8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________

Form 8-K

CURRENT REPORT

     PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) September 9, 2013 (September 3, 2013)

MGT Capital Investments, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-26886	13-4148725
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528

(Address of principal executive offices, including zip code)

(914) 630-7431

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 Entry into a Material Definitive Agreement

On September 3, 2013, MGT Capital Investments, Inc. (the “Company”) entered into aContribution and Sale Agreement (the “Contribution Agreement”) by and among the Company, Gioia Systems, LLC. (“Gioia”) and MGT Interactive, LLC (“MGT Interactive”) whereby MGT Interactive acquired certain assets from Gioia which was the inventor and owner of a proprietary method of card shuffling for the online poker market. Trademarked under the name Real Deal Poker, the technology uses patented shuffling machines, along with permutation re-sequencing, allowing for the creation of up to 16,000 decks per minute in real time. The acquisition includes seven (7) U.S. Patents and several Internet URL addresses, including www.RealDealPoker.com. The information contained in such website is not part of this Current Report on Form 8-K. Pursuant to the Contribution Agreement, Gioia contributed the assets to MGT Interactive in exchange for a 49% interest in MGT Interactive and MGT contributed $200,000 to MGT Interactive in exchange for a 51% interest in MGT Interactive. The $200,000 contributed by the Company shall be utilized as working capital, which shall be used to cover the direct and associated costs relating to the achievement of a certification from Gaming Laboratories International (“GLI”). The Company has the right to acquire an additional 14% ownership interest in MGT Interactive from Gioia in exchange for a purchase price of $300,000 after GLI certification is obtained. Gioia, in turn, will have the right to re-acquire the 14% interest for a period of three years at a purchase price of $500,000. Gioia shall have the right to certain royalty payments from the Gross Rake payments, and any licensing or royalty income received by MGT Interactive.

Simultaneously with the entry into the Contribution Agreement, the Company and Gioa entered into a Limited Liability Company Agreement which serves as the operating agreement for MGT Interactive.

On September 3, 2013, the Company also entered into a consulting agreement (the “Consulting Agreement”) with Gioia whereby Gioia will act as a consultant for the Company to provide services to the Company primary related to obtaining GLI Certification. The Consulting Agreement terminates on the earlier of January 31, 2014 or the date on which GLI Certification is obtained. In the event that GLI Certification is obtained prior to January 31, 2013, the Consulting Agreement shall be extended for an additional year. Pursuant to the Consulting Agreement, Gioia shall receive a monthly consulting fee of $10,000 of which $5,000 will be paid in cash per month and $5,000 will be deferred until GLI certification is obtained.

The Contribution Agreement, Consulting Agreement and Operating Agreement are attached to this Current Report as Exhibit 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference. The foregoing description of the Contribution Agreement, the Consulting Agreement and Operating Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibits.

The Contribution Agreement, Consulting Agreement and Operating Agreement have been included to provide investors and security holders with information regarding their terms. The agreements are not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Contribution Agreement, Consulting Agreement and Operating Agreement were made only for purposes of such agreements, may in some cases be made solely for the allocation of risk between the parties and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Contribution Agreement, the Consulting Agreement and Operating Agreement.

Item 2.01 Completion of Acquisition of Assets

On September 3, 2013, the Company through its newly formed subsidiary MGT Interactive, acquired certain assets belonging to Gioia. See Item 1.01 for a description of the transaction.

Item 8.01 Other Events.

On September 9, 2013, the Company issued a press release announcing that the U.S. Patent and Trademark Office (“USPTO”) had granted the Company’s majority owned subsidiary, MGT Gaming, Inc., U.S. Patent No. 8,500,554 directed to a gaming system in which a bonus game is played on an interactive display. The release also announced that the Company had filed an Amended Complaint with the U.S. District Court for the Southern District of Mississippi seeking to add allegations that defendants in its currently-pending patent infringement lawsuit infringe the new patent. The press release is attached to this Current Report as Exhibit 99.3.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:

Exhibit	Description
10.1	Contribution and Sale Agreement by and among MGT Capital Investments, Inc., MGT Interactive LLC and Gioia Systems, LLC.
10.2	Consulting Agreement by and between MGT Interactive LLC and Gioia Systems, LLC.
10.3	Limited Liability Company Agreement of MGT Interactive, LLC
99.1	Press Release dated September 4, 2013
99.2	Press Release dated September 9, 2013

SIGNATURES

                    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: September 9, 2013

MGT Capital Investments, Inc.
By:	/s/ Robert B. Ladd
Name:	Robert B. Ladd
Title:	President and Chief Executive Officer

EX-10.1

CONTRIBUTION AND SALE AGREEMENt

by and among

GIOIA SYSTEMS, LLC.

MGT CAPITAL INVESTMENTS, INC.

and

MGT INTERACTIVE, LLC

August 29, 2013

TABLE OF CONTENTS

		Page
1.	DEFINITIONS, Interpretation	1
	1.1  Definitions	1
	1.2  Interpretation	3
2	[Reserved]	3
3	CONTRIBUTION AND SALE	3
	3.1  Contribution of Patent Rights	3
	3.2  Issuance of Ownership Interest to Gioia	3
	3.3  Contribution of Cash	3
	3.4  Company Governance	4
	3.5  Certification	4
	3.6  Contingent Consideration	4
	3.7  Commercialization Expenses	4
	3.8  Claw Back	4
	3.9  Contingent Royalty Payments	5
4	CLOSING	5
	4.1  Closing	5
	4.2  Conditions to Closing	5
	4.3  Closing Deliverables and Actions	6
	4.4  Effect of Closing	7
5	REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY	6
	5.1  Formation; Authority	6
	5.2  Execution; Validity of Agreements; Due Authorization	6
	5.3  Consents and Approvals; No Violations	6
	5.4  Ownership	7
6	REPRESENTATIONS AND WARRANTIES REGARDING GIOIA AND THE PATENT RIGHTS	7
	6.1  Formation; Authority	7
	6.2  Execution; Validity of Agreement; Due Authorization	7
	6.3  Consents and Approvals; No Violations	7
	6.4  Title to Condition of Physical Assets	7
	6.5  Patent Rights	7
	6.6  Complementary Assets	9

	6.7  Litigation	9
	6.8  Bankruptcy	9
	6.9  Consents and Approvals	9
	6.10  Broker’s Fee	9
	6.11  Material Disclosure; No Omission	9
7	REPRESENTATIONS AND WARRANTIES OF MTG	9
	7.1  Organization	9
	7.2  No Conflicts	9
	7.3  Due Authorization and Binding Effect	9
8	SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION	10
	8.1  Survival of Representations, Warranties and Covenants	10
	8.2  Indemnification Obligations of Gioia	10
	8.3  Notification of Claims	10
	8.4  Investigation	10
	8.5  Third-Party Claims	10
9	MISCELANEOUS	11
	9.1  Notices	11
	9.2  Entire Agreement	11
	9.3  Further Assurances	11
	9.4  Governing Law; Consent to Jurisdiction	12
	9.5  Binding Effect	12
	9.6  Waivers and Amendments	12
	9.7  Recitals, Exhibits and Schedules	12
	9.8  Headings	12
	9.9  Severability	12
	9.10  Specific Performance	12
	9.11  Fees and Expenses	13
	9.12  Legal Representations of the Parties	13
	9.13  Payment of Transfer Costs and Expenses	13
	9.14  Public Announcement	13
	9.15  Confidentiality	13
	9.16  No Third Party Beneficiaries	13
	9.17  Counterparts; Signatures	13
	EXHIBITS:

A.	ASSETS
B.	PATENTS
C.	PATENT ASSIGNMENT
D.	SCHEDULES

CONTRIBUTION AND SALE AGREEMENT

CONTRIBUTION AND SALEAGREEMENT (this “Agreement”) is dated August 26, 2013, by and among Gioia Systems, LLC, a limited liability company formed under the laws of the State of Colorado (“Gioia”), MGT Capital Investments, Inc., a Delaware corporation (“MGT”) and MGT Interactive, LLC, a Delaware limited liability company (the “Company”), and together with Gioia and MGT, the “Parties”).

RECITALS

WHEREAS, Gioia owns and controls certain physical and intellectual property assets as described and set forth on Exhibit A hereto (hereinafter referred to as the “Assets”) associated with Real Deal Poker, a system conceived and developed by Gioia to be used as a poker gaming platform to be used principally in online poker, including mobile applications (the “Game”), including the Patent Rights as described and set forth on Exhibit B hereto (hereinafter referred to as the “Patents”);

WHEREAS, Gioia is the owner of the Assets and is willing to contribute the Assets to the Company (the “Contribution”) in exchange for a 49% ownership interest in the Company of the Company determined as set forth herein; and,

WHEREAS, MGT will own a 51% ownership interest in the Company in exchange for a contribution to the equity capital of the Company by MGT of $200,000 (“Contribution of Cash”); upon the terms and subject to the conditions described in Section 3.3; and,

WHEREAS, MGT will have the option to purchase an additional 14% ownership interest in the Company from Gioia upon the terms and subject to the conditions described in Section 3.6

NOW, THEREFORE, in consideration of the promises, covenants and other agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

1.        DEFINITIONS; INTERPRETATION.

1.1       Definitions. For purposes of this Agreement, the following terms are defined as follows:

“Action” means any action (including declaratory judgment actions), suit, litigation, controversy, mediation, hearing, claim, charge, complaint, arbitration, reexamination, interference, reissue, investigation, pending inquiry, audit or other proceeding at law or in equity or of, in, by or before any Governmental Authority, mediator or arbitrator.

“Affiliate” means, with respect to any Person, a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person; and “control” (including the terms “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Applicable Law” means, with respect to any Person, any federal, state, local, municipal, foreign or other Law, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect, in each case as of the date of this Agreement, by any Governmental Authority that applies to such Person, its business and its properties.

“Consents” means the consents of any third parties or any Governmental Authorities necessary to transfer the Patent Rights to the Company or to otherwise consummate the transactions contemplated by this Agreement.

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“Governmental Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or similar governing entity.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Knowledge” or words of similar import (e.g. “knowledge,” “known,” or “aware”) with respect to any individual, shall mean the actual knowledge of such individual; as well as the knowledge that such individual should have after reasonable inquiry.

“Laws” means all laws, statutes, rules, regulations, ordinances and orders of any Governmental Authority.

“Lien” means any mortgage, lien, claim, pledge, charge, security interest, preemptive right, right of first refusal, option, judgment, restriction or encumbrance of any kind, or any exceptions, reservations, restrictions, rights-of-way, easements or other matters affecting title, whether arising by contract, law or otherwise.

“Material Adverse Effect” means any change, event, violation, inaccuracy, circumstance or effect that, individually or taken together with all other effects, is, or is reasonably likely to, be or become materially adverse in relation to the value, validity, effectiveness or enjoyment of the Assets including the Patent Rights.

“Patent Assignment” means the assignment by Gioia of all right, title and interest in the Patent Rights to the Company in the form attached hereto as Exhibit C.

“Patent Rights” means (a) the Patents; (b) any and all other rights, priorities and privileges of Gioia provided under United States, state, foreign or multinational law with respect to the Patents; (c) any and all rights to obtain renewals, extensions, re-issues, continuations, continuations-in-part, re-examinations, divisions, certificates of correction, maintenance fees or other legal protections or foreign equivalents thereof that may be obtained pertaining to the Patents; and (d) any and all past, present and future rights to sue at law or in equity, whether currently pending, filed or otherwise, for any infringement, misappropriation, impairment or other alleged unauthorized use or conduct in connection with the Patents occurring prior to or after the Closing Date, including the rights to pursue damages and injunctive relief and receive all past, present, and future proceeds, royalties or damages therefrom. 

“Patents” means those specific patents listed on Exhibit B and any registrations thereof, patents granted thereon or patents issuing therefrom (including all reissues, divisionals, continuations, continuations-in-part, extensions and re-examinations thereof), patents issuing from parent applications thereof, and any foreign counterparts or equivalents to any of the foregoing, in each case, regardless of whether or not any of the foregoing are pending applications or issued patents as of the Closing Date, the same to be held by and enjoyed by Company to the full end of the term for which said patents are granted, as fully and entirely as the same could have been held and enjoyed by Gioia if this transaction had not been made.

“Person” means and includes any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or any Governmental Authority or any department, agency or political subdivision thereof.

“Prosecution History Files” means all documents in Gioia’s custody that are in Gioia’s files or the files of its agent(s) that relate to the prosecution of patent applications relating to the Patents and that were filed with or received from any patent office

“Transaction Agreements” shall mean and include this Agreement and the Patent Assignment.

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The following terms are defined in the following sections of this Agreement:

Term	Section
Assets	Recital
Cash Payment	Recital
Closing	4.1
Closing Date	4.1
Company	Preamble
Contingent Consideration	3.6
Contingent Royalty Payment	3.9
Contribution	Recitals
Game	Recital
Gioia	Preamble
GLI	3.6
GLI Certification	3.6
Gross Rake	3.9
Indemnification Notice	9.3
Indemnifying Party	9.3
Indemnitees	9.2
Losses	9.2
Net Revenue	3.9
Operating Agreement	3.4
Patents	Recital
Parties	Preamble
Purchase Period	3.6
R&D Sponsor	6.5(e)
Securities Act	3.8(b)
Standards Body	6.5(e)
Third Party Claim	9.5

1.2       Interpretation. Unless the context otherwise requires, the terms defined in Section 1.1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The use of the neuter gender herein shall be deemed to include the masculine and feminine genders wherever necessary or appropriate, the use of the masculine gender herein shall be deemed to include the neuter and feminine gender wherever necessary or appropriate and the use of the feminine gender herein shall be deemed to include the neuter and masculine genders wherever necessary or appropriate.

