CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT

MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF

PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Exhibit 10.6

EXECUTION COPY

MEMBERSHIP INTEREST PURCHASE AGREEMENT

by and among

GRE-ILLINOIS, LLC

As Seller

GREAT RIVER ENTERTAINMENT, LLC

As Owner

GRAND RIVER JACKPOT, LLC

As the Company

and

ACCEL ENTERTAINMENT GAMING, LLC

As Buyer

dated as of

August 26, 2019

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS

     1  

ARTICLE II PURCHASE AND SALE

     14  

Section 2.01

  Purchase and Sale      14  

Section 2.02

  Purchase Price      14  

Section 2.03

  Reimbursement of Company Cash      14  

Section 2.04

  Transactions to be Effected at the Closing      17  

Section 2.05

  Closing      17  

Section 2.06

  Post-Closing Adjustment of Estimated Closing Payment      17  

Section 2.07

  Tax Consequences      18  

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER, THE COMPANY AND GRA

     19  

Section 3.01

  Organization and Authority of Seller      19  

Section 3.02

  Organization, Authority and Qualification of the Company and GRA      19  

Section 3.03

  Capitalization      19  

Section 3.04

  No Subsidiaries      20  

Section 3.05

  No Conflicts; Consents      20  

Section 3.06

  Financial Statements; Internal Financial Controls      21  

Section 3.07

  Undisclosed Liabilities      21  

Section 3.08

  Absence of Certain Changes, Events and Conditions      22  

Section 3.09

  Material Contracts      23  

Section 3.10

  Title to and Sufficiency of Assets; Real Property      25  

Section 3.11

  Intellectual Property      26  

Section 3.12

  Insurance      27  

Section 3.13

  Legal Proceedings; Governmental Orders      27  

Section 3.14

  Compliance with Laws; Permits      27  

Section 3.15

  Anti-Corruption Laws      27  

Section 3.16

  Employee Benefit Matters      28  

Section 3.17

  Employment Matters      30  

Section 3.18

  Taxes      30  

Section 3.19

  Environmental, Health and Safety Matters      32  

Section 3.20

  Licensing Issues      32  

Section 3.21

  Brokers      32  

Section 3.22

  Interested Party Transactions      33  

Section 3.23

  GE Person Buy-Out      33  

Section 3.24

  No Other Representations and Warranties      33  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF OWNER

     33  

Section 4.01

  Organization and Authority of Owner      34  

Section 4.02

  No Conflicts; Consents      34  

Section 4.03

  Owner Financial Statements          34  

 

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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER

     34  

Section 5.01

  Organization and Authority of Buyer      35  

Section 5.02

  No Conflicts; Consents      35  

Section 5.03

  Investment Purpose      35  

Section 5.04

  Brokers      35  

Section 5.05

  Legal Proceedings      35  

Section 5.06

  Independent Investigation      36  

ARTICLE VI COVENANTS

     36  

Section 6.01

  Conduct of Business Prior to the Closing      36  

Section 6.02

  Due Diligence      36  

Section 6.03

  Resignations      38  

Section 6.04

  Employees; Benefit Plans      38  

Section 6.05

  Plant Closings and Mass Layoffs      39  

Section 6.06

  Director and Officer Indemnification and Insurance      39  

Section 6.07

  Confidentiality; Public Announcements      39  

Section 6.08

  Governmental Approvals and Other Third-party Consents      39  

Section 6.09

  Books and Records      40  

Section 6.10

  Closing Conditions      41  

Section 6.11

  Further Assurances      41  

Section 6.12

  Transfer Taxes      41  

Section 6.13

  Tax Matters      41  

Section 6.14

  Representation and Warranty Insurance      45  

Section 6.15

  Restrictive Covenants      45  

Section 6.16

  GE Person Buy-Out      46  

Section 6.17

  Post-closing Payments      47  

Section 6.18

  Section 754 Issues      48  

Section 6.19

  IGB Covenant      48  

Section 6.20

  Exclusivity      48  

Section 6.21

  Release      49  

Section 6.22

  Schedule Supplement      49  

ARTICLE VII CONDITIONS TO CLOSING

     49  

Section 7.01

  Conditions to Obligations of All Parties      49  

Section 7.02

  Conditions to Obligations of Buyer      50  

Section 7.03

  Conditions to Obligations of Seller      51  

ARTICLE VIII INDEMNIFICATION

     52  

Section 8.01

  Survival      52  

Section 8.02

  Indemnification By Seller and Owner      52  

Section 8.03

  Indemnification By Buyer      53  

Section 8.04

  Certain Limitations      54  

Section 8.05

  Indemnification Procedures      55  

Section 8.06

  Tax Treatment of Indemnification Payments      56  

Section 8.07

  Exclusive Remedies      56  

 

ii

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ARTICLE IX TERMINATION

     57  

Section 9.01

  Termination      57  

Section 9.02

  Effect of Termination      58  

ARTICLE X MISCELLANEOUS

     58  

Section 10.01

  Expenses      58  

Section 10.02

  Notices      58  

Section 10.03

  Interpretation      59  

Section 10.04

  Headings      59  

Section 10.05

  Severability      59  

Section 10.06

  Entire Agreement      60  

Section 10.07

  Successors and Assigns      60  

Section 10.08

  No Third-party Beneficiaries      60  

Section 10.09

  Amendment and Modification; Waiver      60  

Section 10.10

  Governing Law; Submission to Jurisdiction; Waiver of Jury Trial      60  

Section 10.11

  Specific Performance      61  

Section 10.12

  Counterparts      61  

Section 10.13

  IGB Review      61  

 

iii

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement (this “Agreement”), dated as of
August 23, 2019, is entered into by and among GRE-Illinois, LLC, an Illinois
limited liability company (“Seller”), Great River Entertainment, LLC, an Iowa
limited liability company (“Owner”), Grand River Jackpot, LLC, an Illinois
limited liability company (the “Company”), and Accel Entertainment Gaming, LLC,
an Illinois limited liability company (“Buyer” and together with Seller and
Owner, each, a “Party” and collectively, the “Parties”).

RECITALS

WHEREAS, at the Closing, Seller shall own all of the issued and outstanding
membership interests (the “Membership Interests”) in the Company;

WHEREAS, the Company is a licensed Terminal Operator pursuant to the Illinois
Video Gaming Act (the “Act”) and the written policies, rules and regulations
promulgated thereunder (collectively, with the Act, the “Video Gaming Laws”) and
owns, services, maintains and places Video Gaming Terminals (as defined in the
Act) in various establishments (“Gaming Establishments”) that are licensed under
the Act (the “Gaming Business”);

WHEREAS, the Company owns 100% of the issued and outstanding membership
interests of Grand River Amusements, LLC, an Illinois limited liability company
(“GRA”) and GRA is in the business of owning, servicing, maintaining and
providing amusement games for placement in facilities (“Amusement
Establishments”) throughout the State of Illinois (the “Amusement Business”);
and

WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from
Seller, the Membership Interests, subject to the terms and conditions set forth
herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows:

ARTICLE I

DEFINITIONS

The following terms have the meanings specified or referred to in this Article
I:

“2019 Sales Agent Payment Liability” means all Sales Agent Payments required to
be paid by the Company post-Closing during the 2019 calendar year.

“2019 Regional Manager Payment Liability” means all Regional Manager Payments
required to be paid by the Company post-Closing during the 2019 calendar year.

“Accounting Conventions” has the meaning set forth in Section 6.17.

“Act” has the meaning set forth in the recitals.

“Additional Cash Amount” has the meaning set forth in Section 2.03(a)(i)(D).

“Adjustment Component” has the meaning set forth in Section 2.06(b).

--------------------------------------------------------------------------------

“Adjustment Notice” has the meaning set forth in Section 2.06(b).

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

“Agreement” has the meaning set forth in the preamble.

“Allocation” has the meaning set forth in Section 6.13(e).

“Amusement Agreement” means an oral or written agreement memorializing GRA’s
right to place amusement assets in an Amusement Establishment counterparty
thereto.

“Amusement Business” has the meaning set forth in the recitals to this
Agreement.

“Amusement Establishment” has the meaning set forth in the recitals.

“Anti-Corruption Law” means the Foreign Corrupt Practices Act of 1977 (15 U.S.C.
§§ 78dd-1, et seq.), as amended, any rules or regulations thereunder, the U.S.
Travel Act or any other Laws concerning anti-corruption, anti-bribery, or money
laundering.

“Audited Financial Statements” has the meaning set forth in Section 3.06.

“Auditor” has the meaning set forth in Section 2.03(a)(ii).

“Average Net Win Per Machine Per Day” means, with respect to a Gaming
Establishment, the Net Win for such Gaming Establishment during the applicable
measurement period, divided by the aggregate number of Machine Days for such
Gaming Establishment during the applicable measurement period.

“Balance Sheet” has the meaning set forth in Section 3.06.

“Balance Sheet Date” has the meaning set forth in Section 3.06.

“Baseline Location” means a Company Establishment that has had live Video Gaming
Terminals therein operated by the Company for at least six (6) consecutive
months as of the applicable measurement date.

“Baseline Location Schedule” has the meaning set forth in Section 6.17(b).

“Benefit Plan” has the meaning set forth in Section 3.16(a).

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in Illinois are authorized or required by Law to be
closed for business.

“Buyer” has the meaning set forth in the preamble.

 

2

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“Buyer Benefit Plans” has the meaning set forth in Section 6.04(b).

“Buyer Fundamental Representations and Warranties” means those representations
and warranties of Buyer set forth in Section 5.01 and Section 5.02.

“Buyer Indemnitee” has the meaning set forth in Section 8.02.

“Buyer’s Phase 1 Due Diligence” has the meaning set forth in Section 6.02(a).

“Buyer’s Phase 1 Termination Right” has the meaning set forth in
Section 6.02(a).

“Buyer’s Phase 2 Due Diligence” has the meaning set forth in Section 6.02(b).

“Capitalization Schedule” has the meaning set forth in Section 3.03(a).

“Cash Reimbursement Amount” shall mean the sum of (i) the Vault and ATM Cash
Reimbursement Amount; (ii) the VGT Cash Reimbursement Amount, and (iii) the
Additional Cash Amount, each as calculated on the Closing Date pursuant to the
schedules provided by Seller pursuant to Section 2.03(a)(i).

“CIM” has the meaning set forth in Section 3.24.

“Closing Date” has the meaning set forth in Section 2.05.

“Closing Financial Certificate” has the meaning set forth in Section 7.02(g).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the recitals.

“Company Closing Use Agreement” means a Use Agreement with a Company
Establishment as more fully set forth on Section 1.01(b) of the Disclosure
Schedules.

“Company Continuing Employee” has the meaning set forth in Section 6.04(a).

“Company Establishment” means: (a) a Gaming Establishment that has entered into
a Use Agreement and is set forth on Section 1.01(b) of the Disclosure Schedules
with the Company or that was assigned to the Company, (b) any Pipeline
Establishment that has entered into a Use Agreement as set forth on
Section 1.01(b) of the Disclosure Schedules with the Company or that was
assigned to the Company or enters into a Use Agreement with the Company, Buyer
or an Affiliate of Buyer following the date hereof, (c) any successor in
interest to the original party to a Use Agreement or any Person that occupies a
facility or location having been subject to a Use Agreement set forth in (a) or
(b) of this definition, or (d) a Gaming Establishment majority owned by one or
more owners of a facility or location having been subject to a Use Agreement set
forth in (a), (b) or (c) of this definition, that enters into a Use Agreement
with the Company or Buyer or an Affiliate of Buyer within nine (9) months of
Closing.

“Company Intellectual Property” has the meaning set forth in Section 3.11(b).

 

3

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“Company Operating Agreement” means that certain Amended and Restated Operating
Agreement of the Company, dated October 31, 2016 (as amended).

“Company Transaction Expenses” means the sum of all expenses of the Company or
GRA, or for which the Company or GRA is liable, related to or arising from the
negotiation, preparation and consummation of this Agreement or the transactions
contemplated hereby, including (a) all investment banking fees, commissions,
advisory fees, legal fees, accounting fees, (b) all severance, sale, stay,
bonuses or other similar payments paid or payable in connection with the
transactions contemplated by this Agreement, (c) the 2019 Regional Manager
Payment Liability and the 2019 Sales Agent Payment Liability (but, for the
avoidance of doubt, not including any Route Location Payments due post-Closing
or other continuing employee/sales agent commissions that arise because of the
occurrence of events (including the passage of time) post-Closing), in each
case, including any employer-side payroll or similar Taxes arising in connection
therewith and (D) fifty percent (50%) of the cost of the R&W Insurance Policy.

“Confidentiality Agreement” means the Confidentiality Agreement, dated as of
May 9, 2019, between Buyer and the Company.

“Data Room” means the electronic documentation site established by Intralinks,
Inc. on behalf of Seller containing the documents set forth in the index
included in Section 1.01(a) of the Disclosure Schedules dated as of two (2) days
prior to the Closing Date.

“Date of Last Service” has the meaning set forth in Section 2.03(a)(i)(B).

“Deductible” has the meaning set forth in Section 8.04(a).

“Deposit” means the payment of $6 million put into escrow with the Escrow Agent,
pursuant to that certain Escrow Agreement by and among Buyer, Seller and the
Escrow Agent dated August 23, 2019 and attached hereto as Exhibit C.

“Deposit Conditions” means each of the following is true as of the date of the
applicable termination: (i) Buyer’s Phase 1 Due Diligence Period has expired in
accordance with the terms set forth herein, (ii) the Closing Conditions set
forth in Section 7.01(a) have been satisfied, (iii) the Company and GRA have
been in material compliance with Section 6.01 since the date of this Agreement,
(iv) the Use Agreement Summary is materially accurate, and (v) the
representations and warranties of Seller, the Company and GRA contained in
Article III are true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or Material Adverse Effect, which representations and warranties
as so qualified shall be true and correct in all respects) as though made at and
as of such date (except those representations and warranties that address
matters only as of a specified date, which shall be true and correct in all
respects as of that specified date).

“Direct Claim” has the meaning set forth in Section 8.05(b).

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and
Buyer concurrently with the execution and delivery of this Agreement.

“Dollars” or “$” means the lawful currency of the United States.

 

4

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“Drop Dead Date” has the meaning set forth in Section 9.01(b)(i).

“Employees” means those Persons employed by the Company or GRA immediately prior
to the Closing.

“Encumbrance” means any lien, pledge, mortgage, deed of trust, security
interest, charge, claim, easement, encroachment, conditional sale or other
encumbrance of any kind or character whatsoever or other defect in title.

“Environmental, Health and Safety Requirements” means all applicable Laws
concerning or relating to worker/occupational health and safety, or pollution or
protection of the environment, including those relating to the presence, use,
manufacturing, refining, production, generation, handling, transportation,
treatment, recycling, transfer, storage, disposal, distribution, importing,
labeling, testing, processing, discharge, release, threatened release, control
or other action or failure to act involving cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now in
effect.

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

“ERISA Affiliate” means a trade or business (whether or not incorporated) that
is treated as a single employer with the Company or GRA within the meaning of
Section 414(b), (c), (m) or (o) of the Code.

“Escrow Agent” means Fifth Third Bank, an Ohio banking corporation.

“Estimated Adjustment Component” means each of (i) the Estimated Working Capital
and (ii) the Estimated Unpaid Company Transaction Expenses.

“Estimated Cash Reimbursement Amount” means the Company’s good faith estimate of
the Cash Reimbursement Amount as set forth in the notice delivered to Buyer
pursuant to Section 2.03(a).

“Estimated Closing Payment” has the meaning set forth in Section 2.02(a).

“Estimated Working Capital” has the meaning set forth in Section 7.02(g).

“Estimated Unpaid Company Transaction Expenses” has the meaning set forth in
Section 7.02(g).

“Final Cash Reimbursement Amount” has the meaning set forth in
Section 2.03(a)(iv).

“Financial Statements” has the meaning set forth in Section 3.06.

“Flow of Funds Schedule” means that certain flow of funds allocating the amount
paid at Closing to Seller and which shall include wire transfer instructions for
Seller, which initial schedule shall be delivered by Seller to Buyer no later
than two (2) Business Days prior to the Closing Date and shall be updated
immediately prior to the Closing to account for the reimbursement of Cash
Reimbursement Amount.

 

5

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“Fundamental Representations and Warranties” means the Buyer Fundamental
Representations and Warranties and the Seller Fundamental Representations and
Warranties.

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

“Gaming Business” has the meaning set forth in the recitals.

“Gaming Establishments” has the meaning set forth in the recitals.

“GE Person Buy-Out” means the purchase by Seller of all of Grand Enterprises,
LLC’s Membership Interests in the Company pursuant to the applicable provisions
of the Company Operating Agreement.

“GE Restricted Person” means each of Misty Menossi, Ryan Menossi, Leonard A.
Rakers and Leonard P. Rakers.

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

“Governmental Official” means (a) an officer, agent or employee of any
Governmental Authority or (b) any candidate for any office of or position with
any Governmental Authority.

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

“GRA Operating Agreement” means the operating agreement of GRA dated August 6,
2012.

“GRJ Restricted Person” means any of Seller, [***] and [***].

“IGB” means the Illinois Gaming Board.

“Indebtedness” means (a) all indebtedness for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money, (b) any
indebtedness evidenced by any note, bond, debenture or other debt security,
(c) any indebtedness for the deferred purchase price of property or services
with respect to which a Person is liable, contingently or otherwise, as obligor
or otherwise (other than trade liabilities and other current liabilities
incurred in the ordinary course of business consistent with past practice which
are not more than ninety (90) days past due), (d) any commitment by which a
Person assures a creditor against Loss (including contingent reimbursement
obligations with respect to letters of credit), (e) any indebtedness guaranteed
in any manner by a Person (including guarantees in the form of a contract to

 

6

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repurchase or reimburse), (f) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against Loss, (g) any indebtedness secured by an Encumbrance on a
Person’s assets and (h) accrued interest to the day immediately prior to the
Closing Date in respect of any obligations described in the foregoing clauses
(a) through (g) of this definition and all premiums, penalties, charges, fees,
expenses and other amounts due in connection with the payment and satisfaction
in full of such obligations which will be paid or prepaid (or become payable) at
the Closing. For the avoidance of doubt, Indebtedness shall not include any
Company Transaction Expense.

“Indemnified Party” has the meaning set forth in Section 8.04.

“Indemnifying Party” has the meaning set forth in Section 8.04.

“Insurance Policies” has the meaning set forth in Section 3.12.

“Insurer” means Euclid Transactional, in its capacity as insurer under the R&W
Insurance Policy.

“Intellectual Property” has the meaning set forth in Section 3.11(a).

