STOCK PURCHASE AGREEMENT BY AND AMONG MTR GAMING GROUP, INC., A DELAWARE CORPORATION, AND TLC CASINO ENTERPRISES, INC. A NEVADA CORPORATION DATED AS OF JUNE 26, 2007 FOR THE PURCHASE AND SALEOF 100% OF THE STOCK OF SPEAKEASY GAMING OF FREMONT,INC. AND SPEAKEASY FREMONT STREETEXPERIENCE OPERATING COMPANY

SECTION 3.1.  ORGANIZATION.

(a)           Purchaser is a Nevada corporation duly organized, validly existing and in good standing under the Laws of the State of Nevada and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted or proposed by Purchaser to be conducted.

SECTION 3.2.  AUTHORITY RELATIVE TO THIS AGREEMENT.

(a)           Purchaser has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  No other proceedings on the part of Purchaser are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by Purchaser and, assuming the due and valid authorization, execution and delivery hereof by Seller, constitutes a valid, legal and binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally and general principles of equity.

(b)           The Purchaser has duly and validly authorized the execution and delivery of this Agreement and approved the consummation of the transactions contemplated hereby.

SECTION 3.3.  CONSENTS AND APPROVALS; NO VIOLATIONS.  Except for such filings, permits, authorizations, consents and approvals as may be required by or under, any applicable requirements of federal or state securities laws, the HSR Act, any Gaming Authority, or the City of Las Vegas, Nevada, any filings, permits, authorization, consents and approvals relating or applicable to Seller, SGF, or FSE, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery by Purchaser of this Agreement or the consummation by Purchaser of the transactions contemplated hereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not and would not reasonably be expected to, individually or in the aggregate, materially impair, materially delay or prevent the performance of this Agreement.  Neither the execution, delivery and performance of this Agreement by Purchaser nor the consummation by Purchaser of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the respective articles of incorporation or bylaws (or similar governing documents) of Purchaser; (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or lien under, any of the terms, conditions or provisions of any contract to which Purchaser is a party or by which any of them or any of their respective properties or assets may be bound; or (c) violate any Law (including any Gaming Law) applicable to Purchaser, except in the case of (a) or (b) for violations, breaches or defaults that do not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser.

SECTION 3.4.  LITIGATION.  Except as disclosed in Section 3.4 of the Purchaser Disclosure Schedule there is no Claim pending or, to Purchaser’s knowledge, threatened against Purchaser or any of its properties or assets, including by or before any Governmental Entity, that

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questions the validity of this Agreement or any action to be taken by Seller in connection with the consummation of the transactions contemplated hereby or could otherwise prevent or delay the consummation of the transactions contemplated by this Agreement.

SECTION 3.5.  COMPLIANCE WITH APPLICABLE LAW.  Purchaser holds all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of the businesses of Purchaser (the “Purchaser Permits”), except for failures to hold such permits, licenses, variances, exemptions, orders and approvals that do not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser.  Purchaser and each of its “key employees” (as defined under applicable Gaming Law) are in compliance with the terms of the Purchaser Permits, except where the failure to so comply does not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser.  The businesses of Purchaser are not being conducted in violation of any Law applicable to Purchaser, except for violations or possible violations that do not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser.  To Purchaser’s knowledge, no investigation or review by any Governmental Entity, including any Gaming Authority, with respect to Purchaser is pending or threatened, nor, to Purchaser’s knowledge, has any Governmental Entity, including any Gaming Authority, indicated an intention to conduct the same, other than, in each case, those that Purchaser reasonably believes do not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser. Purchaser has no knowledge of any fact or circumstance that would cause any Gaming Authority or other Governmental Entity with authority over SGF’s or FSE’s operations or proposed operations to deny Purchaser any license or permit.

SECTION 3.6.  BROKERS, INVESTMENT BANKERS, AND FINANCIAL ADVISORS.  Purchaser represents and warrants to Seller that it has not been represented by any broker, investment banker, or financial advisor in connection with this Agreement or the transactions contemplated by this Agreement other than Rock Creek Capital Advisors, LLC.  Purchaser will pay any fees owed to Rock Creek Capital Advisors, LLC in connection with the transactions contemplated by this Agreement and will indemnify and hold Seller harmless from any claim by any broker, agent, finder, or financial advisor purporting to have acted on behalf of Purchaser.

SECTION 3.7.  SUFFICIENT FUNDS.  Purchaser has the current capacity to finance the purchase of the Shares as contemplated by this Agreement.

SECTION 3.8.  LICENSING.  Purchaser has been found suitable and registered as a holding company by the Nevada Gaming Commission and such finding of suitability and registration is in good standing.

SECTION 3.9.  GOOD MORAL CHARACTER.  Purchaser’s owner has been previously found by the Nevada Gaming Commission, by implication, to possess good character, honesty and integrity pursuant to NRS 463.170(2)(a).

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ARTICLE IV

COVENANTS

SECTION 4.1.  FURTHER ASSURANCES.  Each Party agrees to use all reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the transactions contemplated by this Agreement.

SECTION 4.2.  PROPRIETARY INFORMATION.  Each Party shall keep and retain in confidence and shall not use for any purpose other than to evaluate the transactions contemplated under this Agreement any and all of the confidential and proprietary information respecting the other Party set forth or referenced in the schedules or otherwise provided to the receiving Party by the disclosing party in connection with or in anticipation of the Closing, irrespective of the form in which it is delivered or when delivered (the “Proprietary Information”).  The preceding requirement shall not apply to Proprietary Information that (a) a Party was in the possession of, or was rightfully known by, the receiving Party or its representatives, without an obligation to maintain its confidentiality prior to receipt from the disclosing Party or its representatives, (b) is or becomes generally known to the public without violation of this Agreement, (c) is obtained by the receiving Party or its representatives in good faith from a third party having the right to disclose it without an obligation of confidentiality, or (d) is independently developed by the receiving Party or its representatives without the participation of individuals who have had access to the Proprietary Information.  In the event the Agreement is terminated prior to Closing for any reason, the receiving Party agrees to either return to the disclosing party all of the Proprietary Information subject to this Section 4.2 (including all copies) in its possession or under its control or to purge, shred or otherwise destroy all such Proprietary Information not returned, at the option of the disclosing Party.  The receiving Party shall, and shall cause each of its representatives to, keep and maintain all Proprietary Information subject to this Section 4.2 confidential in any case in which the Closing does not occur and not avail itself of or use any of such Proprietary Information for its own benefit.  The receiving Party shall promptly certify its compliance with the foregoing in the event of any termination of the Agreement.

SECTION 4.3.  EXPENSES AND FEES.  Except as otherwise provided herein, each Party shall pay its own expenses in connection with the transactions contemplated herein.

SECTION 4.4.  DISPOSITION OF PRE-EXISTING CLAIMS. Notwithstanding the purchase of all of the capital stock of SGF and FSE by Purchaser, Seller agrees and covenants that it will, at Seller’s sole expense (including any related legal fees), vigorously defend or, at Seller’s election, resolve (a) the litigation currently pending in Clark County, Nevada in which an affiliate of Harrah’s Entertainment claims it is entitled to receive an additional payment of $5,000,000 from Seller (the “Harrah’s Claim”); (b) the arbitration demand pertaining to approximately $20,000 for vacation pay allegedly owed by Horseshoe Operating Company to the Culinary Workers Union; (c) the claim pertaining to an alleged wrongful termination of employment of Ms. Georgina Smith; (d) the potential claim for additional gaming taxes disclosed in connection with Section 2.16 of the Seller Disclosure Schedule; (e) the additional tax attributable to a change in the unemployment tax rate as described in Section 2.6 of the Seller Disclosure Schedule; (f) any rental payments due under the Main Street Lease as described in

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Section 2.8(c) of the Seller Disclosure Schedule for any period prior to Closing; and (g) any other operating expense, tax or other similar claim arising from acts or omissions of SGF or FSE prior to the Closing (collectively, the “Pre-existing Claims”).  Seller agrees that it will indemnify Purchaser for any Loss incurred by Purchaser arising from the Pre-existing Claims, and shall be solely responsible for paying any amounts owed to third parties arising from the Pre-existing Claims, regardless of the indemnity basket described in Section 5.3.  Seller shall retain any recovery on its counterclaims with respect to the Pre-existing Claims.

SECTION 4.5.  PROJECT CAPITAL EXPENDITURES. Purchaser agrees to reasonably consider reimbursement of Seller for any Project Capital Expenditures (as defined below) incurred by Seller and/or SGF with respect to the business and operations of SGF from and after the date hereof, provided that Purchaser consents 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), and, provided further, that Purchaser’s obligations under this Section 4.5 shall be payable only upon, and simultaneously with, the Closing of the transactions contemplated by this Agreement and, provided further, that 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 4.5, only to the extent permitted or not prohibited by Law, including Nevada Gaming Commission Regulation 8.060 or any other applicable Gaming Law. “Project Capital Expenditures” means each of the expenditures listed on Section 4.5 of the Seller Disclosure Schedule, and all other expenditures for new equipment, fixtures and other capital improvements (excluding maintenance expenses) with respect to the business operations of SGF; provided however, that Purchaser will not be obligated to reimburse Seller for any Project Capital Expenditures listed on Section 4.5 of the Seller Disclosure Schedule unless Purchaser has consented to such expenditure as contemplated by the first sentence of this Section 4.5.

SECTION 4.6.  ADJUSTMENTS FOR PROGRESSIVE LIABILITIES. At the Closing, Seller shall pay Purchaser an amount equal to the amount shown as of the Transfer Time (as defined in Section 7.2) on:

(a)           SGF’s in-house progressive slot machine meters as of the Transfer Time (if not removed by the vendor at or before the Transfer Time);

(b)           table games with an in-house progressive jackpot feature as of the Transfer Time; and

(c)           any other games with an in-house progressive feature as of the Transfer Time.

SECTION 4.7.  NO NEGOTIATIONS.  Seller will not, directly or indirectly, through any officer, director, agent, member, shareholder, affiliate or otherwise, solicit, initiate, or encourage submission of any proposal or offer from any person or entity (including any of its officers, directors, partners, employees, or agents) relating to any liquidation, dissolution, recapitalization, merger, consolidation, or acquisition or purchase of all or part of SGF’s or FSE’s assets or properties, or any equity interest in SGF or FSE, or other similar transaction or business combination involving SGF or FSE or their assets or their respective businesses, or participate in any negotiations regarding, or furnish to any other person any information with respect to, or

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otherwise cooperate in any way with, or assist, participate in, facilitate, or encourage, any effort or attempt by any other person or entity to do or seek any of the foregoing.  Seller will promptly notify Purchaser if any such proposal or offer, or any inquiry from or contact with any Person with respect thereto, is made and will promptly provide Purchaser with such information regarding such proposal, offer, inquiry, or contact as Purchaser may request.  The restrictions of this Section 4.7 shall not apply to transactions involving the securities of Seller provided that no such transaction shall amend, modify or affect the terms of this Agreement.