2.       [RESERVED]

3.       CONTRIBUTION AND SALE.

3.1       Contribution of Assets and Patent Rights. Upon the terms and subject to the conditions set forth herein, effective as of the Closing, Gioia hereby irrevocably sells, assigns, grants, transfers and delivers to the Company and its successors and assigns, and the Company hereby accepts, free and clear of all Liens whatsoever, (i) all of the right, title and interest of Gioia in and to the Assets, including the Patent Rights and (ii) all causes of action and enforcement rights whether currently pending, filed or otherwise for the Patents, including all rights to pursue damages, injunctive relief and all other remedies for past, current and future infringement of the Patents. Concurrent with its execution of this Agreement, Gioia shall execute and deliver to the Company the Patent Assignment attached as Exhibit C.

3.2       Issuance of Ownership Interest to Gioia. At the Closing, in consideration for the Contribution described in Section 3.1 above, the Company shall issue to Gioia 49% ownership interest of the Company on the date hereof and subject to reduction or adjustment as set forth herein.

3.3       Contribution of Cash. Upon the terms and subject to the conditions set forth herein, MGT hereby irrevocably agrees to contribute the Cash Payment of $200,000 to the Company as working capital, which shall be used to cover the direct and associated costs of the Company and Company approved costs of Gioia relating to the achievement of GLI Certification (as defined below) in consideration for a 51% ownership interest of the Company.

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3.4        Company Governance. Simultaneously with the execution of this Agreement, the Parties will enter into a Limited Liability Company Operating Agreement (the “Operating Agreement”) that will govern the operations of the Company and enumerated the various rights and obligations of each party.

3.5       Certification. MGT and Gioia agree that they will use their best efforts to cause the Company and the Company agrees to use its best effort to prepare and, as soon as practicable, but in no event later than exhausting the Cash Payment, to achieve certification of the Game (“GLI Certification”) from Gaming Laboratories International (“GLI”), pursuant to Standard Series GLI-19, Version 2.0. The Company will pay for any and all costs and charges in connection with obtaining the GLI Certification from the working capital contributed to the Company by MGT pursuant to Section 3.3 hereof, but not to exceed $200,000. Gioia agrees that it shall work with and cooperate with MGT and the Company to obtain the GLI Certification and shall make available present and past employees. Gioia shall make available to MGT, the Company, and GLI any and all materials which may be used or useful by MGT, the Company, and/or GLI in obtaining the GLI Certification, including, but not limited to, files, software, and source codes related to the Game. Furthermore, Gioia will permit and cooperate with MGT and the Company to make such changes to the Game. The failure by Gioia to cooperate and provide the materials set forth above shall be deemed a material breach of this Agreement.

3.6       Contingent Consideration. MGT hereby agrees that prior to the 60^th calendar day after obtaining the GLI Certification as specified in Section 3.5 (the “Purchase Period”), MGT shall, upon 10 days’ written notice to Gioia (the “Purchase Notice”), purchase from Gioia and Gioia will sell to MGT 14% of the ownership interest of the Company for a purchase price of $300,000 (“Contingent Consideration”), payable in cash on the date specified by MGT in the above referenced notice, and Gioia agrees to sell to MGT 14% of the ownership interest of the Company, free of all liens and encumbrances and otherwise on such terms and at such time as set forth in this Agreement and the above referenced notice, to MGT. After giving effect to the acquisition by MGT of 14% of the ownership interest of the Company, Gioia shall hold 35% of the ownership interest of the Company and MGT shall hold 65% of the ownership interest of the Company.

Anything herein to the contrary notwithstanding, within 3 days of receipt of the Purchase Notice, Gioia may notify the Company in writing that it is opting out of the sale of the above referenced 14% of the ownership interest of the Company and is not accepting the Contingent Consideration. Further, if Gioia sells 14% of the ownership interest of the Company and accepts the Contingent Consideration, at any time during the period that is three years from the date of the Purchase Notice, Gioia shall have the right to notify the Company in writing that it is repurchasing all but not less than all 14% of the ownership interest of the Company for $500,000. Such $500,000 must be paid to the Company simultaneously with Gioia’ s notice that it intends to repurchase all 14% of the ownership interest of the Company.

3.7       Commercialization Expenses. During the two-year period following the receipt of GLI certification, the Company agrees to expend a minimum of $1,200,000 (One million two hundred thousand dollars) for operating costs (the “Commercialization Amount”) towards the commercialization of the Game, which commercialization can take whatever form or promotion or advertising the Company, in its sole discretion deems appropriate.

In the event that the Company shall fail to pay or make available the Commercialization Amount as set forth in the immediately preceding paragraph, then Gioia shall have the right to repurchase all but not less than all of the then current ownership of MGT in the Company within 90 days of the end of the two year period described above for the aggregate amount of MGT’s total investment in the Company.

3.8       Claw Back. In the event that the Company is denied or otherwise does not receive GLI Certification for the Game as specified in Section 3.5 before the expiration of the Purchase Period and upon written demand from MGT, Gioia shall, within 10 calendar days of such written demand from MGT, (i) repurchase the Assets in exchange for the return of the $200,000 contribution made by MGT; provided, however, if on such expiration date GLI shall be processing and/or reviewing the Game for certification, such repurchase period shall be extended 30 calendar days, or (ii) forfeit all the ownership interest of the Company held by Gioia as of the expiration of the Purchase Period to MGT. In such event, MGT shall own 100% of the ownership of the Company.

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3.9       Contingent Royalty Payments. Unless Gioia repurchases the Assets or forfeits its ownership interest of the Company upon either of the occurrences of Section 3.8 above, Gioia shall be entitled to receive from the Company the following royalty payments conditioned upon attainment of certain Net Revenue (as defined below) targets: (i) One percent (1.0%) of all Net Revenue exceeding $50 million; plus, (ii) One percent (1.0%) of all Net Revenue exceeding $100 million; plus, (iii) One percent (1.0%) of all Net Revenue exceeding $150 million; plus, (iv) One percent (1.0%) of all Net Revenue exceeding $200 million; plus, (v) One percent (1.0%) of all Net Revenue exceeding $250 million.

Net Revenue is defined as Gross Rake payments received by the Company, minus all payments made to partners and affiliates, and prior to operating costs of the Company. Net Revenue also includes license and royalty income paid to the Company for use of its technology. Gross Rake is defined as the total cash wagers of all players minus the total payouts to winning players.

4.       CLOSING.

4.1       Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place upon execution of this Agreement (the “Closing Date”). The Closing shall take place at the offices of Sichenzia Ross Friedman and Ference, 61 Broadway, New York, NY 10006 or at such other location as the Parties hereto agree.

4.2       Conditions to Closing.

(a)       Conditions to Obligations of Each Party to Effect the Contribution and Sale. The respective obligations of each Party hereto to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions:

(i)       No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the transactions contemplated herein shall be in effect, nor shall any action have been taken by any Governmental Authority seeking any of the foregoing, and no statute, rule, regulation or order shall have been enacted, entered, enforced or deemed applicable to the transactions contemplated herein, which makes the consummation of such transaction illegal.

(b)       Additional Conditions to Obligations of Gioia. The obligations of Gioia to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (it being understood that each such condition is solely for the benefit of Gioia and may be waived by Gioia in writing in its sole discretion without notice, liability or obligation to any Person):

(i)       The representations and warranties of MGT in this Agreement shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Closing Date (except for representations and warranties which address matters only as to a specified date, which representations and warranties shall be true and correct with respect to such specified date). MGT shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it at or prior to the Closing.

(ii)       Gioia shall have received each of the deliveries required to be made by MGT and the Company to Gioia pursuant to Section 4.3.

(c)       Additional Conditions to Obligations of MGT. The obligations of MGT to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (it being understood that each such condition is solely for the benefit of MGT and may be waived by MGT in writing in its sole discretion without notice, liability or obligation to any Person):

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(i)       The representations and warranties of Gioia in this Agreement shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Closing (except for representations and warranties which address matters only as to a specified date, which representations and warranties shall be true and correct with respect to such specified date). Gioia shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it at or prior to the Closing.

(ii)       MGT shall have received each of the deliveries required to be made by Gioia and the Company to MGT pursuant to Section 4.3.

4.3       Closing Deliverables and Actions. At the Closing:

(a)       Gioia shall execute and deliver to MGT and the Company a certificate dated as of the date hereof, executed on behalf of Gioia by its President, to the effect that (i) the representations and warranties of Gioia provided in Article 6 are true and correct;

(b)       Gioia shall execute and deliver to the Company the Patent Assignment and evidence that all required Consents, if any, have been obtained;

(c)       MGT shall deliver to Gioia a certificate of formation from the Secretary of State of the State of Delaware evidencing the legal existence of the Company;

(d)        Gioia shall deliver, cause to be delivered, or make available in a manner satisfactory to the Company, the Prosecution History Files to the Company.

4.4       Effect of Closing. All transactions contemplated herein and by the other Transaction Agreements to occur on and as of the Closing Date shall be deemed to have occurred simultaneously and to be effective as of the close of business on the Closing Date; provided, however, that none of such transactions shall be deemed to have occurred unless and until all of the conditions to closing described in Section 4.2 and each of the deliverables and actions referenced in Section 4.3 shall have been delivered and taken in accordance therewith.

5.       REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. The Company hereby represents and warrants to Gioia as follows:

5.1       Formation; Authority. The Company (i) is a duly formed and validly existing limited liability company in good standing under the laws of the State of Delaware and is duly qualified as a foreign corporation in any other jurisdiction in which it does business; and (ii) has all requisite power and authority to own, lease and operate the Patent Rights and to carry on its business as presently contemplated and to execute, deliver and perform its obligations under this Agreement and each other Transaction Agreement to which the Company is a party.

5.2       Execution; Validity of Agreement; Due Authorization. This Agreement and each other Transaction Agreement to which the Company is a party has been duly executed and delivered by the Company and this Agreement and each other Transaction Agreement to which the Company is a party constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms. The execution and delivery of this Agreement by the Company and the performance by the Company of its obligations hereunder have been duly authorized by all necessary corporate action on the part of the Company.

5.3       Consents and Approvals; No Violations. Except as set forth in Schedule 5.3, none of the execution, delivery or performance of this Agreement or any other Transaction Agreement by the Company, the consummation by the Company of the transactions contemplated hereby or thereby, or the compliance by the Company with any of the provisions hereof or thereof will (a) require (i) any filing with or notice to any Governmental Authority or other Person, (ii) the obtaining of any Permit or (iii) the expiration or termination of any statutory or regulatory waiting period, (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 require any payment) under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company is a party or by which the Company or any of the Company’s properties or assets is bound, (c) violate any Applicable Laws, or (d) result in the creation of any Lien upon any of the Patent Rights.

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5.4       Ownership. No equity or profits interests in the Company have been issued to any Person, other than the issuance of the ownership interest contemplated herein.

6.       REPRESENTATIONS AND WARRANTIES REGARDING GIOIA AND THE PATENT RIGHTS. Gioia hereby represents and warrants to the Company and MGT as follows, and the Company and MGT, in agreeing to consummate the transactions contemplated by this Agreement, have relied upon such representations and warranties:

6.1       Formation; Authority. Gioia (i) is a duly formed and validly existing limited liability company in good standing under the laws of the State of Colorado and is duly qualified as a foreign company in any other jurisdiction in which it does business; and (ii) has all requisite power and authority to own, lease and operate its property and to carry on its business as presently conducted and to execute, deliver and perform its obligations under this Agreement and each other Transaction Agreement to which Gioia is a party. A true and correct copy of the articles of organization of Gioia, as amended to date, has been delivered to MGT and is in full force and effect as of the date hereof.

6.2       Execution; Validity of Agreement; Due Authorization. This Agreement and each other Transaction Agreement to which Gioia is a party has been duly executed and delivered by Gioia and this Agreement and each other Transaction Agreement to which Gioia is a party constitutes a legal, valid and binding obligation of Gioia, enforceable against Gioia in accordance with their respective terms. The execution and delivery of this Agreement by Gioia and the performance by Gioia of its obligations hereunder have been duly authorized by all necessary corporate action on the part of Gioia, including, but not limited to, approval of the members of Gioia.

6.3       Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement or any other Transaction Agreement by Gioia, the consummation by Gioia of the transactions contemplated hereby or thereby, or the compliance by Gioia with any of the provisions hereof or thereof will (a) require (i) any filing with or notice to any Governmental Authority or other Person, (ii) the obtaining of any Permit or (iii) the expiration or termination of any statutory or regulatory waiting period, (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 require any payment) under, any of the terms, conditions or provisions of (i) the operating agreement of Gioia or any agreement between Gioia and its member(s) or (ii) any material note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Gioia is a party or by which Gioia or any of Gioia’s properties or assets is bound, (c) violate any Applicable Laws, or (d) result in the creation of any Lien upon any of the Patent Rights. 

6.4       Title to and Condition of Physical Assets. Gioia has good, clean, and marketable title to its interest in the physical assets contributed to the Company and such physical assets are in good condition.

