and Purchaser are unable to resolve Seller’s objections, the
objections shall be submitted to an independent accounting firm mutually agreed
upon by the parties.  Such accounting
firm’s determination shall be final (such determination to be based solely on
the written submissions by the Purchaser and Seller and not on any independent
investigation by the accounting firm). 
The costs of the independent accounting firm shall be borne equally by
Purchaser and Seller.  Seller and
Purchaser agree to properly file Form 8594 and the DOV and report the purchase
price allocation as agreed to or determined set forth therein for purposes of
all U.S. federal and state and local income and franchise Tax returns.

25.           Gaming Operator.

Notwithstanding anything
herein to the contrary, in the event that Purchaser desires to engage a gaming
operator (“Gaming Operator”) to conduct gaming operations at the Casino (rather
than obtain Gaming Approvals to operate the Casino itself), the following
provisions shall apply:

(a)           At Closing, the portion of the Purchased Assets that are
comprised of the Gaming Assets shall be conveyed, transferred and/or assigned
and physical possession thereof delivered to Gaming Operator;

(b)           At Closing, Purchaser
shall cause Gaming Operator to agree to discharge and perform when due the
Gaming Liabilities, but no other liabilities of Seller; and

(c)           At Closing, Seller shall execute and deliver a bill of
sale (the “Gaming Bill of Sale”) and an assignment and assumption agreement
whereby Seller assigns the Gaming Contracts to the Gaming Operator and the
Gaming Operator assumes the obligations with respect thereto (the “Gaming
Assignment”).

26.           Counterparts.

This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

 32
 

  
  

27.           No Trial by Jury.

Each Party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each Party hereby irrevocably
and unconditionally waives any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of or relating to this Agreement
and any of the agreements delivered in connection herewith or the transactions
contemplated hereby or thereby.

28.           Miscellaneous.

(a)           If
the date on which either Purchaser or Seller is required to take action under
this Agreement is not a Business Day, the action shall be taken on the next
succeeding Business Day.

(b)           The
captions of the various sections and paragraphs of this Agreement have been
inserted only for the purpose of convenience; such captions are not a part of
this Agreement and shall not be deemed in any manner to modify, explain,
enlarge or restrict any of the provisions of this Agreement.

(c)           Seller and Purchaser
agree that the proposed terms and conditions, and all information (other than
information which is a matter of public record or is provided by other sources
readily available to the public) shared or developed in the context of this
transaction shall be kept strictly confidential, except that Purchaser
acknowledges that Seller’s parent company may describe the terms hereof (as well
as provide copies of this Agreement) in reports that the parent is required to
file with Governmental Authorities, the United States Securities and Exchange
Commission, and Seller’s financiers, attorneys and accountants. Any public
disclosures, press releases, or announcements concerning this agreement and the
sale contemplated herein shall be approved unanimously by the parties in
writing in the exercise of each parties reasonably discretion.  Either party may disclose any items required
by Nevada Gaming Authorities, or any other gaming regulators having
jurisdiction over the Seller.  Purchaser
may disclose such non-public information its attorneys, surveyors, engineers,
financial advisors, investors and lenders as necessary to evaluate the
Purchased Assets.  Purchaser agrees that
while in possession of material non-public information concerning Seller,
Purchaser will not trade in the securities of Seller nor tip or advise others
with respect to such trading.

(d)           If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.

 33
 

  
  

(e)           This Agreement shall
be binding upon and inure solely to the benefit of each party hereto and their
respective successors and assigns, and nothing in this Agreement, express or
implied is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.

(f)            Each party hereto
has participated in the drafting of this Agreement, which each party
acknowledges is the result of extensive negotiations between the parties.  In the event of any ambiguity or question of
intent arises, this Agreement shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.

(g)           Time is of the
essence with respect to the time periods set forth in this Agreement.

[Signatures
appear on the following page.]

 34
 

  
  

IN WITNESS WHEREOF, Purchaser and Seller have signed
this Agreement on the day and year first above written.

	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  MANDEKIC
  COMPANIES, LLC,

  
	
   

  	
  a Nevada limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /S/ Ted Mandekic

  
	
   

  	
  By:  Ted Mandekic

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  SPEAKEASY GAMING
  OF LAS VEGAS, INC.,

  
	
   

  	
  a Nevada
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /S/ Edson R.
  Arneault

  
	
   

  	
  By:  Edson R. Arneault

  
	
   

  	
  Its:   President

  

 

 35
 

  
  

EXHIBITS

 

	
  

  	
  A

  	
   

  	
  —

  	
   

  	
  LEGAL DESCRIPTION

  	
   

  
	
   

  	
  B

  	
   

  	
  —

  	
   

  	
  PERMITTED EXCEPTIONS

  	
   

  
	
   

  	
  C

  	
   

  	
  —

  	
   

  	
  FINANCIAL INFORMATION

  	
   

  

 

 36
 

  
  

SCHEDULES

 

	
  

  	
  7(a) 

  	
   

  	
  —

  	
   

  	
  ASSUMED LIABILITIES

  	
   

  
	
   

  	
  8(k)

  	
   

  	
  —

  	
   

  	
  SELLER’S LIABILITIES

  	
   

  
	
   

  	
  8(o)

  	
   

  	
  —

  	
   

  	
  GAMING ASSETS AT THE HOTEL

  	
   

  
	
   

  	
  8(p)

  	
   

  	
  —

  	
   

  	
  EMPLOYEES

  	
   

  
	
   

  	
  8(q)

  	
   

  	
  —

  	
   

  	
  EMPLOYEE BENEFIT PLANS

  	
   

  

 

 37

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]