“Interim Balance Sheet” has the meaning set forth in Section 3.06.

“Interim Balance Sheet Date” has the meaning set forth in Section 3.06.

“Interim Financial Statements” has the meaning set forth in Section 3.06.

“Knowledge of Seller” or “Seller’s Knowledge” or any other similar knowledge
qualification, means the knowledge of those persons listed on Section 1.01(c) of
the Disclosure Schedules; provided, that such individuals shall be deemed to
have knowledge of a particular fact, circumstance, event or other matter if
(x) such knowledge could be obtained from reasonable inquiry of such
individual’s direct subordinates or direct reports or (y) such fact,
circumstance, event or other matter is reflected in one or more documents
(whether written or electronic, including electronic mails sent to or by such
individual) in, or that have been in, the possession of such individual,
including his or her personal files.

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

“Leases” has the meaning set forth in Section 3.10(b).

“LOI” means that certain Letter of Intent between Buyer and Seller dated
July 18, 2019, as amended.

“Losses” means any losses, damages, liabilities, claims, fees, awards, Taxes,
judgments, fines, penalties, interests, costs and expenses, including costs of
enforcement, investigation and defense and reasonable attorneys’ fees of
counsel, experts and other professionals.

 

7

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“Machine Day” means with respect to each Video Gaming Terminal located in a
Gaming Establishment during a measurement period, the number of days during such
measurement period that such Video Gaming Terminal is located and operational in
such Gaming Establishment.

“Material Adverse Effect” means any one or more events, occurrences, facts,
conditions or changes that are, or would reasonably be expected to be,
materially adverse, individually or in the aggregate, to (a) the business,
results of operations, condition (financial or otherwise) or assets,
liabilities, revenues, income, business, prospects, operations or results of
operations of the Company and GRA, taken as a whole, or (b) the ability of
Seller to consummate the transactions contemplated hereby; provided, however,
that “Material Adverse Effect” shall not include any event, occurrence, fact,
condition or change, directly or indirectly, arising out of or attributable to:
(i) general economic conditions (except to the extent that such changes have a
disproportionate impact on the Company and GRA (taken as a whole) as compared to
other companies in the industry in which the Company or GRA operates); (ii)
conditions generally affecting the industries in which the Company and GRA
operate (except to the extent that such changes have a disproportionate impact
on the Company and GRA (taken as a whole) as compared to other companies in the
industry in which the Company or GRA operates); (iii) any changes in financial,
banking or securities markets in general, including any disruption thereof and
any decline in the price of any security or any market index or any change in
prevailing interest rates (except to the extent that such changes have a
disproportionate impact on the Company and GRA (taken as a whole) as compared to
other companies in the industry in which the Company or GRA operates); (iv) acts
of war (whether or not declared), armed hostilities or terrorism, or the
escalation or worsening thereof; (v) any action required or permitted by this
Agreement or any action taken (or omitted to be taken) with the written consent
of or at the written request of Buyer; (vi) any changes in applicable Laws
(other than by legislation or any action of the IGB) or accounting rules
(including GAAP) or the enforcement, implementation or interpretation thereof;
(vii) the announcement, pendency or completion of the transactions contemplated
by this Agreement, including losses or threatened losses of employees, Company
Establishments, suppliers, distributors or others having relationships with the
Company or GRA; (viii) any natural or man-made disaster or acts of God; or
(ix) any failure by the Company or GRA to meet any internal or published
projections, forecasts or revenue or earnings predictions (provided that the
underlying causes of such failures (subject to the other provisions of this
definition) shall not be excluded).

“Material Contracts” has the meaning set forth in Section 3.09(a).

“Membership Interests” has the meaning set forth in the recitals.

“Net Terminal Income” has the meaning set forth in the Act.

“Net Win” means, with respect to a Gaming Establishment, all amounts deposited
into Video Gaming Terminals located in such Gaming Establishment during the
applicable measurement period less the amount of all credits or payouts issued
to players during such measurement period with respect to such Video Gaming
Terminals.

“OA Restrictive Covenants” means those certain restrictive covenants of the GE
Restricted Persons set forth in Section 6.9(c) of the Company Operating
Agreement.

 

8

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“One-Year Measurement Period” means the one-year period ending on the One-Year
Payment Date.

“One-Year Payment Amount” has the meaning set forth in Section 2.02(b).

“One-Year Payment Amount Offset” means the sum of the following payments
actually made by the Company during the One-Year Measurement Period: (i) the
Route Location Payments, (ii) the Sales Agent Payments, and (iii) the Regional
Manager Incentive Payments. No 2019 Sales Agent Payment Liability or 2019
Regional Manager Payment Liability included in the Estimated Working Capital
calculation shall count toward the One-Year Payment Amount Offset.

“One-Year Payment Date” means the date that is the one-year anniversary of the
Closing Date (provided that if such date is not the last day of a calendar
month, then the last day of the calendar month in which such anniversary
occurs).

“Owner Audited Financial Statements” has the meaning set forth in Section 4.03.

“Owner Financial Statements” has the meaning set forth in Section 4.03.

“Owner Interim Financial Statements” has the meanings set forth in Section 4.03.

“Party” has the meaning set forth in the preamble.

“Permits” means all permits, licenses, franchises, approvals, authorizations,
and consents required to be obtained from Governmental Authorities.

“Permitted Encumbrances” has the meaning set forth in Section 3.10(a).

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

“Phase 1 Due Diligence Period” has the meaning set forth in Section 6.02(a).

“Phase 2 Due Diligence Period” has the meaning set forth in Section 6.02(b).

“Pipeline Establishment” means an establishment identified as being solicited by
the Company to enter into a Use Agreement with the Company and set forth on
Section 1.01(b) of the Disclosure Schedules and which establishment actually
executes a Use Agreement with the Company within nine (9) months of the Closing.

“Post-Closing Tax Period” means any taxable period or portion thereof that
begins after the Closing Date.

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

“Purchase Price” has the meaning set forth in Section 2.02.

 

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“Qualified Benefit Plan” has the meaning set forth in Section 3.16(b).

“R&W Insurance Policy” means that certain buyer-side representations and
warranties insurance policy to be issued by the Insurer to the Buyer on terms
reasonably satisfactory to Buyer, to be entered into simultaneously with, and
effective as of, the Closing.

“Real Property” means the real property owned, leased or subleased by the
Company or GRA, together with all buildings, structures and facilities located
thereon.

“Regional Manager Incentive Payments” means any incentive payments actually paid
to any Company regional manager pursuant to the Company’s 2019 Commission
Program with respect to a Gaming Establishment that has entered into a Use
Agreement with the Company and is set forth on Section 1.01(b) of the Disclosure
Schedules, or any Pipeline Establishment that has entered into a Use Agreement
with the Company as set forth on Section 1.01(b) of the Disclosure Schedules.
All potential Regional Manager Incentive Payments that may be payable during the
One-Year Measurement Period and Three-Year Measurement Period is set forth on
Section 1.01(d) of the Disclosure Schedules; provided that any payment (or
portion thereof) made as a result of a post-Closing modification or amendment to
the Company’s 2019 Commission Program without Seller’s consent shall not be
deemed to be a Regional Manager Incentive Payment for purposes of calculating
the One-Year Payment Amount Offset or the Three-Year Payment Amount Offset to
the extent resulting from such modification or amendment.

“Releasees” has the meaning set forth in Section 6.21.

“Removal Date” means the date on which Buyer terminates the applicable Use
Agreement or otherwise voluntarily removes its Video Gaming Terminals from a
Company Establishment.

“Representative” means, with respect to any Person, such Person’s Affiliates and
any and all directors, officers, employees, consultants, financial advisors,
counsel, accountants and other agents of such Person and its Affiliates.

“Restricted Territory” means the state of Illinois.

“Restrictive Covenant Period” means the period beginning on the Closing Date and
ending on the five (5) year anniversary of the Closing Date.

“Route Location Payments” means any payments made with respect to any route
acquisitions completed by the Company prior to Closing. All potential Route
Location Payments that may be payable during the One-Year Measurement Period and
Three-Year Measurement Period is set forth on Section 1.01(e) of the Disclosure
Schedules; provided that any payment (or portion thereof) made as a result of a
post-Closing modification or amendment to a route acquisition agreement without
Seller’s consent shall not be deemed to be a Route Location Payment for purposes
of calculating the One-Year Payment Amount Offset or the Three-Year Payment
Amount Offset to the extent resulting from such modification or amendment.

 

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“Sales Agent” means an employee or consultant of the Company who facilitated the
Company’s acquisition of a Company Closing Use Agreement as evidenced by such
person being identified as the sales agent with respect to such Use Agreement.

“Sales Agent Payment” means any payments made to any Sales Agent for procuring a
Company Closing Use Agreement. All potential Sales Agent Payments that may be
payable during the One-Year Measurement Period and Three-Year Measurement Period
is set forth on Section 1.01(f) of the Disclosure Schedules; provided that any
payment (or portion thereof) made as a result of a post-Closing modification or
amendment to any agreement with a Sales Agent without Seller’s consent shall not
be deemed to be a Sales Agent Payment for purposes of calculating the One-Year
Payment Amount Offset or the Three-Year Payment Amount Offset to the extent
resulting from such modification or amendment.

“SciGames Report” has the meaning set forth in Section 2.03(a)(i)(C).

“Seller” has the meaning set forth in the preamble.

“Seller Cap” has the meaning set forth in Section 8.04(b).

“Seller Fundamental Representations and Warranties” means those representations
and warranties of Seller set forth in Section 3.01, Section 3.02, Section 3.03,
Section 3.04, Section 3.18, Section 3.21 and Section 3.23.

“Seller Indemnitee” has the meaning set forth in Section 8.03.

“Straddle Period” means any taxable period that begins on or before the Closing
Date and ends on or after the Closing Date.

“Survival Period” has the meaning set forth in Section 8.01.

“Target Working Capital” means $0.00.

“Tax Authority” means any Governmental Authority having jurisdiction over the
assessment, determination, collection or other imposition of Taxes.

“Tax Determination” has the meaning set forth in Section 6.13(c)(ii).

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp, occupation,
premium, property (real or personal), real property gains, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.

 

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“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document filed or required to be filed
by any taxing authority in connection with the determination, assessment,
collection, imposition, payment, refund or credit of any federal, state, local
or foreign Tax or the administration of the laws relating to any Tax., including
any schedule or attachment thereto, and including any amendment thereof.

“Terminal Operator” has the meaning set forth in the Act.

“Third-Party Claim” has the meaning set forth in Section 8.05(a).

“Three-Year Measurement Period” means the two-year period ending on the
Three-Year Payment Date.

“Three-Year Payment Amount” has the meaning set forth in Section 2.02(c).

“Three-Year Payment Amount Offset” means the sum of the following payments
actually made by the Company during the Three-Year Measurement Period (which,
for the avoidance of doubt shall not include any amounts included in the
One-Year Payment Amount Offset): (i) the Route Location Payments, (ii) the Sales
Agent Payments, and (iii) the Regional Manager Incentive Payments. No prepayment
of any Route Location Payment, Sales Agent Payment or Regional Manager Incentive
Payment made during the Three-Year Measurement Period, which was otherwise
scheduled to be made subsequent thereto, shall count toward a Three-Year Payment
Amount Offset.

“Three-Year Payment Date” means the date that is the three-year anniversary of
the Closing Date; provided that if such date is not the last day of a calendar
month, then the last day of the calendar month in which such anniversary occurs.

“TO Share Schedule” has the meaning set forth in Section 6.17.

“TPG” means TPG Pace Holdings Corp.

“TTM GRJ TO Share” means as of the Closing Date, the One-Year Payment Date or
the Three-Year Payment Date (as applicable), the Terminal Operator’s share of
Net Terminal Income generated by all Company Establishments during the twelve
(12) month period ending as of the applicable date (as calculated in accordance
with Section 6.17).

“Underperforming Establishment” means either a Year One Underperforming
Establishment or a Year Three Underperforming Establishment.

“Unpaid Company Transaction Expenses” means, as of the Closing, any Company
Transaction Expenses not previously paid by the Company.

“Unredeemed Voucher Liability” has the meaning set forth in Section 2.03(b).

“USB Credit Agreement” means that certain Amended and Restated Credit Agreement,
dated as of October 31, 2016, by and among GRE Funding Company, LLC, GRE
Burlington Holding Company, LLC and U.S. Bank National Association, as
Administrative Agent.

“Use Agreements” means, the agreements that are related to the placement of
Video Gaming Terminals in qualifying Gaming Establishments to operate Video
Gaming Terminals on its premises.

 

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“Use Agreement Summary” means that certain summary of the Use Agreements set
forth in Folder # 2.1 in the Data Room, as such may be updated from time-to-time
by Seller.

“Vault and ATM Cash Reimbursement Amount” has the meaning set forth in
Section 2.03(a)(i)(A).

“VGT Cash Amount” shall mean with respect to each Company Video Gaming Terminal,
(x) the sum of the aggregate dollar amount of transactions reported on the
SciGames Reports for such Video Gaming Terminal for each day after the Date of
Last Service for such Video Gaming Terminal and prior to the Closing Date plus
(y) 50% of the dollar amount of transactions reported on the SciGames Report for
such Video Gaming Terminal on the Date of Last Service.

“VGT Cash Reimbursement Amount” shall mean the aggregate VGT Cash Amount for
each Company Video Gaming Terminal.

“Video Gaming Laws” has the meaning set forth in the recitals.

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act
of 1988, and similar state, local and foreign laws related to plant closings,
relocations, mass layoffs and employment losses.

“Working Capital” means (a) the Company’s prepaid expenses and accounts
receivable as of the Closing (as defined by and determined in accordance with
GAAP) less (b) the Company’s total consolidated liabilities as of the Closing
(as defined by and determined in accordance with GAAP)1. For purposes of
calculating Working Capital, the Company’s consolidated liabilities shall
(regardless of whether they would be treated as a current liability under GAAP)
exclude any Unpaid Company Transaction Expenses. Set forth on Exhibit A, for
illustrative purposes only, is an example calculation of the Working Capital as
if the Closing had occurred as of June 30, 2019.

“Year One Underperforming Establishment” means a Company Establishment with
respect to which Buyer terminates the applicable Use Agreement or otherwise
voluntarily removes its Video Gaming Terminals during the One-Year Measurement
Period which (i) is a Baseline Location as of the Removal Date, and (ii) has an
Average Net Win Per Machine Per Day during the six-month period ending on the
Removal Date that is in the bottom five percent (5%) of the Average Net Win Per
Machine Per Day for all Baseline Locations set forth in TO Share Schedule
delivered by Buyer to Seller with respect to the One-Year Payment Date. For the
avoidance of doubt, the number of Year One Underperforming Establishments cannot
be more than five percent (5%) of the total number of Baseline Locations set
forth in the TO Share Schedule delivered by Seller to Buyer prior to the Closing
Date.

“Year Three Underperforming Establishment” means a Company Establishment with
respect to which Buyer terminates the applicable Use Agreement or otherwise
voluntarily removes its Video Gaming Terminals during the Three-Year Measurement
Period which (i) is a Baseline Location as of the Removal Date, and (ii) has an
Average Net Win Per Machine Per

 

1 

Sample calculation does not include indebtedness of the Company to be paid off
at Closing.

 

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Day during the six-month period ending on the Removal Date that is in the bottom
five percent (5%) of the Average Net Win Per Machine Per Day for all Baseline
Locations set forth in TO Share Schedule delivered by Buyer to Seller with
respect to the Three-Year Payment Date. For the avoidance of doubt, the number
of Year Three Underperforming Establishments cannot be more than five percent
(5%) of the total number of Baseline Locations set forth in the Baseline
Location Schedule.

ARTICLE II

PURCHASE AND SALE

Section 2.01 Purchase and Sale. Subject to the terms and conditions set forth
herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase
from Seller, the Membership Interests for the consideration specified in
Section 2.02.

Section 2.02 Purchase Price. The aggregate purchase price for the Membership
Interests shall be $109,500,000.00 (the “Purchase Price”), subject to and
payable as follows:

(a) Subject to Section 2.03 and Section 2.06, an amount equal to (i)
$100,000,000.00 plus (ii) an amount (which may be positive or negative) equal to
the difference between the Estimated Working Capital minus the Target Working
Capital, plus (iii) the Estimated Cash Reimbursement Amount, minus (iv) the
Unredeemed Voucher Liability, minus (v) the Deposit and minus (vi) the Estimated
Unpaid Company Transaction Expenses (such amount, the “Estimated Closing
Payment”) shall be payable at the Closing;

(b) $2,500,000.00 (the “One-Year Payment Amount”) shall be payable within thirty
(30) days of the One-Year Payment Date subject to and payable in accordance with
Section 6.17; and

(c) $7,000,000.00 (the “Three-Year Payment Amount”) shall be payable within
thirty (30) days of the Three-Year Payment Date subject to and payable in
accordance with Section 6.17.

Section 2.03 Reimbursement of Company Cash.

(a) Gaming Cash.

(i) No later than two (2) Business Days prior to the Closing Date, Seller shall
deliver to Buyer a schedule together with backup information detailing:

(A) the estimated amount of cash in the vault Equipment and the ATMs of the
Company as of the close of business on the day prior to the Closing Date (such
amount, the “Vault and ATM Cash Reimbursement Amount”); provided, the Vault and
ATM Cash Reimbursement Amount shall exclude any accounts receivable;

 

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(B) the last date of service by the Company from each of the Company’s Video
Gaming Terminals prior to the Closing Date (the “Date of Last Service”);

(C) Scientific Games, On Demand, Video Gaming Transaction Report (“SciGames
Report”) for each Company Video Gaming Terminal for the Date of Last Service and
each day thereafter prior to the Closing Date; and

(D) the estimated amount of cash, as of the close of business on the day before
the Closing Date, (x) remaining in any Company bank accounts, (y) on delivery
trucks in transit for deposit in Video Gaming Terminals and ATMs (the
“Additional Cash Amount”).

(ii) Within ten (10) Business Days after the Closing Date, Buyer shall deliver
to Seller a schedule together with backup information detailing the actual
amount of cash in the vault Equipment and the ATMs as of the close of business
on the day prior to the Closing Date, the VGT Cash Amount for each Company Video
Gaming Terminal and the Additional Cash Amount (the “Actual Cash Amount
Calculation”). At any time within twenty (20) Business Days after receiving such
report from Buyer, Seller may deliver a notice to Buyer disputing the Actual
Cash Amount Calculation. Each of Buyer and Seller agrees to cooperate in good
faith to resolve any such dispute, and if, after ten (10) Business Days of good
faith negotiation, the Parties are unable to resolve such dispute then the
dispute shall be finally resolved by a nationally recognized accounting firm as
shall be mutually agreed by Buyer and Seller (the “Auditor”).