SECTION 4.8.  RELEASE OF LEASE GUARANTEES.  Seller shall exert commercially reasonable efforts to obtain releases of the Lease Guarantees.  Purchaser shall reasonably cooperate with Seller’s efforts to obtain such releases, it being understood that Purchaser or one or more Affiliates of Purchaser (but in no event a natural Person) may be required to guarantee the leases in lieu of Seller; provided, however, that in no event shall Purchaser or any of its Affiliates be required to provide any additional consideration to the lessors in connection with obtaining the releases.  In the alternative, Seller shall exert commercially reasonable efforts to obtain the consent of the requisite lenders under the Credit Agreement for Seller to consummate the transactions contemplated by this Agreement absent such releases.

SECTION 4.9.  RELEASE OF SGF FROM GUARANTY. Immediately after Closing, Seller shall deliver to Wells Fargo Bank, N.A., as trustee under the indentures governing Seller’s Senior Notes due 2010 and Senior Subordinated Notes due 2012, all documents, certificates, supplemental indentures and opinions of counsel required pursuant to such indentures to remove SGF as a guarantor under such indentures.

SECTION 4.10.  RENT PAYMENTS.  From and after the Closing, for so long as Seller is a guarantor with respect to a Company Leased Property, Purchaser shall promptly pay all rent in accordance with the Lease Documents and shall not suffer a default or take any other action under any such lease that will result in a claim against Seller by landlord under such lease pursuant to the corresponding Lease Guaranty.

SECTION 4.11.  COLLECTIVE BARGAINING AGREEMENT WITH CULINARY WORKERS.  If an extension or replacement of the collective bargaining agreement by and between Horseshoe Operating Company dba Horseshoe Hotel & Casino (aka Binion’s Gambling Hall and Hotel) and the Local Joint Executive Board of Las Vegas, on behalf of Culinary Workers Union, Local No. 226, and Bartenders Union, Local No. 165 (the “Culinary Workers Union CBA”), is executed and delivered before the Closing Date, and the terms and conditions of such agreement provide for additional compensation to be paid to SGF’s employees retroactively, Seller shall be responsible for any additional compensation required by such agreement for any period of time prior to the Closing Date. If the Culinary Workers Union CBA is executed and delivered after the Closing Date, and the terms and conditions of such agreement provide for additional compensation to be paid to SGF’s employees retroactively, Seller shall be responsible for any additional compensation required by such agreement for any period of time prior to the Closing Date, except to the extent such additional compensation is greater than the compensation required to be paid under such agreement during the twelve (12) month period following the Closing, in which case Purchaser shall be responsible for such additional amount for the period from the retroactive date until the Closing Date.

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SECTION 4.12.  SEVERANCE/CHANGE IN CONTROL BENEFITS.  If Seller terminates any SGF or FSE employee identified in Section 2.11(a)(viii) or Section 2.15(b) of the Seller Disclosure Schedule prior to Closing or Purchaser terminates any such SGF or FSE employee within thirty (30) days after Closing, Seller shall be solely responsible for any severance benefits or other amounts required to be paid by SGF or FSE to any such employee as a result of any written agreement between such employee and SGF nor FSE. Whether or not any such employee is terminated, Seller shall be solely responsible for any change of control benefits or other amounts required to be paid by SGF or FSE to any such employee as a result of the transactions contemplated by this Agreement.  If Seller becomes obligated to make any such payments or other amounts pursuant to this Section 4.12, any such payments or amounts shall be deemed added to the losses set forth in the projections Seller has provided to Purchaser prior to the date hereof.

SECTION 4.13.  CONSENT TO RELEASE.  Notwithstanding anything to the contrary in this Agreement, in connection with any settlement of the Harrah’s Claims, none of Seller, SGF or FSE shall enter into any release with HHLV Management Company LLC or any affiliate of Harrah’s Entertainment that terminates or otherwise limits the rights of Seller, SGF, and FSE to seek indemnification for certain environmental claims as contemplated by the Joint Operating License Agreement, as amended, dated March 10, 2004, or the Purchase and Sale Agreement, as amended, by and among Seller, HHLV and SGF, dated as of February 9, 2004, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned, or delayed.

ARTICLE V

INDEMNIFICATION

SECTION 5.1.  INDEMNIFICATION BY PURCHASER.

(a)           Subject to the limits set forth in this Article V, 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” or individually, a “Loss”), arising directly or indirectly out of or directly or indirectly due to any inaccuracy of any representation or the breach of any warranty, covenant, undertaking or other agreement of Purchaser contained in this Agreement, including the Exhibits and Schedules attached hereto and incorporated by reference herein as set forth in Section 11.5 hereof.

(b)           Seller has delivered to Purchaser copies of the Lease Guarantees.  Purchaser agrees to indemnify, defend and hold Seller and its officers, directors, agents and Affiliates harmless from and in respect of any and all Losses relating to matters occurring from and after the Closing Date and arising directly or indirectly out of or directly or indirectly due to any Claim by any landlord who is a beneficiary under a Lease Guaranty.  Seller’s rights and Purchaser’s obligations under this Section 5.1(b) shall not be subject to any of the limitations set forth in this Article V.

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SECTION 5.2.  INDEMNIFICATION BY SELLER.  Subject to the limits set forth in this Article V, Seller agrees to indemnify, defend and hold Purchaser and its officers, directors and agents harmless from and in respect of any and all Losses arising directly or indirectly out of or directly or indirectly due to any inaccuracy of any representation or the breach of any warranty, covenant, undertaking or other agreement of Purchaser contained in this Agreement, including the Exhibits and Schedules attached hereto and incorporated by reference herein as set forth in Section 11.5 hereof.  Seller also agrees to indemnify, defend and hold Purchaser and its officers, directors and agents, harmless from and in respect of any and all Losses, including reasonable attorney’s fees, arising directly or indirectly out of any tax matters as provided in Article X.

SECTION 5.3.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS; LIMITATIONS ON INDEMNITY.

(a)           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 twenty-four (24) months from the Closing Date; 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 Article V; and (ii) the representations and warranties in Section 2.2 (Capitalization; Ownership), Section 2.14 (Employee Benefit Plans), Section 2.18 (Taxes), and the undertaking in Section 4.9 (release of SGF from guarantees under indentures) shall survive until the date that is one (1) month after the expiration of the applicable statute of limitations. Anything to the contrary contained herein notwithstanding, 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 exceeds Three Hundred Thousand Dollars ($300,000) in the aggregate.  If the total amount of such Losses exceeds Three Hundred Thousand Dollars ($300,000), 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 Three Hundred Thousand Dollars ($300,000); provided, however, that the aggregate amount of Losses that may be recovered by Purchaser from Seller shall not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000).

(b)           For purposes of determining indemnification under this Article V for any breach of representation, warranty, covenant or agreement, including claims for Losses that count toward the indemnity basket provided in Section 5.3(a), any materiality (including any “Material Adverse Change” or “Material Adverse Effect”) or knowledge qualifier shall be disregarded, except knowledge qualifiers with respect to “investigations” or “threatened” matters.

(c)           The Three Hundred Thousand Dollar ($300,000) indemnity basket provided in Section 5.3(a) will not apply to any Loss based on any breach by Seller of any of the representations and warranties under Section 2.2 (Capitalization; Ownership), Section 2.13 (Environmental Matters), Section 2.14 (Employee Benefit Plans), and Section 2.18 (Taxes) or any intentional or deliberate misrepresentation or omission by Seller.

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(d)           Notwithstanding anything to the contrary in this Agreement, including without limitation, Section 5.3 or Section 9.2 hereof, the sole remedy of Seller for any breach of any representation, warranty, covenant or agreement under this Agreement involving the failure or inability of Purchaser to close the transactions contemplated by this Agreement by the Closing Date will be the forfeiture of the Deposit, absent fraud.

SECTION 5.4.  NOTICE AND OPPORTUNITY TO DEFEND.  If an event occurs which a Party asserts is an indemnifiable event pursuant to Section 5.1 or 5.2, 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, unless the named parties to such action or proceeding include both one or more Indemnifying Parties and an Indemnitee, and the Indemnitee has been advised in writing by counsel that there is a non-waivable conflict of interest that precludes the same counsel from representing the Indemnitee and the Indemnifying Party, in which event such Indemnitee shall be entitled, at the Indemnifying Party’s cost, risk and expense, to separate counsel of its own choosing.  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 written consent of the Indemnifying Party, which will not be unreasonably withheld.  In no event shall an Indemnifying Party effect any settlement without the written consent of the Indemnitee, which will not be unreasonably withheld.

SECTION 5.5.  MITIGATION OF LOSS.  Each Indemnitee is obligated to use reasonable efforts to mitigate to the fullest extent practicable the amount of any Loss for which it is entitled to seek indemnification hereunder, provided, however, that nothing in this Section 5.5 shall require Seller or Purchaser to pursue insurance claims, establish reserves, seek contribution from SGF or FSE, or take any other similar action; provided, however, that if the Loss that is subject to any such claim is or may be covered, in whole or in part, by any insurance policy purchased by Seller prior to the date of execution of this Agreement, Purchaser must make, or cause to be made, all reasonable claims for insurance under such insurance policy that may be applicable to the matter giving rise to such claim, to the same extent that it would if such Loss were not subject to indemnification hereunder, before proceeding to collection of any such claim for indemnification against Seller.  The amount of the Loss subject to indemnification under Section 5.1(a) shall be calculated net of any amounts recovered by Purchaser or its Affiliates

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under any insurance policy as provided in this Section 5.5 (net of all direct unreimbursed collection expenses).

SECTION 5.6.  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 Loss to which the payment relates (excluding insurers for policies purchased and maintained by Purchaser); provided, however, that until the Indemnitee recovers full payment of its Loss, 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 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.

SECTION 5.7.  INVESTIGATION.  The representations, warranties, covenants and obligations of the Parties, and the rights and remedies that may be exercised by the Indemnitees, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or with the knowledge of, the other Party, any of the other Indemnitees or any of their representatives.