6.5       Patent Rights. Prior to giving effect to the transactions contemplated herein

(a)       Gioia is the exclusive, true and lawful owner of all right, title, and interest in and to the Patent Rights, including all right, title and interest to sue for infringement thereof and to grant the assignments provided for under this Agreement, and Gioia has good and valid title to the Patent Rights. The Patent Rights are free and clear of any Liens, licenses or other encumbrances and no rights, licenses, covenants not to sue or similar rights have been granted under the Patents. Other than the transfer of the Patent Rights to Gioia, neither Gioia nor the inventors have transferred or attempted to transfer any of the Patent Rights to any Person.

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(b)       The Patents are (i) valid, subsisting and enforceable, (ii) in compliance with any and all formal legal requirements necessary to maintain the validity and enforceability thereof, (iii) not subject to any outstanding Governmental Order adversely affecting Gioia’s use thereof or rights thereto, or that would impair the validity or enforceability thereof, and (iv) in compliance with any and all formal legal requirements necessary to record and perfect Gioia’s interest therein and the chain of title thereof. None of the Patents is abandoned and all annuities, application fees, maintenance fees and all and any other applicable fees for the Patents have been timely paid and any Actions have been responded to in a manner so as to prevent abandonment or lapse. Gioia has complied with its duty of candor and disclosure to the United States Patent and Trademark Office and any other applicable Governmental Authority with respect to all applications for registration included in the Patents and neither Gioia nor the inventors have made any material misrepresentations in any such applications. In the event that either the Company or MGT pays any annuities, application fees, maintenance fees and all and any other applicable fees for the Patents and takes any Actions in a manner so as to prevent abandonment or lapse, the amount of such any annuities, application fees, maintenance fees and all and any other applicable fees and the cost associated with such Actions shall be deducted from the $300,000 purchase price payable to Gioia pursuant to Section 3.6.

(c)       The Patents have not been the subject of any Action and there is no Action pending, asserted or threatened (i) by or against Gioia concerning the ownership, validity, registerability, enforceability or use of, misappropriation, infringement or licensed right to use, any of the Patents, or (ii) contesting or challenging the ownership, validity, registerability, enforceability or use of, misappropriation, infringement or Gioia’s or any of its customers’ right to use, any of the Patents, and Gioia has received no notice asserting that the Patents are invalid or unenforceable. Gioia has received no notice asserting infringement of any of the Patents by third parties, and has not notified any third party of actual or potential infringement of any of the Patents.

(d)       No inventor of the Patents is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of invention agreement or similar agreement relating to the protection, ownership, development, use or transfer of the Patents. To the extent that any Patent has been conceived, developed or created for Gioia by any other Person, Gioia has executed valid and enforceable written agreements with such Person with respect thereto transferring to Gioia the entire right, title and interest therein and thereto by operation of law or by valid written assignment.

(e)       No university, military, educational institution or Governmental Authority (each, a “R&D Sponsor”) has funded or sponsored any research and development conducted in connection with the Patents, or has any claim of right to, ownership of or other lien on any of the foregoing. No research and development conducted in connection with the Patents was performed by a student or employee of any R&D Sponsor such that any such R&D Sponsor has any claim of right to, ownership of or other Lien on any of the foregoing. Gioia has not participated in any standards-setting activities or joined any standards setting, intellectual property sharing, or similar organization (a “Standards Body”) that would affect the proprietary nature of any of the Patents, or restrict the ability of Gioia to enforce, license or exclude others from using any of the Patents, and there is no obligation imposed by a Standards Body to license any of the Patents on particular terms or conditions.

(f)       There are no inventors of the Patent Rights other than Gioia. There are no asserted or unasserted claims of ownership of the Patent Rights by any Person other than Gioia.

(g)       Gioia, its Affiliates, employees, assignors, licensors, or legal counsel did not fail to disclose or mischaracterize any known prior art or commit any other conduct, that constitutes inequitable conduct or renders the Patents unenforceable. There is no prior art or any conduct of Gioia relevant to patentability that has not been or was not considered during the examination of the Patents.

(h)       Gioia has marked in accordance with 35 U.S.C. 287(a) all of its products and services covered by the claims of the Patents by listing the relevant patent numbers within its general online terms of service.

(i)       All documents, agreements, prototypes, models, product samples, books, notebooks, certificates, licenses, files and any other diligence materials that Gioia has provided to the Company in connection with the Company’s evaluation of the Patents are true, correct and complete originals (if originals were provided by Gioia) or copies of such materials.

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(j)       Gioia has delivered to the Company true and complete copies of (i) the names and addresses of counsel who prosecuted the Patents and who are handling the Patents; (ii) the Prosecution History Files, and (iii) copies of executed originals of all agreements assigning ownership of the Patent Rights from Gioia and/or prior owners to Gioia as filed with the United States Patent and Trademark Office.

6.6      Complementary Assets. Other than the transfer of the Assets to the Company, Gioia has not transferred or attempted to transfer any assets related or complementary to the Game to any Person.

6.7      Litigation. Except as set forth on Schedule 6.7 hereto, there are no actions, lawsuits, judgments, claims, investigations or legal or administrative proceedings, pending or threatened against Gioia. There is no judgment, order, injunction, decree or award (whether rendered by a court, administrative agency or by arbitration) to which Gioia is a party.

6.8      Bankruptcy. None of Gioia or any Affiliate of Gioia has committed or currently intends to commit any act of bankruptcy, is insolvent, has proposed or currently intends to propose a compromise or arrangement to its creditors generally, has had or currently intends to have any petition for a receiving order in bankruptcy filed against it, has made or currently intends to make a voluntary assignment in bankruptcy, has initiated or currently intends to initiate any proceeding with respect to a compromise or arrangement, has initiated or intends to initiate any proceeding to have itself declared bankrupt or wound-up, has initiated or intends to initiate any proceeding to have a receiver appointed to any part of its assets, has had any creditor take or currently anticipates that any creditor will take possession of any of its property, or has had any of the foregoing become enforceable or currently anticipates that any of the foregoing will become enforceable upon any of its property or the Patent Rights.

6.9       Consents and Approvals. No Consents or notices to, or filings, registrations, or qualifications with any Person or Governmental Authority and no Consents or waivers from, or notices to, any other party are required for the consummation by Gioia of the transactions contemplated by this Agreement and the other Transaction Agreements.

6.10      Broker’s Fee. No agent, broker, investment banker, firm, or other Person, acting on behalf of Gioia or any of its Affiliates, or under the authority of Gioia or any of its Affiliates, is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee or expense, directly or indirectly, in connection with any of the transactions contemplated by this Agreement or any of the other Transaction Agreements.

6.11       Material Disclosure; No Omission. No representation or warranty of Gioia contained in this Agreement or in any other Transaction Agreement and no statement by or on behalf of Gioia contained in any exhibit, certificate, schedule, attachment or other instrument specified in this Agreement or in any other Transaction Agreement contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained herein or therein not misleading.

7.       REPRESENTATIONS AND WARRANTIES OF MGT. MGT hereby represents and warrants to Gioia as follows:

7.1       Organization. MGT is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware.

7.2       No Conflicts. Neither the execution and delivery of this Agreement and each other Transaction Agreement to which MGT is a party, nor the performance by MGT of its obligations hereunder and thereunder will: (i) constitute a violation of any Applicable Law; (ii) violate or breach MGT’s certificate of incorporation or bylaws, in each case as amended to date; or (iii) violate any order, writ, injunction or decree applicable to MGT.

7.3       Due Authorization and Binding Effect. The execution and delivery of this Agreement by MGT and the performance by MGT of its obligations hereunder have been duly authorized by all necessary corporate action on the part of MGT. This Agreement and each other Transaction Agreement to which MGT is a party has been duly executed and delivered by MGT and constitutes the legal and binding obligation of MGT enforceable against it in accordance with their respective terms.

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8.       SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION.

8.1       Survival of Representations, Warranties and Covenants. Each statement contained in any exhibit, schedule, or certificate delivered pursuant to this Agreement constitutes a representation and warranty by the Person who delivered it or on whose behalf it was delivered. All representations and warranties set forth or made in this Agreement and any other Transaction Agreement shall survive the Closing indefinitely. All covenants and agreements of the Parties set forth in this Agreement and the other Transaction Agreements to be performed after the Closing shall survive the Closing in accordance with their respective terms. Any claim pending on the expiration date of any applicable survival period for which a notification of claim has been made pursuant to Section 8.3 below on or before such expiration date may continue to be asserted and indemnified against until finally resolved.

8.2       Indemnification Obligations of Gioia. Gioia agrees to indemnify, defend and hold harmless MGT and the Company and their respective shareholders, officers, directors, managers, representatives, agents, employees and Affiliates (collectively, the “Indemnitees”) from and against any claim, suit, action, liability, loss, damage, deficiency, fee, cost or expense of any nature whatsoever (including, without limitation, any diminution in value of any ownership interest and any interest, penalties, investigation expenses and fees through trial and appeals, and disbursements of counsel and accountants, but excluding incidental, consequential, special, or punitive and treble damages) (collectively, “Losses”) arising out of, based upon or resulting from: (i) the breach of any representation or warranty of Gioia which is contained in this Agreement, any other Transaction Agreement or any exhibits or schedules hereto or thereto; (ii) any breach or failure to perform any of the covenants, agreements or undertakings of Gioia contained in this Agreement, any other Transaction Agreement or any exhibit or schedule hereto or thereto; (iii) the matters set forth on any Schedules delivered pursuant to Article 6 hereof; (iv) any and all costs and expenses (including reasonable legal and accounting fees) incident to the enforcement of the indemnification rights of the Indemnitees under this Section 8.2.

8.3       Notification of Claims. In the event that any Party asserts a claim for indemnification hereunder, such Party shall (a) provide the indemnifying Party (“Indemnifying Party”) with prompt written notice of the nature of such claim (an “Indemnification Notice”), (b) make available to the Indemnifying Party all relevant information which is material to the claim and which is in the possession of the Indemnitee and (c) otherwise reasonably cooperate with the Indemnifying Party with respect to such claim; provided, however, that the failure of an Indemnitee to deliver an Indemnification Notice under this Section 8.3 shall not relieve the Indemnifying Party of its indemnification obligations under this Section 8 unless and only to the extent that such Indemnifying Party is materially prejudiced by such failure.

8.4       Investigation. The right to indemnification, payment of Losses or any other remedy based on the representations, warranties and the covenants hereunder will not be affected by any investigation conducted with respect to, or any knowledge acquired, or capable of being acquired at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy of, or compliance with, any such representation, warranty or covenant. Furthermore, no information or knowledge obtained in any investigation pursuant this Agreement or any other Transaction Agreement shall affect or be deemed to modify any representation, warranty or covenant contained herein or therein.

8.5       Third-Party Claims.       The obligations and liabilities of an Indemnifying Party under this Section 8, with respect to Losses resulting from a claim brought by any third party (a “Third-Party Claim”) shall be subject to the following terms and conditions:

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(a)       Promptly after delivery of an Indemnification Notice in respect of a Third-Party Claim, the Indemnifying Party may elect, by written notice to the Indemnitee within ten (10) days of an Indemnification Notice, to undertake the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee, at the sole cost and expense of the Indemnifying Party. If the Indemnifying Party chooses to defend any Third-Party Claim, the Indemnitee shall cooperate with all reasonable requests of the Indemnifying Party and shall make available to the Indemnifying Party any books, records or other documents within its control that are necessary or appropriate for such defense.

(b)       In the event that the Indemnifying Party, within ten (10) days after receipt of an Indemnification Notice, does not so elect to defend such Third-Party Claim, the Indemnitee will have the right to undertake the investigation and defense of such Third-Party Claim for the account of the Indemnifying Party. The Indemnitee shall not settle or compromise any Third-Party Claim, or consent to the entry of a judgment, whether or not the Indemnifying Party shall elect to defend such Third-Party Claim, without the written consent of the Indemnifying Party (which consent may not be unreasonably withheld)

9.       MISCELLANEOUS.

9.1       Notices. All notices, requests, claims, demands, waivers, instructions, documents and other communications to be given pursuant to this Agreement shall be in writing and shall be delivered personally, faxed, or sent by nationally-recognized overnight courier to a Party at the address set forth below for such Party or to such other address as the Party to whom notice is to be given may have furnished to the other Parties hereto in writing in accordance herewith. Any such notice or communication shall be deemed to have been delivered and received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of faxing, on the date sent (or on the first Business Day following the date sent if the date sent is not a Business Day) if confirmation of successful transmission is received, and (c) in the case of a nationally-recognized overnight courier, on the first Business Day after the date when sent for overnight delivery:

If to MGT, to:

MGT Capital Investments, Inc.

500 Mamaroneck Avenue – Suite 204

Harrison, NY 10528

Attention: Robert B. Ladd CFA

Fax: (914) 630-7532

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

Sichenzia Ross Friedman Ference LLP

61 Broadway

New York, NY 10006

Attention: Jay Kaplowitz

Fax: (212) 930-9725

If to Gioia, to:

Gioia Systems LLC.