(iii) The fees, costs and expenses of the Auditor in connection with this
Section 2.03 shall be paid (i) by Buyer in the event the absolute value of the
difference between the actual amount of cash in the vault Equipment and the ATMs
as of the close of business on the day prior to the Closing Date, the VGT Cash
Amount for each Company Video Gaming Terminal and the Additional Cash Amount as
determined by the Auditor pursuant to this Section 2.03 and the Actual Cash
Amount Calculation delivered by Buyer pursuant to Section 2.03(a)(ii) (such
aggregate difference, the “Buyer’s Cash Difference”) is greater than the
absolute value of the difference between the final actual amount of cash in the
vault Equipment and the ATMs as of the close of business on the day prior to the
Closing Date, the VGT Cash Amount for each Company Video Gaming Terminal and the
Additional Cash Amount as determined by the Auditor pursuant to this
Section 2.03 and the actual amount of cash in the vault Equipment and the ATMs
as of the close of business on the day prior to the Closing Date, the VGT Cash
Amount for each Company Video Gaming Terminal and the Additional Cash Amount set
forth in Seller’s notice of objection delivered pursuant to Section 2.03(a)(ii)
(such aggregate difference, the “Seller’s Cash Difference”), (ii) by Seller if
the Buyer’s Cash Difference is less than the Seller’s Cash Difference or
(iii) equally by the Buyer and Seller if the Buyer’s Cash Difference is equal to
the Seller’s Cash Difference.

 

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(iv) The final determination of the actual amount of cash in the vault Equipment
and the ATMs, aggregate VGT Cash Amount for each Company Video Gaming Terminal,
and Additional Cash Amount as of the close of business on the day prior to the
Closing Date (the “Final Cash Reimbursement Amount”) shall become final and
binding on all Parties upon the earliest to occur of (A) mutual agreement by the
Parties that such amount is final, (B) the date that is one (1) day after the
ten (10) Business Day review period specified in Section 2.03(a)(ii), if no
notice of dispute is delivered by Seller and (C) the date on which the Auditor
finally resolves in writing any disputed matters.

(v) To the extent (A) the Estimated Cash Reimbursement Amount exceeds the Final
Cash Reimbursement Amount, Seller shall pay the difference to Buyer within five
(5) Business Days after determination of the Final Cash Reimbursement Amount
(B) the Final Cash Reimbursement Amount exceeds the Estimated Cash Reimbursement
Amount, Buyer shall pay the difference to Seller within five (5) Business Days
after determination of the Final Cash Reimbursement Amount and (C) the Estimated
Cash Reimbursement Amount equals the Final Cash Reimbursement Amount, no further
payment shall be required.

(b) Unredeemed Voucher Liability. No later than two (2) Business Days prior to
the Closing Date, Seller shall provide Buyer with the Company’s unredeemed
voucher liability report from the Scientific Games portal, which report shall
set forth the amount of the Company’s total unredeemed voucher liability as of
immediately prior to the Closing Date (the “Unredeemed Voucher Liability”). On
the first anniversary of the Closing Date, Buyer shall provide Seller (or its
designee) with a schedule setting forth the amounts paid by the Company during
the first year after Closing with regard to the Unredeemed Voucher Liability. To
the extent that the amount paid by Buyer on account of the Unredeemed Voucher
Liability is less than the full amount of the Unredeemed Voucher Liability,
Buyer shall pay such difference to Seller (or its designee).

(c) GRA Amusement Cash. Within five (5) Business Days prior to the Closing Date,
GRA shall commence its regular Amusement Establishment collection cycle (the
“Final Collection Cycle”). A representative of GRA shall visit the Amusement
Establishments in the normal course of the Final Collection Cycle to facilitate
the removal of GRA’s cash in amusement games up to and including the last day of
the Final Collection Cycle (which, for the avoidance of doubt, may occur after
the Closing with respect to some of the Amusement Establishments). Any cash
deposited in amusement games located in an Amusement Establishment after GRA has
removed its amusement cash from such Amusement Establishment during the Final
Collection Cycle (whether prior to the Closing or after the Closing), shall be
the property of Buyer, provided that Buyer acknowledges that all such cash shall
be subject to any splits with the Amusement Establishment as set forth in the
applicable Amusement Agreement.

(d) Deposit. On or prior to the date hereof, Buyer shall deposit with the Escrow
Agent the Deposit, to be held by the Escrow Agent pursuant to this Agreement and
the Escrow Agreement.

 

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Section 2.04 Transactions to be Effected at the Closing.

(a) At the Closing, Buyer shall deliver to Seller:

(i) the Estimated Closing Payment, by wire transfer of immediately available
funds to the account of Seller as set forth in the Flow of Funds Schedule; and

(ii) all other agreements, documents, instruments or certificates required to be
delivered by Buyer at or prior to the Closing pursuant to Section 7.03 of this
Agreement.

(b) At the Closing, Seller shall deliver to Buyer:

(i) An assignment separate from certificate, in the form attached hereto as
Exhibit B, duly executed by Seller assigning the Membership Interests to Buyer
free and clear of all Encumbrances;

(ii) a copy of the Company’s current Terminal Operator License; and

(iii) all other agreements, documents, instruments or certificates required to
be delivered by Seller at or prior to the Closing pursuant to Section 7.02 of
this Agreement.

(c) At the Closing, the Escrow Agent shall deliver to Seller the Deposit by wire
transfer of immediately available funds to the account of Seller as set forth in
the Flow of Funds Schedule.

Section 2.05 Closing. The closing of the transactions contemplated herein (the
“Closing”) shall, subject to the satisfaction or waiver of the closing
conditions set forth in Article VII, take place at 12:01 a.m., Chicago, Illinois
time, on such date as determined by Buyer, upon three (3) Business Days’ prior
notice to Seller, which shall be on September 16, 2019, but in no event later
than the Drop Dead Date. The Closing shall occur by email exchange of signature
pages followed and appropriate wire transfer(s) between the Parties. The time
and date on which the Closing is actually held is sometimes referred to herein
as the “Closing Date.” If the Closing has not been consummated on or before the
Drop Dead Date, then either Party may terminate this Agreement by providing
written notice to the other Party in which case this Agreement shall terminate
and Buyer and Seller shall have no further obligation to complete the
transaction hereunder; provided, however if the Deposit Conditions have been
satisfied at the time of such termination, then the Deposit shall be forfeited
by Buyer as liquidated damages and Buyer shall promptly instruct the Escrow
Agent (as escrow agent of the Deposit) to deliver the Deposit to Seller. The
Parties agree that, although a more precise measure of damages cannot be made,
the Deposit represents a good faith and reasonable estimate of such damages.

Section 2.06 Post-Closing Adjustment of Estimated Closing Payment.

(a) In addition to the adjustments set forth in Section 2.03, following the
Closing Date, the Estimated Closing Payment shall be further adjusted in
accordance with this Section 2.06. Pursuant to Section 7.02(g), the Company
shall deliver the Closing Financial Certificate to Buyer not later than two
(2) Business Days prior to the Closing Date.

 

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(b) Within sixty (60) days after the Closing Date, Buyer shall deliver to Seller
a schedule together with backup information detailing the actual amount of
(i) Working Capital and (ii) Unpaid Company Transaction Expenses (each, an
“Adjustment Component” and such report, the “Adjustment Notice”). At any time
within thirty (30) days after receiving such report from Buyer, Seller may
deliver a notice to Buyer disputing the amount of either or both of the
Adjustment Components set forth in the Adjustment Notice. Each of Buyer and
Seller agrees to cooperate in good faith to resolve any such dispute, and if,
after ten (10) Business Days of good faith negotiations, the Parties are unable
to resolve such dispute, then the dispute shall be finally resolved by the
Auditor.

(c) The fees, costs and expenses of the Auditor in connection with this
Section 2.06 shall be paid (i) by Buyer in the event the absolute value of the
difference between the final Adjustment Components as determined by the Auditor
pursuant to this Section 2.06 and the Adjustment Components set forth in the
Adjustment Notice (such aggregate different, the “Buyer’s Difference”) is
greater than the absolute value of the difference between the final Adjustment
Components as determined by the Auditor pursuant to this Section 2.06 and the
Adjustment Components set forth in Seller’s notice of objection delivered
pursuant to Section 2.06(b) (such aggregate difference, the “Seller’s
Difference”), (ii) by the Seller if the Buyer’s Difference is less than the
Seller’s Difference or (iii) equally by the Buyer and Seller if the Buyer’s
Difference is equal to the Seller’s Difference.

(d) The final determination of the actual Adjustment Components (the “Final
Adjustment Components”) shall become final and binding on all Parties upon the
earliest to occur of (i) mutual agreement by the Parties that such amount is
final, (ii) the date that is one (1) day after the fifteen (15) day review
period specified in Section 2.06(b) if no notice of dispute is delivered by
Seller and (iii) the date on which the Auditor finally resolves in writing any
disputed matters.

(e) To the extent (i) the sum of the Estimated Adjustment Components exceeds the
sum of the Final Adjustment Components, Owner (or Seller at Owner’s direction)
shall pay the difference to Buyer within five (5) Business Days after
determination of the Final Adjustment Components, (ii) the sum of the Final
Adjustment Components exceeds the sum of the Estimated Adjustment Components,
Buyer shall pay the difference to Seller within five (5) Business Days after
determination of the Final Adjustment Components and (iii) the sum of the
Adjustment Components equals the sum of the Final Adjustment Components, no
further payment shall be required.

Section 2.07 Tax Consequences. The Parties agree to treat and report Buyer’s
purchase of the Membership Interests as purchasing all the assets of the Company
and GRA for U.S. income tax purposes except as otherwise required by a Tax
Authority in connection with a good faith resolution of a Tax audit.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER, THE COMPANY AND GRA

Except as set forth in the Disclosure Schedules, each of Seller and the Company
represents and warrants to Buyer that the statements contained in this Article
III are true and correct as of the date hereof and as of the Closing Date.

Section 3.01 Organization and Authority of Seller. Seller is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the state of Illinois. Seller has all necessary limited liability company power
and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by Seller of this Agreement and all other documents to be delivered
by Seller hereunder, the performance by Seller of its obligations hereunder and
the consummation by Seller of the transactions contemplated hereby have been
duly authorized by all requisite limited liability company action on the part of
Seller. This Agreement has been duly executed and delivered by Seller, and
(assuming due authorization, execution and delivery by Buyer) this Agreement
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).

Section 3.02 Organization, Authority and Qualification of the Company and GRA.
Each of the Company and GRA is a limited liability company in good standing
under the Laws of the state of Illinois and has all necessary limited liability
company power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on its business as it is
currently conducted. Each of the Company and GRA is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business as currently
conducted makes such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing would not have a
material effect on the Company taken as a whole. The Company possesses a valid
Terminal Operator License under the Video Gaming Laws.

Section 3.03 Capitalization.

(a) Section 3.03(a) of the Disclosure Schedules accurately sets forth the
outstanding Membership Interests in the Company as of the date hereof (the
“Capitalization Schedule”). The Membership Interests set forth on the
Capitalization Schedule represent all of the outstanding equity securities of
the company and such equity securities have been duly authorized and validly
issued, and are owned of record and beneficially by Seller as set forth on the
Capitalization Schedule free and clear of all Encumbrances, other than those
Encumbrances set forth in Section 3.03(a) of the Disclosure Schedules and at the
Closing will be transferred to Buyer free and clear of all Encumbrances (other
than Permitted Encumbrances). Seller represents that all of the membership
interests in GRA have been duly authorized and validly issued, and are owned of
record and beneficially by the Company free and clear of all Encumbrances, other
than those Encumbrances set forth in Section 3.03(a) of the Disclosure
Schedules.

 

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(b) There are no outstanding or authorized profits interests, options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of the Company or GRA or
obligating Seller or the Company or GRA to issue or sell any equity securities
of, or any other interest in, the Company or GRA. Neither GRA nor the Company
has outstanding or authorized any stock appreciation, phantom equity, profit
participation or similar rights. There are no voting trusts, equity holder
agreements, proxies or other agreements or understandings in effect with respect
to the voting or transfer of any of the Membership Interests or with respect to
GRA except as set forth in Section 3.03(b) of the Disclosure Schedules. None of
the equity securities of the Company or GRA were issued in violation of the
Securities Act, state securities laws, or any other legal requirement.

Section 3.04 No Subsidiaries. Other than GRA, the Company does not own, or have
any interest in any shares or have an ownership interest in any other Person.
GRA does not own, or have any interest in any shares or have an ownership
interest in any other Person.

Section 3.05 No Conflicts; Consents.

(a) The execution, delivery and performance by Seller or the Company of this
Agreement, and the consummation of the transactions contemplated hereby, do not
and will not: (a) result in a violation or breach of any provision of the
articles of organization of Seller or Seller’s Operating Agreement or (b) result
in a violation or breach of any provision of any Law or Governmental Order
applicable to Seller or the Membership Interests. No consent, approval, Permit,
Governmental Order, declaration or filing with, or notice to, any Governmental
Authority is required by or with respect to Seller, the Company or GRA in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except as set forth in
Section 3.05(a) of the Disclosure Schedules.

(b) The execution, delivery and performance by Seller or the Company of this
Agreement, and the consummation of the transactions contemplated hereby, do not
and will not: (a) result in a violation or breach of any provision of the
articles of organization of the Company or the Company Operating Agreement;
(b) result in a violation or breach of any provision of any Law or Governmental
Order applicable to the Company, including, any Video Gaming Laws, or IGB
regulation, rule or policy; (c) except as set forth in Section 3.05(b) of the
Disclosure Schedules, require the consent, notice or other action by any Person
under, conflict with, result in a violation or breach of, constitute a default
(either with or without notice or lapse of time) under or result in the
acceleration of any Material Contract or Company Closing Use Agreement or
(d) result in the creation or imposition of any Encumbrance upon any of the
material assets or businesses of the Company. No consent, approval, Permit,
Governmental Order, declaration or filing with, or notice to, any Governmental
Authority is required by or with respect to the Company in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, except as set forth in Section 3.05(b) of the
Disclosure Schedules.

 

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(c) The execution, delivery and performance by Seller or the Company of this
Agreement, and the consummation of the transactions contemplated hereby, do not
and will not: (a) result in a violation or breach of any provision of the
articles of organization of GRA or the GRA Operating Agreement; (b) result in a
violation or breach of any provision of any Law or Governmental Order applicable
to GRA, including and Video Gaming Laws or IGB regulation, rule or policy; or
(c) except as set forth in Section 3.05(c) of the Disclosure Schedules, require
the consent, notice or other action by any Person under, conflict with, result
in a violation or breach of, constitute a default (either with or without notice
or lapse of time) under or result in the acceleration of any Material Contract
or Amusement Agreement, or (d) result in the creation or imposition of any
Encumbrance upon any of the material assets or businesses of GRA. No consent,
approval, Permit, Governmental Order, declaration or filing with, or notice to,
any Governmental Authority is required by or with respect to GRA in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, except as set forth in Section 3.05(c) of the
Disclosure Schedules.

Section 3.06 Financial Statements; Internal Financial Controls. Copies of the
Company’s consolidated audited financial statements consisting of the balance
sheet of the Company as at December 31, 2018 and in each of the years ending
December 31, 2017 and December 31, 2016 and the related statements of income and
retained earnings, stockholders’ equity and cash flow for the years then ended
and notes to the financial statements (the “Audited Financial Statements”), and
unaudited consolidated financial statements consisting of the consolidated
balance sheet of the Company as at June 30, 2019 and the related consolidated
statements of income and retained earnings, stockholders’ equity and cash flow
for the six-month period then ended (the “Interim Financial Statements” and
together with the Audited Financial Statements, the “Financial Statements”) have
been delivered or made available to Buyer in the Data Room. The Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the period involved, subject, in the case of the Interim
Financial Statements, to normal and recurring year-end adjustments and the
absence of notes and are correct and complete in all material respects. The
Financial Statements fairly present in all material respects the financial
condition of the Company, as of the respective dates they were prepared and the
results of the operations and cash flows of the Company for the periods
indicated. The balance sheet of the Company as of December 31, 2018 is referred
to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet
Date” and the balance sheet of the Company as of June 30, 2019 is referred to
herein as the “Interim Balance Sheet” and the date thereof as the “Interim
Balance Sheet Date”. The books and records of the Company and GRA have been, and
are being, maintained in all material respects in accordance with applicable
legal and accounting requirements (including, without limitation, GAAP) and the
Financial Statements are consistent with such books and records.

Section 3.07 Undisclosed Liabilities. The Company has no liabilities,
obligations or commitments of a type required to be reflected on a balance sheet
prepared in accordance with GAAP, except (a) those which are adequately
reflected or reserved against in the Balance Sheet as of the Balance Sheet Date,
(b) those which have been incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date and which are not material in
amount, either individually or in the aggregate, and do not result from a breach
of contract, breach of warranty, violation of Law, infringement or other tort,
(c) Company Transaction Expenses and (d) any incurred but not reported health
insurance claims. All reserves that are set forth in or reflected in the Interim
Financial Statements have been established in accordance with GAAP applied on a
consistent basis with the accounting principles, methods and practices used in
preparing the Audited Financial Statements.