ARTICLE VI

PRE-CLOSING COVENANTS OF SELLER

SECTION 6.1.  OPERATION OF BUSINESS.  Unless Seller first obtains a written waiver or consent from Purchaser, Seller agrees that, from the date of execution of this Agreement until the Closing (the “Pre-Closing Period”):

(a)           Each of SGF and FSE will conduct its operations exclusively in the ordinary course of business and consistent with past practice and use its best efforts to preserve intact its current business organization, and maintain its relations and goodwill with all professionals, suppliers, creditors, licensors, licensees, employees, regulators and other Persons having business relationships with SGF or FSE.

(b)           Seller will confer regularly with Purchaser concerning operational matters of SGF and FSE, to the extent permitted by Nevada Gaming Commission Regulation 8.060, or any other applicable Gaming Law, and will report to Purchaser at least once each month concerning the status of SGF’s and FSE’s business, condition, assets, liabilities, operations, financial performance and prospects, which report shall include copies of the unaudited financial statements for each of SGF and FSE for the prior month as well as any interim period, in each case prepared consistent with the methods and accounting principles in effect prior to the execution of this Agreement;

(c)           Neither SGF and FSE will form any subsidiary or acquire any equity interest or other interest in any other Person;

(d)           Each of SGF and FSE will pay and/or accrue any debts and applicable taxes when due and pay or perform other obligations when due, subject to good faith disputes thereof;

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(e)           Each of SGF and FSE will give all notices and other information required prior to the Closing Date to be given to the employees of SGF and FSE and to any applicable Government Entity pursuant to applicable Law in connection with the transactions provided for in this Agreement;

(f)            Neither SGF nor FSE will amend or otherwise change its Organizational Documents;

(g)           Neither SGF nor FSE will issue, sell, pledge, dispose of, grant, transfer, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of any shares of its capital stock or any other equity interest in such corporation, including any securities convertible or exchangeable or exercisable for any shares of such capital stock;

(h)           Neither SGF nor FSE will declare, set aside, make or pay any dividend, distribution (whether payable in cash, securities or property or any combination thereof), contribution, loan or any other payment out of the ordinary course of business with respect to any class of its capital stock;

(i)            Neither SGF nor FSE will increase the compensation or benefits payable or to become payable to its directors, officers or employees or grant any rights to severance, retention or termination pay to or enter into any employment or severance agreement with, any director, officer or employee or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, compensation, pension, retirement, savings, welfare, deferred compensation, employment, termination, severance or other employee benefit plan, agreement, policy or arrangement for the benefit or welfare of any directors, officers or current or former employees, including any Company Benefit Plan, except (i) to the extent required by applicable Law; (ii) pursuant to any Company Benefit Plans in effect as of the date of this Agreement consistent with past practices; (iii) for salary and other benefit increases, grants, payments or modifications made in the ordinary course of business consistent with past practice to employees other than officers of SGF or FSE; and (iv) any bonuses, severance benefits or other similar payments paid in full by SGF or FSE prior to the Closing Date;

(j)            Neither SGF nor FSE will sell, transfer or otherwise dispose of any properties or assets with the fair market value in excess of $100,000 except for sales of current assets in the ordinary course of business and consistent with past practice;

(k)           Neither SGF nor FSE will incur or assume any indebtedness greater than $100,000, except as will be repaid in full prior to or at the Closing by Seller, SGF, or FSE or as to which SGF and FSE will be released at the Closing;

(l)            Neither SGF nor FSE will pay, discharge or satisfy any material claims or liabilities other than in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of SGF or FSE;

(m)          Neither SGF nor FSE will fail to maintain any existing insurance coverage in all material respects of all types in effect as of the date hereof;

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(n)           Neither SGF nor FSE will make any change with respect to accounting policies or procedures, other than required by GAAP or any Governmental Entity, or in the ordinary course of business and consistent with past practice;

(o)           Neither SGF nor FSE will enter into, cancel, terminate or adversely modify or amend any Material Contract, or waive, release, assign, settle or compromise any material rights or claims, or any material litigation or arbitration;

(p)           Neither SGF nor FSE will take, or agree to commit to take, any action that would make any representation or warranty of SGF or FSE contained herein inaccurate in any respect at, or as of any time prior to, the Closing so as to cause the conditions to Purchaser to consummate the transactions contemplated herein not to be satisfied;

(q)           Neither SGF nor FSE will substantially change the manner in which SGF or FSE will administer the Company Benefit Plans or make any changes that would materially impact the cost of administration of the Company Benefit Plans; or

(r)            Neither SGF nor FSE will enter into any agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize or announce an intention to do any of the forgoing.

SECTION 6.2.  FILINGS AND CONSENTS.

(a)           Seller agrees that each filing or notice required to be made or given (pursuant to any applicable legal requirement, order or contract, or otherwise) by Seller, SGF, or FSE in connection with the execution and delivery of this Agreement or in connection with the consummation or performance of the transactions contemplated hereby shall be made or given as promptly as practicable after the date of this Agreement.

(b)           Seller shall obtain or cause to be obtained each consent or estoppel letter required to be obtained, if any, (pursuant to any applicable legal requirement, order or contract, or otherwise) by Seller, SGF, or FSE, including, without limitation, any consent required under any leases governing Company Leased Property, in connection with the execution and delivery of this Agreement or in connection with the consummation or performance of the transactions contemplated hereby as promptly as practicable after the date of this Agreement and each of such consents shall remain in full force and effect through the Closing Date.

(c)           Seller shall promptly deliver to Purchaser a copy of each filing made, each notice given and each consent obtained by Seller, SGF, or FSE during the Pre-Closing Period.

(d)           During the Pre-Closing Period, Seller and its representatives shall cooperate with Purchaser and its representatives, and prepare and make available such documents and take such other actions as Purchaser may request in good faith.

SECTION 6.3.  NOTIFICATION.

(a)           During the Pre-Closing Period, Seller shall promptly notify Purchaser of:

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(i)            the discovery by Seller of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes a breach of any representation or warranty made by Seller in this Agreement;

(ii)           any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute a breach of any representation or warranty made by Seller in this Agreement if (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance, or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement;

(iii)          any breach of any covenant or obligation of Seller; and

(iv)          any event, condition, fact or circumstance that may make the timely satisfaction of any of the conditions set forth in Article VIII impossible or unlikely.

(b)           Seller shall have the obligation to supplement any section of the schedules prior to Closing with respect to any transaction permitted under Section 6.1 or any matter described in Section 6.3(a) above that occurs during the Pre-Closing Period.  Such supplementation is not a waiver by Purchaser of any breach of a representation or warranty as to the matter so supplemented.

SECTION 6.4.  BEST EFFORTS.  During the Pre-Closing Period, Seller shall use its best efforts to cause the conditions applicable to Seller set forth in Article VIII to be satisfied on a timely basis, and shall not take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties set forth in Article II of this Agreement becoming untrue, or in any of the conditions of Closing set forth in Article VIII not being satisfied.

SECTION 6.5.  CONFIDENTIALITY; PUBLICITY.  During the Pre-Closing Period:

(a)           Seller, Purchaser and their respective representatives shall keep strictly confidential the existence and terms of this Agreement prior to the issuance or dissemination of any mutually agreed upon press release or other disclosure of the transactions contemplated hereunder.

(b)           None of Seller, Purchaser nor their respective representatives shall issue or disseminate any press release or other publicity or otherwise make any disclosure of any nature regarding the transactions contemplated by this Agreement, except as required by federal securities Laws or other applicable Laws and except as otherwise agreed by the Parties, provided that upon the execution of this Agreement, the Parties will be permitted to announce the transaction, subject to each Party’s approval of the content of such announcement, such approval not to be unreasonably withheld.

(c)           If Seller is required by Law to make any disclosure regarding the transactions contemplated by this Agreement, Seller shall advise Purchaser at least two (2) Business Days prior to making such disclosure, of the nature and content of the intended disclosure.

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(d)           Purchaser acknowledges that Seller’s securities are publicly traded and the Parties agree that Seller shall be permitted to make such public announcements and include in its periodic filings with the Securities and Exchange Commission such information concerning the transaction as its outside securities counsel deems is required.  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.

(e)           Notwithstanding anything in this Section 6.5 to the contrary, Seller acknowledges that it may not disclose the existence and terms of this Agreement in violation of Section 4.7.

SECTION 6.6.  ACCESS TO INFORMATION. Upon reasonable notice, Seller shall (and shall cause SGF and FSE, and its and their respective representatives, to) (i) provide Purchaser’s representatives reasonable access, during normal business hours, to all of SGF’s and FSE’s personnel (subject to the limitations in this Section 6.6), properties, books, contracts, commitments and records (other than those that Seller, SGF, or FSE may not provide due to confidentiality agreements) and (ii) furnish promptly to Purchaser’s representatives (A) copies of all monthly financial reports and development reports prepared by Seller in the ordinary course of business relating to SGF or FSE; and (B) all other information concerning SGF’s or FSE’s business, properties and personnel as Purchaser may reasonably request, in each case, so long as such actions (1) do not materially interfere with the business of Seller, SGF, or FSE; (2) would not, after consultation with counsel, violate any Law in such counsel’s reasonable judgment; and (3) do not comprise strategic marketing materials in the form of names and/or addresses of customers of Seller, SGF, or FSE or the means by which Seller, SGF, or FSE determines when and how to solicit such customers by direct mail offers. Notwithstanding the foregoing, none of Seller, SGF nor FSE shall be required to provide any information that it reasonably believes (after consultation with outside legal counsel) it may not provide to Purchaser by reason of applicable Law, or constitutes information protected by the attorney/client and/or attorney work product privilege. No information or knowledge obtained in any investigation pursuant to this Section 6.6 shall affect or be deemed to modify any representation or warranty contained in this Agreement or the conditions to the obligations of the Parties to consummate the transactions contemplated herein. Purchaser shall have access to the General Manager of the Property and each employee of the Property other than the General Manager so long as Purchaser shall have provided prior notice to Seller and an opportunity to participate in any communication or meeting with the General Manager or such employee.  Purchaser agrees that Seller shall have the right to reschedule the time and place of any such communication or meeting as reasonably necessary to allow Seller or any of its representatives to participate.

SECTION 6.7.  DOMAIN NAMES.  Prior to Closing, Seller shall assign (or cause to be assigned) the domain names listed on Section 2.10 of the Seller Disclosure Schedule to SGF.