3885 Holland Street

Wheat Ridge, CO 80033

Attention: Gene Gioia

Fax: [_________]

If to Company, to:

MGT Interactive, LLC

500 Mamaroneck Avenue – Suite 204

Harrison, NY 10528

Attention: Robert B. Ladd CFA

Fax: (914) 630-7532

9.2       Entire Agreement. This Agreement (including the exhibits and schedules hereto), and the other Transaction Agreements constitute the entire agreement among the Parties with respect to the subject matter hereto and supersede all prior agreements and understandings, both oral and written, among the Parties with respect to the subject matter of this Agreement.

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9.3       Further Assurances. The Company, Gioia and MGT shall, at any time and from time to time after the date hereof, do or to cause to be done all such further acts, and to execute, acknowledge, deliver and file, or cause to be executed, acknowledged, delivered or filed, all such deeds, transfers, conveyances, assignments or assurances as may be reasonably requested by another Party for: (i) transferring, conveying and assigning the Patent Rights to the Company; and (ii) otherwise effectuating the transactions contemplated by this Agreement. In any Action involving the infringement or validity of any of the Patents, Gioia shall, and shall cause its Affiliates to, reasonably coordinate and cooperate with the Company’s counsel with respect to all aspects of the Action.

9.4       Governing law; Consent to Jurisdiction.

(a)       This Agreement shall be governed and construed in accordance with the laws of the State of New York, without regard to the conflict of laws rules thereof.

(b)       The Parties hereto irrevocably: (a) agree that any suit, action or other legal proceeding arising out of this Agreement shall be brought in the United States District Court for the Southern District of New York or in the Borough of Manhattan, New York Supreme Court, (b) consent to the jurisdiction of each such court in any suit, action or proceeding, (c) waive any objection which they, or any of them, may have to the laying of venue of any such suit, action or proceeding in any of such courts, and (d) agree that service of process by overnight courier or registered or certified mail, at the addresses listed in Section 10.3 shall be good and sufficient service of process. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 

9.5       Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement may not be assigned by any Party hereto without the prior written consent of the other Parties, which consent may be withheld at the discretion of each Party whose consent is requested and any purported assignment, unless so consented to, shall be void and without effect.

9.6       Waivers and Amendments. This Agreement may be amended, superseded, cancelled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Parties hereto or, in the case of a waiver, by the Party waiving compliance. Any Party may waive any misrepresentation by any other Party, or any breach of warranty by, or failure to perform any covenant, obligation or agreement by any other Party, provided that mere inaction or failure to exercise any right, remedy or option under this Agreement, or any delay in exercising the same, will not operate as nor shall be construed as a waiver, and no waiver will be effective unless set forth in writing and only to the extent specifically stated therein, and no single or partial exercise of any such right, power or privilege will preclude any further exercise thereof or the exercise of any such right, power or privilege will preclude any further exercise thereof or the exercise of any other such right, power or privilege.

9.7       Recitals, Exhibits and Schedules. The recitals to this Agreement and all exhibits and schedules attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

9.8       Headings. The descriptive headings in this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

9.9       Severability. If any provision of this Agreement is determined to be illegal or unenforceable, such provision will be deemed amended to the extent necessary to conform to Applicable Law, or, if it cannot be so amended without materially altering the intention of the Parties, it will be deemed stricken and the remainder of this Agreement will remain in full force and effect.

9.10       Specific Performance. Each of the Parties hereto acknowledges and agrees that the other Parties hereto would be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that there would be no adequate remedy at law or in monetary damages to compensate for any such breach. Accordingly, each Party hereto agrees that, in addition to any remedy to which such Party may be entitled at law or in equity, they each shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof, in each case without being required to post a bond or other security.

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9.11       Fees and Expenses. Gioia and MGT shall each pay their own expenses incidental to the preparation and negotiation of this Agreement and the consummation of the transactions contemplated hereby.

9.12       Legal Representation of the Parties. Each of the Parties hereto has had the opportunity to have its own legal counsel independently advise such Party with respect to the transactions contemplated by this Agreement and the other Transaction Agreements. The Parties expressly agree that the language used in this Agreement shall be deemed to be the language chosen by the Parties hereto to express their mutual intent, and no provision of this Agreement should be construed against or interpreted to the advantage of any Party hereto by reason of such Party or its legal counsel having drafted or participated in the drafting thereof.

9.13       Payment of Transfer Costs and Expenses. All stamp, transfer, documentary, sales, use, bulk, registration and other such Taxes and fees (including penalties and interest) which may be imposed in any jurisdiction in connection with, or arising from any of the transactions set forth herein shall be paid by the Company.

9.14       Public Announcements. Gioia shall not issue any press release or other public statement with respect to this Agreement or the transactions contemplated hereby without the prior approval of MGT. MGT shall use commercially reasonable efforts to consult with Gioia before issuing any press release or other public statement with respect to this Agreement or the transactions, except as may be required by Applicable Law.

9.15       Confidentiality. Except for any press release or public announcement previously issued or issued in accordance with Section 10.14, all terms of this Agreement, the other Transaction Agreements and the transactions contemplated hereby and thereby shall remain confidential. No Party hereto shall disclose to anyone the negotiations, any information concerning the contemplated transactions, or anything contained herein, except to their accountants, employees, bankers and attorneys in connection with the transactions contemplated by this Agreement, without the approval of the other Parties.

9.16       No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto and their successors and permitted assigns and, except with respect to the rights of the Indemnitees under Article 9, this Agreement shall not be deemed to confer upon any third party any remedy, claim, reimbursement or other right in addition to those which may exist without regard to this Agreement.

9.17       Counterparts; Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together will constitute one and the same instrument. This Agreement and any amendments hereto, to the extent executed and delivered by means of a facsimile machine or e-mail of a PDF file containing a copy of an executed agreement (or signature page thereto), shall be treated in all respects and for all purposes as an original agreement or instrument and shall have the same binding legal effect as if it were the original signed version thereof.

[Remainder of Page Intentionally Blank–Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

MGT INTERACTIVE, LLC
By:	/s/ Robert B. Ladd
	Name: Robert B. Ladd
	Title: President and CEO
GIOIA SYSTEMS LLC
By:	/s/ Gene Gioia
	Name: Gene Gioia
	Title: Managing Member
MGT CAPITAL INVESTMENTS, INC.
By:	/s/ Robert B. Ladd
	Name: Robert B. Ladd
	Title: President and CEO

[Signature Page to Contribution and Sale Agreement]

14

EXHIBIT A

ASSETS

3 Real Deal shuffling machines including spare parts and blueprints.

Any computers or servers associated with the machines.

Playing card stock.

Trade show branding decorations.

Internet URLs:

· Www.realdealpoker.com

· Www.realdealpoker.net

· Www.cutnshuffle.com

· Www.cutnshuffle.net

· Www.cutnshuffle.org

· Www.realdealpoker.mobi

Trademarks related to the machines and the game.

15

EXHIBIT B

PATENTS

PATENT NO.	TITLE
1 8,313,365	Detecting duplicate collections of virtual playing instruments
2 8,113,932	Method and computer readable medium relating to creating child virtual decks from a parent virtual deck
3 8,105,168	Method and computer readable medium relating to virtual playing instruments
4 7,766,334	System and computer-executable instructions for physically randomizing a plurality of playing instruments in absence of a random number generator
5 7,766,331	Method and device for physically randomizing a plurality of playing instruments in absence of a random number generator
6 7,591,728	Online gaming system configured for remote user interaction
7 7,300,056	System and methods for randomizing playing instruments for use in online gaming

16

EXHIBIT C

Deed of Assignment

THIS DEED OF ASSIGNMENT (“Assignment”), EFFECTIVE AS OF August __, 2013, IS MADE BY AND BETWEEN

Gioia Systems, LLC (hereinafter “ASSIGNOR”), a Colorado company, with its principal place of business located at 3885 Holland Street, Wheat Ridge, CO 80033; and

MGT Interactive, LLC (hereinafter “ASSIGNEE”), a Delaware limited liability company, with its principal place of business located at 500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528.

WHEREAS:

A ASSIGNOR is the sole owner in respect of the patents listed in the attached Appendix (hereinafter “the PATENTS”); and

B ASSIGNEE is desirous of acquiring all of the worldwide right, title and interest in and to the PATENTS and the inventions disclosed therein.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, ASSIGNOR has sold, assigned and transferred, and does hereby sell, assign and transfer to ASSIGNEE all of the worldwide right, title and interest in (i) the PATENT and the inventions and improvements disclosed therein; (ii) all reissues, divisionals, continuations, continuations-in-part, extensions, renewals, reexaminations and foreign counterparts thereof, and other patents, patent applications, certificates of invention other governmental grants resulting from the PATENTS; (iii) all patents and applications which claim priority to or have common disclosure or common priority with any such patents or patent applications (for the avoidance of doubt, patents which include partial commonalities such as figures or patents whose features of the inventions are different from those of the PATENTS are excluded), and (iv) any PATENT that as of the Effective Date is subject to a Disclaimer Issue with respect to any other such patent or patent application; and (v) all rights corresponding to any of the foregoing throughout the world (including the right to claim the priority date of any of the PATENT and the right to sue for and recover damages for any past, present or future infringement of the Patents), the same to be held and enjoyed by ASSIGNEE for its own use and enjoyment, and for the use and enjoyment of its successors, assigns and other legal representatives, to the end of the term or terms of said PATENTS granted or reissued or reexamined as fully and entirely as the same would have been held and enjoyed by ASSIGNOR, if this assignment and sale had not been made.

IN WITNESS WHEREOF, ASSIGNOR has caused these presents to be signed by its duly appointed officier or member having full authority to convey its property; and ASSIGNEE has caused these presents to be signed by its duly appointed officer or member.

And if the issue date and/or patent number of any of the PATENTS is unknown to ASSIGNOR and ASSIGNEE at the time this Assignment is executed, ASSIGNOR does hereby authorize its attorneys to insert on this Assignment the issue date and patent number of said PATENTS when known.

ASSIGNOR hereby declares that ASSIGNEE may take the steps for recordal of this assignment in the sole name of ASSIGNEE.

ASSIGNOR hereby undertakes that it shall, without further consideration, but at the expense of ASSIGNEE, execute all documents and do all such acts and things necessary and reasonably requested by ASSIGNEE to enable Letters Patent or any other form of protection to be issued in respect of any of said PATENTS and the inventions disclosed therein in any part of the world. ASSIGNOR also agrees, without further consideration, but at the expense of ASSIGNEE, to enable or to assist ASSIGNEE to defend oppositions thereto, to maintain the PATENTS and to prosecute for the infringement thereof.

17

SIGNED for and on behalf of

Gioia Systems, LLC

By	_______________________	on	August __,  2013
	(Signature)		(Date)

(Print Name and Title)

On this __ day of August 2013 before me, _____________________________, personally appeared _______________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the instrument and acknowledged to me that he executed the same in his authorized capacity and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of New York that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

___________________________

(Notary Public)

SIGNED for and on behalf of

MGT Interactive, LLC

by	_______________________	on	August __,  2013
	(Signature)		(Date)

(Print Name and Title)

On this day of August 2013 before me, _____________________________, personally appeared ___________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of New York that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

___________________________

(Notary Public)

18

Exhibit A

Listed Patents

Date Format (MM/DD/YYYY)

1. United States Listed Issued Patents

US Issued Patents

Patent Number

8,313,365

8,113,932

8,105,168

7,766,334

7,766,331

7,591,728

7,300,056

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EX-10.2

CONSULTING AGREEMENT

This CONSULTING AGREEMENT (this “Agreement”) is entered into as of August 29, 2013, by and between MGT Interactive, LLC, a Delaware corporation (the “Company”) and Gioia Systems, LLC (the “Consultant”).

WHEREAS, the Company desires to engage Consultant to provide certain Services (as defined in Section 3 below) for compensation, and Consultant desires to provide the Services to the Company, upon the terms and subject to the conditions set forth below.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Engagement. The Company hereby engages Consultant to provide the Services during the Term (as defined below), and Consultant hereby accepts such engagement to provide the Services during the Term (the “Engagement”).

2. Term of Engagement. The Engagement shall commence on the date hereof and shall terminate on the earlier of January 31, 2014 or the date on which the Game, as that term is defined in that certain Contribution and Asset Purchase Agreement dated August 29, 2013 receives certification by the GLA(the “Term”). In the event that the Game receives certification on or before January 31, 2014, than the term shall be extended for an additional year.

3. Services to be Provided by Consultant. During the Term, Consultant shall provide services to the Company as set forth on Exhibit A, as well as any other services that are mutually agreed between the parties hereto (collectively, the “Services”). The parties hereto acknowledge and agree that the Services to be provided are in the nature of advisory services only, and Consultant shall have no responsibility or obligation for execution of the Company’s business or any aspect thereof nor shall Consultant have any ability to obligate or bind the Company in any respect. Consultant shall have control over the time, method and manner of performing the Services. Consultant shall render such services as are from time to time requested by the Company.

4. Compensation. In consideration for the Services to be provided hereunder, Consultant shall receive as a monthly consulting fee of $10,000 to be paid $5,000 in cash per month and $5,000 deferred until GLA certification. Upon GLA certification the consulting fee shall be payable in cash for the remainder of the term.

5. Expenses. The Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in providing the Services hereunder no later than thirty (30) days after the submission of an invoice evidencing such expenses in a form reasonably satisfactory to the Company; provided that the Company shall not be obligated to reimburse Consultant for expenses if incurred without the Company’s prior written approval.