 

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Section 3.08 Absence of Certain Changes, Events and Conditions. Except as
expressly contemplated by the Agreement or as set forth on Section 3.08 of the
Disclosure Schedules, from the Interim Balance Sheet Date until the date of this
Agreement, each of the Company and GRA has operated in the ordinary course of
business in all material respects and there has not been, with respect to each
of the Company or GRA, any:

(a) event, occurrence or development that has had a Material Adverse Effect;

(b) amendment of the Company’s articles of organization, GRA’s articles of
organization, Company Operating Agreement, GRA Operating Agreement or other
organizational documents of the Company or GRA;

(c) split, combination or reclassification of any shares of its equity
interests;

(d) issuance, sale or other disposition of any of its equity interests, or grant
of any profits interests, options, warrants or other rights to purchase or
obtain (including upon conversion, exchange or exercise) any of its equity
interests;

(e) declaration or payment of any distributions on or in respect of any of its
equity interests or redemption, purchase or acquisition of its equity interests;

(f) material change in any method of accounting or accounting practice of the
Company, except as required by GAAP or applicable Law or as disclosed in the
notes to the Financial Statements;

(g) entry into any contract that would constitute a Material Contract;

(h) incurrence, assumption or guarantee of any Indebtedness for borrowed money
in an aggregate amount exceeding $500,000, except unsecured current obligations
and liabilities incurred in the ordinary course of business;

(i) sale or other disposition of any of the assets shown or reflected on the
Balance Sheet, except in the ordinary course of business and except for any
assets having an aggregate value of less than $200,000;

(j) Except as set forth in Section 3.08(j) of the Disclosure Schedules,
(i) hiring, or offering to hire, any Employees or any consultants or independent
contractors, (ii) termination of employment, change in the title, office or
position or material reduction in the responsibilities of any Employee (provided
that terminations for “cause” need not be set forth in Section 3.08(j) of the
Disclosure Schedules) or (iii) amendment or extension of the term of any
employment or consulting agreement with any officer or any Employee, consultant
or independent contractor;

(k) increase in the compensation of its Employees, directors or consultants,
other than as required by Law or the terms of any Benefit Plan;

 

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(l) grant, payment or increase in any (i) change in control, special bonus or
special remuneration to any Employee or non-employee director, consultant or
independent contractor or (ii) severance, retention or termination pay, or other
similar benefits to any Employee, consultant or independent contractor outside
of the ordinary course of business;

(m) action to accelerate the vesting or payment of, or otherwise fund or secure
the payment of, any compensation or benefits under any Benefit Plan;

(n) termination of any Benefit Plan or adoption, amendment or modification of
any Benefit Plan, the effect of which in the aggregate would increase the
obligations of the Company and GRA of their aggregate existing annual
obligations to such plans;

(o) acquisition by merger or consolidation with, or by purchase of a substantial
portion of the assets or stock of, or by any other manner, any business or any
Person or any division thereof for consideration in excess of $250,000;

(p) any capital expenditure in excess of $1,000,000 in the aggregate;

(q) adoption of any plan of merger, consolidation, reorganization, liquidation
or dissolution or filing of a petition in bankruptcy under any provisions of
federal or state bankruptcy Law or consent to the filing of any bankruptcy
petition against it under any similar Law; or

(r) any agreement to do any of the foregoing, or any action or omission that
would result in any of the foregoing.

Section 3.09 Material Contracts.

(a) Section 3.09(a) of the Disclosure Schedules lists each of the following
contracts and other agreements of the Company and GRA (together with all Leases
listed in Section 3.10(b) of the Disclosure Schedules, collectively, the
“Material Contracts”):

(i) each agreement involving aggregate consideration in excess of $100,000 and
which, in each case, cannot be canceled without penalty or without more than 90
days’ notice;

(ii) all equipment leases for Video Gaming Terminals for an amount in excess of
$250,000;

(iii) all agreements that relate to the sale of any of the Company’s or GRA’s
assets, other than in the ordinary course of business, for consideration in
excess of $500,000;

(iv) all broker, distributor, dealer, manufacturer’s representative, franchise,
agency, sales promotion, market research, marketing, consulting and advertising
agreements involving aggregate consideration in excess of $50,000;

 

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(v) except for agreements relating to trade receivables, all agreements relating
to Indebtedness (including, without limitation, guarantees) of the Company or
GRA, in each case having an outstanding principal amount in excess of $100,000;

(vi) all agreements that provide for any joint venture, partnership or similar
arrangement or any sharing of revenues, profits, losses, costs or liabilities;

(vii) all separation agreement or severance agreement with any current or former
employees under which the Company or GRA has any actual or potential liability;

(viii) all agreements that provide for retention, severance or change in control
benefits to any Employee, consultant or independent contractor of the Company or
GRA;

(ix) all agreements that require the Company or GRA to purchase its total
requirements of any product or service from a third party or that contain “take
or pay” provisions;

(x) all agreements (A) pursuant to which (A) any other party is granted
exclusive rights or “most favored party” rights of any type or scope with
respect to any products or services provided by the Company or GRA,
(B) containing any non-competition covenants or other restrictions relating to
any products or services provided by the Company or GRA or (C) that limit or
would limit the freedom of the Company or GRA, or in each case, any of their
respective successors or assigns to engage or participate, or compete with any
other Person, in any line of business, market, location or geographic area,
including any grants by the Company or GRA of exclusive rights or licenses;

(xi) all agreements that provide for the indemnification by Seller or the
Company or GRA of any Person or the assumption of any Tax, environmental or
other liability of any Person;

(xii) any mortgage, pledge, indenture or security agreement or similar
arrangement constituting an Encumbrance upon the assets or properties of the
Company or GRA;

(xiii) all agreements between or among the Company or GRA on the one hand and
any Affiliate on the other; and

(xiv) all collective bargaining agreements or agreements with any labor
organization, union or association to which the Company or GRA is a party.

(b) Each Material Contract, Company Closing Use Agreement and Amusement
Agreement is valid, binding and enforceable against the Company and GRA, as
applicable, together with all legally binding, written modifications, schedules
or supplements thereto. Except as set forth on Section 3.09(b) of the Disclosure
Schedules, neither the Company nor GRA is in breach of, or default under, any
Material Contract,

 

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Company Closing Use Agreement or Amusement Agreement and to the Knowledge of
Seller, no other Person that is party to a Material Contract, Company Closing
Use Agreement or Amusement Agreement is in breach thereof or default thereunder,
except for such breaches or defaults that would not be material to the Company,
taken as a whole. As of the Agreement Date, to the Knowledge of Seller, no
Person has threatened the Company in writing to terminate or refuse to perform
its obligations under any Material Contract, Company Closing Use Agreement or
Amusement Agreement to which it is a party (regardless of whether such Person
has the right to do so under such contract).

(c) True and correct copies of all Company Closing Use Agreements, Material
Contracts and Amusement Agreements existing as of the date hereof have been made
available to Buyer in the Data Room. The copy of each Company Closing Use
Agreement, Material Contract and Amusement Agreement is a true and complete copy
of the document it purports to represent and reflects all amendments thereto
made through the date of this Agreement. Prior to the date hereof, neither the
Company, nor anyone acting on behalf of the Company, has sold, transferred or
assigned any of the Company Closing Use Agreements or Amusement Agreements, in
whole or in part, to any third party. Seller makes no representations regarding
the ability of any Gaming Establishment subject to any Company Closing Use
Agreement to obtain, maintain or renew a gaming license.

(d) All potential Regional Manager Incentive Payments that may be payable during
the One-Year Measurement Period and Three-Year Measurement Period are set forth
on Section 1.01(d) of the Disclosure Schedules. All potential Route Location
Payments that may be payable during the One-Year Measurement Period and
Three-Year Measurement Period is set forth on Section 1.01(e) of the Disclosure
Schedules. All potential Sales Agent Payments that may be payable during the
One-Year Measurement Period and Three-Year Measurement Period is set forth on
Section 1.01(f) of the Disclosure Schedules.

Section 3.10 Title to and Sufficiency of Assets; Real Property.

(a) The Company or GRA have good and valid (and, in the case of owned Real
Property, good and marketable fee simple) title to, or a valid leasehold
interest in, all Real Property and tangible personal property and other assets
reflected in the Audited Financial Statements or acquired after the Balance
Sheet Date, other than properties and assets sold or otherwise disposed of in
the ordinary course of business since the Balance Sheet Date. All such
properties and assets (including leasehold interests) are in good working
condition (subject to ordinary wear and tear), sufficient for the conduct of the
business of the Company and GRA and free and clear of Encumbrances except for
the following (collectively referred to as “Permitted Encumbrances”):

(i) those items set forth in Section 3.10(a) of the Disclosure Schedules;

(ii) liens for Taxes not yet due and payable or being contested in good faith by
appropriate procedures;

 

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(iii) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising
or incurred in the ordinary course of business that are not delinquent and which
are not, individually or in the aggregate, material to the business of the
Company or GRA;

(iv) easements, rights of way, zoning ordinances and other similar encumbrances
affecting Real Property;

(v) payment obligations pursuant to the Video Gaming Laws; or

(vi) other imperfections of title or Encumbrances, if any, that, individually or
in the aggregate, do not and would not reasonably be expected to materially
affect the use of the properties or assets subject thereto or otherwise
materially impair business operations as presently conducted and are not
incurred in connection with the borrowing of money.

(b) Section 3.10(b) of the Disclosure Schedules lists: (i) the street address of
each parcel of owned Real Property; and (ii) the street address of each parcel
of leased Real Property, and a list, as of the date of this Agreement, of all
leases for each parcel of leased Real Property (collectively, “Leases”),
including the identification of the lessee and lessor thereunder.

Section 3.11 Intellectual Property.

(a) “Intellectual Property” means any and all of the following in any
jurisdiction throughout the world: (i) trademarks and service marks, including
all applications and registrations and the goodwill connected with the use of
and symbolized by the foregoing; (ii) copyrights (registered or unregistered),
including all applications and registrations related to the foregoing;
(iii) trade secrets and confidential know-how; (iv) patents and patent
applications; (v) internet domain name registrations; and (vi) other
intellectual property and related proprietary rights, interests and protections.

(b) Section 3.11(b) of the Disclosure Schedules lists all patents, patent
applications, trademark registrations and pending applications for registration,
copyright registrations and pending applications for registration and internet
domain name registrations owned by the Company or GRA. Except as set forth in
Section 3.11(b) of the Disclosure Schedules, or as would not have a Material
Adverse Effect, the Company or GRA owns or has the right to use all Intellectual
Property necessary to conduct the business as currently conducted (the “Company
Intellectual Property”).

(c) Except as set forth in Section 3.11(c) of the Disclosure Schedules, or as
would not be material to the Company, taken as a whole: (i) the Company
Intellectual Property as currently licensed or used by the Company or GRA, and
the Company’s and GRA’s conduct of its business as currently conducted, do not
infringe, misappropriate or otherwise violate the Intellectual Property of any
Person; and (ii) no Person is infringing, misappropriating or otherwise
violating any Company Intellectual Property. This Section 3.11(c) constitutes
the sole representation and warranty of Seller under this Agreement with respect
to any actual or alleged infringement, misappropriation or other violation by
Seller and the Company of the Intellectual Property of any other Person.

 

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Section 3.12 Insurance. Section 3.12 of the Disclosure Schedules sets forth a
true, correct and complete list, as of the date hereof, of all material
insurance policies maintained by the Company or GRA or with respect to which the
Company or GRA is a named insured or otherwise the beneficiary of coverage
(collectively, the “Insurance Policies”). Such Insurance Policies are in full
force and effect on the date of this Agreement and all premiums due on such
Insurance Policies have been paid and no notice of cancellation or termination
has been received by the Company or GRA. The Company and GRA are not in default
with respect to their obligations under the policies applicable to them. Except
as set forth on Section 3.12 of the Disclosure Schedules, there is no claim by
the Company or GRA pending under any of such policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies.

Section 3.13 Legal Proceedings; Governmental Orders.

(a) Except as set forth in Section 3.13(a) of the Disclosure Schedules, there
are no actions, suits, claims, audits, investigations, mediations, arbitrations
or other legal proceedings pending or, to Seller’s Knowledge, threatened against
or by the Company or GRA affecting any of its properties or assets (or by or
against Seller or any Affiliate thereof and relating to the Company or GRA) or
any of its managers, directors, officers or employees (in their capacities as
such or relating to their employment, services or relationship with the Company
or GRA).

(b) Except as set forth in Section 3.13(b) of the Disclosure Schedules, there
are no outstanding Governmental Orders and no unsatisfied judgments, penalties
or awards against or affecting the Company or GRA or any of its properties or
assets.

Section 3.14 Compliance with Laws; Permits.

(a) Except as set forth in Section 3.14(a) of the Disclosure Schedules, each of
the Company and GRA is in compliance, in each case in all material respects,
with all Laws applicable to it or its business, properties or assets. Since
January 1, 2018, neither the Company nor GRA has received any written notices of
any actual noncompliance with any Law.

(b) All material Permits required for each of the Company and GRA to conduct its
business have been obtained by it and are valid and in full force and effect,
and neither the Company nor GRA is in material violation of any such Permit.
Neither the Company nor GRA has received any written notice of any actual or
potential material noncompliance with any material Permit.

Section 3.15 Anti-Corruption Laws. Each of the Company and GRA has at all times
been, and is currently, in material compliance with all applicable
Anti-Corruption Laws. None of the Company, GRA, or any of their respective
Representatives (to the extent acting on their behalf) has, directly or
indirectly (i) used any funds for unlawful contributions, gifts, services of
value, entertainment or other unlawful expenses; made, offered, authorized, or
promised to make

 

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any unlawful payment or provided, offered, authorized, or promised to provide
anything of value to any Person including but not limited to any Governmental
Official, or made, or promised to make any contribution, bribe, rebate, gift,
payoff, influence payment, kickback or other similar unlawful payment or other
advantage, or taken any action which would cause it to be in violation of any
Anti-Corruption Laws, (ii) requested or agreed to receive or accepted any
unlawful contributions, gifts, services of value, advantage, entertainment or
other unlawful expenses, contribution, bribe, rebate, gift, payoff, influence
payment, kickback or other similar unlawful payment, or similar incentive which
would cause it to be in violation of any Anti-Corruption Laws, (iii) offered,
made, promised to make, or authorized the making of any gift or payment of money
or anything of value either directly or indirectly to any Person, or to
Governmental Official, or to any Person acting in an official capacity for or on
behalf of any such Governmental Authority, for purposes of (A) influencing any
act or decision of any Person, or such Governmental Official in his or her
official capacity, (B) inducing any Person or such Governmental Official to do
or omit to do any act in violation of the lawful duty of such Person or
Governmental Official or (C) inducing such Person or Governmental Official to
use his or her influence improperly including with a Governmental Authority to
affect or influence any act or decision of such Governmental Authority in order
to obtain, retain or direct or assist in obtaining, retaining or directing
business to the Company. There are no pending or, to Seller’s Knowledge,
threatened actions, suits, legal proceedings, audits or investigations against,
or settlements involving, the Company or GRA or its or their respective
Representatives acting on their behalf with respect to any Anti-Corruption Laws.

Section 3.16 Employee Benefit Matters.

(a) Section 3.16(a) of the Disclosure Schedules contains a list of all “employee
benefit plans” within the meaning of Section 3(3) of ERISA and each material
benefit, retirement, employment, consulting, compensation, incentive, bonus,
stock option, restricted stock, stock appreciation right, profits interest,
phantom equity, change in control, severance, vacation, paid time off, welfare
and fringe-benefit agreement, plan, policy and program, whether or not reduced
to writing, in effect and covering one or more Employees, former employees of
the Company or GRA, current or former directors or managers of the Company or
GRA or the beneficiaries or dependents of any such Persons, and is maintained,
sponsored, contributed to, or required to be contributed to by the Company, GRA
or any of their ERISA Affiliates, or under which the Company, GRA or any of
their respective ERISA Affiliates has any material liability for premiums or
benefits (as listed on Section 3.16(a) of the Disclosure Schedules, each, a
“Benefit Plan”).

(b) Except as set forth in Section 3.16(b) of the Disclosure Schedules, each
Benefit Plan and related trust complies with all applicable Laws (including
ERISA and the Code). Each Benefit Plan that is intended to be qualified under
Section 401(a) of the Code (a “Qualified Benefit Plan”) has received a favorable
determination letter from the Internal Revenue Service, or with respect to a
prototype plan, can rely on an opinion letter from the Internal Revenue Service
to the prototype plan sponsor, to the effect that such Qualified Benefit Plan is
so qualified and that the plan and the trust related thereto are exempt from
federal income Taxes under Sections 401(a) and 501(a), respectively, of the
Code, and, to Seller’s Knowledge, nothing has occurred that could reasonably be
expected to cause the revocation of such determination letter from the Internal
Revenue

 

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Service or the unavailability of reliance on such opinion letter from the
Internal Revenue Service. Except as set forth in Section 3.16(b) of the
Disclosure Schedules, all benefits, contributions and premiums required by and
due under the terms of each Benefit Plan or applicable Law have been timely paid
in accordance with the terms of such Benefit Plan, the terms of all applicable
Laws and GAAP. With respect to any Benefit Plan, no event has occurred or is
reasonably expected to occur that has resulted in or would subject the Company
or GRA to a Tax under Section 4971 of the Code or the assets of the Company to a
lien under Section 430(k) of the Code.

(c) Except as set forth in Section 3.16(c) of the Disclosure Schedules, no
Benefit Plan: (i) is subject to the minimum funding standards of Section 302 of
ERISA or Section 412 of the Code; or (ii) is a “multi-employer plan” (as defined
in Section 3(37) of ERISA). None of Seller, the Company or GRA: (x) has
withdrawn from any pension plan under circumstances resulting (or expected to
result) in a liability to the Pension Benefit Guaranty Corporation; or (y) has
engaged in any transaction which would give rise to a liability of the Company,
GRA or Buyer under Section 4069 or Section 4212(c) of ERISA.

(d) Except as set forth in Section 3.16(d) of the Disclosure Schedules and other
than as required under Section 4980B of the Code or other applicable Law, no
Benefit Plan provides benefits or coverage in the nature of health, life or
disability insurance following retirement or other termination of employment
(other than death benefits when termination occurs upon death).

(e) Except as set forth in Section 3.16(e) of the Disclosure Schedules,
(i) there is no pending or, to Seller’s Knowledge, threatened action relating to
a Benefit Plan; and (ii) no Benefit Plan has within the three years prior to the
date hereof been the subject of an examination or audit by a Governmental
Authority.

(f) Each “nonqualified deferred compensation plans” (within the meaning of
Section 409A of the Code) to which the Company or GRA is a party complies with
the requirements of paragraphs (2), (3) and (4) of Section 409A(a) by its terms
and has been operated in accordance with such requirements. No event has
occurred that would be treated by Section 409A(b) as a transfer of property for
purposes of Section 83 of the Code. The Company and GRA are under no obligation
to gross up any Taxes under Section 409A of the Code.

(g) Except as set forth in Section 3.16(g) of the Disclosure Schedules, none of
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated herein, individually or together or with the
occurrence of some other event (whether contingent or otherwise) will (A) result
in any payment or benefit (including severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due or payable, or required to be
provided to any Employee, director, independent contractor or consultant,
(B) increase the amount or value of any benefit or compensation otherwise
payable or required to be provided to Employee, director, independent contractor
or consultant, (C) result in the acceleration of the time of payment, vesting or
funding of any such benefit or compensation, (D) result in the forgiveness in
whole or in part of any outstanding loans made by the Company or GRA

 

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to any Employee, director, independent contractor or consultant or (E) limit the
Company’s or GRA’s ability to terminate any Benefit Plan. No amount paid or
payable by the Company or GRA in connection with the transactions contemplated
herein, whether alone or in combination with another event, will be an “excess
parachute payment” within the meaning of Section 280G of the Code or
Section 4999 of the Code or will not be deductible by the Company or GRA by
reason of Section 280G of the Code. Neither the Company nor GRA has ever had any
obligation to report, withhold or gross up any excise Taxes under Section 280G
or Section 4999 of the Code.