ARTICLE VII

PRE-CLOSING COVENANTS

SECTION 7.1.  BEST EFFORTS.  During the Pre-Closing Period, neither Seller nor Purchaser shall take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties set forth in

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Article II or Article III of this Agreement becoming untrue or in any of the conditions of closing set forth in Article II or Article VIII not being satisfied. Within twenty-one (21) calendar days after the execution of this Agreement, Purchaser shall apply for, and shall use its best efforts to obtain promptly, the approval of the transactions contemplated by this Agreement by the Nevada State Gaming Control Board, the Nevada Gaming Commission, and to the extent applicable, the City of Las Vegas, Nevada.

SECTION 7.2.  HOUSE FUNDS. Prior to Closing, Purchaser and Seller shall mutually agree upon a procedure for counting and determining all House Funds (as defined below) as of 11:59:59 P.M. Las Vegas time on the date immediately preceding the Closing Date (the “Transfer Time”), and Purchaser shall deliver to Seller, at the Closing, an amount equal to the House Funds so determined. “House Funds” means all cash and cash equivalents located at any property owned or leased by SGF, 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 any SGF petty cash fund and cashiers’ banks, coins and slot hoppers, carousels, slot vault, counting rooms, and poker bank, and the funds in any bank accounts maintained by SGF.

ARTICLE VIII

CONDITIONS

SECTION 8.1.  CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE CLOSING.  The obligations of Seller, on the one hand, and Purchaser, on the other, to consummate the Closing are subject to the satisfaction (or, if permissible, waiver by the Party for whose benefit such conditions exist) of the following conditions:

(a)           No court, arbitrator or Government Entity shall have issued any order, decree or ruling, and there shall not be any statute, rule or regulation, restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement; provided that the Parties shall have used their best efforts to cause any such order, decree, statute, rule or regulation to be vacated or lifted;

(b)           All consents, approvals, findings of suitability, licenses, permits, orders or authorizations of and registrations, declarations or filings with any Governmental Entity with jurisdiction and respect of the Gaming Laws applicable to Seller, SGF, FSE, the Property, or Purchaser, in each case, required or necessary in connection with the transactions contemplated by this Agreement (including, but not limited to, approval, licensing or registration of Purchaser and any of its officers and/or stockholders, if necessary), shall have been obtained and made and shall be in full force and effect.

SECTION 8.2.  CONDITIONS TO THE OBLIGATIONS OF PURCHASER.  The obligations of Purchaser to consummate the transactions contemplated hereby are subject to the satisfaction (or waiver by Purchaser) of the following further conditions:

(a)           the representations and warranties of Seller, SGF, and FSE set forth in Article II that are qualified by materiality shall be true and correct and the representations and warranties

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of Seller, SGF, and FSE that are not so qualified shall be true and correct in all material respects on and as of the Closing with the same force and effect as if made on and as of the Closing, and each of Seller, SGF, and FSE shall in all material respects have performed each obligation and agreement and complied with each covenant to be performed and complied with by it hereunder at or prior to the Closing (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need to be true and accurate only as of such date or with respect to such period);

(b)           Seller shall have performed in all material respects the obligations hereunder required to be performed by them at or prior to the Closing Date;

(c)           Purchaser shall have received a certificate signed by the chief executive officer and the chief financial officer of Seller, dated as of the Closing Date, to the effect that, to the best of his or her knowledge, the conditions set forth in Section 8.2(a) and 8.2(b) have been satisfied in all material respects; and (ii) a certificate of a separate executive of Seller certifying that such officer was duly authorized to sign the certificate in his or her capacity as stated in the officer’s certificate;

(d)           Purchaser shall have received the written resignations of each board member and officer of each of SGF and FSE to be effective on the Closing Date;

(e)           Seller shall have provided a release satisfactory to Purchaser providing for the release of any encumbrance on the shares of SGF’s or FSE’s capital stock being purchased by Purchaser pursuant to this Agreement;

(f)            Seller shall have obtained all required consents from any third parties with respect to any Material Contracts whose terms require the obtaining of such consents,  including, without limitation, any leases governing any Company Leased Property;

(g)           Seller shall have delivered to Purchaser, at Seller’s sole cost and expense (i) a survey for each Company Owned Property (other than a licensed property) and each property ground leased by Seller (such survey, form of survey certificate and date of such survey to be reasonably satisfactory to Purchaser) and (ii) a title policy for each Company Owned Property (other than a licensed property) and each property ground leased by Seller (such policies to be ALTA extended owner’s or leasehold (as applicable)), together with copies of the underlying documents referenced in each such title policy.  The issuer, reinsures, form of policy, endorsements, and scheduled exceptions for each such title policy shall all be reasonably satisfactory to Purchaser.  In the case where Seller possesses a valid Title Policy, the requirements set forth herein may be satisfied, at the sole discretion of Purchaser, by obtaining an endorsement to such Title Policy dating down the coverage thereunder to the date of the Closing.

(h)           there shall have been no Material Adverse Effect with respect to SGF’s or FSE’s business, condition (financial or otherwise), assets, liabilities, operations or financial performance since the date of this Agreement;

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(i)            there shall have been no distributions, payments or similar transfers of money by SGF or FSE to Seller or to any members of Seller’s Affiliated Group, except for distributions, payments or transfers made in the ordinary course consistent with past practice;

(j)            The Nevada State Gaming Control Board and the Nevada Gaming Commission, and to the extent applicable and required, the City of Las Vegas, Nevada, shall have approved the transactions contemplated hereby;

(k)           SGF and its properties shall have been released from all liabilities and obligations pursuant to the Credit Agreement;

(l)            SGF shall have paid, in full, any and all Taxes claimed to be due by the Nevada unemployment tax division, including, but not limited to, those amounts set forth as an additional Tax in Section 2.18 of the Seller Disclosure Schedule; provided, however, that Seller may, in the alternative, agree to allocate such amounts from the Purchase Price and place them in an interest bearing escrow account pending payment as and when such amounts may become due from time to time in whole or in part, with all interest on such amounts being the sole property of Seller;

(m)          Seller shall have delivered to Purchaser a receipt or certificate for each of SGF and FSE from the Nevada Department of Taxation showing that all state and local taxes have been paid by each of them; provided, however, that if Seller is unable to deliver such receipt or certificate by the Closing Date solely due to the unemployment tax matter disclosed in Section 2.18 of the Seller Disclosure Schedule or government delay unrelated to any tax payment issue, Purchaser shall waive this condition to Closing (although such waiver shall not constitute a waiver of Purchaser’s rights to indemnification hereunder). Notwithstanding the foregoing, Purchaser will not be required to waive this condition until the Closing Date as described in Section 1.4, even if all other conditions to Closing have been satisfied by Seller; and

SECTION 8.3.  CONDITIONS TO THE OBLIGATIONS OF SELLER.  The obligations of Seller to consummate the transactions contemplated hereby are subject to the satisfaction (or waiver by Seller) of the following conditions:

(a)           the representations and warranties of Purchaser set forth in Article III that are qualified by materiality shall be true and correct and the representations and warranties of Purchaser that are not so qualified shall be true and correct in all material respects on and as of the Closing with the same force and effect as if made on and as of the Closing, and Purchaser shall in all material respects have performed each obligation and agreement and complied with each covenant to be performed and complied with by it hereunder at or prior to the Closing (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need to be true and accurate only as of such date or with respect to such period);

(b)           The Purchaser shall have performed all of the obligations hereunder required to be performed by the Purchaser, at or prior to the Closing Date;

(c)           Seller shall have received (i) a certificate signed by the chief executive officer and the chief financial officer of Purchaser, dated as of the Closing Date, to and the effect that, to the best of his or her knowledge, the conditions set forth in Section 8.3(a) and 8.3(b) have been

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satisfied and (ii) a certificate of the secretary or assistant secretary of the Purchaser certifying that such officer was authorized under the bylaws of Purchaser to sign the certificate in his or her capacity as stated in the officer’s certificate;

(d)           the requirements of Section 7.2 of the Agreement shall have been fulfilled; and

(e)           Seller shall have obtained the releases of the Lease Guarantees, or, in the alternative, the lenders under the Credit Agreement shall have consented to Seller closing the transactions contemplated by this Agreement absent such releases on terms acceptable to Seller in its sole and absolute discretion.

ARTICLE IX

TERMINATION

SECTION 9.1.  TERMINATION.  This Agreement may be terminated and the transactions contemplated hereby abandoned:

(a)           by mutual written consent of Seller and Purchaser;

(b)           by either Seller or Purchaser if any Governmental Entity shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement and such order, decree, ruling or any other action shall have become final and non-appealable;

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

(d)           by Purchaser if there shall have been any material breach of a representation and warranty or obligation of Seller hereunder (other than Section 4.7) and, if such breach is curable, such default shall not have been remedied within ten (10) days after receipt by Seller of notice in writing from Purchaser specifying such breach and requesting that it be remedied, including, without limitation, any agreement by Seller, SGF, or FSE to amend any collective bargaining agreement covering more than 20 employees of SGF or FSE that is not rationally related to market rates for comparable properties in downtown Las Vegas, Nevada;

(e)           by Purchaser if Seller breaches Section 4.7;

(f)            by either Seller or Purchaser if the Nevada State Gaming Control Board or the Nevada Gaming Commission shall not have approved the transactions contemplated by this Agreement prior to the Closing Date;

(g)           by either Seller or Purchaser if the Closing has not otherwise occurred on or before the Closing Date;

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(h)           by Purchaser, if the costs associated with the remediation of any non-asbestos environmental matters set forth in the Phase II (defined below) are estimated in such Phase II to be:

(i)            greater than $2,000,000; or

(ii)           equal to or less than $2,000,000 and Seller does not agree to reduce the Purchase Price by the amount of such estimate.

For purposes of this Section 9.1(h), Purchaser shall obtain a Phase I Environmental Site Assessment & Limited Asbestos Survey (“Phase I”) of the Company Real Property, and, if recommended by the consultant who performed the Phase I, a Phase II Environmental Site Assessment & Limited Asbestos Survey (“Phase II”); or

(i)            by Purchaser, if (i) there are any material defects in the physical condition of the Company Real Property or the improvements located on the Company Real Property, except as set forth in Section 2.8 of the Seller Disclosure Schedule or except to the extent that any such defect or defects would not be reasonably expected to have a Material Adverse Effect on the Company Real Property; or (ii) there are any material defects in the physical condition or operability of the tangible personal assets and properties described in Section 2.9 that would impair the use of such assets and properties as and where such assets and properties are currently used in any material respects, except as set forth in Section 2.9 of the Seller Disclosure Schedule or except to the extent that any such defect or defects would not be reasonably expected to have a Material Adverse Effect on SGF or FSE. Purchaser may not terminate this Agreement pursuant to this Section 9.1(i) unless Purchaser notifies Seller in writing of its election to terminate this Agreement pursuant to Section 9.1(i) within 90 days after the date of this Agreement.