6. Independent Contractor Status. It is understood and agreed that in the performance of the Services hereunder, Consultant is acting as an independent contractor and not as an agent or employee of, or partner, joint venturer or in any other relationship with, the Company. Consultant acknowledges that no income, social security or other taxes will be withheld or accrued by the Company, on Consultant’s behalf. Neither the Company nor Consultant has the authority to bind the other in any agreement without the prior written consent of the entity to be bound.

7. Confidentiality. In connection with Consultant’s Engagement, it is contemplated that the Company will not supply Consultant with non-public or proprietary information concerning the Company and its business and operations and affiliates without the prior written agreement of Consultant to receive such Confidential Information (“Confidential Information”).

8. Legal Representation. Each party hereto acknowledges that it has been represented by independent legal counsel in the preparation of the Agreement. Each party recognizes and acknowledges that counsel to the Company has represented Consultant in connection with various legal matters and each party waives any conflicts of interest or other allegations that it has not been represented by its own counsel.

9. Non-Competition.   Except as provided below, during the period commencing on the date of this Agreement and ending three (3) years from the termination of this Agreement (the “Restrictive Period”), Consultant shall not, in [any county, state, country or other jurisdiction in which Company or the Company do business or are planning to do business as of the date of this Agreement], alone, with and/or through others, be, become or function as an officer, director, employee, owner, corporate affiliate, salesperson, co-owner, partner, trustee, promoter, founder, technician, engineer, analyst, employee, agent, representative, distributor, re-seller, sublicensor, supplier, investor or lender, consultant, advisor or manager of or to, or otherwise acquire or hold any interest in or otherwise engage in the provision of services to, any person or entity that engages in a business that is Directly Competitive (as defined herein); provided, however, that Consultant may work exclusively for a division, entity or subgroup of such a business if the division, entity or subgroup is not Directly Competitive. For purposes of this Agreement, “Directly Competitive” means developing, manufacturing, providing, marketing, distributing or otherwise commercially exploiting any products, services or technology that compete with the Company’s products, services or technology in existence as of the Effective Date or the foregoing products, services or technology as such may be developed, enhanced or modified by the Company or Company after the Effective Date.

10. Confidentiality. Consultant hereby covenants and agrees that, during the Term and for a period of five (5) years thereafter, it will not communicate, disclose or otherwise make available to any person or entity (other than the Company), or use for its own account or for the benefit of any other person or entity, any information or materials proprietary to the Company that relate to the Company’s business or affairs which is of a confidential nature, including, but not limited to, trade secrets, information or materials relating to existing or proposed products (in all and various stages of development), “know-how”, marketing techniques and materials, marketing and development plans, customer lists and other customer information (including current prospects), price lists, pricing policies, personnel information and financial information (collectively, “Proprietary Information”). Proprietary Information includes any and all such information and materials, whether or not obtained by Consultant with the knowledge and permission of the Company, whether or not developed, devised or otherwise created in whole or in part by Consultant’s efforts, and whether or not a matter of public knowledge unless as a result of authorized disclosure.

11.   General Terms.

a.          Any notice to be given hereunder by a party to any other party hereto may be effectuated in writing by personal delivery, by mail, registered or certified, postage prepaid, with return receipt requested, or by facsimile or other electronic transmission and addressed to such party at the address set forth on the signature page below.

b.          If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, that provision shall be deemed modified to the extent necessary to make it valid or enforceable, or if it cannot be so modified, then severed, and the remainder of the Agreement shall continue in full force and effect.

c.          All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations and enforcement of this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York for the adjudication of any dispute hereunder or in connection herewith or with respect to the enforcement of this Agreement, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by delivering a copy thereof via overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.

d.          This Agreement embodies the entire understanding of the parties hereto with respect to the subject matter hereof, and supersedes all prior or contemporaneous agreements, arrangements or understandings with respect to the subject matter hereof, whether oral or written.

e.          This Agreement may not be modified except in a writing signed by the parties hereto.

f.          No term of this Agreement may be waived, except in a writing signed by the party hereto entitled to the benefit of such term.

g.          Each party hereto represents and agrees that such party is authorized to enter into this Agreement and this Agreement constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms. This Agreement may not be assigned by any party.

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

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

GIOIA SYSTMES, LLC		MGT INTERACTIVE, LLC
By:	/s/ Gene Gioia	By:	/s/ Robert Ladd
Name:	Gene Gioia	Name:	Robert Ladd
Title:	Managing Member	Title:	President and CEO

Address for Notice:	Address for Notice:
Gioia Systems LLC	MGT Capital Investments, Inc.
3885 Holland Street	500 Mamaroneck Avenue, Suite 204
Wheat Ridge, CO 80033	Harrison, NY 10528

EX-10.3

LIMITED LIABILITY COMPANY AGREEMENT

OF

MGT Interactive, LLC

______________________________

This Limited Liability Company Agreement (this “Agreement”), dated as of August 29, 2013, of MGT Interactive, LLC (the “Company”), a limited liability company organized pursuant to the Delaware Limited Liability Company Act, Del. Code, Title 6, Section 18-201 et seq., as amended from time to time (the “Delaware Act”), is entered into by and among the Company and its initial members, MGT Capital Investments, Inc. (the “MGT Member”) and Gioia Systems, LLC (the “Gioia Member”) (each, a “Member”).

Article I

Definitions

As used in this Agreement, the following terms shall have the following respective meanings:

“Additional Member” shall have the meaning assigned to such term in Section 3.6.

“Additional Membership Interests” shall have the meaning assigned to such term in Section 3.6.

“Affiliate” shall mean, with respect to any Person, (i) any other Person who controls, is controlled by or is under common control with such Person, with the term “control” (and its derivations) meaning the ability to direct the policy or management of any Person, whether by means of ownership of securities, agreement or otherwise or (ii) any family member of such Person.

“Agreement” shall have the meaning assigned to such term in the title hereto.

“Allocation Period” shall have the meaning assigned to such term in Section 7.1

“Asset Purchase Agreement” shall mean that certain Asset Purchase Agreement by and among the MGT Member, the Gioia Member and the Company dated August 29, 2013 pursuant to which the Company Purchased the Assets and Patents listed on Exhibit A and Exhibit B, respectively, to the Asset Purchase Agreement.

“Available Cash” of the Company shall mean all cash funds of the Company on hand from time to time (other than funds received as Capital Contributions) after compliance with the terms of this Agreement.

“Book Value” means, with respect to any Company asset, its adjusted basis for federal income tax purposes; provided, however, that (i) the initial Book Value of any assets contributed by a Member to the Company shall be the gross Fair Market Value of such assets at the time of such contribution and (ii) the Book Value of a Company asset shall be adjusted for the depreciation and amortization of such asset taken into account in computing Net Profits and Net Losses and for Company expenditures and transactions that increase or decrease the asset’s Federal income tax basis.

“Business” means the financing, establishment and operation of a platform for playing Poker over the Internet.

“Capital Account” shall mean, for each Member, the account established for such Member in accordance with Section 3.4.

“Capital Contribution” shall mean the total amount of cash and the Fair Market Value of other property contributed by a Member to the capital of the Company.

“Certificate of Formation” shall have the meaning set forth in Section 2.1.

“Code” shall mean the Internal Revenue Code of 1986, as amended (including any corresponding provisions of any succeeding law).

“Company” shall have the meaning assigned to such term in the title hereto.

“Company Sale” means (a) any transaction or series of related transactions in which a person, or group of related persons, acquires from the Members of the Company a majority of the outstanding Membership Interests, (b) a merger, consolidation, share exchange, combination, reorganization, recapitalization or similar transaction or series of transactions in which (i) a subsidiary of the Company is a constituent party and the Company issues Membership Interests pursuant to such merger or consolidation, or (ii) the Company is a constituent party, except in either case any such merger or consolidation involving the Company or a subsidiary in which the Membership Interests outstanding immediately prior to such merger or consolidation continue to represent, or are converted or exchanged for equity which represents, immediately following such merger or consolidation, at least a majority, by voting power, of the equity of (1) the surviving or resulting corporation or (2) if the surviving or resulting entity is a wholly-owned subsidiary of another entity immediately following such merger or consolidation, the parent of such surviving or resulting entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, except where such sale, lease, transfer or other disposition is to a wholly owned subsidiary of the Company.“Fair Market Value” shall mean, as of a specified time, the fair value of any property or asset, as determined in good faith by the Members holding a Member Majority.

“Fiscal Year” shall mean the twelve-month period ending on December 31 of each year except that the first Fiscal Year shall be the period commencing on the date of formation of the Company and the last fiscal year shall end on the date of the final distribution in liquidation of the Company.

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“GAAP” shall mean generally accepted accounting principles in the United States.

“Indemnitee” shall have the meaning assigned to such term in Section 8.1.

“Liquidator” shall have the meaning assigned to such term in Section 10.2(a).

“Member” or “Members” shall mean a person who is admitted to the Company as a Member as provided in Section 18-301 of the Delaware Limited Liability Company Act.

“Membership Interest” means the ownership interest in the Company owned by a Member and includes, without limitation, (i) the Member’s right to vote on Company matters and participate in its affairs, as set forth in this Agreement and as otherwise required by the Delaware Act, and (ii) the percentage interest in which the Member, after allocations and distributions in accordance with Article VII, shares in the Net Profits, Net Losses and distributions of the Company.

“Member Majority” means one or more Members holding, in the aggregate, Membership Interests representing 50.1% or more of the aggregate Membership Interests held by all Members as of the relevant date of determination.

“Net Profit” or “Net Loss” shall mean the income or loss of the Company as determined in accordance with the accounting methods followed by the Company for federal income tax purposes, including income exempt from tax and described in Section 705(a)(1)(B) of the Code, treating as deductions items of expenditure described in, or under Treasury Regulations deemed described in, Section 705(a)(2)(B) of the Code and treating an adjustment to the Book Value of a Company asset as a gain (to the extent of an increase) or as a loss (to the extent of a decrease) from the disposition of such asset for purposes of computing Net Profit or Net Loss. For avoidance of doubt, Net Profit or Net Loss shall include the results of all subsidiaries of the Company. Depreciation, depletion, amortization, income and gain (or loss) with respect to Company assets shall be computed with reference to their Book Value.

“Officer” shall mean a natural person or persons designated by the MGT Member to carry out the day to day operations of the Company that his or her title implies.

“Permitted Transfer” shall have the meaning assigned to such term in Section 9.2.

“Permitted Transferee” shall have the meaning assigned to such term in Section 9.2.

“Person” shall mean an individual, corporation, association, limited liability company, limited liability partnership, partnership, estate, trust, unincorporated organization, a government or any agency or political subdivision thereof, or any other legal entity.

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“Securities Act” shall mean the United States Securities Act of 1933, as amended.

“Substitute Member” shall have the meaning assigned to such term in Section 9.3.

“Transfer” shall mean any sale, transfer, assignment, pledge, granting of a security interest or other disposition, whether voluntarily or by operation of law.

“Treasury Regulations” shall mean the permanent, temporary or proposed income tax regulations of the United States Department of the Treasury promulgated under the Code, as such regulations may be amended from time to time.

Article II

Formation, Purpose and Term

2.1.     Formation and Name. The Company has been formed as a limited liability company under the laws of the State of Delaware by the filing of the Certificate of Formation of the Company on August 23, 2013 pursuant to the Delaware Act (the “Certificate of Formation”). The name of the Company is “MGT Interactive, LLC” and all of the Company’s business shall be conducted under that name or such other names that comply with applicable law as the Members may select from time to time.

2.2.     Registered Agent and Offices. The registered agent of the Company shall be Vcorp Services, LLC and the registered office shall be 1811 Silverside Road, Wilmington, Delaware 19810. The initial principal office of the Company shall be located at 500 Mamaroneck Avenue, Suite 204, Harrison, New York, 10528, or at such other location (which need not be a place of business of the Company) as the Members may designate from time to time. The Company may change its registered agent or principal office or have such other offices as the Members may designate from time to time.

2.3.     Qualification in Other Jurisdictions. The Members shall cause the Company to be qualified or registered to do business in any jurisdiction in which the Company transacts its business, in which such qualification, formation or registration is required or desirable. The Members shall execute, deliver and file any certificates (and any amendments or restatements thereof) necessary for the Company to do business in a jurisdiction in which the Company may wish to conduct business.

2.4.     Purpose. The Company is formed for the object and purpose of engaging in any lawful act or activity for which limited liability companies may be organized under the Delaware Act. The debts, obligations and liabilities of the Company shall be solely the debts, obligations and liabilities of the Company, and the Members shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member of the Company.

2.5.     Term. The term of the Company commenced on the date of the filing of the Certificate of Formation in the Office of Secretary of State of the State of Delaware pursuant to the Delaware Act and its existence shall be perpetual and shall continue until dissolved sooner pursuant to Article 10.

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Article III

CAPITAL of the company

3.1.     Capital Contributions and Membership Interests. Each Member shall make an initial Capital Contribution to the Company in the form and amount set forth beside such Member’s name on Schedule A attached hereto. In exchange for such Capital Contribution, each Member initially shall receive the Membership Interest set forth beside such Member’s name on Schedule A, which shall be adjusted from time to time as set forth pursuant to the terms of the Asset Purchase Agreement or to properly reflect the admission of new Members or any other event having an effect on a Member’s Membership Interest.