Section 3.17 Employment Matters.

(a) Neither the Company nor GRA is a party to, or bound by, any collective
bargaining or other agreement with a labor organization representing any of its
Employees. Since January 1, 2017, there has not been, nor, to Seller’s
Knowledge, has there been any threat of, any strike, slowdown, work stoppage,
lockout, concerted refusal to work overtime or other similar labor activity or
dispute affecting the Company or GRA.

(b) Each of the Company and GRA is in material compliance with all applicable
Laws pertaining to employment and employment practices (including terms and
conditions of employment, employee benefits, worker classification (including
the proper classification of workers as independent contractors and consultants,
and the proper classification of employees as exempt or non-exempt), wages,
hours and occupational safety and health practices) to the extent they relate to
employees of the Company or GRA. Except as set forth in Section 3.17(b) of the
Disclosure Schedules, there are no actions, suits, claims, investigations or
other legal proceedings against the Company or GRA pending or, to Seller’s
Knowledge threatened to be brought or filed, by or with any Governmental
Authority or arbitrator in connection with the employment of any current or
former employee of the Company or GRA, including, without limitation, any claim
relating to unfair labor practices, employment discrimination, harassment,
retaliation, equal pay or any other employment related matter arising under
applicable Laws.

(c) Except as set forth in Section 3.17(c) of the Disclosure Schedules, since
January 1, 2017, there has not been, nor, to Seller’s Knowledge, has there been
any, action, suit, legal proceeding, audit or investigation against any employee
of the Company or GRA with respect to allegations of sexual harassment or sexual
misconduct, and to Seller’s Knowledge, since January 1, 2017, there have been no
reported internal or external complaints accusing any supervisory or managerial
employee of the Company or GRA of sexual harassment or sexual misconduct and no
employee of the Company or GRA has entered into a contract for the settlement of
any action, suit, legal proceeding, audit or investigation with respect to
sexual harassment or sexual misconduct.

Section 3.18 Taxes. Except as set forth in Section 3.18 of the Disclosure
Schedules:

(a) Each of the Company and GRA has filed (taking into account any valid
extensions) all income and other material Tax Returns required to be filed by
the Company or GRA. Such Tax Returns are true, complete and correct in all
material respects. Neither the Company nor GRA is currently the beneficiary of
any extension of time within which to file any material Tax Return other than
extensions of time to file Tax Returns obtained in the ordinary course of
business. Each of the Company and GRA has timely paid all Taxes (whether or not
shown as due and payable on such Tax Returns).

 

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(b) No extensions or waivers of statutes of limitations have been given or
requested with respect to any material Taxes of the Company or GRA.

(c) No audit or administrative or judicial Tax examination or proceeding is
pending or is being conducted with respect to each of the Company and GRA. Each
of the Company and GRA has not received any written communication from any
taxing authority which has caused or should reasonably cause it to believe that
an audit is forthcoming. No deficiency with respect to Taxes has been proposed,
asserted, or assessed against each of the Company and GRA, which has not been
fully paid.

(d) Neither the Company nor GRA is a party to any Tax-sharing agreement. Neither
the Company nor GRA has any liability for Taxes of any other Person as a
transferee or successor, by contract or otherwise.

(e) All material Taxes which the Company or GRA is obligated to withhold from
amounts owing to any employee, independent contractor, stockholder, partner,
creditor or third party have been paid or accrued. All Taxes which the Company
or GRA is obligated to withhold under Code Section 1446 have been paid or
accrued.

(f) Each of the Company and GRA has not received notice of any claim by any
taxing authority in any other jurisdiction that the Company or GRA is or may be
subject to taxation by that jurisdiction.

(g) The Company has been treated as a partnership (and not treated as a
publicly-traded partnership) for U.S. federal income tax purposes at all times
since its formation and shall be treated as a partnership for the period from
the date of this Agreement to date the GE Person Buy-Out shall have been
consummated. GRA has been treated as an entity disregarded from its sole owner
for U.S. federal income tax purposes at all times since its formation.

(h) As of the Closing, the gross value of the Company’s assets consisting of
United States real property interests (within the meaning of Section 897(c)(1)
of the Code) constitute less than fifty percent (50%) of the gross value of the
sum of the Company and GRA’s total business assets and interests in real
property.

(i) Each of the Company and GRA will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date including as a result
of any (i) change in method of accounting or improper accounting method for a
taxable period ending on or prior to the Closing Date, (ii) “closing agreement”
as described in Section 7121 of the Code (or any corresponding or similar
provision of state or local law) executed on or prior to the Closing Date,
(iii) Tax incurred pursuant to Section 965 of the Code (or any

 

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corresponding or similar provision of state, local, or foreign Tax law), (iv)
installment sale or open transaction disposition transaction made on or prior to
the Closing Date, (v) prepaid amount received on or prior to the Closing Date,
(vi) election under Section 108(i) of the Code or (vii) any similar election,
action, or agreement that would have the effect of deferring any liability for
Taxes of the Company from any period ending on or before the Closing Date to any
period ending after such date.

(j) Neither the Company nor GRA has participated or engaged in any “reportable
transaction” within the meaning of Section 6707A(c) of the Code and Treasury
Regulations Section 1.6011-4 or any corresponding or similar provision of state,
local or non-U.S. law.

(k) Except for certain representations related to Taxes in Section 3.14, the
representations and warranties set forth in this Section 3.18 are Seller’s sole
and exclusive representations and warranties regarding Tax matters.

Section 3.19 Environmental, Health and Safety Matters. Except as set forth on
Section 3.19(a) of the Disclosure Schedules, each of the Company and GRA
currently is, and at all times has been, in compliance in all material respects
with all applicable Environmental, Health and Safety Requirements in connection
with the ownership, use, maintenance or operation of its business or assets or
properties. Seller has made available to Buyer a copy of all studies, audits,
assessments or investigations containing material information concerning
compliance with, or liability or obligations under, Environmental, Health and
Safety Requirements affecting the Company and GRA, each of which is identified
in Section 3.19(b) of the Disclosure Schedules. There are no actions, suits,
legal proceedings, audits or investigations pending or, to the Seller’s
Knowledge, threatened by any Person that the properties or assets of the Company
and GRA are not, or in each case that its or their respective business has not
been conducted, in compliance with all Environmental, Health and Safety
Requirements. To Seller’s Knowledge, there are no past or present facts,
circumstances or conditions that would reasonably be expected to give rise to
any material liability of the Company or GRA with respect to Environmental,
Health and Safety Requirements.

Section 3.20 Licensing Issues.

(a) Since the date that the Company received its license to conduct its business
from the State of Illinois, none the Company or its officers, directors or
members, as applicable, or Seller have committed a crime or been involved in a
civil lawsuit which if convicted or found liable could result in the loss of any
material license of the Company.

(b) Since the date that the Company received its license to conduct its business
from the State of Illinois, the revenue reports filed with the IGB have
accurately and fairly represented the Company’s revenues for the periods covered
therein and were prepared based on the books and records of the Company.

Section 3.21 Brokers. Except for Fifth Third Securities, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company, GRA or Seller.

 

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Section 3.22 Interested Party Transactions. Except for any transactions entered
into in the ordinary course of business on arms-length terms, no officer,
director, employee, or other Affiliate of the Company or GRA (nor, to Seller’s
Knowledge, any immediate family member of any of such Persons or any trust,
partnership, corporation, or other entity in which any of such Persons has or
has had an interest) (each, an “Interested Party”), has or has had, directly or
indirectly, (a) any interest in any Person that purchases from or sells or
furnishes to the Company or GRA, any goods or services or (b) any interest in,
or is a party to, any contract to which the Company or GRA is a party, other
than ordinary course Benefit Plans which have been made available to
Buyer; provided, however, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation shall not be deemed to
be an “interest in any Person” for purposes of this Section 3.22. All
transactions pursuant to which any Interested Party has purchased any services,
products, technology or Intellectual Property from, or sold or furnished any
Intellectual Property to, the Company or GRA have been on an arms-length basis
on terms no less favorable to the Company or GRA than would be available from an
unaffiliated party.

Section 3.23 GE Person Buy-Out. Seller has provided to Buyer true and correct
copies of all definitive agreements effecting the GE Person Buy-Out. Such
definitive agreements set forth (a) the amounts required to effect the GE Person
Buy-Out in full on the Closing Date, (b) upon payment of such amounts, (i) a
release of the Company and (ii) a confirmation that no ongoing obligations will
be outstanding from and after the Closing. Such agreements accurately reflect
the complete agreement between parties thereto and there are no other
agreements, arrangements, side-letters or contracts relating to the GE Person
Buy-Out.

Section 3.24 No Other Representations and Warranties. Except for the
representations and warranties contained in this Article III (including the
related portions of the Disclosure Schedules), none of Seller, the Company, GRA
or any other Person has made or makes any other express or implied
representation or warranty, either written or oral, on behalf of Seller, the
Company or GRA (including the Confidential Information Memorandum prepared by
Fifth Third Securities dated June 2019 (the “CIM”) and any management
presentations or in any other form in expectation of the transactions
contemplated hereby) or as to the future revenue, profitability or success of
the Company or GRA. Notwithstanding the foregoing, nothing in this Section 3.24
shall limit any Buyer Indemnitee’s rights or remedies in the case of fraud,
intentional misrepresentation or willful misconduct by or on behalf of the
Company or Seller.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF OWNER

Except as set forth in the Disclosure Schedules, Owner represents and warrants
to Buyer that the statements contained in this Article IV are true and correct
as of the date hereof and as of the Closing Date.

 

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Section 4.01 Organization and Authority of Owner. Owner is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the state of Iowa. Owner has all necessary limited liability company power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery by Owner of this Agreement and all other documents to be delivered by
Owner hereunder, the performance by Owner of its obligations hereunder and the
consummation by Owner of the transactions contemplated hereby have been duly
authorized by all requisite limited liability company action on the part of
Owner. This Agreement has been duly executed and delivered by Owner, and
(assuming due authorization, execution and delivery by Buyer) this Agreement
constitutes a legal, valid and binding obligation of Owner, enforceable against
Owner in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).

Section 4.02 No Conflicts; Consents. The execution, delivery and performance by
Owner of this Agreement, and the consummation of the transactions contemplated
hereby, do not and will not: (a) result in a violation or breach of any
provision of the articles of organization of Owner or Owner’s operating
agreement or other organizational document or (b) result in a violation or
breach of any provision of any Law or Governmental Order applicable to Owner. No
consent, approval, Permit, Governmental Order, declaration or filing with, or
notice to, any Governmental Authority is required by or with respect to Owner in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except as set forth in
Section 4.02 of the Disclosure Schedules.

Section 4.03 Owner Financial Statements. Copies of Owner’s consolidated audited
financial statements consisting of the balance sheet of the Company as at
December 31, 2018 and in each of the years ending December 31, 2017 and
December 31, 2016 and the related statements of income and retained earnings,
stockholders’ equity and cash flow for the years then ended and notes to the
financial statements (the “Owner Audited Financial Statements”), and unaudited
consolidated financial statements consisting of the consolidated balance sheet
of the Company as at June 30, 2019 and the related consolidated statements of
income and retained earnings, stockholders’ equity and cash flow for the
six-month period then ended (the “Owner Interim Financial Statements” and
together with the Owner Audited Financial Statements, the “Owner Financial
Statements”) have been delivered or made available to Buyer in the Data Room.
The Owner Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved, subject, in the
case of the Interim Financial Statements, to normal and recurring year-end
adjustments and the absence of notes and are correct and complete in all
material respects. The Owner Financial Statements fairly present in all material
respects the financial condition of Owner, as of the respective dates they were
prepared and the results of the operations and cash flows of Owner for the
periods indicated. The books and records of Owner have been, and are being,
maintained in all material respects in accordance with applicable legal and
accounting requirements (including, without limitation, GAAP) and the Owner
Financial Statements are consistent with such books and records.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that the statements contained in this
Article V are true and correct as of the date hereof and as of the Closing Date.

 

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Section 5.01 Organization and Authority of Buyer. Buyer is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the state of Illinois. Buyer has all necessary company power and authority to
enter into this Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery by
Buyer of this Agreement and all other documents to be delivered by Buyer
hereunder, the performance by Buyer of its obligations hereunder and the
consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all requisite company action on the part of Buyer. This Agreement
has been duly executed and delivered by Buyer, and (assuming due authorization,
execution and delivery by Seller) this Agreement constitutes a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors’ rights generally
and by general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity).

Section 5.02 No Conflicts; Consents. The execution, delivery and performance by
Buyer of this Agreement, and the consummation of the transactions contemplated
hereby, do not and will not: (a) result in a violation or breach of any
provision of the articles of organization or operating agreement of Buyer or
(b) result in a violation or breach of any provision of any Law or Governmental
Order applicable to Buyer, except in the case of clause (b), where the
violation, breach, conflict, default, acceleration or failure to give notice
would not have a material adverse effect on Buyer’s ability to consummate the
transactions contemplated hereby. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental Authority is
required by or with respect to Buyer in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, except for such consents, approvals, Permits, Governmental Orders,
declarations, filings or notices which would not have a material adverse effect
on Buyer’s ability to consummate the transactions contemplated hereby.

Section 5.03 Investment Purpose. Buyer is acquiring the Membership Interests
solely for its own account for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution thereof. Buyer
acknowledges that the Membership Interests are not registered under the
Securities Act of 1933, as amended, or any state securities laws, and that the
Membership Interests may not be transferred or sold except pursuant to the
registration provisions of the Securities Act of 1933, as amended or pursuant to
an applicable exemption therefrom and subject to state securities laws and
regulations, as applicable. Buyer is able to bear the economic risk of holding
the Membership Interests for an indefinite period (including total loss of its
investment), and has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risk of its
investment.

Section 5.04 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer.

Section 5.05 Legal Proceedings. There are no actions, suits, claims,
investigations or other legal proceedings pending or, to Buyer’s knowledge,
threatened against or by Buyer or any Affiliate of Buyer that challenge or seek
to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.

 

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Section 5.06 Independent Investigation. Buyer has conducted its own independent
investigation, review and analysis of the business, results of operations,
prospects, condition (financial or otherwise) or assets of the Company and GRA,
and acknowledges that it has been provided adequate access to the personnel,
properties, assets, premises, books and records, and other documents and data of
Seller, the Company and GRA for such purpose. Buyer acknowledges and agrees
that: (a) in making its decision to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer has relied solely upon its own
investigation and the express representations and warranties of Seller, the
Company and GRA set forth in Article III f this Agreement (including the related
portions of the Disclosure Schedules); and (b) none of Seller, the Company, GRA
or any other Person has made any representation or warranty as to Seller, the
Company, GRA or this Agreement, except as expressly set forth in Article III of
this Agreement (including the related portions of the Disclosure Schedules);
provided, that nothing in this Section 5.06 shall limit any Buyer Indemnitee’s
rights or remedies in the case of fraud, intentional misrepresentation or
willful misconduct by or on behalf of Seller, the Company or GRA.

ARTICLE VI

COVENANTS

Section 6.01 Conduct of Business Prior to the Closing. From the date hereof
until the Closing, except as otherwise provided in this Agreement or consented
to in writing by Buyer (which consent shall not be unreasonably withheld or
delayed), Seller shall, and shall cause each of the Company and GRA to:
(a) conduct the business of the Company and GRA in the ordinary course of
business; and (b) use commercially reasonable efforts to maintain and preserve
intact the current organization, business and franchise of the Company and GRA
and to preserve the rights, franchises, goodwill and relationships of their
Employees, customers, lenders, suppliers, regulators and others having business
relationships with the Company or GRA. From the date hereof until the Closing
Date, except as consented to in writing by Buyer (which consent shall not be
unreasonably withheld or delayed), Seller shall not cause or permit the Company
or GRA to take any action that would cause any of the changes, events or
conditions described in Section 3.08 or that would otherwise result in a failure
of conditions set forth in Section 7.02(a) to be satisfied as of the Closing
Date.

Section 6.02 Due Diligence.

(a) Phase 1 Diligence Period. Beginning on the date hereof and continuing until
the date that is the earlier of: (i) August 30, 2019 at 5:00 p.m. CST or
(ii) either Buyer or its Affiliate makes a public announcement regarding its
entry into this Agreement (the “Phase 1 Due Diligence Period”), Buyer shall be
provided access to (“Buyer’s Phase 1 Due Diligence”):

(i) All Material Contracts other than the Use Agreements and the Amusement
Agreements.

(ii) The Use Agreement Summary.

 

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(iii) Inspection of the Real Property provided that Buyer shall request any
on-site inspections of Real Property at least three days in advance and any such
inspections shall be done after business hours as scheduled by Seller.

(iv) Seller’s key management personnel for interview, including [***], [***],
[***], [***], [***], [***], [***] and each Company regional manager; provided
that Buyer shall send all interview requests to Gary Hoyer and all interviews
shall be conducted in the presence of Gary Hoyer (or his designee) and any
follow up questions shall be scheduled through Gary Hoyer.

(v) All employee records and files, including the Company’s and GRA’s employee
benefits programs, employee compensation, salary, and bonus records, agreements,
and documentation related thereto.

(vi) All Financial Statements and Tax Returns of the Company and GRA.

In connection with Buyer’s Phase 1 Due Diligence, Seller agrees to reasonably
cooperate with Buyer, and Buyer’s consultants, surveyors, engineers, accountants
and attorneys in conducting Buyer’s Phase 1 Due Diligence, including providing
reasonable access to all relevant documents, reports, contracts Financial
Statements, Tax Returns, and to the Real Property.

Prior to the expiration of the Phase 1 Due Diligence Period, Buyer shall have
the right and option to terminate this Agreement without penalty (by written
notice to Buyer), and the Deposit shall be returned to Buyer in full (the
“Buyer’s Phase 1 Termination Right”). If Buyer does not exercise Buyer’s Phase 1
Termination Right as provided in this Section 6.02(a), then Buyer’s Phase 1
Termination Right shall expire, terminate and shall be deemed null and void and
the Deposit shall become non-refundable except to the extent set forth herein.

(b) Phase 2 Diligence Period. Beginning on the date of the expiration of the
Phase 1 Due Diligence Period and continuing until September 16, 2019 at 5:00PM
CST (the “Phase 2 Due Diligence Period”), in addition to all of the Buyer’s
Phase 1 Due Diligence items, Buyer shall be provided access to (“Buyer’s Phase 2
Due Diligence”):

(i) All of the Company’s Use Agreements and Amusement Agreements (unredacted);

(ii) All employees of the Company; and

(iii) Site visits to select Gaming Establishments on at least three day notice,
during regular business hours, with a representative of the Company present.