SECTION 9.2.  EFFECT OF TERMINATION.

(a)           If this Agreement is terminated by Seller or Purchaser by reason of Section 9.1(a), (b), (c), (f) or (g), provided that, with respect to a termination by reason of Section 9.1(g), the failure to close the transactions contemplated by this Agreement on or before the Closing Date was not the result of Seller’s failure to fulfill any closing condition under this Agreement, Seller may retain the Deposit as liquidated damages, which payment the Parties acknowledge shall be in full and complete satisfaction of any and all claims for damages and shall be the sole and exclusive remedy under this Agreement, except in the event of a fraudulent or willful breach of any representations, warranties, covenants or agreements by Purchaser, in which case Seller shall have all remedies available at law or in equity with respect thereto.

(b)           If this Agreement is terminated by Purchaser pursuant to Section 9.1(d) or (e), or by Seller or Purchaser pursuant to Section 9.1(g) as the result of Seller’s failure to fulfill any closing condition under this Agreement, Purchaser shall be entitled to receive a return of the Deposit plus an amount equal to $500,000, which payments the Parties acknowledge and agree shall be in full and complete satisfaction of any and all claims for damages and shall be the sole and exclusive remedy under this Agreement, except in the event of a fraudulent or willful breach of the representations, warranties, covenants or agreements contained herein by Seller, in which case Purchaser shall have all remedies available at law or in equity with respect thereto.

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(c)           If this Agreement is terminated by Seller other than pursuant to Section 9.1(a), (b), (c), (f), or (g), or Seller breaches Section 4.7, and prior to the nine (9) month anniversary of such termination or breach, whichever is applicable, Seller, SGF or FSE enters into any agreement with a Person other than the Purchaser relating to the liquidation, dissolution, recapitalization, merger, consolidation, or acquisition or purchase of all or part of SGF’s or FSE’s assets or properties, or any equity interest in SGF or FSE, or other similar transaction or business combination involving SGF or FSE or their assets or their respective businesses, Purchaser shall be entitled to receive, in addition to the return of the Deposit provided in Section 9.2(b), an amount equal to $5,000,000, which payments the Parties acknowledge and agree shall be in full and complete satisfaction of any and all claims for damages and shall be the sole and exclusive remedy under this Agreement, except in the event of a fraudulent or willful breach of the representations, warranties, covenants or agreements contained herein by Seller, in which case Purchaser shall have all remedies available at law or in equity with respect thereto.  Notwithstanding the foregoing, Purchaser may elect to pursue its right to specific enforcement as provided in Section 9.3 in lieu of liquidated damages under this Section 9.2(c).

(d)           If this Agreement is terminated by Purchaser pursuant to Section 9.1(h), Purchaser shall be entitled to receive a return of the Deposit plus $200,000, which payments the Parties acknowledge and agree shall be in full and complete satisfaction of any and all claims for damages and shall be the sole and exclusive remedy under this Agreement, except in the event of a fraudulent or willful breach of the representations, warranties, covenants or agreements contained herein by Seller, in which case Purchaser shall have all remedies available at Law or in equity with respect thereto.

(e)           If this Agreement is terminated by Purchaser pursuant to Section 9.1(i), Purchaser shall be entitled to receive a return of 50% of the Deposit, which payment the Parties acknowledge and agree shall be in full and complete satisfaction of any and all claims for damages and shall be the sole and exclusive remedy under this Agreement, except in the event of a fraudulent or willful breach of the representations, warranties, covenants or agreements contained herein by Seller, in which case Purchaser shall have all remedies available at law or in equity with respect thereto.

(f)            Notwithstanding any other provision of this Section 9.2, if this Agreement is terminated by Seller or Purchaser pursuant to Section 9.1(g) due to Seller’s failure to satisfy Section 8.3(e), Purchaser shall be entitled to receive a return of the Deposit, which payment the Parties acknowledge and agree shall be in full and complete satisfaction of any and all claims for damages and shall be the sole and exclusive remedy under this Agreement, except in the event of a fraudulent or willful breach of the representations, warranties, covenants or agreements contained herein by Seller, in which case Purchaser shall have all remedies available at Law or in equity with respect thereto.

SECTION 9.3.  SPECIFIC PERFORMANCE.  Purchaser will have the right to obtain specific performance of Seller’s obligations to close in the event Seller fails to close this Agreement in accordance with the provisions hereof and this Agreement has not been terminated pursuant to Section 9.1; provided, however, that Purchaser is not in material breach of this Agreement.  Purchaser must file and serve an action within ten (10) Business Days of the Closing Date or waive any right to seek specific performance.

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ARTICLE X

TAX MATTERS

SECTION 10.1.  Indemnification and Allocation of Liabilities.

(a)           Tax Indemnification.  Seller shall indemnify and hold harmless Purchaser, its successors, heirs and assigns, and Affiliates, stockholders, officers and directors, from and against, without duplication on an after-tax basis, all losses or liabilities incurred by it or them directly and indirectly with respect to, in connection with, or arising from:

(i)            any and all Taxes (or the non-payment thereof) of Seller and all members of its Affiliated Group, including SGF and FSE, for all Pre-Closing Tax Periods, and the portion of any Straddle Tax Period that ends on the Closing Date, as determined in Section 10.1(c);

(ii)           any and all Taxes (or the non-payment thereof) of any member of an affiliated, consolidated, combined, or unitary group of which either SGF or FSE (or any predecessor of any of the foregoing) is or was a member, including pursuant to Treas. Reg. Sec. 1.1502-6 or any analogous state, local or foreign Law or regulation, during any Pre-Closing Tax Periods, and the portion of any Straddle Tax Period that ends on the Closing Date as determined in Section 10.1(c);

(iii)          any breach of any representation, warranty, or covenant relating to or with respect to Taxes which includes but is not limited to the provisions set forth in Section 2.18 and this Article X;

(iv)          a reduction of Tax attributes of either SGF or FSE (as owned by Purchaser) as a result of any action or inaction involving the Seller or any Affiliates of Seller, other than as contemplated by Section 10.9 of this Agreement; and

(v)           any and all Taxes (or the non-payment thereof) of any Person (other than SGF or FSE) imposed on either SGF or FSE as a transferee or successor by contract or pursuant to any Law, rule or regulation, which Taxes relate to an event or transaction occurring on or before the Closing Date.

(b)           Procedure for Reimbursement.  Seller shall fully reimburse Purchaser for any Taxes of Purchaser or the SGF or FSE, which are the responsibility of Seller pursuant to this Section 10.1 pursuant to the provisions set forth in Section 10.05 (“Timing and Treatment of Payments”).

(c)           Straddle Tax Period.  For purposes of this Article X, whenever it is necessary to determine the amount of Taxes (or the non-payment thereof) of either SGF or FSE for a Straddle Tax Period, the determination of the Taxes for the portion of the Straddle Tax Period beginning prior to the Closing Date and ending on the Closing Date, and beginning the day after the Closing Date, shall be determined:

(i)            in the case of Taxes that are either (A) based upon or related to income or receipts, or (B) imposed in connection with any distribution, sale or other transfer or assignment

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of property, by assuming that SGF or FSE had a taxable year or period which ended at the close of the Closing Date and closing the books of SGF or FSE as of such date (and for such purpose the taxable period of any partnership, joint venture or other pass-through entity in which SGF or FSE holds a beneficial interest shall be deemed to terminate at such time), except that exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, shall be apportioned on a time basis; and

(ii)           in the case of Taxes not described in clause (i) that are imposed on a periodic basis and measured by the level of any item, shall be deemed to be the amount of such Taxes (including any minimum) for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction the numerator of which is the number of calendar days in the period determined in clause (1) above and the denominator of which is the number of calendar days in the entire Straddle Tax Period.  In the case of any Tax based upon or measured by capital (including net worth or long-term debt) or intangibles, any amount thereof required to be allocated under this subsection shall be computed by reference to the level of such items on the Closing Date.  All determinations necessary to effect the foregoing allocations shall be made in a manner consistent with prior practice of the Company.

(iii)          For the avoidance of doubt, any Taxes resulting from an election under Code Section 338(h)(10) shall be the responsibility of Seller.

(d)           Responsibility for Filing Tax Returns for Periods through the Closing Date.

(i)            Seller shall include the income of SGF or FSE (including any deferred items triggered into income by Treas. Reg. Sec. 1.1502-13 and any excess loss account taken into income under Treas. Reg. Sec. 1.1502-19) on Seller’s consolidated federal income Tax Returns for all periods through the Closing Date and pay any federal income Taxes attributable to such income.  For all taxable periods ending on or before the Closing Date, Seller shall cause SGF and FSE to join in Seller’s consolidated federal income tax return and, in jurisdictions requiring separate reporting from Seller, to file separate company state and local income Tax Returns.  All such Tax Returns shall be prepared and filed in a manner consistent with prior practice, except as required by a change in applicable Law.  Purchaser shall have the right to review and comment on any such Tax Returns prepared by Seller to the extent that such Tax Returns pertain to SGF or FSE.

(ii)           Purchaser shall cause each of SGF and FSE to furnish information to Seller as reasonably requested by Seller to allow Seller to satisfy its obligations under this Section 10.1 in accordance with past custom and practice.  SGF, FSE and Purchaser shall consult and reasonably cooperate with Seller as to any elections to be made on returns of SGF or FSE for periods ending on or before the Closing Date.

(iii)          Purchaser shall cause Seller, SGF and FSE to file income Tax Returns for all periods other than periods ending on or before the Closing Date.

(e)           Tax Cooperation and Exchange of Information.

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(i)            General.  Purchaser and Seller shall provide each other with such cooperation and information as either of them reasonably may request of the other (and Purchaser shall cause SGF and FSE to provide such cooperation and information) in filing any Tax Return, amended Tax Return, or claim for refund, determining a liability for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes or making representations to or furnishing information to parties subsequently desiring to purchase any part of the assets of SGF or FSE or the equity of either SGF or FSE.  Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with related work papers and documents relating to rulings or other determinations by Governmental Entities.  Purchaser and Seller shall make themselves (and their respective employees) reasonably available on a mutually convenient basis to provide explanations of any documents or information provided under this Section 10.1.