3.2.     Additional Capital Needs. No Member shall be required to make any Capital Contributions to the Company. No Member shall be entitled to make any loan or Capital Contribution to the Company other than as expressly provided herein or as otherwise agreed to in writing by the MGT Member. No loan made to the Company by any Member shall constitute a Capital Contribution to the Company for any purpose unless otherwise agreed to in writing by the Members.

3.3.     No Withdrawal of Capital Contribution. No Member shall have the right to withdraw such Member’s Capital Contribution or demand and receive Company property or any distribution in return for such Member’s Capital Contribution, except as required by law (excluding any law which grants such a right in the absence of a negating provision in this Agreement) or as provided herein. No Member shall have any liability for the return of the Capital Contribution of any other Member.

3.4.     Capital Accounts. A separate Capital Account shall be established and maintained for each Member, including any Substitute Member or Additional Member who shall hereafter acquire a Membership Interest in the Company, in accordance with the following provisions:

(a)     Each Member’s Capital Account shall be increased by:

(i) the amount of any money of any additional cash contributed by or on behalf of such Member to the Company;

(ii) the Fair Market Value of any additional contributions of property by such or on behalf of such Member to the Company;

(iii) the amount of Net Profits allocated to such Member; and

(iv) the amount of any Company liabilities assumed by such Member (or taken subject to, if property is distributed to the Member by the Company).

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(b)     Each Member’s Capital Account shall be decreased by:

(i) the amount of any money distributed to or on behalf of such Member by the Company;

(ii) the Fair Market Value of any property distributed to or on behalf of the Member by the Company;

(iii) the amount of Net Losses allocated to such Member; and

(iv) the amount of any liabilities of such Member assumed by the Company (or taken subject to if property is contributed to the Company by such Member).

(c)     The Members’ Capital Accounts shall be adjusted as and to the extent required by Treasury Regulations Section 1.704-1(b)(2)(iv)(m) in connection with the adjustment to the tax basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code.

(d)     This Section 3.4 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 704 of the Code and Treasury Regulations Section 1.704-1(b) and shall be applied in a manner consistent with such provisions. In the event the Members shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the Members may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member. The Members also shall make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations §1.704-1(b).

3.5.     Transfer of Capital Accounts. The original Capital Account established for each Substitute Member shall be in the same amount as the Capital Account of the Member who such Substitute Member succeeds, at the time such substituted Member is admitted to the Company. The Capital Account of any Member whose Membership Interest in the Company has increased due to the Transfer to it of all or part of the Membership Interest in the Company of another Member shall be appropriately adjusted to reflect such Transfer. Any reference in this Agreement to a Capital Contribution of, or distribution to, a then Member shall include a Capital Contribution or distribution previously made by or to any prior Member on account of the Membership Interest of such then Member.

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3.6.     Additional Membership Interests and Members. Subject to the voting rights of Members and any requirements under applicable laws, the Members may cause the Company from time to time to issue to Members or other Persons (who, upon such issuance and upon the execution by such Persons of an agreement to be bound by this Agreement in the capacity of a Member and such other documents and/or instruments as the MGT Member reasonably deems necessary, shall become a Member (each, an “Additional Member”) additional or initial Membership Interests, in one or more classes, or one or more series of any such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties as the Members may authorize and approve, including rights, powers and duties senior to the then-existing Membership Interests, or options, warrants or other rights or equity securities exercisable, convertible or exchangeable into or for additional or initial Membership Interests (collectively, “Additional Membership Interests”), for such consideration (including present or future services to be rendered to the Company) as shall be determined by the Members in their sole and absolute discretion. Upon issuance or grant of such Additional Membership Interests, the Members shall proportionately adjust the relative Membership Interests of the existing Members to account for such issuance or grant. .

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Article IV

Management of the Company

4.1.     Management. The property, business and affairs of the Company shall be managed by persons designated by the MGT Member. Except as otherwise expressly provided in this Agreement, all actions of the Company and of the Members on behalf of the Company shall be authorized and approved by a Member holding a Member Majority. Except for the execution by any Member of this Agreement on behalf of the Company, as otherwise expressly authorized by this Agreement, or as approved by the Members as provided in this Agreement, no Member or designee of a Member shall have the power or authority to act on behalf of or to bind the Company or the other Members.

4.2.     Limitation on Powers.      The entering into or engaging in any line of business or activity, or permitting or authorizing the Company or any subsidiary thereof to enter into or engage in any line of business or activity, other than the Business as currently conducted, or contemplated to be conducted, by the Company shall be authorized by the approval of all the Members.

4.3.     Compensation of the Member and Officers. Except as otherwise approved, by vote or written consent, of a Member Majority, no Member or designee of a Member shall, in his, her or its capacity as a Member or designee, receive any salary, draw or other compensation for services rendered for or on behalf of the Company; provided, however, that the Company shall reimburse a Member or designee of a Member for all reasonable out-of-pocket expenses incurred by such Person on behalf of the Company, and any such reimbursement shall be deemed an expense of the Company, and not a distribution to such Person.

4.4.     Officers. The Company may have such Officers, with such duties, powers and authority, as the Members shall deem to be necessary, advisable, appropriate or convenient to facilitate the business, activities, operations and affairs of the Company, consistent with the terms of this Agreement. The Officers of the Company shall exercise such delegated powers and authority in a manner consistent with the policies adopted from time to time by the Members. Each Officer shall hold his or her respective office for the term specified by the Members, unless earlier removed by the Members. The Officers of the Company shall be designated by the MGT Member, except as otherwise provided by law, any number of offices may be held by the same person and Members may also be Officers.

The initial Officers of the Company shall be as follows:

Name	Title
Robert Ladd	President, Chief Executive Officer and Secretary
Robert Traversa	Chief Financial Officer and Treasurer

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Article V

MEETINGS

5.1.     Meetings of Members.

(a)     A meeting of the Members may be called at any time by any Member. Meetings of the Members shall be held at the Company’s principal place of business or at any other place designated by the MGT Member. Not less than forty eight (48) hours nor more than sixty (60) days before each meeting, the Member calling the meeting shall give written notice of the meeting to each other Member, stating the place, date, hour and purpose of the meeting. Notwithstanding the foregoing provisions, a Member shall be deemed to waive such notice if, before or after the meeting, the Member signs a waiver of the notice which is filed with the records of meetings of the Members, or is present at the meeting in person or by proxy without objecting to the lack of notice prior to the commencement of such meeting.

(b)     At any meeting, the presence in person or by proxy of designees of Members holding not less than a majority of the Membership Interests then outstanding shall constitute a quorum. If, at any meeting duly called, a quorum shall not be present, a majority of the Members present at such meeting by their respective designees may reschedule such meeting, despite the absence of a quorum, which rescheduled meeting may be held on not less than twenty-four (24) hours notice to the other Members. A Member may vote either in person or by written proxy signed by the Member or by the Member’s duly authorized designee.

(c)     A meeting of the Members need not be held at any time, except as called pursuant to Section 5.1(a).

5.2.     Action by Written Consent. Any action which may be taken by the Members at any meeting may be taken without a meeting if consents in writing setting forth the action so taken are signed by Members holding the requisite number of Membership Interests then issued and outstanding (or their duly authorized proxies), and the writing or writings are delivered to the Company and to any Members who or which did not consent to the taking of such action. The Company shall file such writings with the minutes of proceedings of the Members.

5.3.     Record Date. The record date for the purpose of determining the Members entitled to notice of a Members’ meeting, for demanding a meeting, for voting, or for taking any other action shall be the tenth (10th) day prior to the date of the meeting or other action.

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5.4.     Proxies. A Member entitled to vote may appoint a designee to vote or otherwise act for the Member pursuant to a written appointment form executed by the Member or the Member’s duly authorized attorney-in-fact. An appointment of a proxy shall be effective when received by each of the other Members. The general proxy of a fiduciary shall be given the same effect as the general proxy of any other Member. A proxy appointment shall be valid for eleven (11) months from the date of its receipt by the other Members unless otherwise expressly stated in the appointment form.

5.5.     Transferees. No transferee of a Membership Interest shall be entitled to vote or participate on any matters at any meeting unless such transferee becomes a Substitute Member in accordance with the provisions of Section 9.3.

5.6.     Means of Communication. Any or all Members may participate in any Members’ meeting by, or through the use of, any means of communication by which all Members participating may simultaneously hear each other during the meeting. A Member so participating shall be deemed to be present in person at the meeting.

Article VI

Accounting and Records

6.1.     Deposit Accounts. The MGT Member shall be authorized to designate, or cause to be designated, from time to time such bank, banks, trust company or trust companies as the Members deem to be in the best interests of the Company, to serve as depositaries of the Company, and to open with any such depositary an account or accounts in the name of the Company, to be known by such titles as shall be designated by the MGT Member and to designate one or more persons as signatories with respect to any account maintained with any such depositary

6.2.     Records and Accounting. The Company shall keep, or cause to be kept, complete and accurate books and records of account (including Capital Accounts) of the Company and the applicable Membership Interest of each Member. The books of the Company (other than books required to maintain Capital Accounts) shall be kept on an accrual basis of accounting, and otherwise in accordance with GAAP consistently applied, and shall at all times be maintained or made available at the principal business office of the Company, the MGT Member may request, at the expense of the Company, that the financial statements of the Company be audited by an auditing firm of its choosing. The books and records of the Company shall reflect all Company transactions and shall be appropriate and adequate for the Company’s business. Copies of the Company’s federal, state and local income tax returns and reports, if any, for the three most recent years, copies of the Agreement and of any financial statements of the Company for the three most recent years and all other records required to be maintained pursuant to the Delaware Act shall also be maintained at the principal business office of the Company.

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6.3.     Reports.

(a)     Upon request, the Company shall, at the cost and expense of the Company, furnish, or cause to be furnished, to each Member such information bearing on the financial condition and operations of the Company as any Member may from time to time reasonably request.

(b)     Each Member shall have the right, during normal business hours upon reasonable prior written notice to the Company to audit, examine and make copies of or extracts from the books of account of the Company for any purpose reasonably related to such Member’s Membership Interest as a member of the Company. Such right may be exercised through any agent or employee of such Member designated by it or by a certified public accountant designated by such Member. A Member shall bear all expenses incurred in any examination made for such Member’s account.

6.4.     Filing of Returns and Other Writings.

(a)     The Members shall determine the method of depreciation to be utilized by the Company for tax purposes and all elections to be made by the Company for tax purposes.

(b)     The President shall use his best efforts to cause the Company to deliver to each Member, within ninety (90) days after the end of each Fiscal Year, all information necessary for the preparation of such Member’s United States federal income tax return. The Tax Matters Member (as defined below) shall also use its best efforts to cause the Company to prepare, within seventy-five (75) days after the end of each Fiscal Year, a financial report of the Company for such Fiscal Year, containing a balance sheet as of the last day of the year then ended, an income statement for the year then ended, a statement of sources and applications of funds, and a statement of reconciliation of the Capital Accounts of the Members.

(c)     The initial tax matters member of the Company (“Tax Matters Member”) shall be a designee of the MGT Member. The Tax Matters Member shall be considered the “Tax Matters Partner” for purposes of Section 6231(a)(7) of the Code. Each Member hereby irrevocably makes, constitutes, and appoints the Tax Matters Member as their true and lawful attorney-in-fact to sign, execute, acknowledge, file and record with respect to the Company all instruments and documentation as may be necessary or appropriate in connection with all tax matters.

(d)     Promptly following the written request of the Tax Matters Member, the Company shall, to the fullest extent permitted by law, reimburse and indemnify the Tax Matters Member for all reasonable expenses, including reasonable legal and accounting fees, claims, liabilities, losses and damages incurred by the Tax Matters Member in connection with any administrative or judicial proceeding with respect to the tax liability of the Members.

(e)     The provisions of this Section 6.4 shall survive the termination of the Company or the termination of any Member’s Membership Interest and shall remain binding on the Members for as long a period of time as is necessary to resolve with the Internal Revenue Service any and all matters regarding the federal income taxation of the Company or the Members.

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6.5.     Taxation as Partnership. It is the intention that the Company shall be treated as a partnership for United States federal income tax purposes. The Members hereby authorize the Tax Matters Member to execute and file any and all documents necessary to effect such treatment as a partnership.

Article VII

Allocations, Distributions and Use of Proceeds

7.1.     Allocation of Net Profit. On or before the 31^st day of January of each Fiscal Year, any Net Profit resulting from the immediately preceding Fiscal Year (the “Allocation Period”) shall be allocated among the Members as follows:

(a)     first, in proportion to, and to the extent of, prior respective allocations of Net Loss under Section 7.2(a) below; and

(b)     second, to the Members in proportion to their respective Membership Interests. In addition, if there are additional capital contributions during a taxable year or if one or more Members are admitted or withdraw during a taxable year, allocations of the varying interests of the Members shall be computed in accordance with Section 706 of the Code and Section 7.5 below.

7.2.     Allocation of Net Losses. On or before the 31^st day of January of each Fiscal Year, any Net Loss for the applicable Allocation Period shall be allocated among the Members as follows:

(a)      first, in proportion to the Member’s Capital Accounts, provided, however, that if the Capital Account of any Member is zero or is thereby reduced to zero, any remaining Net Loss for the applicable Allocation Period shall be allocated to the other Members in proportion to their Capital Accounts until the Capital Accounts of all Members is reduced to zero; and

(b)     second, to the Members in accordance with their respective Membership Interests. In addition, if there are additional capital contributions during a taxable year or if one or more Members are admitted or withdraw during a taxable year, allocations of the varying interests of the Members shall be computed in accordance with Section 706 of the Code and Section 7.5 below.