In connection with Buyer’s Phase 2 Due Diligence, Seller agrees to reasonably
cooperate with Buyer, and Buyer’s consultants, surveyors, engineers, accountants
and attorneys in conducting Buyer’s Phase 2 Due Diligence.

 

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Notwithstanding anything to the contrary in this Agreement, none of Seller, the
Company or GRA shall be required to disclose any information to Buyer if such
disclosure would, in Seller’s sole discretion: (x) jeopardize any
attorney-client or other privilege; or (y) contravene any applicable Law,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. Prior to the Closing, without the prior written consent of Seller,
which may be withheld for any reason, Buyer shall not contact any suppliers to,
or customers of, the Company and Buyer shall have no right to perform invasive
or subsurface investigations of the Real Property. Buyer shall, and shall cause
its Representatives to, abide by the terms of the Confidentiality Agreement with
respect to any access or information provided pursuant to this Section 6.02.

Section 6.03 Resignations. Seller shall deliver to Buyer written resignations,
effective as of the Closing Date, of the officers and Managers of the Company
and GRA.

Section 6.04 Employees; Benefit Plans.

(a) During the period commencing at the Closing and ending on the date which is
12 months from the Closing (or if earlier, the date of the employee’s
termination of employment with the Company), Buyer shall and shall cause each of
the Company and GRA to provide each Employee who remains employed immediately
after the Closing (“Company Continuing Employee”) with: (i) base salary or
hourly wages which are no less than the base salary or hourly wages; (ii) target
bonus opportunities (excluding equity-based compensation), if any; (iii) defined
contribution, retirement and welfare benefits; and (iv) severance benefits that
are no less favorable in the aggregate than the practice, plan or policy
described in clauses (i) through (iii) above in effect for such Company
Continuing Employee immediately prior to the Closing.

(b) With respect to any employee benefit plan maintained by Buyer or GRA
(collectively, “Buyer Benefit Plans”) in which any Company Continuing Employees
will participate effective as of the Closing, Buyer shall use commercially
reasonable efforts to recognize all service of the Company Continuing Employees
with the Company or GRA, as the case may be as if such service were with Buyer,
for vesting and eligibility purposes in any Buyer Benefit Plan in which such
Company Continuing Employees may be eligible to participate after the Closing
Date; provided, however, such service shall not be recognized to the extent that
(x) such recognition would result in a duplication of benefits or (y) such
service was not recognized under the corresponding Benefit Plan.

(c) This Section 6.04 shall be binding upon and inure solely to the benefit of
each of the Parties, and nothing in this Section 6.04, express or implied, shall
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Section 6.04. Nothing contained herein, express or
implied, shall be construed to establish, amend or modify any benefit plan,
program, agreement or arrangement. The Parties acknowledge and agree that the
terms set forth in this Section 6.04 shall not create any right in any Employee
or any other Person to any continued employment with the Company, GRA, Buyer or
any of their respective Affiliates or compensation or benefits of any nature or
kind whatsoever.

 

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Section 6.05 Plant Closings and Mass Layoffs. Buyer shall not take any action,
and shall not cause the Company and GRA to take any action, following the
Closing that could result in WARN Act liability to Seller or Owner.

Section 6.06 Director and Officer Indemnification and Insurance. Owner maintains
a comprehensive director and officer insurance policy that covers the officers
and directors of its subsidiaries, including the Company and GRA. Owner agrees
to maintain such coverage with respect to claims arising out of or relating to
events which occurred on or prior to the Closing Date (including in connection
with the transactions contemplated by this Agreement) with respect to GRA and
the Company for a period of six (6) years.

Section 6.07 Confidentiality; Public Announcements.

(a) The Parties acknowledge and agree that the Confidentiality Agreement (as
amended) remains in full force and effect and, in addition, covenants and agrees
to keep confidential, in accordance with the provisions of the Confidentiality
Agreement, information provided to Buyer pursuant to this Agreement. If this
Agreement is, for any reason, terminated prior to the Closing, the
Confidentiality Agreement and the provisions of this Section 6.07 shall
nonetheless continue in full force and effect. The Parties further agree that at
no time shall any Party or any of their representatives disclose any of the
terms of this Agreement (including the economic terms) or any non-public
information about a party hereto to any other Person without the prior written
consent of the Party about which such non-public information relates.
Notwithstanding anything to the contrary contained in the foregoing or the
Confidentiality Agreement, a Party shall be permitted to disclose any and all
terms to its financial, tax and legal advisors (each of whom is subject to a
similar obligation of confidentiality), and to any Governmental Authority or
administrative agency to the extent necessary in compliance with applicable Law
and the rules of the New York Stock Exchange.

(b) Neither Seller nor, prior to the Closing, the Company shall issue any press
release or other public communications relating to the terms of this Agreement
or use Buyer’s name or refer to Buyer directly or indirectly in connection with
Buyer’s relationship with the Company in any media interview, advertisement,
news release, press release or professional or trade publication, or in any
print media, whether or not in response to an inquiry, without the prior written
approval of Buyer, unless required by applicable Law and except as reasonably
necessary for the Company and Seller to obtain the consents and approvals of
third parties as contemplated by this Agreement.

Section 6.08 Governmental Approvals and Other Third-party Consents.

(a) Each Party shall, as promptly as possible, use its reasonable best efforts
to obtain, or cause to be obtained, all consents, authorizations, orders and
approvals from all Governmental Authorities that may be or become necessary for
its execution and delivery of this Agreement and the performance of its
obligations pursuant to this Agreement. Each Party shall cooperate fully with
the other Party and its Affiliates in promptly seeking to obtain all such
consents, authorizations, orders and approvals.

 

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(b) Notwithstanding the foregoing or anything to the contrary set forth in this
Agreement, it is expressly understood and agreed that neither Party shall have
any obligation to litigate any action, suit, claim, mediation, arbitration or
other legal proceeding that may be brought in connection with the transactions
contemplated by this Agreement, and neither Party shall be required to agree to
any license, sale or other disposition or holding separate (through the
establishment of a trust or otherwise), of shares of capital stock or of any
business, assets or property of either Party or any of the Parties’ respective
Affiliates, or the imposition of any limitation on the ability of any of them to
conduct their businesses or to own or exercise control of such assets,
properties and stock or any actions that are not conditioned on the occurrence
of the Closing.

(c) All analyses, appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments, and proposals made by or on behalf of Seller or the
Company before any Governmental Authority or the staff or regulators of any
Governmental Authority, solely in connection with the transactions contemplated
hereunder (but, for the avoidance of doubt, not including any interactions
between Seller, the Company or GRA with Governmental Authorities in the ordinary
course of business, any disclosure which is not permitted by Law or any
disclosure containing confidential information) shall be disclosed to the other
Party in advance of any filing, submission or attendance, it being the intent
that the Parties will consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any such analyses,
appearances, meetings, discussions, presentations, memoranda, briefs, filings,
arguments, and proposals. Each Party shall give notice to the other Party with
respect to any meeting, discussion, appearance or contact with any Governmental
Authority or the staff or regulators of any Governmental Authority, with such
notice being sufficient to provide the other Party with the opportunity to
attend and participate in such meeting, discussion, appearance or contact. For
the avoidance of doubt, the Parties agree that none of the foregoing obligations
shall apply to the preparation by Buyer of any filings with the U.S. Securities
and Exchange Commission or the New York Stock Exchange.

(d) Seller and Buyer shall use commercially reasonable efforts to give all
notices to, and obtain all consents from, all third parties that are described
in Section 3.05 and Section 5.02 of the Disclosure Schedules.

Section 6.09 Books and Records.

(a) In order to facilitate the resolution of any claims made against or incurred
by Seller prior to the Closing, or for any other reasonable purpose, for a
period of five (5) years after the Closing, Buyer shall:

(i) retain the books and records (including personnel files) of the Company
relating to periods prior to the Closing in a manner reasonably consistent with
the prior practices of the Company; and

(ii) upon reasonable notice, afford the Representatives of Seller reasonable
access (including the right to make, at Seller’s expense, photocopies), during
normal business hours, to such books and records.

 

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(b) In order to facilitate the resolution of any claims made by or against or
incurred by Buyer or the Company after the Closing, or for any other reasonable
purpose, for a period of five (5) years following the Closing, Seller shall:

(i) retain the books and records (including personnel files) of Seller which
relate to each of the Company and GRA and each of its operations for periods
prior to the Closing; and

(ii) upon reasonable notice, afford the Representatives of Buyer or the Company
reasonable access (including the right to make, at Buyer’s expense,
photocopies), during normal business hours, to such books and records.

(c) Neither Buyer nor Seller shall be obligated to provide the other Party with
access to any books or records (including personnel files) pursuant to this
Section 6.09 where such access would violate any Law.

Section 6.10 Closing Conditions. From the date hereof until the Closing, each
Party shall, and Seller shall cause each of the Company and GRA to, use
commercially reasonable efforts to take such actions as are necessary to
expeditiously satisfy the closing conditions set forth in Article VII hereof.

Section 6.11 Further Assurances. Following the Closing, each of the Parties
shall, and shall cause their respective Affiliates to, execute and deliver such
additional documents, instruments, conveyances and assurances, and take such
further actions as may be reasonably required to carry out the provisions hereof
and give effect to the transactions contemplated by this Agreement.

Section 6.12 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration, property, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement shall be
borne and paid by Buyer when due. Buyer shall, at its own expense, timely file
any Tax Return or other document with respect to such Taxes or fees (and Seller
shall cooperate with respect thereto as necessary). Notwithstanding the
foregoing, all transfer, documentary, sales, use, stamp, registration, property,
value added and other such Taxes and fees (including any penalties and interest)
incurred in connection with the GE Person Buy-Out shall be borne and paid by
Seller when due and Seller shall, at its own expense, timely file any Tax Return
or other document with respect to such Taxes or fees.

Section 6.13 Tax Matters.

(a) Tax Liabilities.

(i) Seller shall be liable for any Taxes imposed on the Company or GRA, or for
which the Company or GRA may otherwise be liable, for any Pre-Closing Tax Period
(including any taxes related to the Section 754 election in Section 6.18). Buyer
shall be liable for any Taxes imposed on the Company or GRA, or for which the
Company or GRA may otherwise be liable, for any Post-Closing Tax Period.

 

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(ii) For purposes of Section 6.13, the Taxes of the Company or GRA for the
portion of the Straddle Period ending on and including the Closing Date shall,
(x) in the case of Taxes based on or measured by income or sales or receipts of
the Company or GRA for the Straddle Period, be determined by assuming that the
Straddle Period consisted of two taxable years or periods, one which ended at
the close of business on the Closing Date and the other which began at the
beginning of business on the day immediately following the Closing Date and all
sales or receipts and all items of income, gain, deduction, loss or credit of
the Company or GRA for the Straddle Period shall be allocated between such two
taxable years or periods on a “closing of the books basis” by assuming that the
books of the Company and GRA were closed at the close of the Closing Date, and,
(y) in the case of all other Taxes (including property Taxes), shall be
apportioned between such two taxable years or periods on a daily basis.

(iii) Buyer and Seller agree that Seller shall be entitled to claim any
deductions for income tax purposes resulting from the following payments or
write-offs in connection with the sale of the Membership Interests pursuant to
this Agreement (x) the payoff of Indebtedness and the write off of costs and
expenses incurred in connection with Indebtedness and (y) any Unpaid Company
Transaction Expenses unless otherwise required by applicable Law.

(b) Tax Returns.

(i) Seller shall file or cause to be filed when due (taking into account all
extensions properly obtained) all Tax Returns that are required to be filed by
or with respect to the Company or GRA for Pre-Closing Tax Periods (excluding any
Straddle Periods), and Seller shall remit or cause to be remitted any Taxes due
in respect of such Tax Returns. Except as otherwise required by law, all such
Tax Returns shall be prepared and filed in a manner materially consistent with
past practice and, on such Tax Returns, no position shall be taken, election
made or method adopted that is inconsistent with positions taken, elections made
or methods used in preparing and filing similar Tax Returns in prior periods
(including positions, elections or methods that would have the effect of
deferring income to Post-Closing Tax Periods or accelerating deductions to
Pre-Closing Tax Periods).

(ii) Buyer shall file or cause to be filed when due (taking into account all
extensions properly obtained) all Tax Returns for all Straddle Periods and
Post-Closing Tax Periods that are required to be filed by or with respect to the
Company or GRA, and Buyer shall remit or cause to be remitted any Taxes due in
respect of such Tax Returns. Except as otherwise required by applicable Law
(determined in good faith by Buyer), all such Tax Returns shall be prepared and
filed in a manner materially consistent with past practice and, on such Tax
Returns, no position shall be taken, election made or method adopted that is
inconsistent with positions taken, elections made or methods used in preparing
and filing similar Tax Returns in prior periods.

 

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(iii) The respective payer shall, at its own expense, timely file all necessary
Tax Returns and other documentation with respect to all transfer taxes, and, if
required by applicable Law, the other party shall, and shall cause its
Affiliates to, join in the execution of any such Tax Returns and other
documentation.

(c) Contest Provisions.

(i) Buyer shall notify Seller within twenty (20) Business Days after receipt by
Buyer, any of its Affiliates or, after the Closing Date, the Company or GRA of
written notice of any pending or threatened Tax audits or assessments relating
to any Pre-Closing Tax Period.

(ii) Seller shall have the sole right to represent the Company’s and GRA’s
interests in any Tax audit or administrative or court proceeding relating to a
Tax liability (a “Tax Determination”) regarding any Tax Return related to a tax
period that ends on or prior to the Closing Date, and to employ counsel of
Seller’s choice at Seller’s expense, unless Seller notifies Buyer in writing of
Seller’s intention not to represent the Company or GRA in any such Tax
Determination; provided, however, that (A) Seller (“controlling party”) shall
keep the Buyer, the Company and GRA (“noncontrolling party”) reasonably informed
and consult in good faith with the non-controlling party with respect to any
issue relating to such Tax Determination, (B) the controlling party shall
provide the non-controlling party with copies of all correspondence, notices and
other written material received from any Governmental Authority with respect to
such Tax Determination, (C) the controlling party shall provide the
non-controlling party with a copy of, and an opportunity to review and comment
on, all submissions made to a Governmental Authority in connection with such Tax
Determination and (D) the controlling party may not agree to an abandonment,
settlement or compromise thereof without the prior written consent of the
noncontrolling party, which consent shall not be unreasonably withheld,
conditioned or delayed.

(iii) Buyer, on behalf of the Company and GRA, at its own respective expense,
shall have the right to exercise control at any time over the handling,
disposition or settlement of any issue raised in any such Tax Determination
regarding any Straddle Period.

(iv) Buyer shall have the sole right to represent the Company’s and GRA’s
interests in any Tax Determination if Seller declines or fails to notify Buyer
within twenty (20) business days of its election to exercise such rights
pursuant to Section 6.13(c)(ii) and to employ counsel of Buyer’s choice at
Buyer’s expense. For any taxable year or period beginning after the Closing
Date, Buyer shall have the sole right to defend the Company and GRA with respect
to any issue, and settle or compromise any issue, arising in connection with any
Tax audit or administrative or court proceeding to the extent Buyer shall have
agreed in writing to forego any indemnification under this Agreement with
respect to such issue.

 

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(v) Nothing herein shall be construed to impose on Buyer any obligation to
defend the Company or GRA in any Tax audit or administrative or court
proceeding. Any proceeding with respect to which Seller does not assume control
in accordance with Section 6.13(c)(ii) may be settled or compromised in the
discretion of Buyer, and any such settlement or compromise shall not affect
Buyer’s right to indemnification under this Agreement.

(d) Assistance and Cooperation; Intent of the Parties.

(i) After the Closing Date, each of Seller and Buyer shall (and shall cause
their respective Affiliates to):

(A) timely sign and deliver such certificates or forms as may be necessary or
appropriate to establish an exemption from (or otherwise reduce), or file Tax
Returns or other reports;

(B) assist the other Party in preparing any Tax Returns which such other Party
is responsible for preparing and filing in accordance with Section 6.13, and in
connection therewith, provide the other Party with any necessary powers of
attorney;

(C) cooperate fully in preparing for and defending any Tax Determination;

(D) make available to the other and to any Tax Authority as reasonably requested
all information, records, and documents relating to Taxes of the Company or GRA;
and

(E) furnish the other with copies of all correspondence received from any Tax
Authority in connection with any Tax audit or information request with respect
to any such taxable period.

(ii) Notwithstanding anything in this Agreement to the contrary, on or prior to
Closing, the Seller shall make available to the Buyer one or more properly
executed affidavits, in form and substance reasonably acceptable to Buyer,
certifying that the transactions contemplated hereby are not subject to
withholding under Sections 1445 and 1446(f) of the Code; provided that the
Buyer’s only remedy for the failure to make such affidavits available shall be
to withhold from payments to be made pursuant to this Agreement any Tax required
to be withheld under Sections 1445 and 1446(f) of the Code.

(iii) The Parties intend for the Company to terminate as a partnership as of the
date the GE Person Buy-out is consummated pursuant to Section 708(b)(1) of the
Code.

(e) Purchase Price Allocation. The allocation of the Purchase Price among the
assets of the Company and GRA in accordance with Section 1060 of the Code (the
“Allocation”) will be determined in accordance with the methodology set forth on
Section 6.13(e) of the Disclosure Schedules. Each of Buyer and Seller agree to
file IRS form 8594 and all Tax Returns in accordance with such schedule and
methodology. Seller and Buyer shall act reasonably and in good faith with
respect to the Allocation, including any amendments to the Allocation to reflect
any adjustments to the Purchase Price under this Agreement.

 

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Section 6.14 Representation and Warranty Insurance. Buyer shall (a) obtain the
R&W Insurance Policy as promptly as practicable after the date of this Agreement
(subject to the reasonable approval of Seller) and to bind such policy as of the
Closing and (b) pay all costs and expenses required to ensure that the R&W
Insurance Policy is effective as of Closing. Following the Closing, Buyer shall
(i) satisfy on a timely basis all conditions necessary for the issuance of or
continuance of coverage under the R&W Insurance Policy as set forth in the R&W
Insurance Policy, (ii) use all efforts to seek coverage under the R&W Insurance
Policy, including the timely and adequate delivery of notices of claims under
the R&W Insurance Policy and (iii) otherwise comply with the terms and
conditions of the R&W Insurance Policy. Without limiting the generality of the
foregoing, Buyer shall timely pay all premiums and other amounts required to
cause the R&W Insurance Policy to become effective in accordance with its terms.
Buyer shall not (and shall not permit any of its Affiliates to) take any action
with the intention of causing the R&W Insurance Policy or the rights of any
party thereunder to be terminated, cancelled or waived in a manner that would
have an adverse impact on Seller or any of its Affiliates. Following the
Closing, Buyer shall not amend the subrogation or third party beneficiary
provisions contained in the R&W Insurance Policy benefiting the Seller or its
Affiliates or otherwise amend or modify the R&W Insurance Policy in a manner
adverse to Seller or any of its Affiliates.