(ii)           Retention of Information.  Each of Purchaser and Seller shall retain all Tax Returns, work papers and all material records or other documents in its possession (or in the possession of its Affiliates) relating to Tax matters of SGF and FSE for any Straddle Tax Period and for all Pre-Closing Tax Periods until the later of (A) the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions or (B) six years following the due date (without extension) for such Tax Returns.  After such time, before Seller shall dispose of any such documents in its possession (or in the possession of its Affiliates), Purchaser shall be given an opportunity, after 90 days prior written notice, to remove and retain all or any part of such documents as Purchaser may select (at such other Party’s expense).  Any information obtained under this Section 10.1 shall be kept confidential, except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting an audit or other proceeding.

(iii)          Cooperation.  Purchaser and Seller further agree, upon request, to use commercially reasonable efforts to obtain any certificate or other document from any Governmental Entity or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).  Seller agrees, upon request, to assist Purchaser, SGF and FSE in obtaining the lowest available unemployment Tax rate, including any assistance that would allow Purchaser, SGF or FSE to take advantage of SGF and FSE’s historical operations prior to the Closing.

(iv)          Filings.  Purchaser and Seller agree, upon request, to provide the other Party with all information that either Party may be required to report pursuant to Code Section 6043, Code Section 6043A, or any other Section of the Code and all Treasury Regulations promulgated thereunder.

SECTION 10.2.  338(H)(10) ELECTION.

(a)           Election.  At Purchaser’s option, Purchaser and Seller shall join in making an election under Code Section 338(h)(10) (and any corresponding election under state, local, or foreign tax law) (collectively a “§338(h)(10) Election”) with respect to the purchase and sale of the stock of SGF and FSE hereunder.  Seller will pay any Tax attributable to the making of the §338(h)(10) Election and will indemnify Purchaser and SGF and FSE against any Adverse

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Consequences arising out of any failure to pay such Tax.  If Purchaser does not cause Purchaser and Seller to join in making a §338(h)(10) Election as contemplated by the first sentence of this Section, then, upon Purchaser’s request, Seller shall provide Purchaser, within thirty (30) days of Purchaser’s request, the Tax basis in each asset of SGF and FSE as of the Closing, and the Tax basis in each asset owned by any subsidiary of such corporation as of the Closing.

(b)           Form 8023.  Within ninety (90) days following the Closing Date, Purchaser shall prepare Form 8023 and submit the form to Seller for its approval, which shall not be unreasonably withheld.  If Purchaser has failed to provide Form 8023 to Seller within ninety (90) days of the Closing Date, then Seller may (but shall have no obligation to) prepare such form and submit such form to Purchaser for its approval, which approval shall not be unreasonably withheld.

(c)           Allocation of Purchase Price.  The Parties agree that the Purchase Price and the liabilities of SGF and FSE (plus other relevant items) will be allocated to the assets of SGF and FSE for all purposes (including Tax and financial accounting purposes) as shown on the allocation schedule (the “Allocation Schedule”) prepared by Purchaser and delivered to Seller no later than three (3) months after Closing in a manner consistent with Code Sections 338 and 1060 and the regulations thereunder, subject to Seller’s approval, which approval shall not be unreasonably withheld.  At any time after the execution of this Agreement, Purchaser may submit to Seller one or more proposed Allocation Schedules.  Within twenty (20) days after Seller’s receipt of any proposed Allocation Schedule, Seller shall advise Purchaser, in writing, of Seller’s objection, if any, to any particular allocation, and the reason related thereto.  If Seller and Purchaser cannot agree on the proper allocation, then such allocation shall be made by an independent accounting firm selected by Purchaser.  Purchaser, SGF and FSE and Seller shall timely file all Tax Returns (including Form 8883, amended returns and claims for refund) and information reports in a manner consistent with such allocation.

(d)           Tax Indemnification.  Without limiting the obligations of Seller pursuant to this Article X, if a §338(h)(10) Election is made with respect to the acquisition of SGF and FSE, then Purchaser and Seller acknowledge that if Purchaser had purchased the assets of SGF and FSE directly, rather than their outstanding stock, and Purchaser had neither assumed nor purchased such assets “subject to” any Tax obligations of SGF and FSE or Seller, then Purchaser would not have any obligation for the Taxes of SGF and FSE or Seller for the period ending as of Closing.  Purchaser and Seller intend and agree that the Tax indemnification obligations of Seller set forth in this Article X shall be applied to indemnify and hold Purchaser and SGF and FSE harmless, at a minimum, from the same Taxes that would have remained the obligation of Seller, if the Parties had effected the transactions contemplated by this Agreement as a direct purchase of assets by Purchaser from SGF and FSE and SGF and FSE had been liquidated, with Seller succeeding to SGF’s and FSE’s pre-Closing Tax Liabilities, including the Tax Liabilities arising from such sale and liquidation. Provided that Seller cooperates with Purchaser’s request to make a §338(h)(10) Election, Seller shall have no obligation to indemnify Purchaser from any loss of tax benefits arising from an inability to make an effective §338(h)(10) Election unless such inability is due to (i) Seller’s breach of Section 2.18(d)(ii) or (ii) Seller’s failure to satisfy any covenant set forth in this Article X.

SECTION 10.3.  RETURNS AND PAYMENTS.

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(a)           After the Closing, Seller shall prepare and file or otherwise furnish in proper form, in a manner consistent with past practice of SGF and FSE (subject to any departure required to comply with applicable Law) to the appropriate Governmental Entity at its own cost (or cause to be prepared and filed or so furnished) in a timely manner all income Tax Returns relating to SGF and FSE with respect to any Pre-Closing Tax Period.  Purchaser shall cause to be prepared and filed all (i) Tax Returns, other than income Tax Returns, with respect to any Pre-Closing Period that are due after the Closing Date, and (ii) Tax Returns relating to SGF and FSE for any Straddle Tax Periods and Post-Closing Tax Periods.  With respect to any such income Tax Return relating to SGF and FSE that include any Pre-Closing Tax Period, Seller shall provide Purchaser and its authorized representatives with a copy of such completed Tax Return (or portions thereof relating to SGF and FSE), together with appropriate supporting information and schedules, as soon as reasonably practicable prior to the due date (including any extension hereof) for the filing of such Tax Return, and Purchaser and its authorized representatives shall have the right to review, comment, and consent (which consent may not be unreasonably withheld) on such Tax Return (or portion thereof) and statement prior to the filing of such Tax Return.

(b)           Seller shall pay all Taxes with respect to SGF and FSE due and payable for any Pre-Closing Tax Period and the portion of any Straddle Tax Period which includes the period that ends on the Closing Date, and Purchaser shall pay or cause to be paid all Taxes due and payable for any Post-Closing Tax Period.

SECTION 10.4.  TRANSFER TAXES.  Seller will pay, and will indemnify and hold Purchaser harmless against, any real property transfer or gains tax, stamp tax, stock transfer tax, sales, use, documentary, excise taxes and fees or other similar Tax imposed on Purchaser or SGF or FSE as a result of the transactions contemplated by this Agreement including any penalties, interest, and additions (collectively, the “Transfer Taxes”).  Seller, after the review and consent by Purchaser, shall file such applications and documents as shall permit any such Transfer Taxes to be assessed and paid on or prior to the Closing Date in accordance with any available pre-sale filing procedure.

SECTION 10.5.  TIMING AND TREATMENT OF PAYMENTS.

(a)           Payment by Seller of any amounts due under this Article X shall be made at the earlier of (i) at least three (3) Business Days before the due date of the applicable Tax Return required to be filed by Purchaser for which Seller is responsible under this Article X, (ii) within three (3) Business Days following the earlier of the establishment of Seller’s responsibility that an indemnity amount is payable to Purchaser pursuant to this Article X, or following the payment of Taxes by the Purchaser or SGF or FSE.

(b)           Notwithstanding subsection (a) above, if liability under this Article X related to costs or expenses other than Taxes, payment by Seller of any amounts due under this Article X shall be made within five (5) Business Days after the date Purchaser notifies Seller that Seller has a liability for a determinable amount under this Article X and is provided with calculations or other materials supporting such liability.

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(c)           Purchaser and Seller agree that any payments made under this Article X will be treated by the Parties on their Tax Returns as an adjustment to the Purchase Price.

SECTION 10.6.  SURVIVAL.  Notwithstanding any provisions of this Agreement to the contrary, this Article X shall survive and shall remain in effect until one (1) month after the expiration of all applicable statute of limitations and shall survive any corporate reorganization, dissolution or liquidation of Seller, Purchaser or SGF or FSE.  Notwithstanding anything to the contrary in this Agreement, including the limitations set forth in Article V of this Agreement, the Tax indemnification obligations of Seller are not subject to any threshold requirement relating to the amount to be reimbursed or any ceiling on the maximum amount subject to indemnification, and Purchaser shall not be treated as having assumed the risk of any Taxes by reason of the closing of the transaction or by reason of any knowledge that Purchaser had or should have had about Seller’s or either SGF’s and FSE’s Tax obligations, notwithstanding any other provision of this Agreement to the contrary.

SECTION 10.7.  OTHER TAX MATTERS.

(a)           Termination of Tax Sharing Agreements.  If applicable, any and all Tax sharing agreements or similar agreements with respect to or involving SGF or FSE shall be terminated as of the Closing Date and, after the Closing Date, none of Purchaser, SGF, or FSE shall be bound by such agreements or have any liability thereunder.

(b)           Prior Consents Required.  Except as otherwise required by Law, or with the consent of Purchaser which shall not be unreasonably withheld, delayed or conditioned, Seller agrees that neither it nor its Affiliates (including SGF and FSE prior to the Closing as well as any member of Seller’s Affiliated Group or its combined, consolidated or unitary group) shall file or amend any Tax Return, file any claim for refund, change any method of Tax accounting, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to either SGF or FSE, enter into any closing agreement, settle or compromise any federal, state, local or foreign Tax liability or claim regarding either SGF or FSE, or make or change any Tax election with respect to any Tax period, in each case that may result in any increased Tax liability of, or loss of Tax benefits by, the Purchaser or either SGF or FSE.  Nothing in this Article X shall prohibit Purchaser (or either SGF or FSE, if directed by Purchaser) to amend, refile, or otherwise modify (or grant an extension of any statute of limitations with respect to) any Tax Return relating in whole or in part to either SGF or FSE with respect to any taxable year or period ending on or before the Closing Date or with respect to any Straddle Tax Period provided such amendment, refiling, modification, or extension will not have an adverse affect on the liability of the Seller or either SGF or FSE for which Seller is liable pursuant to this Agreement.