7.3.     Distributions.

(a)     Distributions of Available Cash or other property shall be made at such time as Members holding a Member Majority shall determine. Distributions of Available Cash or other property comprising Net Profit of the Company shall be made as follows:

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(i)     first, to the Members having positive balances in their Capital Accounts in proportion to the positive balances of their respective Capital Account as of the date of distribution up to an amount equal to the aggregate sum of their Capital Accounts, after giving effect to all contributions, distributions and allocations for all periods prior to such distribution;

(ii)     second, to the Members in accordance with their respective Membership Interests.

(b)     Distributions upon dissolution or liquidation of the Company shall be made in accordance with Article X.

(c)     All distributions shall be made in cash or other property. In the event of the distribution of securities, such securities shall be distributed to all Members pro rata in accordance with Section 7.3(a) and such securities will be deemed to have been sold at their Fair Market Value as of the date of distribution, as determined by the Member Majority and appropriate adjustments made to the Capital Accounts of Members.

7.4.     Tax Distributions. Subject to the requirements of applicable law and notwithstanding the distribution provisions of Section 7.3, the Company shall make distributions of cash in respect of each Fiscal Year (taking into account all distributions made in respect of the Fiscal Year) sufficient to pay the federal, state and local income taxes on the Members’ distributive share of the Company’s income, loss, deduction or credit as determined under Section 702 of the Code for such Fiscal Year. The Company shall (a) at least fifteen (15) days prior to the due dates for the Members’ obligations to pay the federal, state and local income tax on the their distributive shares of the Company’s income, loss, deductions or credit as determined under Section 702 of the Code for such Fiscal Year, provide sufficient information to the Members to enable them to compute the amount of federal, state and local income taxes owed, and (b) to the extent that the distributions made in respect of such Fiscal Year are insufficient to pay any taxes owed, make such distributions as are necessary to enable the Members to pay such taxes at least five (5) days prior to the due dates thereof. If the Company is precluded by applicable law from making the distribution set forth above, the Company shall be obligated to make such distribution immediately at such time as allowable under applicable law. The pro rata distributions to be made pursuant to this Section shall be calculated using the highest marginal income tax rate (federal, state and local combined, but taking into account the deductibility of state and local income tax from federal income tax) applicable to the Member subject to the greatest level of taxation on such Member’s distributive share of the Company’s income, loss, deduction or credit as determined under Section 702 of the Code.

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7.5.     Allocation of Income and Loss and Distributions in Respect of Membership Interests Transferred.

(a)     If, during a Fiscal Year of the Company, Membership Interests are Transferred or a new Member is admitted to the Company, each item of income, gain, loss, deduction, or credit of the Company for such Fiscal Year shall be assigned pro rata to each day in the particular period of such Fiscal Year to which such item is attributable (i.e., the day on or during which it is incurred) and the amount of each such item so assigned to any such day shall be allocated to the Member based upon the provisions of Sections 7.1 and 7.2.

(b)     Distributions of Company assets shall be made only to the Members who, according to the books and records of the Company, are on the actual date of distribution Members of the Company. Neither the Company nor any Member shall incur any liability for making distributions in accordance with the provisions of the preceding sentence, whether or not the Company or any Member has knowledge or notice of any Transfer of any Membership Interests. Notwithstanding any provision above to the contrary, gain or loss of the Company realized in connection with a sale or other disposition of any of the assets of the Company shall be allocated solely to the Members of the Company as of the date such sale or other disposition occurs.

7.6.     Restoration of Funds. Except as otherwise provided by law, no Member shall be required to restore to the Company any funds properly distributed to it pursuant to Section 7.3.

Article VIII

INDEMNIFICATION

8.1.     Obligation to Indemnify. The Company shall indemnify and hold harmless to the fullest extent permitted by the laws of the State of Delaware, any Member, designee of a Member, Officer and/or any Affiliate thereof (individually, in each case, an “Indemnitee”), from and against any and all losses arising out of or incidental to the Business, activities or operations of, or relating to, the Company, regardless of whether the Indemnitee continues to be a Member, designee of a Member, Officer or Affiliate of any thereof at the time any such liability or expense is paid or incurred; provided, however, that no Indemnitee may be indemnified by the Company from and against any losses which result from the gross negligence, willful misconduct, fraud or violation of law of or by such Indemnitee.

8.2.     Advance of Expenses. Expenses incurred by an Indemnitee in defending any claim, demand, action, suit or proceeding subject to this Article 8 shall, from time to time, upon request by the Indemnitee, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined in a judicial proceeding or a binding arbitration that such Indemnitee is not entitled to be indemnified as authorized in this Article 8. Notwithstanding anything herein to the contrary, the Company shall not be obligated to reimburse an Indemnitee for any costs or expenses (including, without limitation, reasonable attorneys’ fees), to the extent not reasonable unless approved in writing in advance.

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8.3.     No Prejudice to Other Rights. The indemnification provided by this Article 8 shall be in addition to any other rights to which an Indemnitee may be entitled under any other agreement, by vote of the Members, as a matter of law or equity, or otherwise, both as to an action in the Indemnitee’s capacity as a Member, designee of a Member, Officer or Affiliate thereof, and as to an action in another capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

8.4.     Insurance. The Company may purchase and maintain insurance on behalf of the Officers and such other Persons as the MGT Member shall determine, against any liability that may be asserted against or expense that may be incurred by such Persons in connection with the business, activities or operations of the Company, regardless of whether the Company would have the power to indemnify such Persons against such liability under the provisions of this Agreement.

8.5.     Interested Transactions. An Indemnitee shall not be denied indemnification in whole or in part under this Article 8 or otherwise by reason of the fact that the Indemnitee had an interest in the transaction with respect to which the indemnification applies, if the transaction was otherwise permitted or not expressly prohibited by the terms of this Agreement.

8.6.     Severability of Indemnification Obligations. If this Article 8 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Person indemnified pursuant to this Article 8 as to costs, charges and expenses (including, without limitation, reasonable attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any suit, action or proceeding relating to this Agreement, whether civil, criminal, administrative or investigative, to the fullest extent permitted by any applicable portion of this Article 8 that shall not have been invalidated and to the fullest extent permitted by applicable law.

8.7.     Exculpation. No Indemnitee shall have personal liability to the Company or the Members for monetary damages for breach of such Indemnitee’s fiduciary duties (if any) or for any act or omission performed or omitted by such Indemnitee in good faith on behalf of the Company. Each Indemnitee shall be indemnified and exculpated from liability for damages in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters that such Indemnitee reasonably believes are within such Person’s professional or expert competence.

Article IX

Transferability, REPURCHASE AND WITHDRAWAL

9.1.     Restrictions on Transfer. No Member shall be entitled to Transfer any Membership Interests except as provided in this Article 9. Any Transfer (including an involuntary Transfer or a Transfer by operation of law) effected or purported to be effected, in violation of the terms and conditions of this Agreement, shall be void ab initio and shall not bind the Company.

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9.2.     Permitted Transfers. A Member may Transfer all or any portion of its Membership Interests only with the prior written consent of the Member Majority.  A Transfer described in this Section 9.2 is sometimes referred to herein as a “Permitted Transfer”; any transferee pursuant to a Permitted Transfer is sometimes referred to herein as a “Permitted Transferee”.  Unless and until the requirements of Section 9.3 are satisfied, a Permitted Transferee shall not become a Member of the Company.

9.3.      Substitute Members.  A Permitted Transferee shall be admitted as a Member, and become a “Substitute Member” as sometimes referred to herein, if the MGT Member shall have consented to such admission as a Substitute Member.

9.4.     Withdrawal of a Member.

(a)     Except as otherwise expressly contemplated in this Agreement, without the consent of all the Members holding at least a Member Majority (other than the Member seeking to withdraw), a Member shall not have the right to withdraw from the Company as a Member or terminate such Member’s Membership Interest. Notwithstanding the foregoing, a Member shall cease to be a Member upon such Member’s voluntary filing of a petition for, or the filing against such Member of an involuntary petition of bankruptcy, which remains uncontested for ten (10) days and undismissed for sixty (60) days bankruptcy.

(b)     Upon a permitted withdrawal, the withdrawing Member shall be (i) deemed to have forfeited all right, title and interest in and to such Member’s Membership Interests, which shall automatically revert, and be deemed to have been Transferred to, the Company, and (ii) be entitled to receive the balance of such Member’s Capital Account as of the withdrawal date, payable in cash or in securities at Fair Market Value, as the Company may select. The payment to a withdrawing Member shall be made within ninety (90) days from the date of withdrawal. The amount payable to a withdrawing Member under this Section 9.3 may, as the Company shall determine, be subject to reserves for subsequent adjustments in the computation of the withdrawal amount and reserves for contingencies, including contingent liabilities relating to pending or anticipated litigation or to Internal Revenue Service examinations, and to a reasonable charge to cover the cost of selling or liquidating assets in order to effect payment to the withdrawing Member. Any amount held as a reserve shall reduce the amount payable under this Section 9.3 and shall be invested by the Company in a segregated interest-bearing account, and the unused portion of any reserve shall be distributed with interest thereon after the Members shall have determined that the need therefore shall have ceased.

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9.5.     Tag-Along Rights. If the MGT Member proposes to directly or indirectly transfer any Membership Interests, the Gioia Member shall have the right to require the transferee in the proposed transfer to purchase from such Member, for the same consideration per Membership Interest and upon the same terms and conditions as to be paid and given to the transferring Member, up to a maximum number of Membership Interests equal to such Member’s pro rata Membership Interest multiplied by the transferred Membership Interests.

9.6.      Drag-Along Rights.     If at any time a Company Sale is approved by Members holding a Member Majority, then all other Members shall also agree to vote in favor of, and to transfer their Membership Interests in, such Company Sale.

Article X

DISSOLUTION and Liquidation

10.1.     Dissolution of the Company. The Company shall be dissolved in accordance with Section 18-801 of the Delaware Act upon the first to occur of the following events:

(a)     the sale, transfer or other disposition of all or substantially all the assets of the Company;

(b)     ninety (90) days after the withdrawal of the last remaining Member; or

(c)     the occurrence of any of the events set forth in Section 18-801(4) or Section 18-801(5) of the Delaware Act; and

(d)     the written decision of the Member Majority.

10.2.     Winding up Affairs and Distribution of Assets.

(a)     Upon dissolution of the Company, the MGT Member if it is at that time a Member or one Member elected by the Members (or, in the case of dissolution pursuant to Section 10.2(b) of this Agreement, such representative as may be appointed) shall be the liquidating party (the “Liquidator”) and shall proceed to wind up the affairs of the Company, liquidate the remaining property and assets of the Company and wind-up and terminate the business of the Company. The Liquidator shall cause a full accounting of the assets and liabilities of the Company to be taken and shall cause the assets to be liquidated and the business to be wound up as promptly as possible by either or both of the following methods: (i) selling the Company assets and distributing the net proceeds therefrom (after the payment of Company liabilities) to each Member in accordance with its Capital Account or (ii) if all Members shall agree, distributing the Company assets to the Members in kind and debiting the Capital Account of each Member with the Fair Market Value of such assets, each Member accepting an undivided interest in the Company assets (subject to their liabilities) in proportion to and to the extent of each Member’s positive Capital Account balance after allocating and crediting to the Capital Accounts the unrealized gain or loss to the Members as if such gain or loss had been recognized and allocated pursuant to Section 7.1 and Section 7.2.

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(b)     If the Company shall employ “method (i)” as set forth in Section 10.2(a) in whole or part as a means of liquidation, then the proceeds of such liquidation shall be applied in the following order of priority: (i) first, to the expenses of such liquidation; (ii) second, to the debts and liabilities of the Company to third parties, if any, in the order of priority provided by law; (iii) third, a reasonable reserve shall be set up to provide for any contingent or unforeseen liabilities or obligations of the Company to third parties (to be held and disbursed, at the discretion of the Liquidator, by an escrow agent selected by the Liquidator) and at the expiration of such period as the Liquidator may deem advisable, the balance remaining in such reserve shall be distributed as provided herein; (iv) fourth, to debts of the Company to the Members or their Affiliates and any fees and reimbursements payable under this Agreement; (v) fifth, to the Members in accordance with the positive Capital Account balances of Members after taking into account all Capital Account adjustment for the Company’s taxable year during which the liquidation occurs; and (vi) sixth, to the Members in accordance with their respective Membership Interests.

(c)     In connection with the liquidation of the Company, the Members severally, jointly, or in any combination upon which they may agree, shall have the first opportunity to make bids or tenders for all or any portion of the assets of the Company, and such assets shall not be sold to an outsider except only for a price higher than the highest and best bid of a single Member, the Members jointly, or a combination of Members. Any bid made by a Member or Members for all or any portion of the assets shall be made, if at all, within thirty (30) days after the Liquidator or any Member shall have requested such bids. A copy of each bid shall be delivered by the Liquidator to each Member. Unless otherwise agreed by all Members, no Member shall be entitled to raise its bid after submission thereof, whether in response to a bid received by the Company from any other Member or third party, or otherwise.