Section 6.15 Restrictive Covenants.

(a) Each GRJ Restricted Person acknowledges that the covenants set forth in this
Section 6.15 are reasonable in scope and are necessary to protect the legitimate
business interests of Buyer, and Buyer would not enter into this Agreement but
for the GRJ Restricted Persons agreeing to the restrictions set forth in this
Section 6.15 and that the restrictions set forth in this Section 6.15 are
ancillary to the sale of the Membership Interests by Seller to Buyer. Each GRJ
Restricted Person hereby covenants and agrees that during the Restrictive
Covenant Period, no GRJ Restricted Person shall directly or indirectly within
the Restricted Territory:

(i) Serve, function or act as a Terminal Operator, as that term is defined in
the Video Gaming Laws, or as an employee, agent, representative, owner, member,
stockholder, investor, organizer, consultant, independent contractor or other
role of or for a Terminal Operator or in an amusement business that is
competitive with Buyer, the Company or GRA;

(ii) Serve, function or act as an employee, agent, representative, consultant,
independent contractor, or otherwise, perform services, solicit Use Agreements
or Amusement Agreements for or render assistance to any Terminal Operator, or
any business, partnership, proprietorship, firm, or competitive entity,
organization, or corporation, which services or assists or are competitive with
the business, products or services of the Company or GRA in the Gaming Business
or the Amusement Business; on his own behalf or for any other Person, knowingly

 

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offer, contract with, solicit or induce any officer, director, employee,
customer, supplier, independent contractor or owner of a Gaming Establishment or
Amusement Establishment in the Restricted Territory to enter into or execute any
Use Agreement with any Terminal Operator, or to terminate such Gaming
Establishment’s Use Agreement or relationship with the Company; or

(iii) On his own behalf or for any other Person, knowingly offer, contract with,
solicit or induce any officer, director, or employee of Buyer, the Company or
GRA to terminate its employment with Buyer, the Company or GRA other than to
those persons set forth on Section 6.15(a)(iii) of the Disclosure Schedules or
in response to a general solicitation.

(b) Each GRJ Restricted Person acknowledges and agrees that the Gaming Business
and the Amusement Business is highly competitive and that a violation of any of
the provisions of Section 6.15 would cause immediate and irreparable harm, loss
and damage to Buyer not adequately compensable by a monetary award. Each GRJ
Restricted Person further acknowledges and agrees that the time periods and
territorial areas provided for herein are the minimum necessary to adequately
protect the legitimate business interests of Buyer. Without limiting any of the
other remedies available to Buyer, at law or in equity, or Buyer’s right or
ability to collect money damages, each GRJ Restricted Person agrees that any
actual or threatened violation of any of the provisions of Section 6.15 may be
restrained or enjoined by any court of competent jurisdiction, and that a
temporary restraining order or emergency, preliminary or final injunction may be
issued in any court of competent jurisdiction, upon one day’s notice and without
bond.

(c) The Company Operating Agreement provided in the Data Room is a true, correct
and complete copy of the operating agreement (or equivalent) of the Company,
including all amendments thereto, which is in full force and effect as of the
date hereof (including, for the avoidance of doubt, the OA Restrictive
Covenants) There have been no amendments or modifications to the Company
Operating Agreement, and no steps have been taken by the managers, members,
officers or directors of the Company to effect or authorize any amendment or
modification to the Company Operating Agreement, and no action is pending to
amend, modify or rescind the Company Operating Agreement.

(d) Buyer acknowledges and agrees that nothing in this Section 6.15 or the
Company Operating Agreement restricts any GRJ Restricted Person or GE Restricted
Person from owning a licensed Gaming Establishment or Amusement Establishment in
the Restricted Territory following the Closing and utilizing the services of any
licensed Terminal Operator such Person so chooses to service such licensed
Gaming Establishment or Amusement Establishment.

Section 6.16 GE Person Buy-Out. From and after the date of this Agreement, none
of the parties to any agreements described in Section 3.23 shall amend or waive
the terms of such agreements without the consent of Buyer.

 

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Section 6.17 Post-closing Payments. No later than three (3) Business Days prior
to the Closing Date, Seller shall prepare and deliver to Buyer a schedule
showing the TTM GRJ TO Share as of the last day of the calendar month
immediately prior to the Closing Date and the number of Baseline Locations in
existence as of the date thereof (the “TO Share Schedule” with the accounting
methods and conventions used in the preparation thereof being referred to as the
“Accounting Conventions”).

(a) Within five (5) Business Days following the One-Year Payment Date, Buyer
shall prepare and deliver to Seller (x) a schedule calculating the One-Year
Payment Offset, including a description of each payment made and identifying the
agreement or Incentive Program section pursuant to which such payment was made
and (y) a TO Share Schedule calculating: (i) the TTM GRJ TO Share as of the
One-Year Payment Date, as reported on the SciGames Reports for all Company
Establishments prepared in accordance with the Accounting Conventions, and
(ii) the Average Net Win Per Machine Per Day for each Company Establishment that
is a Baseline Location as of the One-Year Payment Date. In the event that the
TTM GRJ TO Share as of the One-Year Payment Date is at least $19 million, then
Buyer shall pay to Seller an amount equal to (A) the One-Year Payment Amount
minus (B) the One-Year Payment Amount Offset within thirty (30) days of the
One-Year Payment Date. In the event that the TTM GRJ TO Share as of the One-Year
Payment Date is less than $19 million, then Buyer shall have no obligation to
pay the One-Year Payment Amount and the One-Year Payment Amount shall be deemed
forfeited.

(b) Within ten (10) Business Days following the two (2) year anniversary of the
Closing, Buyer shall prepare and deliver to Seller a schedule showing the number
of Baseline Locations as of such two-year anniversary (the “Baseline Location
Schedule”).

(c) Within five (5) Business Days following the Three-Year Payment Date, Buyer
shall prepare and deliver to Seller (x) a schedule calculating the Three-Year
Payment Offset, including a description of each payment made and identifying the
agreement or Incentive Program section pursuant to which such payment was made
and (y) a TO Share Schedule calculating: (i) the TTM GRJ TO Share as of the
Three-Year Payment Date, as reported on the SciGames Reports for all Company
Establishments prepared in accordance with the Accounting Conventions, and
(ii) the Average Net Win Per Machine Per Day for each Company Establishment that
is a Baseline Location as of the Three-Year Payment Date. In the event that the
TTM GRJ TO Share as of the Three-Year Payment Date is at least $19 million, then
Buyer shall pay to Seller an amount equal to (A) the Three-Year Payment Amount
minus (B) the Three-Year Payment Amount Offset within thirty (30) days of the
Three-Year Payment Date. In the event that the TTM GRJ TO Share as of the
Three-Year Payment Date is less than $19 million, then Buyer shall have no
obligation to pay the Three-Year Payment Amount and the Three-Year Payment
Amount shall be deemed forfeited.

(d) Each of the One-Year Payment Amount and the Three-Year Payment Amount shall
be paid by wire transfer of immediately available funds to the account or
accounts designated by Seller (or its successors, if applicable) in writing to
Buyer at least two (2) Business Days prior to the date of the One-Year Payment
Date or the Three-Year Payment Date, as applicable.

 

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(e) In the event Buyer assigns or transfers any Use Agreement with a Company
Establishment prior to the One-Year Payment Date or the Three-Year Payment Date,
as applicable, then applicable TO Share Schedule shall include the Net Terminal
Income for such Company Establishment during the twelve full calendar month
period prior to the occurrence of such transfer. In the event Buyer voluntarily
terminates any Use Agreement with (or otherwise voluntarily removes its Video
Gaming Terminals from) a Company Establishment that is not an Underperforming
Establishment, then the applicable TO Share Schedule shall include the Net
Terminal Income generated by such Company Establishment during the twelve full
calendar month period prior to the occurrence of such termination (or removal of
Video Gaming Terminals). The TO Share Schedule shall not include Net Terminal
Income after the date of termination: (i) with respect to Use Agreements that
have been terminated as a result of the Company Establishment electing to not
renew its Use Agreement with the Company and/or Buyer (or an Affiliate of Buyer)
or the voluntary or involuntary closure of the Company Establishment by the
owner of such Company Establishment, or (ii) generated by an Underperforming
Establishment.

(f) Each TO Share Schedule and Baseline Location Schedule delivered by Buyer to
Seller shall be accompanied by a certificate of the chief financial officer of
Buyer attesting to the accuracy and completeness of such schedule.

Section 6.18 Section 754 Issues. The Company will make an election pursuant to
Section 754 of the Code for the tax year ending on the date that Seller becomes
the owner of 100% of the Membership Interests (which date shall be the final
date on which the Company shall be treated as a partnership for tax purposes and
thereafter shall be treated as a disregarded entity).

Section 6.19 IGB Covenant. Buyer and Seller covenant and agree to cooperate with
the IGB to ensure a smooth transition of the Video Gaming Terminals that are
currently operational in Gaming Establishments and Amusement Establishments with
minimal to no interruption.

Section 6.20 Exclusivity. From and after the date hereof until the earlier of
the Drop Dead Date or this Agreement is terminated as provided in Article IX,
Seller shall not and shall cause the Company, GRA and each of their respective
Affiliates, officers, managers, employees, agents or Representatives, not to,
directly or indirectly, encourage, solicit, initiate or participate in
discussions or negotiations with, provide any information to, receive any
proposals or offers from, or enter into any agreement with, any third party, in
each case other than the Buyer, that involves the sale, joint venture or the
other disposition of all or any portion of the Company or GRA, the assets of the
Company or GRA or the business of the Company or GRA or any merger,
consolidation, recapitalization or other business combination of any kind
involving the Company or GRA, the assets of the Company or GRA or the business
of the Company or GRA, other than sales of inventory in the ordinary course of
business and consistent with past practice. If Seller receives or becomes aware
of any proposal, offer or proposed offer, Seller shall promptly notify Buyer
with the details thereof.

 

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Section 6.21 Release. Seller, on behalf of itself and each of its officers and
managers hereby unconditionally and irrevocably acquits, remises, discharges and
forever releases, effective as of the Closing, Buyer, the Company, GRA and their
respective Affiliates, equityholders, partners, managers, trustees, employees,
officers, directors, representatives and agents (collectively, the “Releasees”)
from any and all claims and Losses of every kind whatsoever, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or
determinable, including those arising under any Law, contract, agreement,
arrangement, commitment or undertaking, whether written or oral, to the extent
arising on or prior to the Closing; provided that the claims and Losses
acquitted, remised, discharged and released pursuant to this Section 6.21 shall
not include any rights of Seller under this Agreement and the other documents
and agreements executed in consummation of the transactions contemplated by this
Agreement.

Section 6.22 Schedule Supplement. From time to time prior to the date that is
three (3) Business Days prior to the Closing Date, Seller shall have the right
(but not the obligation) to supplement or amend the Disclosure Schedules hereto
solely to disclose any facts that are not in existence on the date hereof but
which arise prior to the Closing and which do not result from a breach of this
Agreement (each, a “Schedule Supplement”). Any disclosure in any such Schedule
Supplement shall not be deemed to have cured any inaccuracy in or breach of any
representation or warranty contained in this Agreement, including for purposes
of the indemnification or termination rights contained in this Agreement or of
determining whether or not the conditions set forth in Section 7.02 have been
satisfied; provided, however, that if Buyer has the right to, but does not elect
to, terminate this Agreement as a result of the items disclosed in such Schedule
Supplement, then such disclosure shall be deemed to qualify the representation
or warranty with respect to which it was disclosed for purposes of determining
whether Buyer is entitled to indemnification with respect to a breach of such
representation or warranty.

ARTICLE VII

CONDITIONS TO CLOSING

Section 7.01 Conditions to Obligations of All Parties. The obligations of each
Party to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:

(a) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any Governmental Order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion
thereof.

(b) Seller shall have received all consents, authorizations, orders and
approvals from the Governmental Authorities referred to in Section 3.05 in form
and substance reasonably satisfactory to Buyer, and no such consent,
authorization, order and approval shall have been revoked.

 

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Section 7.02 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the
following conditions:

(a) The representations and warranties of Seller, the Company and GRA contained
in Article III 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 or Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects) as of the
date of this Agreement and the Closing Date with the same effect as though made
at and as of such date (except those representations and warranties that address
matters only as of a specified date, which shall be true and correct in all
respects as of that specified date).

(b) Seller shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.

(c) Buyer shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Seller, that each of the conditions set forth in
Section 7.02(a) and Section 7.02(b) have been satisfied.

(d) Buyer shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Seller and the Company certifying that
attached thereto are true and complete copies of all resolutions adopted by the
Managers of Seller and the Company authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, and that all such resolutions are in full force and effect
and are all the resolutions adopted in connection with the transactions
contemplated hereby.

(e) Buyer shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Seller and the Company certifying to the
accuracy and completeness of (i) the articles of organization of the Company and
GRA, (ii) the Company Operating Agreement and GRA Operating Agreement, (iii) the
certificates of good standing (or equivalent) from the Illinois Secretary of
State and each other secretary of state (or equivalent) of each jurisdiction
where the Company or GRA conduct business and (iv) the names and signatures of
the authorized signatories of Seller authorized to sign this Agreement and the
other documents to be delivered hereunder.

(f) Seller shall have delivered, or caused to be delivered, to Buyer an
assignment separate from certificate, in the form attached hereto as Exhibit B,
duly executed by Seller assigning the Membership Interests to Buyer free and
clear of all Encumbrances.

(g) No later than two (2) Business Days prior to the Closing, Seller shall have
delivered a certificate, certified by an officer of the Company and setting
forth the Company’s good faith estimate of each of the following as of the
Closing: (i) the Working Capital (the “Estimated Working Capital”), (ii) the
Estimated Cash Reimbursement Amount, (iii) the Unredeemed Voucher Liability,
(iv) the Unpaid Company Transaction Expenses (the “Estimated Unpaid Company
Transaction Expenses”) and (v) the Company’s calculation of the Estimated
Closing Payment based on the items set forth in clauses (i) through (iv) (such
certificate, the “Closing Financial Certificate”).

 

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(h) Buyer shall have received duly executed payoff letters and related lien
releases in customary form reasonably satisfactory to Buyer in connection with
the repayment of the USB Credit Agreement and the release of the liens set forth
on Section 3.10(a) of the Disclosure Schedules.

(i) Concurrent with or prior to the Closing, Seller shall have consummated the
GE Person Buy-Out on terms reasonably acceptable to Buyer.

(j) Concurrent with or prior to the Closing, Buyer shall have obtained the R&W
Insurance Policy on terms reasonably acceptable to Buyer.

Section 7.03 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the
following conditions:

(a) The representations and warranties of Buyer contained in Article V 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 or
Material Adverse Effect, which representations and warranties as so qualified
shall be true and correct in all respects) as of the date of this Agreement and
the Closing Date with the same effect as though made at and as of such date
(except those representations and warranties that address matters only as of a
specified date, which shall be true and correct in all respects as of that
specified date).

(b) Buyer shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.

(c) Buyer shall have received all consents, authorizations, orders and approvals
from the Governmental Authorities referred to in Section 5.02, in each case, in
form and substance reasonably satisfactory to Seller, and no such consent,
authorization, order and approval shall have been revoked.

(d) Seller shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Buyer, that each of the conditions set forth in
Section 7.03(a) and Section 7.03(b) have been satisfied.

(e) Seller shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Buyer certifying that attached thereto are
true and complete copies of all resolutions adopted by the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, and that all such
resolutions are in full force and effect and are all the resolutions adopted in
connection with the transactions contemplated hereby.

(f) Seller shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Buyer certifying the names and signatures
of the officers of Buyer authorized to sign this Agreement and the other
documents to be delivered hereunder.

 

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(g) Buyer shall have delivered to Seller the Estimated Closing Payment by wire
transfer of immediately available funds to the account of Seller as set forth in
the Flow of Funds Schedule.

(h) Buyer shall have delivered to Seller the Estimated Cash Reimbursement Amount
by wire transfer of immediately available funds to the account of Seller as set
forth in the Flow of Funds Schedule.

(i) Concurrent with or prior to the Closing, Buyer shall have obtained the R&W
Insurance Policy on terms reasonably acceptable to Seller.

ARTICLE VIII

INDEMNIFICATION

Section 8.01 Survival. Subject to the limitations and other provisions of this
Agreement, the representations and warranties contained herein (other than
Fundamental Representations and Warranties) shall survive the Closing and shall
remain in full force and effect until the date that is eighteen (18) months from
the Closing Date (the “Survival Period”). Fundamental Representations and
Warranties shall survive the Closing and shall remain in full force and effect
until sixty (60) days following the expiration of the applicable statute of
limitations. None of the covenants or other agreements contained in this
Agreement shall survive the Closing Date other than those which by their terms
contemplate performance after the Closing Date, and each such surviving covenant
and agreement shall survive the Closing for the period contemplated by its
terms. Notwithstanding the foregoing, any claims asserted in good faith with
reasonable specificity (to the extent known at such time) and in writing by
notice from the non-breaching party to the breaching party prior to the
expiration date of the applicable survival period shall not thereafter be barred
by the expiration of such survival period and such claims shall survive until
finally resolved.

Section 8.02 Indemnification By Seller and Owner. Subject to the other terms and
conditions of this Article VIII, Seller and Owner shall jointly and severally
indemnify Buyer, its subsidiaries, Affiliates, members, managers, officers,
employees and agents and the members, managers, directors, officers, employees
and agents of its Affiliates (the “Buyer Indemnitees”) against, and shall hold
the Buyer Indemnitees harmless from and against, any and all Losses incurred or
sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of,
with respect to or by reason of:

(a) any inaccuracy in or breach of any of the representations or warranties of
Seller, the Company or Owner contained in this Agreement or the other
agreements, documents or certificates contemplated hereby;

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Seller pursuant to this Agreement or the other agreements,
documents or certificates contemplated hereby; or

(c) any third party claim made against any Buyer Indemnitee arising from or
related to the operation of the assets and businesses of Seller, the Company or
GRA prior to the Closing;

 

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(d) any Liabilities for claims, counterclaims, causes of action or demands
arising out of or relating to Seller’s prior relationship with the Company or
GRA or its rights or status as a member of the Company (excluding any such
Liabilities arising under this Agreement and the transactions contemplated by
this Agreement (other than the GE Person Buy-out);

(e) regardless of any disclosure of any matter set forth in the Disclosure
Schedules, any Liabilities arising from or relating to any non-compliance with
the Video Gaming Laws, any IGB rule, regulation or policy or any other state or
local Laws governing or relating to gambling activities or gaming activities
occurring or existing prior to the Closing;

(f) regardless of any disclosure of any matter set forth in the Disclosure
Schedules, any inaccuracy in any information or calculations set forth in the
Estimated Working Capital, the Estimated Cash Reimbursement Amount, the
Unredeemed Voucher Liability, the Unpaid Company Transaction Expenses and the
calculation of the Estimated Closing Payment; and

(g) any Taxes for which Seller is liable pursuant to Section 6.13(a) or
otherwise.