SECTION 10.8.  AUDITS.  Seller shall allow Purchaser and SGF and FSE to participate in any audit or assessment of Seller’s consolidated federal income Tax Returns to the extent that such returns relate to Purchaser or either SGF or FSE.  Seller shall not settle any such audit in a manner that would adversely affect Purchaser or either SGF or FSE after the Closing Date without the prior written consent of Purchaser, which consent shall not be unreasonably withheld.   Seller shall promptly inform Purchaser in writing of the occurrence of any event or circumstance in any such Tax audit or contested Tax proceeding, and shall provide Purchaser

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and either SGF or FSE with a copy of all correspondence received in such Tax audit or Tax proceeding.

SECTION 10.9.  UTILIZATION OF LOSSES BY SELLER.  Notwithstanding any provision in this Agreement to the contrary, Seller shall be entitled to use the net operating losses incurred by SGF and FSE prior to the Closing Date to reduce the consolidated taxable income of the consolidated group of which Seller is the common parent.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1.  GOVERNING LAW AND CONSENT TO JURISDICTION.  The Laws of the State of Nevada (irrespective of its choice of law principles) shall govern all issues concerning the validity of this Agreement, the construction of its terms and the interpretation and enforcement of the right and duties of the Parties.  Each Party irrevocably submits to the exclusive jurisdiction of the courts of the State of Nevada and the Federal courts of the United States of America located in Nevada (and the Nevada state and Federal courts having jurisdiction over appeals therefrom) in respect of the transaction contemplated by this Agreement, the other agreements and documents referred to herein and the transactions contemplated by this Agreement and such other documents and agreements.

SECTION 11.2.  AMENDMENT AND MODIFICATION.  Subject to applicable Law, this Agreement may be amended, modified and supplemented in any and all respects only by written agreement duly executed and delivered by all of the Parties.

SECTION 11.3.  NOTICES.  All notices, consents and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand or by Federal Express or a similar overnight courier; (b) five (5) days after being deposited in any United States Post Office enclosed in a postage prepaid, registered or certified envelope addressed; or (c) when successfully transmitted by telecopier (with a confirming copy of such communication to be sent as provided in clauses (a) or (b) above), to the receiving Party at the address or telecopier number set forth below (or at such other address or telecopier number for a Party as shall be specified by like notice); provided however, that any notice of change of address or telecopier number shall be effective only upon receipt:

(a)           If to Seller, to:

MTR Gaming Group, Inc.

State Route 2 South

P.O. Box 356

Chester, WV 26034

Telephone:  (304) 387-8300

Facsimile:  (304) 387-8304

Attn:  Edson R. Arneault, President

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With a copy (which shall not constitute notice) to:

Ruben & Aronson, LLP

4800 Montgomery Lane

Suite 150

Bethesda, MD 20814

Telephone:  (301) 951-9696

Facsimile:  (301) 951-9636

Email: ***@***

Attn:  Robert L. Ruben, Esq.

(b)           If to Purchaser, to:

TLC Casino Enterprises, Inc.

c/o Four Queens Hotel & Casino

202 Fremont Street

Las Vegas, NV 89101

Telephone:  (702) 387-5155

Facsimile:  (702) 387-5103

Attn: Terry Caudill

With a copy (which shall not constitute notice) to:

Snell & Wilmer L.L.P.

400 E. Van Buren

Phoenix, AZ 85004

Telephone:  (602) 382 - 6554

Facsimile:  (602) 382 — 6070

Attn:  William A. Kastin, Esq.

SECTION 11.4.  COUNTERPARTS.  This Agreement may be executed in multiple counterparts, all of which shall together be considered one and the same agreement.

SECTION 11.5.  INCORPORATION BY REFERENCE.  The Preamble and Recitals to this Agreement and the Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

SECTION 11.6.  ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES.  This Agreement (including the documents incorporated herein by reference in Section 11.5 hereof and other documents and instruments referred to herein) (a) constitutes the entire agreement and supersedes any prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof and (b) except as expressly provided herein, are not intended to confer upon any Person other than the Parties herein any rights or remedies hereunder.

SECTION 11.7.  SERVICE OF PROCESS.  Each Party irrevocably consents to the service of process outside the territorial jurisdiction of the courts referred to in Section 11.1 hereof in any such action or proceeding by mailing copies thereof by registered United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 11.3 hereof.  However, the foregoing shall not limit the right of a Party to effect service of process on the other Party by any other legally available method.

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SECTION 11.8.  SPECIFIC PERFORMANCE.  Seller acknowledges and agrees that, in the event of any breach of this Agreement by Seller, Purchaser would be irreparably and immediately harmed and could not be made whole by monetary damages.  It is accordingly agreed that Purchaser will be entitled to compel specific performance of this Agreement in any action instituted in accordance with Section 11.1.

SECTION 11.9.  MEDIATION; ARBITRATION.

(a)           All claims, disputes and other matters in controversy (herein called a “dispute”) arising directly or indirectly out of or related to this Agreement, or the breach thereof, whether contractual or noncontractual, other than as specifically provided elsewhere in this Agreement, or and whether during the term or after the termination of this Agreement, shall be resolved exclusively according to the procedures set forth in this Section 11.9.

(b)           Neither Party shall commence an arbitration proceeding pursuant to the provisions of Section 11.9(c) unless such Party shall first give a written notice (a “Dispute Notice”) to the other Party setting forth the nature of the dispute.  The Parties shall attempt in good faith to resolve the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association “AAA” in effect on the date of the Dispute Notice.  If the Parties cannot agree on the selection of a mediator within twenty (20) days after delivery of the Dispute Notice, the mediator will be selected by the AAA.  If the dispute has not been resolved by mediation as provided above within sixty (60) days after delivery of the Dispute Notice, then the dispute shall be determined by arbitration in accordance with the provisions of Section 11.9(c) hereof.

(c)           Any dispute that is not settled through mediation as provided in Section 11.9(b) shall be resolved by arbitration in Las Vegas, Nevada, governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq, and administered by the AAA under its Commercial Arbitration Rules in effect on the date of the Dispute Notice as modified by the provisions of this Section 11.9(c).  If the claim in dispute does not exceed $1,000,000, there shall be a single arbitrator appointed according to this Section 11.9(c).  If the claim in dispute equals or exceeds $1,000,000, the arbitration panel shall consist of three (3) members one of whom shall be selected by each party and the third, who shall serve as chairman, shall be selected according to the same process used in selecting a single arbitrator in this Section 11.9(c).  Persons eligible to be selected as an arbitrator shall be limited to (i) retired judges of the Federal District Court or (ii) lawyers with excellent academic and professional credentials who are or have been a partner in a highly respected law firm for at least 10 years specializing in either general commercial litigation or general corporate and commercial matters and who have had both training and experience as an arbitrator.  Each Party shall be entitled to strike on a peremptory basis, for any reason or no reason, any or all of the names of potential arbitrators on the list submitted to the Parties by the AAA as being qualified in accordance with the criteria set forth herein.  If the Parties cannot agree on a mutually acceptable single arbitrator from the one or more lists submitted by the AAA, the AAA shall designate three persons who, in its opinion, meet the criteria set forth herein, which designees may not include persons named on any list previously submitted by the AAA.  Each Party shall be entitled to strike one of such three designees on a peremptory basis, indicating its order of preference with respect to the remaining designees, and the selection of the arbitrator shall be made from among such designee(s) which have not been so stricken by either Party in accordance with their indicated order of mutual preference to the extent possible.  The

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arbitrator shall base the award on applicable Law and judicial precedent and, unless both Parties agree otherwise, shall include in such award the findings of fact and conclusions of Law upon which the award is based.  Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

(d)           Notwithstanding the foregoing, if the dispute is determined by a single arbitrator, or in the event the Parties agree to a panel of three arbitrators to be selected in accordance with the applicable AAA rules, and if the dispute is determined by less than the unanimous decision of the three arbitrators, then upon the application by either Party to a court for an order confirming, modifying or vacating the award, the court shall have the power to review whether, as a matter of Law based on the findings of fact determined by the arbitrator, the award should be confirmed, modified or vacated in order to correct any errors of Law made by the arbitrator.  In order to effectuate such judicial review limited to issues of Law, the Parties agree (and shall stipulate to the court) that the findings of fact made by the arbitrator shall be final and binding on the Parties and shall serve as the facts to be submitted to and relied on by the court in determining the extent to which the award should be confirmed, modified or vacated.

(e)           If either Party fails to proceed with mediation or arbitration as provided herein or unsuccessfully seeks to stay such mediation or arbitration, or fails to comply with any arbitration award, or is unsuccessful in vacating or modifying the award pursuant to a petition or application for judicial review, the other Party shall be entitled to be awarded costs, including reasonable attorneys’ fees, paid or incurred by such other Party in successfully compelling such arbitration or defending against the attempt to stay, vacate or modify such arbitration award and/or successfully defending or enforcing the award.

(f)            All applicable statutes of limitations and defenses based upon the passage of time shall be tolled while the procedures specified in this Section 11.9 are pending.  The Parties will take such action, if any, required to effectuate such tolling.

SECTION 11.10.  ASSIGNMENT.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either Party (whether by operation of Law or otherwise) without the prior written consent of the other Party; provided, however, that Purchaser may assign its rights under this Agreement without the consent of the Seller if such assignment is made prior to the Closing Date to an Affiliate of Purchaser and Purchaser remains bound by its obligations under this Agreement.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective permitted heirs, successors and assigns.

SECTION 11.11.  WAIVERS.  Except as otherwise provided in this Agreement, any failure of either Party to comply with any obligation, covenant, agreement or condition herein may be waived by the Party or Parties entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

SECTION 11.12.  ATTORNEY FEES.  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

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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.

SECTION 11.13.  NO TRIAL BY JURY. Each Party acknowledges and agrees that any controversy that 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.  Each Party certifies and acknowledges that (a) no representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce either of such waivers, (b) it understands and has considered the implications of such waivers, (c) it makes such waivers voluntarily, and (d) it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11.13.

[Remainder of the Page Blank]

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed with legal and binding effect by their respective authorized officers, in their individual capacity, as of the date first written above.