(d)     If any assets of the Company consisting of securities that are not freely marketable or for which a public market does not exist are to be distributed in kind, the net Fair Market Value of such assets as of the date of dissolution shall be determined in good faith by the Members in accordance with generally accepted industry practices, appraisal or by agreement of the Members. Any assets of the Company distributed in kind on dissolution of the Company shall be distributed in accordance with the provisions of Section 7.3 and such assets shall be deemed to have been sold as of the date of dissolution for their Fair Market Value, and the Capital Accounts of the Members shall be adjusted pursuant to the provisions of Section 3.4 to reflect such deemed sale.

(e)     Upon completion of the winding-up, liquidation and distribution of the assets, the Company shall be deemed dissolved and terminated.

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Article XI

GENERAL PROVISIONS

11.1.     Representations and Warranties. To the extent that the Membership Interests herein constitute securities for the purposes of the Securities Act or the securities laws of any applicable state or other jurisdiction, each Member hereby represents, warrants and covenants to the Company and each other Member that: (a) such Member is acquiring such Member’s Membership Interests for such Member’s own account as an investment and without an intent to distribute such Membership Interests in violation of applicable securities laws; (b) the interests in the Company have not been registered under the Securities Act or any state securities laws, and that such Member shall not sell or otherwise transfer any of such Member’s Membership Interests without registration under the Securities Act or pursuant to an opinion of counsel reasonably satisfactory to the Company that an exemption from registration is available; (c) such Member must bear the total economic risk of its interest in the Company for an indefinite period of time because, among other reasons, none of the Membership Interests in the Company have been registered under the Securities Act or under the securities laws of any applicable state or other jurisdiction and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless subsequently registered under the Securities Act and under the applicable securities laws of such states or jurisdictions or an exemption from such registration is available; and (d) such Member understands the lack of liquidity and restrictions on transfer of the Membership Interests and that its investment therein is suitable only for a person or entity of adequate financial means that has no need for liquidity of its investment and that can afford a total loss of such Member’s investment.

11.2.     Confidentiality. At all times after the date of this Agreement, no Member or Officer of the Company shall, or permit or cause any Affiliate thereof to, disclose to any third party any proprietary or confidential information of Company or its Business (including without limitation, any business processes, marketing techniques, concepts and ideas and other information or material relating to the Company or its Business which is not generally known); provided, however, that such obligation shall not apply to any information (a) to the extent that it legally is or becomes part of public or industry knowledge from authorized sources other than a Member, Officer of the Company or any Affiliate thereof, (b) which the Member, Officer of the Company or any Affiliate thereof is required by law to disclose (but only to the extent required to be so disclosed), (c) which is disclosed in accordance with the Company’s then-existing policies and during the ordinary course of the performance of such Member’s, Officer’s or Affiliate’s duties on behalf of the Company or its subsidiaries, or (d) for public filings by the Member, Officer of the Company or any Affiliate as may be required by law.

11.3.     No Exclusive Duty; Non-Competition.

(a)     Subject to Section 11.3(b), the Members may have other business interests and may engage in other activities in addition to those relating to the Company. Neither the Company nor any Member shall have any right, by virtue of this Agreement, to share or participate in such other investments or activities of the Members or in any income or revenues derived therefrom.

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(b)      Notwithstanding anything contained herein to the contrary, no Member or any of its Affiliates shall, during the term of the Company, directly or indirectly, (i) solicit or attempt to solicit business of any customers of the Company for products or services the same as those offered, sold or produced at any time by the Company; (ii) solicit or attempt to solicit for any business endeavor any employee or independent contractor or prior employee or independent contractor of the Company; or (iii) interfere with any business relationship between the Company and any other Person.

11.4     Binding Agreement. Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and inure to the benefit of the parties hereto, and their respective distributees, successors and assigns. No Person other than a party hereto shall have any legal, or equitable right, remedy or claim under or in respect of this Agreement.

11.5.     Headings. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

11.6.     Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held illegal, invalid, or unenforceable, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby.

11.7.     Counterparts. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument.

11.8.     Further Assurances. Each party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, conditions and covenants of this Agreement.

11.9.     Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address and/or facsimile number listed on Schedule A attached hereto.

11.10.     Injunctive Relief. Each party hereto (on its own behalf and on behalf of its designees) hereby acknowledges and admits that damages relating to or arising from a breach of their respective obligations in this Agreement would be difficult, if not impossible, to ascertain and the parties hereto would not have an adequate remedy at law. Therefore, in any action relating to or arising from a breach of this Agreement, the parties hereto shall be entitled to injunctive relief without further proof of “irreparable harm”, in addition to such other remedies and relief that would, in such event, be available to it.

11.11.     Amendments. All amendments to this Agreement must be in writing and signed by all of the parties hereto; provided, however, that neither amendment of Schedule A attached hereto in order to reflect changes in Membership Interests or the interests of Substitute Members shall be deemed an amendment hereof.

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11.12.     Title to Company Property. Legal title to all property of the Company will be held and conveyed in the name of the Company.

11.13.     Waivers. The failure of any party hereto to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.

11.14.     Number and Gender. As used in this Agreement, all pronouns and any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the Person or Persons may require.

11.15.     Governing Law. This Agreement and the rights of the parties hereunder shall be governed by, interpreted, and enforced in accordance with the laws of the State of New York (without giving effect to its conflict of laws principles). In the event of a conflict between any provision of this Agreement and any non-waivable or non-mandatory provision of the Delaware Act, the provision of this Agreement shall control and take precedence.

11.16.     CONSENT TO JURISDICTION.   EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL AND STATE COURT IN NEW YORK SITTING IN NEW YORK CITY AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE LITIGATED EXCLUSIVELY IN SUCH COURTS.  EACH PARTY HERETO AGREES NOT TO COMMENCE ANY LEGAL PROCEEDING RELATED HERETO OR THERETO EXCEPT IN SUCH COURT. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO CONSENTS TO PROCESS BEING SERVED IN ANY SUCH ACTION OR PROCEEDING BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL.

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11.17     WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OF THE OTHER PARTIES HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY OF THE OTHER PARTIES WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.17.

11.18.     Entire Agreement. This Agreement constitutes the entire agreement between and among the parties hereto with respect to the subject matter hereof, and supersedes any prior agreement or understanding with respect to such subject matter.

[Signature Page(s) Follow(s)]

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IN WITNESS WHEREOF, the undersigned have duly executed this Operating Agreement of the Company as of the date first written above.

The Company:
By:	/s/ Robert Ladd
	Name: Robert Ladd
	Title: President

The Members:
GIOIA SYSTEMS, LLC
By:	/s/ Gene Gioia
Name: Gene Gioia
Title: Managing Member
MGT CAPITAL INVESTMENTS, INC.
By:	/s/ Robert Ladd
Name: Robert Ladd
Title: President and CEO

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SCHEDULE OF MEMBERS AND MEMBERSHIP INTERESTS

Name and Address	Capital Contribution		Membership Interest
GIOIA SYSTEMS LLC	Assets and Patents listed on Exhibits A and B of the Asset Purchase Agreement			49	%
MGT CAPITAL INVESTMENTS, INC. 500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528	$	200,000		51	%
Total:				100	%

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EX-99.1

MGT Capital Acquires Online Poker Technology

Patented Card Shuffling Technology Creates Fair and Auditable Gameplay

Harrison, NY (September 4, 2013) – MGT Capital Investments, Inc. (NYSE MKT: MGT) announced today that its majority owned subsidiary MGT Interactive, LLC has acquired certain assets from Gioia Systems LLC, the inventor and owner of a proprietary method of card shuffling for the online poker market. Trademarked under the name Real Deal Poker, the technology uses patented shuffling machines, along with permutation re-sequencing, allowing for the creation of up to 16,000 decks per minute in real time.  Each newly created deck is then "dealt" for a hand of online poker, complete with burn cards and the option for a player to “cut” the deck. In addition to providing a higher level of realism, each deck provides an authentic randomized deal and full audit trail; both missing from currently used random number generating algorithms.  

The Real Deal system overcomes the inaccuracies inherent in current virtual dealing practices by creating unique decks formed by real cards that have been randomly shuffled first in a process that can be verified by players and regulatory authorities. In addition to poker, Real Deal can be adapted to other card games such as blackjack and baccarat. The Company intends to exhibit the system at the G2E convention in Las Vegas from September 23 - 26.

The acquisition includes 7 U.S. patents and several Internet URL addresses, including www.RealDealPoker.com.

Robert Ladd, CEO of MGT stated, "As U.S. states begin to allow betting on online poker, we expect Real Deal to offer regulators the only way to ensure fairness and allow for full transparency for any card dealt online.  We expect to partner with casinos as they offer online poker to adults in Nevada and New Jersey.  We also plan to license the Real Deal technology to other legal online poker sites that wish to offer their customers a more true-life poker experience.” The Company not yet entered into any such business arrangements and there can be no assurance that it will do so.

About MGT Capital Investments, Inc.

MGT Capital Investments and its subsidiaries are engaged in the business of acquiring, developing and monetizing assets in the online and mobile gaming space.

MGT Sports, Inc., a wholly owned subsidiary, owns a majority interest in FanTD LLC, an online daily fantasy sports wagering business.  FanTD LLC owns and operates FanThrowdown.com, one of the leading daily fantasy sports websites.  Launched in 2012, FanThrowdown.com offers daily fantasy gameplay for the NFL, MLB, NCAA (basketball & football), NHL, NBA and professional golf.  Its goal is to offer fantasy sports fans the absolute best play environment and the most popular gameplay styles with a perfect balance between user-friendliness and in-depth statistical analysis.

MGT Gaming, Inc., a majority owned subsidiary, owns U.S. Patent No. 7,892,088 relating to casino gaming systems. In November 2012, MGT Gaming filed a patent infringement suit against Caesars Entertainment Corporation, MGM Resorts International, Inc., WMS Gaming (a subsidiary of WMS Industries, Inc.), Penn National Gaming, Inc., and Aruze Gaming America, Inc.

In addition, the Company owns Hammercat Studios, a publisher and developer of videogames for digital distribution in the mobile app space.

Forward-looking statements

This press release contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." MGT's financial and operational results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.

Company contact

MGT Capital Investments, Inc.

Robert Traversa, Chief Financial Officer

914-630-7431

rtraversa@mgtci.com

EX-99.2

MGT Capital Asserts New Patent in Infringement Lawsuit

Continuation Patent Granted by USPTO Strengthens and Expands Claims

Harrison, NY (September 9, 2013) – MGT Capital Investments, Inc. (NYSE MKT: MGT) announced today that its majority owned subsidiary MGT Gaming, Inc. was recently granted U.S. Patent No. 8,500,554 (the “554 Patent”), directed to a gaming system in which a bonus game is played on an interactive display.

The Company also announced that it has filed an Amended Complaint with the U.S. District Court for the Southern District of Mississippi seeking to add allegations that defendants in its currently-pending patent infringement lawsuit, (Case 3:12-cv-00741-CWR-FKB), infringe the new '554 patent. The accused products in this lawsuit include at least those identified under the trade names: PARADISE FISHING and AMAZON FISHING (manufactured and distributed by Aruze Gaming, and in use at casinos owned and operated by Caesars Entertainment, MGM Resortsand Penn National Gaming); PIRATE BATTLE and CLUE (manufactured and distributed by WMS Gaming, and in use at casinos owned and operated by MGM Resorts and Caesars Entertainment); and BATTLESHIP, STAR TREK BATTLE STATIONS, MONOPOLY BIGGER EVENT, and CASTLE KING (all manufactured and distributed by WMS Gaming).

"We are very pleased to add this new patent to our intellectual property assets," said Robert Ladd, MGT CEO and President.  "Our portfolio consists of quality, fundamentalpatents that we believe will strengthen our licensing efforts to the casino gaming industry."

About MGT Capital Investments, Inc.

MGT Capital Investments and its subsidiaries are engaged in the business of acquiring, developing and monetizing assets in the online and mobile gaming space.

MGT Sports, Inc., a wholly owned subsidiary, owns a majority interest in FanTD LLC, an online daily fantasy sports wagering business.  FanTD LLC owns and operates FanThrowdown.com, one of the leading daily fantasy sports websites.  Launched in 2012, FanThrowdown.com offers daily fantasy gameplay for the NFL, MLB, NCAA (basketball & football), NHL, NBA and professional golf.  Its goal is to offer fantasy sports fans the absolute best play environment and the most popular gameplay styles with a perfect balance between user-friendliness and in-depth statistical analysis.

MGT Gaming, Inc., a majority owned subsidiary, owns U.S. Patent Nos. 7,892,088 and 8,500,554 relating to casino gaming systems. In November 2012, MGT Gaming filed a patent infringement suit against Caesars Entertainment Corp., MGM Resorts International, Inc., WMS Gaming (a subsidiary of WMS Industries, Inc.), Penn National Gaming, Inc., and Aruze Gaming America, Inc.

MGT Interactive, Inc., a majority owned subsidiary, owns REAL DEAL POKER™, an innovative online poker technology with a patented card shuffling system, allowing for regulatory transparency and a higher level of realism. Real Deal Poker intends to exhibit at G2E 2013 (booth 4828i) in Las Vegas Nevada from September 24-26, 2013.

In addition, the Company owns Hammercat Studios, a publisher and developer of videogames for digital distribution in the mobile app space.

Forward-looking statements

This press release contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." MGT's financial and operational results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.

Company contact

MGT Capital Investments, Inc.

Robert Traversa, Chief Financial Officer

914-630-7431

rtraversa@mgtci.com