Section 8.03 Indemnification By Buyer. Subject to the other terms and conditions
of this Article VIII, Buyer shall indemnify Seller and its managers, members,
directors, officers, employees and agents (the “Seller Indemnitees”) against,
and shall hold the Seller Indemnitees harmless from and against, any and all
Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based
upon, arising out of, with respect to or by reason of:

(a) any inaccuracy in or breach of any of the representations or warranties of
Buyer contained in this Agreement or the other agreements, documents or
certificates contemplated hereby;

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer pursuant to this Agreement or the other agreements, documents
or certificates contemplated hereby;

(c) any third party claim made against any Seller Indemnitee arising from the
operation of the assets and businesses of the Company and GRA from and after the
Closing;

(d) any Taxes for which Buyer is liable pursuant to Section 6.13(a) or
otherwise; and

(e) any Losses incurred by any Seller Indemnitee from any claims, proceedings or
other litigation brought by a third party or Governmental Authority, in each
case arising out of disclosures made by Buyer or TPG regarding the transactions
contemplated herein in any of TPG’s filings with the U.S. Securities and
Exchange Commission or the New York Stock Exchange, to the extent such
disclosure is not otherwise approved by Seller in advance thereof.

 

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Section 8.04 Certain Limitations. The Party making a claim under this Article
VIII is referred to as the “Indemnified Party”, and the Party against whom such
claims are asserted under this Article VIII is referred to as the “Indemnifying
Party”. The indemnification provided for in Section 8.02 and Section 8.03 shall
be subject to the following limitations:

(a) The Indemnifying Party shall not be liable to the Indemnified Party for
indemnification under Section 8.02(a) (other than the Seller Fundamental
Representations and Warranties) or Section 8.03(a) (other than the Buyer
Fundamental Representations and Warranties), as the case may be, until the
aggregate amount of all Losses in respect of indemnification under
Section 8.02(a) or Section 8.03(a) exceeds $550,000 (the “Deductible”), in which
event the Indemnifying Party shall only be required to pay or be liable for
Losses in excess of the Deductible.

(b) The aggregate amount of all Losses for which Seller and Owner shall be
liable for breach of Section 8.02(a) other than for a breach of Seller
Fundamental Representations and Warranties (to the extent not covered by the R&W
Insurance Policy) shall not exceed $550,000 (the “Seller Cap”) and all Losses
for which Seller and Owner shall be liable for breach of Section 8.02(a) in
excess of the Seller Cap shall be limited to recovery from the R&W Insurance
Policy (other than for a breach of Seller Fundamental Representations and
Warranties; to the extent any such Losses are not covered by the R&W Insurance
Policy). With respect to Losses arising pursuant to a breach of a Seller
Fundamental Representation and Warranty, such Loss shall first be satisfied from
the R&W Insurance Policy (to the extent covered thereby) prior to the
Indemnified Party seeking satisfaction from the Indemnifying Party. The
aggregate amount of all Losses for which an Indemnifying Party shall be liable
for a breach of Fundamental Representations and Warranties (to the extent not
covered by the R&W Insurance Policy with respect to Seller Fundamental
Representations and Warranties) shall not exceed the Purchase Price less the
Cash Reimbursement Amount.

(c) Payments by an Indemnifying Party pursuant to Section 8.03 in respect of any
Loss shall be limited to the amount of any liability or damage that remains
after deducting therefrom any insurance proceeds and any indemnity, contribution
or other similar payment actually received by the Indemnified Party in respect
of any such claim. The Indemnified Party shall use its commercially reasonable
efforts to first seek recovery under the R&W Insurance Policy for any Losses
prior to seeking indemnification under this Agreement. To the extent any Loss is
not otherwise covered by the R&W Insurance Policy, Buyer shall have the right to
offset any amounts conclusively owed to any Buyer Indemnitee by any Indemnifying
Parties pursuant to this Article VIII against any amounts owed by Buyer to
Seller pursuant to this Agreement after Closing.

(d) In no event shall any Indemnifying Party be liable to any Indemnified Party
for any punitive or special damages unless otherwise awarded to a third-party in
a Third-Party claim by a court of competent jurisdiction.

(e) Any qualification in the representations and warranties with respect to a
Material Adverse Effect, materiality, material or similar terms will not have
any effect with respect to (i) the determination of the existence of any breach
of any representation or warranty or (ii) the calculation of the amount owed
under a claim for indemnification pursuant to this Article VIII and such
qualifiers in any such representations and warranties shall be disregarded and
all claims for indemnification under this Article VIII shall be determined as if
such qualifiers were not present in such representations and warranties.

 

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(f) Notwithstanding anything to the contrary set forth herein, any claim that a
Buyer Indemnitee or a Seller Indemnitee may have that arises from fraud, willful
misconduct or intentional misrepresentation or omission shall not be limited by
the limitations set forth in this Article VIII, including the Survival Period,
the Deductible or the Seller Cap.

(g) Subject to the other applicable provisions regarding indemnification
contained in this Article VIII, if Seller and Owner are obligated to reimburse
or compensate the Buyer Indemnitees for any Losses in connection with a claim by
any of the Buyer Indemnitees under Section 8.02(a), then indemnification for
such Losses shall, subject to the applicable limitations, if any, set forth in
this Article VIII, be satisfied first, from the Seller and Owner until the
Seller Cap is exhausted and second, by seeking recovery under the R&W Insurance
Policy, but subject to the coverage and other limitations thereof. Buyer hereby
acknowledges and agrees that Buyer’s sole recourse for any Losses arising
pursuant to Section 8.02(a) (other than in connection with a breach of Seller
Fundamental Representations and Warranties or in connection with any fraud,
intentional misrepresentations or willful misconduct) shall be limited to the
Seller Cap and the amounts available for recovery under the R&W Insurance
Policy.

(h) Notwithstanding anything to the contrary in this Agreement, Owner shall not
be obligated to indemnify any Buyer Indemnitee pursuant to this Article VIII
unless (and to the extent that) Seller has not made any payment that Seller was
obligated to make under this Article VIII when such payment is required to be
made hereunder.

Section 8.05 Indemnification Procedures.

(a) Third-Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any action, suit, claim or other legal proceeding
made or brought by any Person who is not a Party or an Affiliate of a Party or a
Representative of the foregoing (a “Third-Party Claim”) against such Indemnified
Party with respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party prompt written notice thereof. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party is prejudiced by such delay. Such notice by the Indemnified Party shall
describe the Third-Party Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnified Party shall have the right in its sole
discretion to conduct the defense of and to settle or resolve any such
Third-Party Claim by the Indemnified Party’s own qualified counsel. Seller and
Buyer shall cooperate with each other in all reasonable respects in connection
with the defense

 

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of any Third-Party Claim, including making available (subject to the provisions
of Section 6.07) records relating to such Third-Party Claim and furnishing,
without expense (other than reimbursement of actual out-of-pocket expenses) to
the defending Party, management employees of the non-defending Party as may be
reasonably necessary for the preparation of the defense of such Third-Party
Claim.

(b) Direct Claims. Any claim by an Indemnified Party on account of a Loss which
does not result from a Third-Party Claim (a “Direct Claim”) shall be asserted by
the Indemnified Party giving the Indemnifying Party prompt written notice
thereof. The failure to give such prompt written notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party is prejudiced by reason of such
delay. Such notice by the Indemnified Party shall describe the Direct Claim in
reasonable detail, shall include copies of all material written evidence thereof
and shall indicate the estimated amount, if reasonably practicable, of the Loss
that has been or may be sustained by the Indemnified Party. The Indemnifying
Party shall have thirty (30) days after its receipt of such notice to respond in
writing to such Direct Claim. During such 30-day period, the Indemnified Party
shall allow the Indemnifying Party and its professional advisors to investigate
the matter or circumstance alleged to give rise to the Direct Claim, and whether
and to what extent any amount is payable in respect of the Direct Claim and the
Indemnified Party shall assist the Indemnifying Party’s investigation by giving
such information and assistance (including access to the Company’s premises and
personnel and the right to examine and copy any accounts, documents or records)
as the Indemnifying Party or any of its professional advisors may reasonably
request. If the Indemnifying Party does not so respond within such 30-day
period, the Indemnifying Party shall be deemed to have rejected such claim, in
which case the Indemnified Party shall be free to pursue such remedies as may be
available to the Indemnified Party on the terms and subject to the provisions of
this Agreement, including bringing an action in accordance with the terms of
Section 10.10. The decision of such tribunal as to the validity and amount of
any Direct Claim shall be non-appealable, binding and conclusive upon the
parties hereto.

Section 8.06 Tax Treatment of Indemnification Payments. All indemnification
payments made under this Agreement shall be treated by the Parties as an
adjustment to the Purchase Price for Tax purposes, unless otherwise required by
Law.

Section 8.07 Exclusive Remedies. Subject to Section 10.11, the Parties
acknowledge and agree that their sole and exclusive remedy with respect to any
and all claims (other than claims arising from intentional fraud on the part of
a Party in connection with the transactions contemplated by this Agreement) for
any breach of any representation, warranty, covenant, agreement or obligation
set forth herein or otherwise relating to the subject matter of this Agreement,
shall be pursuant to the indemnification provisions set forth in this Article
VIII. In furtherance of the foregoing, each Party hereby waives, to the fullest
extent permitted under Law, any and all rights, claims and causes of action for
any breach of any representation, warranty, covenant, agreement or obligation
set forth herein or otherwise relating to the subject matter of this Agreement
it may have against the other Parties and their Affiliates and each of their
respective Representatives arising under or based upon any Law, except pursuant
to the indemnification provisions set forth in this Article VIII. Nothing in
this Section 8.07 shall limit any Person’s right to seek and obtain any
equitable relief to which any Person shall be entitled pursuant to Section 10.11
or to seek any remedy on account of fraud by any Party.

 

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ARTICLE IX

TERMINATION

Section 9.01 Termination. This Agreement may be terminated at any time prior to
the Closing:

(a) by the mutual written consent of Seller and Buyer;

(b) by Buyer by written notice to Seller if:

(i) Buyer is not then in material breach of any provision of this Agreement and
there has been a material breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by Seller pursuant to this
Agreement that would give rise to the failure of any of the conditions specified
in Article VII and such breach, inaccuracy or failure cannot be cured by Seller
by September 30, 2019 (the “Drop Dead Date”); or

(ii) any of the conditions set forth in Section 7.01 or Section 7.02 shall not
have been fulfilled by the Drop Dead Date, unless such failure shall be due to
the failure of Buyer to perform or comply with any of the covenants, agreements
or conditions hereof to be performed or complied with by it prior to the
Closing;

(c) by Seller by written notice to Buyer if:

(i) Seller is not then in material breach of any provision of this Agreement and
there has been a material breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by Buyer pursuant to this
Agreement that would give rise to the failure of any of the conditions specified
in Article VII and such breach, inaccuracy or failure cannot be cured by Buyer
by the Drop Dead Date; or

(ii) any of the conditions set forth in Section 7.01 or Section 7.03 shall not
have been fulfilled by the Drop Dead Date, unless such failure shall be due to
the failure of Seller to perform or comply with any of the covenants, agreements
or conditions hereof to be performed or complied with by it prior to the
Closing; or

(d) by Buyer or Seller in the event that:

(i) there shall be any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited;

(ii) any Governmental Authority shall have issued a Governmental Order
restraining or enjoining the transactions contemplated by this Agreement, and
such Governmental Order shall have become final and non-appealable; or

 

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(iii) the Closing has not occurred on or prior to the Drop Dead Date.

Section 9.02 Effect of Termination. In the event of the termination of this
Agreement in accordance with this Article, this Agreement shall forthwith become
void and there shall be no liability on the part of any Party except:

(a) as set forth in this Article IX, Section 6.07, Article X hereof;

(b) if the Deposit Conditions have been met at the time of such termination,
then the Deposit shall be paid by the Escrow Agent to Seller;

(c) if the Deposit Conditions have not been met at the time of such termination,
then the Deposit shall be paid by the Escrow Agent to Buyer; and

(d) that nothing herein shall relieve any Party from liability for any
intentional breach of any provision hereof; provided that the Deposit shall
constitute liquidated damages, and the Seller’s sole monetary remedy for breach
thereof, if it is paid to Seller as provided in clause (b).

ARTICLE X

MISCELLANEOUS

Section 10.01 Expenses. Except as otherwise expressly provided herein (including
Section 6.12 hereof), all costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors and accountants, incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the Party incurring such costs and expenses, whether or not the
Closing shall have occurred; provided, however, that Seller shall pay all
amounts payable to Fifth Third Securities.

Section 10.02 Notices. All notices, requests, consents, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been given: (a) when delivered by hand (with written confirmation of
receipt); (b) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested); (c) on the date sent by facsimile or
e-mail of a PDF document (with confirmation of transmission) if sent during
normal business hours of the recipient, and on the next Business Day if sent
after normal business hours of the recipient; or (d) on the third day after the
date mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective Parties at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 10.02):

 

If to Seller:   

Grand River Jackpot, LLC

[***]

[***]

Attn: Gary Hoyer

Telephone: [***]

Facsimile: [***]

E-mail: [***]

 

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with a copy to:   

Taft Stettinius & Hollister LLP

111 East Wacker Drive, Suite 2800

Chicago, Illinois 60601
Facsimile: 312-966-8502
E-mail: pjenson@taftlaw.com

Attention: Paul T. Jenson

If to Buyer:   

Accel Entertainment Gaming LLC

140 Tower Drive

Burr Ridge, IL 60527
Facsimile: 630-863-7279
E-mail: [***]
Attention: Andy Rubenstein

with a copy to:    Fenwick & West LLP
Silicon Valley Center
801 California Street
Mountain View, California 94041
Facsimile: (650) 938-5200
E-mail: dmichaels@fenwick.com
Attention: David Michaels and a copy to:    Much Shelist, P.C.
191 North Wacker Drive Suite 1800
Chicago, IL 60606
E-mail: jrubenstein@muchlaw.com
Attention: Jeffrey C. Rubenstein

Section 10.03 Interpretation. For purposes of this Agreement: (a) the words
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this
Agreement as a whole. Unless the context otherwise requires, references herein:
(x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles
and Sections of, and Disclosure Schedules and Exhibits attached to, this
Agreement; (y) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof; and (z) to
a statute means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated thereunder. This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the Party drafting an instrument or
causing any instrument to be drafted. The Disclosure Schedules and Exhibits
referred to herein shall be construed with, and as an integral part of, this
Agreement to the same extent as if they were set forth verbatim herein.

Section 10.04 Headings. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.

 

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Section 10.05 Severability. If any term or provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the Parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

Section 10.06 Entire Agreement. This Agreement constitutes the sole and entire
agreement of the Parties with respect to the subject matter contained herein and
therein, and supersede all prior and contemporaneous representations,
warranties, understandings and agreements, both written and oral, with respect
to such subject matter. In the event of any inconsistency between the statements
in the body of this Agreement, the Exhibits and Disclosure Schedules (other than
an exception expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control.

Section 10.07 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their respective successors and
permitted assigns. Neither Party may assign its rights or obligations hereunder
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed provided, that Buyer may, without the other
Parties’ consent, assign or transfer this Agreement or the other agreements
entered into in connection herewith, in whole or in part or from time to time,
to one or more of its Affiliates, but no such transfer or assignment will
relieve the Buyer of its obligations hereunder. Except as otherwise expressly
provided in this Agreement, all covenants and agreements set forth in this
Agreement by or on behalf of the Parties shall bind and inure to the benefit of
the respective heirs, successors and permitted assigns of the Parties, whether
so expressed or not. No assignment shall relieve the assigning Party of any of
its obligations hereunder.

Section 10.08 No Third-party Beneficiaries. Except as provided in Article VIII,
this Agreement is for the sole benefit of the Parties and their respective
successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person or entity any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

Section 10.09 Amendment and Modification; Waiver. This Agreement may only be
amended, modified or supplemented by an agreement in writing signed by each
Party. No waiver by any Party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and signed by the Party so waiving. No
waiver by any Party shall operate or be construed as a waiver in respect of any
failure, breach or default not expressly identified by such written waiver,
whether of a similar or different character, and whether occurring before or
after that waiver. No failure to exercise, or delay in exercising, any right,
remedy, power or privilege arising from this Agreement shall operate or be
construed as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

 

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Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Illinois without giving effect to any choice or
conflict of law provision or rule (whether of the State of Illinois or any other
jurisdiction).

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES
OF AMERICA OR THE COURTS OF THE STATE OF ILLINOIS IN EACH CASE LOCATED IN THE
CITY OF CHICAGO AND COUNTY OF COOK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING.
SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S
ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT,
ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION,
(B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.10(c).

Section 10.11 Specific Performance. The Parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the Parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy to which they
are entitled at law or in equity.

Section 10.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by
facsimile, e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Agreement.

 

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Section 10.13 IGB Review. Buyer and Seller acknowledge that this Agreement is
subject to the IGB’s review of, and to the extent required by the IGB, consent
to the use of this Agreement. To that end, Buyer and Seller each agree to submit
this Agreement to the IGB and to cooperate with each other in obtaining the
IGB’s consent, if so required. Buyer and Seller each hereby agree to modify or
amend this Agreement to comply with the requirements of the IGB or any change in
the Video Gaming Laws.

[SIGNATURE PAGE FOLLOWS]

 

62

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the date first written above by their respective officers thereunto duly
authorized.

 

SELLER:

 

GRE-ILLINOIS, LLC

        By:/s/ Gary L. Hoyer
        Name: GARY L. HOYER

        Title: MANAGER

COMPANY:

 

GRAND RIVER JACKPOT, LLC

 

        By: /s/ Gary L. Hoyer
        Name: Gary L. Hoyer
        Title: CEO/President

OWNER:

 

GREAT RIVER ENTERTAINMENT, LLC

 

        By: /s/ Gary L. Hoyer
        Name: Gary L. Hoyer

        Title: CEO/President

BUYER:

 

ACCEL ENTERTAINMENT GAMING, LLC

 

        By: /s/ Andy Rubenstein
        Name: Andy Rubenstein
        Title: Manager