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EXHIBIT A

GLOSSARY OF DEFINED TERMS

“AAA” is defined in Section 11.9(b).

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees including court costs and reasonable attorneys’ fees and expenses.

“Affiliate” means any Person directly or indirectly controlling, controlled by, or under common control with another Person. “Control,” “controlled” and “controlling” means the power to direct or cause the direction of the management and policies of a Person and shall be deemed to exist if any Person directly or indirectly owns, controls, or holds the power to vote  [25%] or more of the voting securities of such other Person.

“Affiliated Group” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local or foreign law of which either Company has been a member.

“Agreement” is defined in the Recitals.

“Allocation Schedule” is defined in Section 10.2(c).

“Auditor” is defined in Section 1.2(d).

“Balance Sheet Date” means March 31, 2007.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in Las Vegas, Nevada are authorized or required by law to close.

“Closing Date” means a date that is on or prior to six months following the execution and delivery of this Agreement, which date may be extended by Purchaser for up to two additional periods of three months each, provided Purchaser has complied with all of its obligations under this Agreement but has not been successful, despite its best efforts, to obtain the approvals required by Section 8.1(b) and Section 8.2(i) hereof.

“Closing” is defined in Section 1.4.

“Code” means the Internal Revenue Code of 1986, as amended, or any corresponding provision of any succeeding law.

“Company Benefit Plan is defined in Section 2.14(a).

“Company Leased Property” means all real property on which any casino operations, casino support operations, office or administrative operations are conducted or that are otherwise material to the operation of SGF’s or FSE’s business and leased or operated by SGF or FSE.

“Company Owned Property” means all real property owned or used by SGF and FSE.

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“Company Pension Plans” is defined in Section 2.14(a).

“Company Permit” or “Company Permits” means all permits, registrations, findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and approvals of all Governmental Entities (including without limitation all authorizations under any applicable Gaming Laws), necessary to conduct the business and operations of SGF and FSE as currently conducted and as proposed to be conducted, each of which is in full force and effect in all material respects.

“Company Real Property” means all Company Owned Property and Company Leased Property.

“Company Welfare Plans” is defined in Section 2.14(a).

“Contract” means any agreement, contract, lease, power of attorney, note, loan, evidence of indebtedness, purchase order, letter of credit, settlement agreement, franchise agreement, undertaking, covenant not to compete, employment agreement, license, instrument, obligation, commitment, understanding, policy, purchase and sales order, quotation and other executory commitment to which any Person is a party or to which any of the assets of such Person are subject, whether oral or written, express or implied.

“Credit Agreement” means that certain Fifth Amended and Restated Credit Agreement dated as of September 22, 2006, as amended, by and between Seller and its subsidiaries, including SGF, and Wells Fargo National Association.

“Current Assets” means, subject to Section 1.2(c), with respect to the financial information of SGF, the aggregate of the following assets to the extent that such assets are classified as current under GAAP and are acquired by Purchaser pursuant to the terms of this Agreement:  (i) cash plus cash equivalents; (ii) marketable securities; (iii) accounts receivable generated in the ordinary course of business, less a reasonable reserve for doubtful accounts consistent with past practices; (iv) inventories held for use in the ordinary course of business (excluding any inventories that are obsolete or otherwise unusable in the business); (v) prepaid expenses; and (vi) all other assets of any kind classified as current under GAAP.

“Current Liabilities” means, subject to Section 1.2(c), with respect to the financial information of SGF, the aggregate of the following liabilities (without duplication) to the extent that such liabilities are assumed by Purchaser in accordance with the terms of this Agreement:  (a) all accounts payable; (b) all accrued liabilities of any kind shown on a balance sheet prepared in accordance with GAAP, including but not limited to contingent obligations, accrued vacation pay, accrued employee bonuses, litigation reserves, liabilities for outstanding gaming chips and accrued payroll and related liabilities and accrued gaming tax for the current fiscal year; and (c) all other liabilities of any kind classified as current under GAAP.

“Deposit” means Five Hundred Thousand Dollars ($500,000) paid to Seller upon the execution and delivery of this Agreement as an inducement to enter into this Agreement, and any amounts added pursuant to Section 1.4(b).

“Dispute” is defined in Section 11.9(a).

“Dispute Notice” is defined in Section 11.9(b).

“ERISA Affiliate” is defined in Section 2.14(a).

“ERISA” is defined in Section 2.14(a).

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“Final Closing Balance Sheet” means a final closing balance sheet for SGF as of the Closing Date audited by Seller’s independent auditors and prepared in accordance with GAAP consistent with the accounting principles used in the preparation of Seller’s financial statements dated as of December 31, 2006.

“Financial Statements” is defined in Section 2.5.

“FSE Securities” is defined in Section 2.2(b).

“FSE” means Speakeasy Fremont Street Experience Operating Company, a Nevada corporation.

“GAAP” means generally accepted accounting principles.

“Gaming Authority” means any Governmental Entity with regulatory control or jurisdiction over liquor operations or the conduct of lawful gaming or gambling, including, without limitation, the Nevada State Gaming Control Board, the Nevada Gaming Commission and the City of Las Vegas, Nevada.

“Gaming Law” means any federal, state, local or foreign statute, ordinance, rule, regulation, permit, consent, registration, finding of suitability, approval, license, judgment, order, decree, injunction or other authorization, including any condition or limitation placed thereon and including any liquor laws, governing or relating to the current or contemplated casino and gaming activities and operations of the Property, including without limitation, the provisions of the Municipal Code of the City of Las Vegas, Nevada concerning liquor and gaming, the Nevada Gaming Control Act and the regulations promulgated thereunder by the Nevada Gaming Commission, in each case as amended from time to time.

“Governmental Entity” means any court or tribunal or administrative, legislative, governmental or regulatory body, agency or authority, including any Gaming Authority as well as the Internal Revenue Service or any taxing authority (whether domestic or foreign), including without limitation, any state, local or foreign government or any subdivision or taxing agency thereof (including a United States possession).

“Harrah’s Claims” is defined in Section 4.4.

“Historical Financial Statements” is defined in Section 2.5.

“House Funds” is defined in Section 7.2.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Indemnifying Party” is defined in Section 5.4.

“Indemnitee” is defined in Section 5.4.

“Insurance Policies” means all fire and casualty, general liability, business interruption, product liability, and sprinkler and water damage insurance policies, with extended coverage, normal and customary for the business and operations conducted by SGF and FSE.

“Intellectual Property” is defined in Section 2.10.

“Interim Financial Statements” is defined in Section 2.5.

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“knowledge” means, when used in the phrase “to the knowledge of Seller” or “to Seller’s knowledge” and words of similar import, the actual knowledge of all principal officers and managers involved in the operation of the Property, after due inquiry.

“Law” means any foreign or domestic law, statute, code, ordinance, rule, regulation, order, judgment, writ, stipulation, award, injunction, decree or arbitration award, policies, guidance, court decision, rule of common law or finding.

“Lease Documents” means true, correct and complete copies of the documents under which the Company Leased Property is leased.

“Lease Guarantees” is defined in Section 2.8(m)

“Loss” and “Losses” is defined in Section 5.1(a).

“March Balance Sheets” means the unaudited balance sheets of SGF and FSE as of March 31, 2007.

“Material Adverse Effect” means any material adverse change in the business, financial condition, prospects or operations of a Person (as hereinafter defined), taken as a whole; provided, however, that any adverse effect on a Person resulting from the execution of this Agreement, the announcement of this Agreement and the transactions contemplated hereby shall be excluded from the determination of Material Adverse Change.

“Material Contract” or “Material Contracts” is defined in Section 2.11(a).

“Multiemployer Plan” is defined in Section 2.14(c).

“National Priorities” is defined in Section 2.13(f).

“Organizational Documents” means true and correct copies of the Certificate of Incorporation and Bylaws of each of SGF and FSE.

“Party” or “Parties” is defined in the Recitals to this Agreement.

“Person” means a natural person or any partnership, limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative, capacity or any other entity.

“Post-Closing Tax Period” means a taxable period that commences after the Closing Date.

“Pre-Closing Period” means from the date of execution of this Agreement until the Closing.

“Pre-Closing Tax Period” means a taxable period that ends on or before the Closing Date.

“Project Capital Expenditures” is defined in Section 4.5.

“Property” means the casino facility known as Binion’s Gambling Hall and Hotel located in Las Vegas, Nevada.

“Proprietary Information” is defined in Section 4.2.

“Purchaser” means TLC Casino Enterprises, Inc., a Nevada corporation.

“Purchase Price” is defined in Section 1.1.

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“Purchaser Disclosure Schedule” means the disclosure schedule delivered by Purchaser to Seller prior to the execution of this Agreement, a copy of which is attached hereto as Exhibit C.

“Purchaser Permits” is defined in Section 3.5.

“Seller Board” means the Board of Directors of Seller.

“Seller Disclosure Schedule” means the disclosure schedule delivered by Seller to Purchaser prior to the execution of this Agreement, a copy of which is attached hereto as Exhibit B.

“SGF Securities” is defined in Section 2.2(a).

“SGF” means Speakeasy Gaming of Fremont, Inc., a Nevada corporation.

“Shares” means 100% of the issued and outstanding shares of common stock of SGF, and 100% of the issued and outstanding shares of common stock of FSE.

“Straddle Tax Period” means a taxable period that includes but does not end on the Closing Date.

“Survey” means as defined in Section 2.8(b).

“Tax” or “Taxes” means any (i) federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, gaming, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or withholding, or other tax, charge, levy, assessment, or fee of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalties, additions to tax or additional amounts in respect of the foregoing; (ii) liability for the payment of any amounts of the type described in clause (i) arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any Tax Return relating thereto); and (iii) liability for the payment of any amounts of the type described in clause (i) as a result of any express or implied obligation, by contract or pursuant to Law, to indemnify or otherwise assume or succeed to the liability of any other person.

“Tax Return” means any returns, declarations, reports, bills, claims for refund, information returns (including where permitted or required, any consolidated, combined or unitary returns) or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or in connection with the administration of any statutes, laws, rules, regulations, orders or awards of any Governmental Entity relating to any Taxes.

“Title Policies” means as defined in Section 2.8(b).

“Transfer Taxes” is defined in Section 10.4.

“Transfer Time” is defined in Section 7.2.

“Treasury Regulations” or “Regulation” means the temporary and final regulations promulgated under the Code.

“VEBAs” is defined in Section 2.14(a).

“§338(h)(10) Election” is defined in Section 10.2(a).

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